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Important Note: The text in this chapter is intended to clarify business-related concepts. It is not intended nor can it replace formal legal advice. Before taking any actions relating to your business, always consult your accountant or a business law/tax attorney.

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Kanika tandon hdfc_bank_ltd._summer_internship_project...

  1. 1. A PROJECT REPORT On “ANALYSIS OF HDFC LOANS IN BAREILLY “ For HDFC BANK Ltd. SUMMER TRAINING PROJECT UNDER THE GUIDANCE OFAkrash Mehrotra Dr. Sankalp Srivastava(Relationship Manager) (Assistant Director)HDFC BANK LTD., BAREILLY INSTITUTE OF PRODUCTIVITY & MANAGENMENT, Lucknow SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF POST GRADUATION DIPLOMA IN MANAGEMENT BY KANIKA TANDON PGDM (F/T) L209021 INSTITUTE OF PRODUCTIVITY & MANAGEMENT LUCKNOW 1Institute of Productivity and Management
  2. 2. 2009-2011 ACKNOWLEDGEMENTAt the successful completion of summer internship program, I wish to express my true regardsto individuals who supported and directed me throughout this internship.First of all I would like to give my gratitude and sincere regards and a note of thank to AkarshMehrotra (Relationship Manager, HDFC Bank Ltd., Bareilly) for giving me thisopportunity and selecting me as summer trainee in this esteemed organization.I would like to express my deep gratitude and regards for his valuable guidance and supportwithout which completion of this report would not be possible.I would also like to give special thanks to Mr. Mukul Saxena, Mrs. Shweta Arora, (HDFCBank Ltd., Bareilly) for giving me their valuable time, support and inputs that helped me atevery step in this project.I take the opportunity to acknowledge and express sincere thanks to Dr. Sankalp Srivastava(Assistant Director, IPM Lucknow) for being constant source of inspiration to me, showing allthe patience and abundant encouragement throughout the project duration.Lastly, I would like to thank all my friends for their support and help. Kanika Tandon 2Institute of Productivity and Management
  3. 3. DeclarationI hereby declare that this Project Report entitled “ANALYSIS OF HDFC LOANS INBAREILLY “in HDFC BANK LTD., BAREILLY submitted in the partial fulfillment of therequirement of Post Graduate Diploma In Management (PGDM) of INSTITUTE OFPRODUCTIVITY & MANAGEMET, LUCKNOW is based on primary & secondary datafound by me in various departments, books, magazines and websites & collected by me in underguidance of Akarsh Mehrotra.DATE: KANIKATANDON PGDM (Finance) 3Institute of Productivity and Management
  4. 4. SECTION A 4Institute of Productivity and Management
  5. 5. List of ContentsSection A  Industry and Company Profile………………………………................2  Industry Background………………………………….. ……………...18  Competitive Situation……………………………………..….............23  Company background……………………………………...................25  Organizational Chart………………………………………………….30  Product range………………………………………………………… 31  Financial position of the company……………………………...........59Section B  The project Profile……………………………………………………….62  Why this project was undertaken/problem environment/the problem being faced…………………………………………………………………..........6 3  What does company expect to do by solving the problem? ........................64 5Institute of Productivity and Management
  6. 6. Section C  The project – background and methodology……………………………….67  Research problem…………………………………………………………67  Research objective and related sub objectives……………………..............67  Information requirements – in detail and source of information…………...68  Choice of research design…………………………………………………68  Research instrument used- details. Why? ………………………….............69  Sampling techniques used and sample size. Why? ………………………..72  Field work – method used for data collection ……………………………..73  Analytical tool used………………………………………………………...74  Limitations………………………………………………………. …...........74Section D  Analysis & Interpretations …………………………….………..………76  Conclusions……………………………………………………………….10 1  Suggestions………………………………………………………………..10 2 6Institute of Productivity and Management
  7. 7. • Questionnaire• Annexure• Bibliography Industry and Company Profile Industry Profile Introduction on BankOrigin of the word 7Institute of Productivity and Management
  8. 8. The name bank derives from the Italian word banco "desk/bench", used during the Renaissanceby Jewish Florentine bankers, who used to make their transactions above a desk covered by agreen tablecloth. However, there are traces of banking activity even in times ancient , whichindicates that the word bank might not necessarily come from the word banco.Banks date back to ancient times. During the 3rd century AD, banks in Persia and otherterritories in the Persian Sassanid Empire issued letters of credit known as Ṣakks. Muslimtraders are known to have used the cheque or Sakks system since the time of Harun al-Rashid(9th century) of the Abbasid Caliphate. In the 9th century, a Muslim businessman could cash anearly form of the cheque in China drawn on sources in Baghdad a tradition that wassignificantly strengthened in the 13th and 14th centuries, during the Mongol Empire. Indeed,fragments found in the Cairo Geniza indicate that in the 12th century cheques remarkablysimilar to our own were in use, only smaller to save costs on the paper. They contain a sum tobe paid and then the order "May so and so pay the bearer such and such an amount". The dateand name of the issuer are also apparent. The earliest known state deposit bank, Banco di SanGiorgio (Bank of St. George), was founded in 1407 at Genoa, Italy. Banking in the modernsense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in thenorth like Florence, Venice and Genoa. The Bardi and Peruzzi families were dominated bankingin 14th century Florence, establishing branches in many other parts of Europe. Perhaps the mostfamous Italian bank was the Medici bank, set up by Giovanni Medici in 1397.Meaning of bankA bank is a financial intermediary that accepts deposits and channels those deposits intolending activities. Banks are a fundamental component of the financial system, and are alsoactive players in financial markets. The essential role of a bank is to connect those who havecapital (such as investors or depositors), with those who seek capital (such as individualswanting a loan, or businesses wanting to grow). 8Institute of Productivity and Management
  9. 9. Banking is generally a highly regulated industry, and government restrictions on financialactivities by banks have varied over time and location. The current set of global standards iscalled Basel II. In some countries such as Germany, banks have historically owned major stakesin industrial corporations while in other countries such as the United States banks are prohibitedfrom owning non-financial companies. In Japan, banks are usually the nexus of a cross-shareholding entity known as the keiretsu. In France, banc assurance is prevalent, as most banks offerinsurance services (and now real estate services) to their clients. The most recent trend has beenthe advance of universal banks, which attempt to offer their customers the full spectrum offinancial services under the one roof.The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy,which has been operating continuously since 1472.DefinitionThe definition of a bank varies from country to country.Under English common law, a banker is defined as a person who carries on the business ofbanking, which is specified as: • conducting current accounts for his customers • paying cheques drawn on him, and • Collecting cheques for his customers.In most English common law jurisdictions there is a Bills of Exchange Act that codifies the lawin relation to negotiable instruments, including cheques, and this Act contains a statutorydefinition of the term banker: banker includes a body of persons, whether incorporated or not,who carry on the business of banking (Section 2, Interpretation). Although this definition seemscircular, it is actually functional, because it ensures that the legal basis for bank transactionssuch as cheques does not depend on how the bank is organized or regulated.The business of banking is in many English common law countries not defined by statute but bycommon law, the definition above. In other English common law jurisdictions there are 9Institute of Productivity and Management
  10. 10. statutory definitions of the business of banking or banking business. When looking at thesedefinitions it is important to keep in minds that they are defining the business of banking for thepurposes of the legislation, and not necessarily in general. In particular, most of the definitionsare from legislation that has the purposes of entry regulating and supervising banks rather thanregulating the actual business of banking. However, in many cases the statutory definitionclosely mirrors the common law one. Examples of statutory definitions: • "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation). • "banking business" means the business of either or both of the following: 1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. Paying or collecting cheques drawn by or paid in by customers.Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, directdebit and internet banking, the cheque has lost its primacy in most banking systems as apayment instrument. This has led legal theorists to suggest that the cheque based definitionshould be broadened to include financial institutions that conduct current accounts for customersand enable customers to pay and be paid by third parties, even if they do not pay and collectcheques.Standard activitiesBanks act as payment agents by conducting checking or current accounts for customers, payingcheques drawn by customers on the bank, and collecting cheques deposited to customerscurrent accounts. Banks also enable customer payments via other payment methods such astelegraphic transfer, EFTPOS, and ATM. 10Institute of Productivity and Management
  11. 11. Banks borrow money by accepting funds deposited on current accounts, by accepting termdeposits, and by issuing debt securities such as banknotes and bonds. Banks lend money bymaking advances to customers on current accounts, by making installment loans, and byinvesting in marketable debt securities and other forms of money lending.Banks borrow most funds from households and non-financial businesses, and lend most funds tohouseholds and non-financial businesses, but non-bank lenders provide a significant and inmany cases adequate substitute for bank loans, and money market funds, cash managementtrusts and other non-bank financial institutions in many cases provide an adequate substitute tobanks for lending savings to.Wider commercial roleThe commercial role of banks is not limited to banking, and includes: • issue of banknotes (promissory notes issued by a banker and payable to bearer on demand) • processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means • issuing bank drafts and bank cheques • accepting money on term deposit • lending money by way of overdraft, installment loan or otherwise • providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures • safekeeping of documents and other items in safe deposit boxes • currency exchange • acting as a financial supermarket for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial product 11Institute of Productivity and Management
  12. 12. ChannelsBanks offer many different channels to access their banking and other services: • A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers. • ATM is a computerized telecommunications device that provides a financial institutions customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the banks account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank. • Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers. • Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity). • Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building societys secure website. • Mobile banking is a method of using ones mobile phone to conduct simple banking transactions by remotely linking into a banking network.Products:- 12Institute of Productivity and Management
  13. 13. Retail • Savings account • Cheque account • Credit card • Home loan • Personal loan • Business loan • Insurance advisor • Mutual fundWholesale • Project finance • Capital raising (Equity / Debt / Hybrids) • Risk management (FX, interest rates, commodities)Banks in the economyEconomic functionsThe economic functions of banks include: 1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customers order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash. 13Institute of Productivity and Management
  14. 14. 2. Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economies on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them. 3. Credit intermediation – banks borrow and lend back-to-back on their own account as middle men. 4. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the banks assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to rise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position. 5. Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets)Types of retail banks • Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term 14Institute of Productivity and Management
  15. 15. "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses. • Community banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners. • Community development banks: regulated banks that provide financial services and credit to under-served markets or populations. • Postal savings banks: savings banks associated with national postal systems. • Private Banks: banks that manage the assets of high net worth individuals. • Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks. • Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative; in others, socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralized distribution network, providing local and regional outreach—and by their socially responsible approach to business and society. • Building societies and Landesbanks: institutions that conduct retail banking. • Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.Types of investment banks 15Institute of Productivity and Management
  16. 16. • Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital market activities such as mergers and acquisitions. • Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.Both combined • Universal banks, more commonly known as financial services companies, engage in several of these activities. These big banks are much diversified groups that, among other services, also distribute insurance— hence the term banc assurance, a portmanteau word combining "banque or bank" and "assurance", signifying that both banking and insurance are provided by the same corporate entity.Other types of banks • Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis. • Islamic banks adhere to the concepts of Islamic law. This form of banking revolves around several well-established principles based on Islamic canons. All banking activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit (markup) and fees on the financing facilities that it extends to customers.Retail Banking Products 1. Savings accountSavings accounts are accounts maintained by retail financial institutions that pay interest butcan not be used directly as money ( for example, by writing a cheque). These accounts letcustomers set aside a portion of their liquid assets while earning a monetary return. 16Institute of Productivity and Management
  17. 17. 2. Current accountCurrent account or cheque account is a deposit account held at a bank or other financialinstitution, for the purpose of securely and quickly providing frequent access to funds ondemand, through a variety of different channels. Because money is available on demand theseaccounts are also referred to as demand accounts or demand deposit accounts. Transactionalaccounts are meant neither for the purpose of earning interest nor for the purpose of savings, butfor convenience of the business or personal client; hence do they tend not to bear interest.Instead, a customer can deposit or withdraw any amount of money any number of times, subjectto availability of funds. 3. Credit cardA credit card is part of a system of payments named after the small plastic card issued to usersof the system. It is a card entitling its holder to buy goods and services based on the holderspromise to pay for these goods and services. The issuer of the card grants a line of credit to theconsumer (or the user) from which the user can borrow money for payment to a merchant or asa cash advance to the user. Usage of the term "credit card" to imply a credit card account is ametonym. A credit card is different from a charge card, where a charge card requires the balanceto be paid in full each month. In contrast, credit cards allow the consumers to revolve theirbalance, at the cost of having interest charged. Most credit cards are issued by local banks orcredit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1. Thisis defined as 85.60 × 53.98 mm (33/8 × 21/8 in) in sizeFees charged to customersThe major fees are for: • Late payments or overdue payments • Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called over limit fees 17Institute of Productivity and Management
  18. 18. • Returned cheque fees or payment processing fees (e.g. phone payment fee) • Cash advances and convenience cheques (often 3% of the amount) • Transactions in a foreign currency (as much as 3% of the amount). A few financial institutions do not charge a fee for this. • Membership fees (annual or monthly), sometimes a percentage of the credit limit. • Exchange rate loading fees (these may sometimes not be reported on the customers statement, even when they are applied). 4. MortgageA mortgage is a security interest in real property held by a lender as a security for a debt,usually a loan of money. While a mortgage in itself is not a debt, it is the lenders security for adebt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgagelender, on the condition that this interest will be returned to the owner when the terms of themortgage have been satisfied or performed. In other words, the mortgage is a security for theloan that the lender makes to the borrower. The word comes from the Old French word for"dead pledge," apparently meaning that the pledge ends (dies) either when the obligation isfulfilled or the property is taken through foreclosure. In most jurisdictions mortgages arestrongly associated with loans secured on real estate rather than on other property (such asships) and in some jurisdictions only land may be mortgaged. A mortgage is the standardmethod by which individuals and businesses can purchase real estate without the need to pay thefull value immediately from their own resources. See mortgage loan for residential mortgagelending, and commercial mortgage for lending against commercial property. • Participants and variant terminologyLegal systems in different countries, while having some concepts in common, employ differentterminology. However, in general, a mortgage of property involves the following parties.Mortgage lender- 18Institute of Productivity and Management
  19. 19. A mortgage lender is an investor that lends money secured by a mortgage on real estate. Intodays world, most lenders sell the loans they write on the secondary mortgage market. Whenthey sell the mortgage, they earn revenue called Service Release Premium. Typically, thepurpose of the loan is for the borrower to purchase that same real estate. The borrower, knownas the mortgagor, gives the mortgage to the lender, known as the mortgagee. As the mortgagee,the lender has the right to sell the property to pay off the loan if the borrower fails to pay. 5. Unsecured LoanAn unsecured loan is a loan that is not backed by collateral. Also known as a signature loan orpersonal loan. Unsecured loans are based solely upon the borrowers credit rating. As a result,they are often much more difficult to get than a secured loan, which also factors in theborrowers income. An unsecured loan is considered much cheaper and carries less risk to theborrower. However, when an unsecured loan is granted, it does not necessarily have to bebased on a credit score. For example, if your friend lends you money without any collateral,meaning something of worth that can be repossessed if the loan isnt repaid, then your creditscore has zero to do with it, but rather the value of your friendship is at stake. Therefore the realmeaning of an unsecured loan is that it is not backed by any object of value and is lent to youbased on your good name. For financial institutional purposes, they may want to look at yourcredit score because they are not your friend and it is strictly a business transaction, thereforeyour good name may be associated with your historical payment history on prior debt, reflectingin your credit score. • Types of unsecured loansThere are three types of unsecured loans. • First there is a personal unsecured loan, meaning a loan that you individually are responsible for the repayment of. • Second is an unsecured business loan which leaves the business responsible for the repayment. 19Institute of Productivity and Management
  20. 20. • Finally there is an unsecured business loan with a personal guarantee. With the latter, although the borrower is the business, you as an individual will be the payer of last resort if the business defaults on the loan 6. Mutual Fund A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low-cost. The flow chart below describes broadly the working of a mutual fund: Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invests the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally form the basis for an investors decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time.Wholesale Banking Products I. Project financing 20Institute of Productivity and Management
  21. 21. Project finance is the long term financing of infrastructure and industrial projects based upon theprojected cash flows of the project rather than the balance sheets of the project sponsors.Usually, a project financing structure involves a number of equity investors, known as sponsors,as well as a syndicate of banks that provide loans to the operation. The loans are mostcommonly non-recourse loans, which are secured by the project assets and paid entirely fromproject cash flow, rather than from the general assets or creditworthiness of the project sponsors,a decision in part supported by financial modeling. The financing is typically secured by all ofthe project assets, including the revenue-producing contracts. Project lenders are given a lien onall of these assets, and are able to assume control of a project if the project company hasdifficulties complying with the loan terms. Generally, a special purpose entity is created foreach project, thereby shielding other assets owned by a project sponsor from the detrimentaleffects of a project failure. As a special purpose entity, the project company has no assets otherthan the project. Capital contribution commitments by the owners of the project company aresometimes necessary to ensure that the project is financially sound. II. Risk managementIn ideal risk management, a prioritization process is followed whereby the risks with the greatestloss and the greatest probability of occurring are handled first, and risks with lower probabilityof occurrence and lower loss are handled in descending order. In practice the process can bevery difficult, and balancing between risks with a high probability of occurrence but lower lossversus a risk with high loss but lower probability of occurrence can often be mishandled.Intangible risk management identifies a new type of a risk that has a 100% probability ofoccurring but is ignored by the organization due to a lack of identification ability. For example,when deficient knowledge is applied to a situation, a knowledge risk materializes. Relationshiprisk appears when ineffective collaboration occurs. Process-engagement risk may be an issuewhen ineffective operational procedures are applied. These risks directly reduce the productivityof knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation,brand value, and earnings quality. Intangible risk management allows risk management to createimmediate value from the identification and reduction of risks that reduce productivity. 21Institute of Productivity and Management
  22. 22. Risk management also faces difficulties in allocating resources. This is the idea of opportunitycost. Resources spent on risk management could have been spent on more profitable activities.Again, ideal risk management minimizes spending and minimizes the negative effects of risks. Company ProfileHDFC Bank Ltd. is a major Indian financial services company based in Mumbai, incorporatedin August 1994, after the Reserve Bank of India allowed establishing private sector banks. TheBank was promoted by the Housing Development Finance Corporation, a premier housingfinance company (set up in 1977) of India. HDFC Bank has 1,412 branches and over 3,295ATMs, in 528 cities in India, and all branches of the bank are linked on an online real-timebasis. As of September 30, 2008 the bank had total assets of INR 1006.82 billion. For the fiscalyear 2008-09, the bank has reported net profit of Rs.2,244.9 crore, up 41% from the previousfiscal. Total annual earnings of the bank increased by 58% reaching at Rs.19,622.8 crore in2008-09. Board of DirectorManaging Director • Mr. Aditya PuriExecutive Director • Mr. Harish Engineer 22Institute of Productivity and Management
  23. 23. • Mr. Paresh SukthankarGroup Head - Equities, Private Banking, Third Party Products, NRI & InternationalConsumer Business • Mr. Abhay AimaTreasurer • Mr. Ashish PathasarthyGroup Head – Properties • Mr. Bharat ShahCountry Head - Internal Controls & Compliance Risk • Mr. G. SubramanianCountry Head - Branch Banking • Mr. Navin PuriHead – Finance • Mr. Sashi Jagdishan 23Institute of Productivity and Management
  24. 24. Industry BackgroundBanking system in IndiaCurrently, India has 96 scheduled commercial banks (SCBs) - 27 public sector banks (that iswith the Government of India holding a stake), 31 private banks (these do not have governmentstake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. Theyhave a combined network of over 53,000 branches and 49,000 ATMs. According to a report byICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets ofthe banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. 24Institute of Productivity and Management
  25. 25. Early historyBanking in India originated in the last decades of the 18th century. The first banks were TheGeneral Bank of India which started in 1786, and the Bank of Hindustan, both of which are nowdefunct. The oldest bank in existence in India is the State Bank of India, which originated in theBank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This wasone of the three presidency banks, the other two being the Bank of Bombay and the Bank ofMadras, all three of which were established under charters from the British East India Company.For many years the Presidency banks acted as quasi-central banks, as did their successors. Thethree banks merged in 1921 to form the Imperial Bank of India, which, upon Indiasindependence, became the State Bank of India. 25Institute of Productivity and Management
  26. 26. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as aconsequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 andstill functioning today, is the oldest Joint Stock bank in India. It was not the first though. Thathonor belongs to the Bank of Upper India, which was established in 1863, and which surviveduntil 1913, when it failed, with some of its assets and liabilities being transferred to the AllianceBank of Shimla.When the American Civil War stopped the supply of cotton to Lancashire from the ConfederateStates, promoters opened banks to finance trading in Indian cotton. With large exposure tospeculative ventures, most of the banks opened in India during that period failed. The depositorslost money and lost interest in keeping deposits with banks. Subsequently, banking in Indiaremained the exclusive domain of Europeans for next several decades until the beginning of the20th century.Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The ComptoiredEscompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;branches in Madras and Pondicherry, then a French colony, followed. HSBC established itselfin Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade ofthe British Empire, and so became a banking center.The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in1895, which has survived to the present and is now one of the largest banks in India.Around the turn of the 20th Century, the Indian economy was passing through a relative periodof stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrialand other infrastructure had improved. Indians had established small banks, most of whichserved particular ethnic and religious communities.The presidency banks dominated banking in India but there were also some exchange banks anda number of Indian joint stock banks. All these banks operated in different segments of theeconomy. The exchange banks, mostly owned by Europeans, concentrated on financing foreigntrade. Indian joint stock banks were generally under capitalized and lacked the experience and 26Institute of Productivity and Management
  27. 27. maturity to compete with the presidency and exchange banks. This segmentation let LordCurzon to observe, "In respect of banking it seems we are behind the times. We are like someold fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersomecompartments."The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshimovement. The Swadeshi movement inspired local businessmen and political figures to foundbanks of and for the Indian community. A number of banks established then have survived tothe present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, CanaraBank and Central Bank of India.The fervour of Swadeshi movement lead to establishing of many private banks in DakshinaKannada and Udupi district which were unified earlier and known by the name South Canara( South Kanara ) district. Four nationalised banks started in this district and also a leadingprivate sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of IndianBanking".List of banks in India:-Public Sector BanksThere are total 26 public sector banks in India (As on 26-09-2009). Of these 19 are nationalisedbanks, 6(STATE BANK OF INDORE ALSO MERGED RECENTLY) belong to SBI &associates group and 1 bank (IDBI Bank) is classified as other public sector bank.Nationalized Banks • Bank of Baroda • Dena Bank 27Institute of Productivity and Management
  28. 28. • Indian Bank • Indian Overseas Bank • Oriental Bank of Commerce • Punjab National Bank • Punjab and Sind Bank • Syndicate Bank • UCO Bank • Union Bank of India • United Bank of India • Vijaya Bank • Repco bank • Allahabad bankSBI & associates • State Bank of India • State Bank of Bikaner and Jaipur • State Bank of Indore • State Bank of Travancore • State Bank of Patiala • State Bank of Hyderabad • State Bank of MysorePrivate Banks 28Institute of Productivity and Management
  29. 29. • Axis Bank • Bank of Rajasthan • Catholic Syrian Bank • City Union Bank • Development Credit Bank • Dhanalakshmi Bank • Federal Bank • HDFC Bank • ICICI Bank • ING Vysya Bank • Jammu & Kashmir Bank • Karnataka Bank • Kotak Mahindra Bank • Laxmi Vilas Bank • Yes Bank 29Institute of Productivity and Management
  30. 30. Competitive Situation ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is a major banking and financial services organization in India. It is the 4th largest bank in India and the largest private sector bank in India bymarket capitalization. The bank also has a network of 1,700+ branches (as on 31 March 2010)and about 4,721 ATMs in India and presence in 19 countries, as well as some 24 millioncustomers (at the end of July 2007). ICICI Bank offers a wide range of banking products andfinancial services to corporate and retail customers through a variety of delivery channels andspecialization subsidiaries and affiliates in the areas of investment banking, life and non-lifeinsurance, venture capital and asset management. (These data are dynamic.) ICICI Bank is alsothe largest issuer of credit cards in India. The Bank is expanding in overseas markets and has thelargest international balance sheet among Indian banks. ICICI Bank now has wholly-ownedsubsidiaries, branches and representatives offices in 19 countries, including an offshore unit inMumbai. Axis Bank, formally UTI Bank, is a financial services firm that had begun operations in 1994, after the Government of India allowed new privatebanks to be established. The Bank was promoted jointly by the Administrator of the SpecifiedUndertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC),General Insurance Corporation Ltd., National Insurance Company Ltd., The New IndiaAssurance Company, The Oriental Insurance Corporation and United India Insurance CompanyUTI-I holds a special position in the Indian capital markets and has promoted many leadingfinancial institutions in the country. The bank changed its name to Axis Bank in April 2007 toavoid confusion with other unrelated entities with similar name..As on the year ended March 31,2009 the Bank had a total income of Rs 13,745.04 crore (US$ 2.93 billion) and a net profit ofRs. 1,812.93 crore (US$ 386.15 million).On February 24, 2010, Axis Bank announced thelaunch of AXIS CALL & PAY on atom, a unique mobile payments solution using Axis Bank 30Institute of Productivity and Management
  31. 31. debit cards. Axis Bank is the first bank in the country to provide a secure debit card-basedpayment service over IVR. State Bank of India is the largest state-owned banking and financial services company in India, by almost every parameter -revenues, profits, assets, market capitalization, etc. The bank traces its ancestry to British India,through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making itthe oldest commercial bank in the Indian Subcontinent. The Government of India nationalizedthe Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, andrenamed it the State Bank of India. In 2008, the Government took over the stake held by theReserve Bank of India.SBI provides a range of banking products through its vast network ofbranches in India and overseas, including products aimed at NRIs. The State Bank Group, withover 16,000 branches, has the largest banking branch network in India. With an asset base of$260 billion and $195 billion in deposits, it is a regional banking behemoth. It has a marketshare among Indian commercial banks of about 20% in deposits and advances, and SBIaccounts for almost one-fifth of the nations loans. Bank of Baroda is the third largest bank in India, after the State Bank of India and the Punjab National Bank and ahead of ICICI Bank. BOB has total assets in excess of Rs. 2.27 lakh crores, orRs. 2,274 billion, a network of over 3,000 branches and offices, and about 1,100 ATMs. It offersa wide range of banking products and financial services to corporate and retail customersthrough a variety of delivery channels and through its specialized subsidiaries and affiliates inthe areas of investment banking, credit cards and asset management. As of August 2010, thebank has 78 branches abroad and by the end of FY11 this number should climb to 90. In 2010,BOB opened a branch in Auckland, New Zealand, and its tenth branch in the United Kingdom.The bank also plans to open five branches in Africa. 31Institute of Productivity and Management
  32. 32. Company BackgroundHistory of HDFC Bank Ltd.HDFC Bank Ltd. is a commercial bank of India, incorporated in August 1994, afterthe Reserve Bank of India allowed establishing private sector banks. The Bank was promoted bythe Housing Development Finance Corporation, a premier housing finance company (set up in1977) of India. HDFC Bank has 1,412 branches and over 3,295 ATMs, in 528 cities in India,and all branches of the bank are linked on an online real-time basis. As of September 30, 2008the bank had total assets of INR 1006.82 billion. For the fiscal year 2008-09, the bank hasreported net profit of Rs.2,244.9 crore, up 41% from the previous fiscal. Total annual earningsof the bank increased by 58% reaching at Rs.19,622.8 crore in 2008-09.HDFC Bank was incorporated in the year of 1994 by Housing Development FinanceCorporation Limited (HDFC), Indias premier housing finance company. It was among the firstcompanies to receive an in principle approval from the Reserve Bank of India (RBI) to set up abank in the private sector. The Bank commenced its operations as a Scheduled CommercialBank in January 1995 with the help of RBIs liberalization policies.In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than1,000. The amalgamated bank emerged with a strong deposit base of around Rs. 1,22,000 croreand net advances of around Rs. 89,000 crore. The balance sheet size of the combined entity isover Rs. 1,63,000 crore. The amalgamation added significant value to HDFC Bank in terms ofincreased branch network, geographic reach, and customer base, and a bigger pool of skilledmanpower.Business FocusHDFC Bank deals with three key business segments – Wholesale Banking Services, RetailBanking Services, Treasury. It has entered the banking consortia of over 50 corporates forproviding working capital finance, tradeservices, corporate finance and merchant banking. It isalso providing sophisticated product structures in areas of foreign exchange and derivatives,money markets and debt trading and equity research. 32Institute of Productivity and Management
  33. 33. Wholesale Banking ServicesThe Banks target market ranges from large, blue-chip manufacturing companies in the Indiancorp to small & mid-sized corporates and agri-based businesses. For these customers, the Bankprovides a wide range of commercial and transactional banking services, including workingcapital finance, trade services, transactional services, cash management, etc. The bank is also aleading provider of structured solutions, which combine cash management services with vendorand distributor finance for facilitating superior supply chain management for its corporatecustomers. HDFC Bank has made significant inroads into the banking consortia of a number ofleading Indian corporate including multinationals, companies from the domestic business housesand prime public sector companies. It is recognized as a leading provider of cash managementand transactional banking solutions to corporate customers, mutual funds, stock exchangemembers and banks.Retail Banking ServicesThe objective of the Retail Bank is to provide its target market customers a full range offinancial products and banking services, giving the customer a one-stop window for all his/herbanking requirements. The products are backed by world-class service and delivered tocustomers through the growing branch network, as well as through alternative delivery channelslike ATMs, Phone Banking, NetBanking and Mobile Banking.HDFC Bank was the first bank in India to launch an International Debit Card in association withVISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Banklaunched its credit card business in late 2001. By March 2009, the bank had a total card base(debit and credit cards) of over 13 million. The Bank is also one of the leading players in the“merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit / creditcards acceptance at merchant establishments. The Bank is well positioned as a leader in variousnet based B2C opportunities including a wide range of internet banking services for FixedDeposits, Loans, Bill Payments, etc.Treasury 33Institute of Productivity and Management
  34. 34. Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,Local Currency Money Market & Debt Securities, and Equities. These services are providedthrough the banks Treasury team. To comply with statutory reserve requirements, the bank isrequired to hold 25% of its deposits in government securities. The Treasury business isresponsible for managing the returns and market risk on this investment portfolio.Distribution network:HDFC Bank is headquartered in Mumbai. The Bank has an network of 1,725 branches spread in771 cities across India. All branches are linked on an online real-time basis. Customers in over500 locations are also serviced through Telephone Banking. The Bank has a presence in allmajor industrial and commercial centres across the country. Being a clearing/settlement bank tovarious leading stock exchanges, the Bank has branches in the centres where the NSE/BSE havea strong and active member base.The Bank also has 3,898 networked ATMs across these cities. Moreover, HDFC Banks ATMnetwork can be accessed by all domestic and international Visa/MasterCard, VisaElectron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. Though, the official license was given to Centurion Bank of Punjab branches, to continue working as HDFC Bank branches, on May 23, 2008Housing Development Finance Corporation Limited, more popularly known as HDFC BankLtd, was established in the year 1994, as a part of the liberalization of the Indian BankingIndustry by Reserve Bank of India (RBI). It was one of the first banks to receive an in principleapproval from RBI, for setting up a bank in the private sector. The bank was incorporated withthe name HDFC Bank Limited, with its registered office in Mumbai. The following year, itstarted its operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as1412 branches and over 3275 ATMs across India.AmalgamationsIn 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank 34Institute of Productivity and Management
  35. 35. promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became thefirst two private banks in the New Generation Private Sector Banks to have gone through amerger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFCBank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while theAdvances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore.Tech-SavvyHDFC Bank has always prided itself on a highly automated environment, be it in terms ofinformation technology or communication systems. All the braches of the bank boast of onlineconnectivity with the other, ensuring speedy funds transfer for the clients. At the same time, thebanks branch network and Automated Teller Machines (ATMs) allow multi-branch access toretail clients. The bank makes use of its up-to-date technology, along with market position andexpertise, to create a competitive advantage and build market share.Capital StructureAt present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of thisthe paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Groupholds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about17.6% is held by the ADS Depository (in respect of the banks American Depository Shares(ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the StockExchange, Mumbai and National Stock Exchange, while its American Depository Shares arelisted on the New York Stock Exchange (NYSE), under the symbol HDB.Housing Finance SectorAgainst the milieu of rapid urbanization and a changing socio-economic scenario, the demandfor housing has grown explosively. The importance of the housing sector in the economy can beillustrated by a few key statistics. According to the National Building Organization (NBO), thetotal demand for housing is estimated at 2 million units per year and the total housing shortfall isestimated to be 19.4 million units, of which 12.76 million units is from rural areas and 6.64million units from urban areas. The housing industry is the second largest employmentgenerator in the country. It is estimated that the budgeted 2 million units would lead to the 35Institute of Productivity and Management
  36. 36. creation of an additional 10 million man-years of direct employment and another 15 millionman-years of indirect employment.Having identified housing as a priority area in the Ninth Five Year Plan (1997-2002), theNational Housing Policy has envisaged an investment target of Rs. 1,500 billion for this sector.In order to achieve this investment target, the Government needs to make low cost funds easilyavailable and enforce legal and regulatory reforms.BackgroundHDFC was incorporated in 1977 with the primary objective of meeting a social need - that ofpromoting home ownership by providing long-term finance to households for their housingneeds. HDFC was promoted with an initial share capital of Rs. 100 million.Business ObjectivesThe primary objective of HDFC is to enhance residential housing stock in the country throughthe provision of housing finance in a systematic and professional manner, and to promote homeownership. Another objective is to increase the flow of resources to the housing sector byintegrating the housing finance sector with the overall domestic financial markets.Organizational Goals o HDFCs main goals are to a) develop close relationships with individual households, b) maintain its position as the premier housing finance institution in the country, c) transform ideas into viable and creative solutions, d) provide consistently high returns to shareholders, and e) to grow through diversification by leveraging off the existing client base. o HDFC is a professionally managed organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction 36Institute of Productivity and Management
  37. 37. and urban policy & development. The board primarily focuses on strategy formulation, policy and control, designed to deliver increasing value to shareholders. Organizational Chart 37Institute of Productivity and Management
  38. 38. Products at glanceAccounts & Deposits Loans Investments & InsuranceSavings Accounts: • Personal Loan • Mutual Funds • Regular Savings Account • Smart Draft • Tax Planning • Savings Plus Account • Home Loan • Insurance • Savings Max Account • Two wheeler Loan • General & Health • Senior citizen Account Insurance • New Car Loan • No Frills Account • Bonds • Used Car Loan • Institutional Savings • Knowledge centre • Gold Loan Account • Equities & • Educational Loan Derivatives • Salary Accounts: • Loan against • Mudra Gold Bar • Payroll Securities Forex Services • Classic • Loan against • Products & Property Services • Regular • Health Care Finance • Trade services • Premium • Commercial Vehicle • Forex Services • Defence Finance Branch Locator • No Frills Salary Account • Loan Against Rental • RBI Guidelines Receivables • Reimbursement Current • Forex Limits Account • Retail Agri Loan Payment Services • Net Safe • Kid’s Advantage Account • Tractor Loan • Merchant Services • Working Capital Finance 38Institute of Productivity and Management
  39. 39. • Pension Saving Bank • Construction • Prepaid Refills Account Equipment Finance • Bill Pay • Family Saving Group • Warehouse receipt Loan • Visa Bill Pay • Kisan No Frill Saving Cards • Pay Now • Kisan Club Services Credit Cards: • Register & Pay • Silver Credit CardCurrent Accounts: • Insta Pay • Gold Credit Card • Plus Current Account • Titanium Credit • Direct Pay • Regular Current Account Card • M Chek • Trade Current Account • Woman’s Gold Credit card • Visa Money • Premium Current Account Transfer • Platinum Gold • RFC-Domestic Account Credit card • RTGS Funds Transfer • Flexi Current Account • Visa Signature Credit card • e-monies • Apex Current Account Electronic Fund • World Master Transfer • Max Current Account CardCredit Card • Donate to CharityFixed Deposits: • Corporate Platinum credit Card • Religious offerings • Regular Fixed Account • Online payment of • Corporate Credit • 5 Year Tax Saving Fixed DVAT card Account • Business Platinum • Online payment of • Super saver facility Gujarat VAT Credit Card • Sweep-in facility • Online payment of • Business Gold Credit card Direct TaxRecurring Deposits • Purchase card • Excise & ServiceDemat Account Tax Payment • Distributor card Access Your Bank 39Institute of Productivity and Management
  40. 40. Safe deposits Lockers • Net Banking Debit Cards: • Credit Card Online • Easy Shop • One View International Debit Card • Insta AlertsHDFC Bank • Easy Shop GoldImperia/Preferred/Classic Debit Card • Mobile BankingBanking • Easy Shop • ATM • Imperia Premium Banking International Business Debit Card • Phone Banking • Preferred Banking • Easy Shop • Email Statements • Classic Banking Woman’s Advantage Debit • Branch NetworksPrivate Banking card • Easy Shop Titanium Debit Card • Easy Shop NRO Debit Card Prepaid Cards: • Forex Plus card • Gift Plus Card • Food Plus Card • Money Plus Card • Forex Plus Chip Card LOANS • Personal Loans: 40Institute of Productivity and Management
  41. 41. HDFC Personal Loans have been designed by HDFC Bank to suit personal requirements ofindividuals like marriage, holiday, and education, purchase of any expensive commodity or anysuch anticipated or unanticipated monetary involvement.Features & benefits: • Borrow up to Rs 15, 00,000 for any purpose depending on your requirements • Flexible Repayment options, ranging from 12 to 60 months. • Repay with easy EMIs. • One of the lowest interest rates. • Hassle free loans - No guarantor/security/collateral required. • Speedy loan approval. • Convenience of service at your doorstep. • Further, there are additional privileges for HDFC Bank account holders like: o Special rates of interest. o For existing Auto Loan customers with a clear repayment of 12 months or more from even any of the approved financiers of HDFC Bank, a hassle free personal loan without income documentation can be obtained. o For existing HDFC Bank Personal Loan customer with a clear repayment of 12 months or more, personal loan can be enhanced.Credit ShieldIn case of death or total permanent disability of the loaner, the loaner/nominee can avail of thePayment Protection Insurance (Credit Shield) which insures the principle outstanding on theloan up to a maximum of the loan amount. Principle outstanding is defined as the amount ofloan outstanding (not including any arrears in payment or interest thereon) at the Date of Loss,having accounted for payments made and interest accruing as determined in the Policy. 41Institute of Productivity and Management
  42. 42. Hence,the amount covered does not include any principal added because of non - payment ofEMI and also will not include interest/ accrued charges.*Personal Accident CoverIn order to ensure that your family is taken care of we also offer a Personal Accident cover ofRs.2,00,000 at a nominal premium.** Premium will be charged for both these products which will be deducted from the loanamount at the time of disbursal .A transaction fee of Rs.750 will also be deducted at the time ofdisbursal. Please note that service tax @ 10% and Education cess of 3% will also be charged.Eligibility and Documentation:-  Salaried Individuals  Self Employed (Professional)  Self Employed (Individuals)  Self Employed(Private companies and Partnership Firms) 1. Salaried Individuals:Salaried Individuals include Salaried Doctors, CAs, employees of select Public and Privatelimited companies, Government Sector employees including public sector undertakings andcentral, state and local bodies:Eligibility Criteria  Minimum age of Applicant: 21 years  Maximum age of Applicant at loan maturity: 60 years  Minimum employment: Minimum 2 years in employment and minimum 1 year in the current organization  Minimum Net Monthly Income: Rs. 10,000 per month (Rs. 15,000 in Mumbai, Delhi, Bangalore, Chennai and Hyderabad & Rs. 12,000 in Calcutta, Ahmedabad and Cochin) 42Institute of Productivity and Management
  43. 43. Documents required:  Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence)  Address Proof (Ration card Tel/Elect. Bill/ Rental agr. / Passport copy/Trade licence /Est./Sales Tax certificate)  Bank Statements (latest 3 months bank statement / 6 months bank passbook)  Latest salary slip or current dated salary certificate with latest Form 16. 2. Self Employed (Professional):Self employed (Professionals) include self - employed Doctors, Chartered Accountants,Architects, and Company Secretaries.Eligibility Criteria • Minimum age of Applicant: 25 years • Maximum age of Applicant at loan maturity: 65 years • Years in business: 4 to 7 years depending on profession • Minimum Annual Income: Rs. 100000 p.a.Documents required:  Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence).  Address Proof (Ration card Tel/elect. Bill/ Rental agr. / Passport copy/Trade licence /Est./Sales Tax certificate).  Bank Statements(latest 6 months bank statement /passbook)  Latest ITR along with computation of income, B/S & P&L a/c for the last 2 yrs. certified by a CA  Qualification proof of the highest professional degree. 3. Self Employed (Individuals): 43Institute of Productivity and Management
  44. 44. Self Employed (Pvt. Cos and Partnership Firms) include Private Companies and Partnershipfirms in the Business of Manufacturing, Trading or ServicesEligibility Criteria  Years in business: Minimum of 3 years in current business and 5 years total business experience  Business must be profit making for the last 2 years  Minimum Annual Income: Rs 100000 p.a.Documents required:  Address Proof (Ration card Tel/elect. Bill/ Rental agr. / Passport copy/Trade licence /Est./Sales Tax certificate)  Bank Statements(latest 6 months bank statement /passbook)  Latest ITR along with computation of income, B/S & P&L a/c for the last 2 yrs. certified by a CA  Proof of continuation (Trade license /Establishment /Sales Tax certificate)Fees & Charges for Personal Loan:Description of Charges Personal LoanLoan Processing Charges Upto 2.50% of the loan amountPrepayment Salaried - No pre-payment permitted until repayment of 12 EMIs Self-employed - No pre-payment permitted until repayment of 6 EMIsPre-payment charges Salaried - 4% of the Principal Outstanding after repayment of 12 EMIs Self-employed - 4% of the Principal Outstanding after 44Institute of Productivity and Management
  45. 45. repayment of 6 EMIsNo Due Certificate / No Objection Certificate (NOC) NILDuplicate no due certificate / NOC Rs 250/-Solvency Certificate Not applicableCharges for late payment of EMI @ 24 % p.a on amount outstanding from date of defaultCharges for changing from fixed to floating rate of Not applicableinterestCharges for changing from floating to fixed rate of Not applicableinterestStamp Duty & other statutory charges As per applicable laws of the stateCredit assessment charges Not applicableNon standard repayment charges Not applicableCheque swapping charges Rs 500/- per eventLoan Re-booking charges / Re-scheduling charges Rs 1000/-Loan cancellation charges Rs. 1000/-Cheque Bounce Charges Rs 450/- per cheque bounceLegal / incidental charges At actual • Business Loan:Small & Medium EnterprisesAt HDFC Bank we understand how much of hard work goes into establishing a successfulSME. We also understand that your business is anything but "small" and as demanding as ever.And as your business expands and enters new territories and markets, you need to keep pacewith the growing requests that come in, which may lead to purchasing new, or updating existingplant and equipment, or employing new staff to cope with the demand. That´s why we at HDFCBank have assembled products, services, resources and expert advice to help ensure that yourbusiness excels. 45Institute of Productivity and Management
  46. 46. Our solutions are designed to meet your varying needs. The following links will help you identify your individual needs. Funded Services Funded Services from HDFC Bank are meant to directly bolster the day-to-day working of a small and a medium business enterprise. From working capital finance to credit substitutes; from export credit to construction equipment loan - we cater to virtually every business requirement of an SME. Click on the services below that best define your needs.• Working Capital Finance• Commercial Vehicle finance• Construction Equipment Loan• Short Term Finance• Bill Discounting• Credit Substitutes• Export Credit• Structured Cash Flow Financing• Real Estate Initiatives• Non-Funded Services Under Non-Funded services HDFC Bank offers solutions that act as a catalyst to propel your business. Imagine a situation where you have a letter of credit and need finance against the same or you have a tender and you need to equip yourself with a guarantee in order to go ahead. This is exactly where we can help you so that you dont face any roadblocks when it comes to your business. • Home Loan: 46 Institute of Productivity and Management
  47. 47. Home Loans offered by HDFC Bank encompasses a wide range of loan options which aresubject to various parameters like term of loan, financial status of the individual seeking loanand the purpose of loan. Owing to these diversifications, HDFC Home Loans have grown inpopularity over the years.The primary subdivision of HDFC Home Loans is loans for:• Resident Indian• Non Resident IndianLoans for Resident Indians:With an HDFC Home Loan, one can buy a self-contained flat in an existing or proposed co-operative society, in an apartment owners association or even an independent single-family ormulti-family bungalow anywhere in India.HDFC Home Loans are easy to arrange and can be customized according to the individualsneeds and repayment capabilities.This category can be further into subdivided into: • Home Loans: Home loans for individuals to purchase (fresh / resale) or construct houses. Application can be made individually or jointly. HDFC finances up to 85% maximum of the cost of the property (Agreement value + Stamp duty + Registration charges) based on the repayment capacity of the customer. • Home Improvement Loan - HIL facilitates internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminum windows. HDFC finances up to 85% of the cost of renovation (100% for existing customers) subject to market value of the property. • Home Extension Loan - HEL facilitates the extension of an existing dwelling unit. All the terms are the same as applicable to Home Loan. • Land Purchase Loan - Be it land for a dream house, or just an investment for the future, HDFC Land Purchase Loan is a convenient loan facility to purchase land. HDFC 47Institute of Productivity and Management
  48. 48. finances up to 85% of the cost of the land (Conditions Apply). Repayment of the loan can be done over a maximum period of 15 years • Short Term Bridging Loans • Professional Loan or Loan for Non-residential Premises • Home Equity LoanLoans for Non Resident Indians:Like Resident Indians, HDFC Home Loans feature similar categories of loans for Non ResidentIndians as well. They include:• Home Loan• Home Improvement Loan• Home Extension Loan• Land Purchase LoanFeatures & Benefits: o Choose from Fixed Rate or Floating Rate with options to structure your loan as Partly Fixed or Partly Floating. o Flexible repayment options to suit your individual needs. o Loan cover Term Assurance Plan - HDFC Standard Life Insurance Company Ltd. offers an insurance plan*, which is designed to ensure that lifes uncertainties do not affect your familys interests and your precious home. LCTAP provides a lump-sum payment on the unfortunate demise of the life assured. This pure risk plan is designed in a way that the cover decreases as you repay your home loan making it a low cost premium insurance plan. *Insurance is the subject matter of solicitation. o Automated Repayment of Home loan EMI - You can give us standing instructions to repay your Home Loan EMIs directly from your HDFC Bank Savings Account, thus, saving you the trouble of procuring, signing and tracking post-dated cheques. 48Institute of Productivity and Management
  49. 49. o HDFC also offers In-house scrutiny of Property documents for your complete peace of mind. o Customer privileges - If you are an existing HDFC Home Loan customer, you can avail of other loans (such as Personal Loans, Car Loans, Two-wheeler Loans and Loan against securities) at lower interest rates. o Applicant and Co - Applicant to the loan: Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co-owners. o Hassle Free Documentation - no security/guarantor is required. o Loan Amount: Customers are eligible to get upto 85% of the amount of the property. o Tenure: 1-20Years o Adjustable Rate Home Loan Loan under Adjustable Rate is linked to HDFCs Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the loan disbursed will not change*. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases. *Conditions ApplyDocuments: • Application Form and submit along with the following documents for an approval of loan. • Application form with photograph • Identity and Residence Proof • Education Qualifications Certificate and Proof of business existence • Last 3 years Income Tax returns (self and business) 49Institute of Productivity and Management
  50. 50. • Last 3 years Profit /Loss and Balance Sheet • Last 6 months bank statements • Processing fee chequeRedemption ChargesAdjustable Rate Home Loan [ARHL]If a prepayment is made within 3 years of the first disbursement*, under Adjustable Rate HomeLoan (ARHL) option early redemption charges of 2% of the amount being prepaid is payable ifthe amount being repaid is more than 25% of the opening balance.Fixed Rate Home Loan [FRHL]Redemption charges of 2% of the amount being prepaid is payable if the amount being repaid ismore than 25% of the opening balanceIncase of commercial refinance under both the FRHL and ARHL an early redemption charge of2% is payable. You may be required to submit copies of your Bank Statements or any otherdocuments that HDFC deems necessary to verify the source of prepayment.*Subject to terms and conditionsSecuritySecurity for the loan is a first mortgage of property to be financed, normally by way of depositof title deeds and/or such other collateral security as may be necessary. Interim security may berequired, if the property is under construction.Current Home Loan Interest Rates of HDFC Bank Home Loan Loan Schemes Up to 30 Lacs From 30 lacs to 50 Lacs Above 50 Lacs HDFC Bank Floating 8.25% Floating 9% Floating 9.25%Eligibility Criteria & Documentation required for HDFC Bank Home Loan 50Institute of Productivity and Management
  51. 51. Salaried Self employed AGE 21years to 58years 21years to 65years Income Rs.1,20,000 (p.a) Rs.1,50,000 (p.a) Loan Amount 2,00,000 - 1,00,00000 2,00,000 - 2,00,00000 Offered Tenure 5years-20years 5years-20yearsCurrent Experience 3years 2years Processing Fee 11000/- or 0.5% 11000/- or 0.5% Documentation 1) Application form with 1) Application form with photograph photograph 2) Identity & residence proof 2) Identity & residence proof 3) Education qualifications certificate & proof of business 3) Latest salary slip, existence 4) Form 16 4) Business profile, Last 3 years profit/loss & balance 5) Last 6 months bank sheet statements 5) Last 6 months bank statements 6) Processing fee cheque 6) Processing fee chequeHome Loan Fees & Charges:Description of Charges Ecbop Home LoanForeclosure charges No prepayments allowed in first 6 months 6 months - 5 years - 1.5% of original loan amount 5 years -10 years - 0.75% of original loan amount > 10 years - No closure fee For Gold Category 6 months - 5 years - 2% of original loan amount > 5 years - No closure fee eBOP customers : Loan repaid from own sources - no FC charges Loan repaid from other sources - regular FC charges.Charges for late payment of EMI 2% per monthCheque swapping charges Rs 500/- 51Institute of Productivity and Management
  52. 52. Bounce Cheque Charges Rs. 500/-Duplicate Statement Charges (per Rs 100/- per page, Maximum Rs 300/-statement)Issue of Duplicate Provisional Rs. 300/-Interest CertificateIssue of Duplicate Interest Rs. 300/-CertificateDuplicate Balance Certificate Rs. 300/-Issue of Amortization Schedule Rs. 300/-(Duplicate)Switch from Variable to Fixed Not ApplicableSwitch from Fixed to Variable Not ApplicablePhotocopy of Documents Rs. 500/-Multiple Repayment Option:Step Up Repayment FacilityHelps young executives take a much bigger loan today based on an increase in their futureincome, this helps executives buy a bigger home today!Flexible Loan installments PlanOften customers, parents and their children, wish to purchase properties together. The parent isnearing retirement and their children have just started working. This option helps suchcustomers combine the incomes and take a long term home loan where in the installmentreduces upon retirement of the earning parent.Tranche Based EMICustomers purchasing an under construction property need to pay interest ( on the loan amountdrawn based on level of construction) till the property is ready . To help customer save thisinterest, we have introduced a special facility of tranche Based EMI. Customers can fix the 52Institute of Productivity and Management
  53. 53. installments they wish to pay till the property is ready. The minimum amount payable is theinterest on the loan amount drawn. Anything over and above the interest paid by the customergoes towards Principal repayment. The customer benefits by starting EMI and hence repays theloan faster. • Loan against Property (LAP):You can now take a loan against your residential or commercial property, to expand yourbusiness, plan a dream wedding, fund your childs education and much more.Loan to purchase Commercial Property (LCP) is a specially designed product to help youexpand your business without reducing the capital from your business.Features & Benefits: • Loans from Rs. 2 Lacs onwards depending on your needs. • Borrow up to 50% of market value of the property. • Flexibility to choose between an EMI based loan or an Overdraft - We also offer to you overdraft against your self-occupied residential or commercial property and you save money by paying interest only on the amount utilized! • High tenure loans for ease of repayment. • Attractive interest rates. • Simple and speedy processing. • Specially designed products for Self Employed.Eligibility & Documentation: 53Institute of Productivity and Management
  54. 54. • Salaried Individuals • Self EmployedSalaried IndividualsDocuments required:  Proof of Residence - Any one of Ration Card / Telephone Bill / Electricity Bill / Voters Card.  Proof of Identity - Any one of Voters Card / Drivers License / Employers Card.  Latest Bank Statement / Passbook (where salary / income is credited for past 6 months).  Latest 3 Months Salary Slip with all deductions & last 2 years Form 16.  Copies of all Property Documents.Self EmployedDocuments required:  Certified Financial Statement for the last 2 years.  Proof of Residence - Any one of Ration Card / Telephone Bill / Electricity Bill / Voters Card.  Proof of Identity - Any one of Voters Card / Drivers License / Employers Card.  Latest Bank Statement / Passbook (where salary / income is credited for past 6 months).  Copies of all Property Documents.Fees & Charges for Loan Against Property:Description of Charges Loan Against Property Dropline Overdraft Loan Against Rent Against Property / Receivables Commercial OD against PropertyLoan Processing 2% 2% 2%Charges* 54Institute of Productivity and Management
  55. 55. ( * Minimum PF ofRs.7500/- )Pre-payment charges 4% of the outstanding 4% of the operating limit 4% of the outstanding principal (Prepayment prevailing at the time of principal (Prepayment cannot be made until six prepayment cannot be made until six months of repayment) months of repayment)No Due Certificate / No Nil Nil NilObjection Certificate(NOC)Solvency Certificate Not applicable Not applicable Not applicableCharges for late payment 2 % per month on overdue 18% penal interest 2 % per month on overdueof EMI EMI amount applicable on overdue EMI amount amountCharges for changing 0.25% of the loan amount Only Bank PLR Linked Only Bank PLR Linkedfrom fixed to Bank PLR interest rate option interest rate optionLinked interest ratesCharges for changing 1.5% of the loan amount Only Bank PLR Linked Only Bank PLR Linkedfrom Bank PLR Linked interest rate option interest rate optioninterest rates to fixedrate of interestDuplicate no due Rs 250/- Rs 250/- Rs 250/-certificate / NOCStamp Duty & other As per applicable laws of As per applicable laws of As per applicable laws ofstatutory charges the state the state the stateCheque swapping Rs 500/- Rs 500/- Rs 500/-chargesBounce Cheque Charges Rs 450/- Rs 450/- Rs 450/-Duplicate Repayment Rs 500/- Rs 500/- Rs 500/-Schedule chargesLegal / Repossession & At actuals At actuals At actualsIncidental charges 55Institute of Productivity and Management
  56. 56. Account Maintenance NIL Rs.5000 p.a. Rs.10000 p.a.Charges • Two wheeler loan:Features & Benefits: • Flexible repayment options, ranging from 12 to 48 months available even at the point of purchase. • Repay through post-dated cheques with easy EMIs. • Hassle free loans - No guarantor required. • Speedy loan approval. • Available for almost all models at attractive interest rates. • Free gifts from time to time on approval of your Two Wheeler Loan. (Watch this space for more details on the free gift promotion).Eligibility & Documentation:Eligibility Criteria:The eligibility criteria for a Two Wheeler Loan are: • You are a salaried or self-employed individual. • You are between =>21 years (at the time of application) and <= 65 years (at the end of the loan tenor). • Your minimum gross income is equivalent to Rs. 54,000/- p.a. if you reside in Mumbai, Delhi, Chennai, Bangalore, Calcutta, Pune and Rs. 42,000/- p.a. for all other cities. • You have been residing for at least 1 year in the city. • At least 1 year at the given residence address ( In case of transfer from other location with less than 1 year at current location - please provide relevant documents to the bank during loan approval stage). • You have been working for at least 1 year. 56Institute of Productivity and Management

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