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A Study Of Loans And Advances Offered In Bajaj Finance
Limited
B. Tech (G.Narayanamma Institute of Technology & Science)
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A Study Of Loans And Advances Offered In Bajaj Finance
Limited
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Summer Internship Project Report
On
“A STUDY OF LOANS AND ADVANCES OFFERED IN
BAJAJ FINANCE LIMITED “
SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREE
OF
BACHELOR OF BUSINESS ADMINISTRATION
(BATCH 2020-2023)
AFFILIATED TO: CH. CHARAN SINGH UNIVERSITY, MEERUT
Submitted To: Submitted By:
Prof. Uttam Sharma Ishita Bhatnagar
(Asst. Professor) Roll No.: 200934105102
BBA-Vth Sem.
INSTITUTE OF TECHNOLOGY & SCIENCE, MOHAN
NAGAR, GHAZIABAD
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CERTIFICATE
This is to certify that Ms. Ishita Bhatnagar University Roll No.200934105102 is a regular student of
BBA IIIrd year, and had successfully completed his summer internship project report entitled “A Study
of Loans and Advances Offered in Bajaj Finance Ltd.”, for partial fulfilment of the curriculum for
the award of the degree of Bachelor of Business Administration from Chaudhary Charan Singh
University, Merrut, is an original work done by him/her.
Signature
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DECLARATION
I “Ishita Bhatnagar” hereby declare that the work which is being presented in this report entitled “A
Study of Loans and Advances Offered in Bajaj Finance Ltd..” is an authentic record of my own
work carried out under the supervision of “Prof. Uttam Sharma (Asst. Prof.)”.
The matter embodied in this report has not been submitted by me for the award of any other degree.
Dated: Ishita Bhatnagar
Roll No.: 200934105102
B BA-5th
Sem.
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Acknowledgement
The situation and euphoria that accompany the successful completion of the project would be
incomplete without my faculty mentor who made it possible.I would like to take the opportunity to
thank and express my deep sense of gratitude to my faculty mentor Prof. Uttam Sharma (Asst. Prof.).
I am greatly indebted for providing their valuable guidance at all stages of the study, their advice,
constructive suggestions, positive and supportive attitude and continuous encouragement, without
which it would have not been possible to complete the project.I hope that I am build upon the
experience and knowledge that I have gained and make a valuable contribution towards this project
in coming future.
Ishita Bhatnagar
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TABLE OF CONTENTS
SL. NUMBER CONTENTS PAGE NUMBERS
1 Executive Summary 1
2 Theoretical Background Of The Study 2-28
3 Industry Profile &Company Profile 29-56
4 Application Of Theoretical Framework 57-62
5
Data Analysis And Interpretation
63-80
6
Learning Experience- Findings,
Suggestions And Conclusion
81-85
7 Bibliography 86
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1 | P a g e
EXECUTIVE SUMMARY
I have taken Finance as a specialization with the title of “A STUDY OF LOANS AND
ADVANCES OFFERED IN BAJAJ FINANCE LIMITED “The objective behind this project was
to primarily focus on loans advances offered in Bajaj Finance for the consumers. This required a
firsthand experience in understanding end to end process flow for loans processing to payment
disbursement. Also I discuss about the Bajaj EMI loans, the Bajaj Finserv Lending Company
which is one of the lending company they also make available EMI Loan option for the loan. I
have collected the Secondary data from Books, Company Annual Report & internet Articles etc.
Bajaj Finance Ltd is one of the leading loans issuing company in the India.
I also focused on the surrogates required for loan approval, which documents are necessary
for approval of loan. SWOT analysis of Company. I have also tried to explain the loan procedure
Through this project, I learn how to given a loan on consumer durable product and how to solve
customer difficulties about the documentation. I was dealing with proper customer, provided
them loans by completing their files and getting the approval online form Bajaj Finance Limited
website. This process helped me to better understand the Loan procedure of Loans and Advances
at Bajaj Finserv Lending.
The major part of my project includes the loans issue process, Eligibility criteria, Interest rates,
and processing charges. Financial statements and Loans lending statement analysis in different
sectors. Different analytical tools used to analyze and the calculation of EMI etc.
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CHAPTER - I
THEORETICAL BACKGROUNG OF THE
STUDY
INTRODUCTION:-
Money is an essential element for any business, because it fulfills the short term and long
term requirement of funds. It is not possible for the owner to bring all the money himself, so
he/she take recourse to loans and advances. Loans refer to a debt provided by a financial
institution for a particular period while Advances are the funds provided by the banks to the
business to fulfill working capital requirement which are to be payable within one year. The loan
amount is required to be repaid along with the interest, either in lump sum or in suitable
installments. It can be a term loan (payable after 3 years) or demand loan (payable within 3
years). In the same way, advances also requirement repayment along with the interest within one
year. These two terms are always uttered in the same breath, but there are a number of
differences between loans and advances.
Meaning of Loans and Advances:-
The term ‘loan’ refers to the amount borrowed by one person from another. The amount is
in the nature of loan and refers to the sum paid to the borrower. Thus From the view point of
borrower, it is ‘borrowing’ and from the view point of bank, it is ‘lending’. Loan may be
regarded as ‘credit’ granted where the money is disbursed and its recovery is made on a later
date. It is a debt for the borrower. While granting loans, credit is given for a definite purpose and
for a predetermined period. Interest is charged on the loan at agreed rate and intervals of
payment. ‘Advance’ on the other hand, isa ‘credit facility’ granted by the bank. Banks grant
advances largely for short-term purposes, such as purchase of goods traded in and meeting other
short-term trading liabilities. There is a sense of debt in loan, whereas an advance is a facility
being availed of by the borrower. However, like loans, advances are also to be repaid. Thus a
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credit facility- repayable in installments over a period is termed as loan while a credit facility
repayable within one year may be known as advances.
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Meaning of Loan:-
The amount lent by the lender to the borrower for a specific purpose like the construction of
the building, capital requirements and purchase of machinery and so on, for a particular period of
time is known as Loan. In general, loans are granted by the banks and financial institutions. It is
an obligation which needs to be repaid back after the expiry of the stipulated period.
The loan carries an interest rate on the debt advanced. Before advancing loans, the lending
institution checks the credit report of the customer, to know about his credibility, financial
position and capacity to pay.
Definition:-
According to Thembi Palane “a loan is a financial transaction in which one party (the
lender) agrees to give another party (the borrower) a certain amount of money with the total
expectation of repayment agreed upon by both parties. Usually there’s a predetermined time for
repaying a loan with conditions attached to it”
According to oxford dictionary “Money that someone borrow from a bank or other
financial organization for a period of time during which they pay interest”
Loan is classified in the following categories:-
 On the basis of Security:
o Secured Loan: The loan which is backed by securities is Secured Loan.
o Unsecured Loan: The loan on which no asset is pledged as security is Unsecured Loan.
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 On the basis of Repayment:
o Demand Loan: The loan which is repaid on demand of the lender is Demand Loan.
o Time Loan: Loan, which is repaid in full at a future specified date, is Time Loan.
o Installment Loan: Loans which are to be repaid in evenly distributed monthly
installments is Installment Loan.
 On the basis of Purpose:
o Home Loan
o Car Loan
o Education Loan
o Commercial Loan
o Industrial Loan
Definition of Advances:-
Advances are the source of finance, which is provided by the banks to the companies to
meet the short-term financial requirement. It is a credit facility which should be repaid within one
year as per the terms, conditions and norms issued by Reserve Bank of India for lending and also
by the schemes of the concerned bank.
Definition:-
According to the oxford dictionary Advance means “an amount of money paid before it
is due or for work only partly completed”
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They are granted against securities which are as under:
 Primary Security: Hypothecation of Debtors, Stock Pro-notes, etc.
 Collateral Security: Mortgage of land and buildings, machinery, etc.
 Guarantees: Guarantees given by partners, directors or promoters, etc.
The following are the forms of Advances:-
 Short term loans: Advance in which the entire amount is provided to the borrower
at one time.
 Overdraft: A facility provided by the bank in which the customer can overdraw
money from his account up to a specified limit.
 Cash Credit: A facility granted by the bank in which the customer can advance money
up to a certain limit against the asset pledged.
 Bills Purchased: An advance facility provided by the bank against the security of bills.
The Advantages and Disadvantages of Loan:-
Loan is a form of debt, often with interest. There are several reasons why people apply for
loans. Usually they borrow money to purchase a house, buy a car, or start a business. Often,
applying for a loan is necessary because most do not have available financial resources they need
to make a purchase.Other forms of loans, like the student loans have helped a lot of students
get through school. Thosewho use student loan debt consolidation clearly have multiple student
loans. They do this to manage their obligations better.
Since loan is borrowed, the lender expects to receive payment with the interest specified.
In addition, borrowers should make the payments at the specified due date for a certain period.
This is where most people have problems. Most problems start when people cannot make the
monthly payments required due to different circumstance. Some finds it difficult to pay their
loan because of
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The many other debts they have. Some encounter additional problems such as medical
emergencies and job loss.
Since getting a loan is a commitment, you have to be very careful with your decisions.
Choose the right lender. There is more to picking a lender than just looking for one with the least
interest. Keep in mind that those with low interest require longer period. Remember, when
choosing a lender, check its stability, its flexibility, repayment schemes, and interest rates.
Before you decide to get a loan, it is only right that you review its advantages and disadvantages.
Advantages:-
Below are the advantages of getting a loan. These are also the reasons why many apply for it:
 There is a loan for just about anything. If you are in need of money to purchase a house, you
can apply for a housing loan. If you need a car, you can apply for a car loan. With all the
loans available, you will be able to purchase everything you need.
 It helps a person afford an expensive purchase. All of us wish to acquire a property.
However, we do not have the amount of money to make the purchase. Loans allow us to do
this. They lend us the money so that we can finally afford our desired property.
 Payment is staggered, which makes it affordable. This enables the person to pay off the loan
gradually. If a person has chosen a good deal, he should be able to finish paying off the loan
in the time specified.
 One gets the funding he needs. If a person wants to start a business, he can do so by applying
for a business loan. He does not have to wait for his savings to build up before he can start
his own business. They can also use the amount they loan for investment purposes.
 Getting a loan is very helpful to start building your dream. However, you have to be very
careful with your decisions. This is because of the problems you will possibly encounter if
you mismanage your loans and other debts. If you have multiple loans, make sure to manage
it well. Use a debt consolidation loan calculator and check if it is better to consolidate all
your loans.
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Make sure that you manage your loans from the start. Keep in mind that loans have
disadvantages too.
Disadvantages:-
Here are some of the disadvantages of having loans:
 Is a long-term debt. This means that you have to deal with it for a specified period, which
means that you have to commit yourself to making monthly payments specified in your
agreement for the period indicated to repay the loans.
 If you miss payments, you will face serious consequences. You can face foreclosure or
repossession of the property. In addition, you could also face penalties and legal issues. It
will alsoreflect in your credit rating, which can lead to a low credit scores.
 You may not be able to make early loan repayment. Few lenders give option for early
repayment. Although there are some who will allow you to do this, they will charge you
with early repayment fees.
 Loans are very helpful. However, you have to manage them well because you can get into a
lot of trouble if you fail to make the expected payments.
Advantages and disadvantages of Cash Advances:-
At some time or another you will have to use some sort of cash advance system, especially if you
don’t have any credit cards or know someone you can borrow money from. While it may be
alright to use cash advances every so often, becoming dependant on them to help you pay bills
every month is not. Cash advances can be extremely expensive because you are charged a fee in
addition to the money youare borrowing. Overtime, these monthly fees could be used to make a
down payment on a house or car.This is why it is important to learn the proper ways to use this
type of loan service and to educate you about the advantages and disadvantages of cash
advances.
Advantages of Cash Advances:-
 Pay bills on time and avoid disruption of services. Some people consider having running
water, and/or electricity more of a priority than being charged a service fee for obtaining a
cash advance.
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 Avoid late fees or penalties. Oftentimes, cash advance fees are less expensive than the late
fees or penalties put into effect by the credit card companies or other lenders.
 Most businesses that offer cash advance services do not require an in depth credit check;
therefore people with bad credit are more likely to get approved for cash advances.
 You are charged a onetime fee for borrowing the money. And you have a specific amount
of time to pay back the cash advance, otherwise additional fees will apply.
Disadvantages of Cash Advances:-
 You are charged a fee based on the amount of money you borrow or based on the percentage
of money you borrow.
 Overtime, cash advance fees can add up to quite a bit of money. If you take out a cash
advance every single month for a year and the fee is $15 each month; that is $180 that you
are throwing away. So you may want to see if there is any way you can save a little bit at a
time to pay your bills every month.
 If you don’t have the money in your account to pay back the cash advance, you will be
charged an additional fee by the lender.
 If you don’t have sufficient funds in your checking account, you will have to pay the fee
associated with insufficient funds put into effect by your financial institution when your
check bounces.
 As you can see there are many advantages and disadvantages of cash advances. To find out
if a cash advance is the right solution for your current financial situation, you should first
weigh the pros and cons before you sign on the dotted line. While cash advances may be one
of the easiest ways to obtain cash when you have bad credit or no credit history, they should
be used sparingly and with caution. Make sure to read all the rules and stipulations
associated with the cash advance loan before making an agreement to pay it back. By
following these cash advance tips, you will know when you should use this type of loan and
when you should consider other available options.
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Note:- Cash advances are not entirely bad and not entirely good. However, they do make it
possible for some people to make ends meet when times are tough. Learn some of the advantages
and disadvantages of using cash advances and when you should consider using them to help pay
bills.
Utility of Loans and Advances:-
Loans and advances granted by banks and other financial institutions are highly beneficial
to individuals, firms, companies and industrial concerns. The growth and diversification of
business activities are effected to a large extent through bank financing. Loans and advances
granted by banks help in meeting short-term and long term financial needs of business
enterprises. We can discuss the role played by banks in the business world by way of loans and
advances as follows:-
 Loans and advances can be arranged from banks in keeping with the flexibility in business
operations. Traders may borrow money for day to day financial needs availing of the facility
of cash credit, bank overdraft and discounting of bills. The amount raised as loan may be
repaid within a short period to suit the convenience of the borrower. Thus business may be
run efficientlywith borrowed funds from banks for financing its working capital
requirements.
 Loans and advances are utilized for making payment of current liabilities, wage and salaries
of employees, and also the tax liability of business.
 Loans and advances from banks are found to be ‘economical’ for traders and
businessmen,because banks charge a reasonable rate of interest on such loans/advances. For
loans from money lenders, the rate of interest charged is very high. The interest charged by
commercial banks is regulated by the Reserve Bank of India.
 Banks generally do not interfere with the use, management and control of the borrowed
money. But it takes care to ensure that the money lent is used only for business purposes.
 Bank loans and advances are found to be convenient as far as its repayment is concerned.
This facilitates planning for future and timely repayment of loans. Otherwise business
activities would have come to a halt.
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 Loans and advances by banks generally carry element of secrecy with it. Banks are duty-
bound to maintain secrecy of their transactions with the customers. This enhances people’s
faith in the banking system.
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Objectives of Loans and Advances:-
General Objective:
The general objective of the study is to figure out the Loan and Advances of Bajaj Finance limited.
Specific objectives are:
1. To have idea regarding various types of Loan and Advances of Bajaj Finance Limited.
2. To identify the loan sanction procedure in different sectors in last some years.
3. To identify the credit approval, their securities and monitoring process of Bajaj Finance Limited
4. To know the loan and advances activities of Bajaj Finance Limited.
5. To identify the recovery rates of the loans in different sectors in last some years and
have a comparison among them.
6. To identify the problems regarding loan and advances and give some
recommendations for improving the effectiveness and efficiency of Loan and Advances
services.
Types of loans:-
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 Highlights
 Loans can be classified basis collateral requirements and usage
 Secured loans vary based on the asset used as collateral
 Personal loans are the most popular form of unsecured loans
 Avail instant financing with pre-approved loan offers
A loan is essentially money borrowed with a promise of return within a specific time
period/tenor. The lender decides a fixed rate of interest that you must pay on the money you
borrow, along with the principal amount borrowed. Let us take a look at the different types of
loans that are available in India.
There are various types of loans available in India, and they are classified based on two factors:
- Whether they require collateral
- The purpose they are used for
Based on whether they require collateral, loans are classified into secured loans and unsecured
loans. Let’s take a look at each type.
I. Secured loans:-
These are loans that do require collateral, i.e., you have to provide an asset to the lender
as security for the money you are borrowing. That way, if you are unable to repay the loan, the
lender still has some means to get back their money. The rate of interest of secured loans tends to
be lower as compared to those for loans without collateral.
Types of secured loans:-
1. Home loan
Home loans are a secured mode of finance, that give you the funds to buy or build the home
of your choice. The following are the type of home loans available in India:
Land purchase loan: Purchase land for your new home
Home construction loan: Build a new home
Home loan balance transfer: Transfer the balance of your existing home loan at a lower interest rate
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Top up loan: Can be used to renovate an existing home or have the latest interiors for your new home
Note that while buying a new property/home, the lender requires you make a down payment of
at least 10-20% of the property’s value. The rest is financed. The loan amount disbursed
depends on your income, its stability and current liabilities among others.
2. Loan against property (LAP)
Loan against property is one of the most common forms of a secured loan where you can
pledge any residential, commercial or industrial property for availing the funds required. The
loan amount disbursed is equivalent to a certain percentage of the property’s value and varies
across lenders.
While some lenders may offer an amount equivalent to 50-60% of the property’s value, others
may offer an amount close to 80%. A loan against property helps you unlock the dormant value
of your asset and can be used to satiate personal life goals such as higher education of children
or marriage. Businesses use a loan against property for business expansion, R&D and product
development among others.
3. Loans against insurance policies
Yes, you can also avail loans against your insurance policy. However, note that all insurance
policies don’t qualify for this. Only policies, such as endowment and money-back policies,
which have a maturity value can be used to avail loans.
Thus, you can’t avail a loan against a term insurance plan as it doesn’t have any maturity
benefits. Also, loans can’t be availed against unit-linked plans as the returns aren’t fixed and
depends on the performance of the market. It’s essential to note that you can opt for a loan
against endowment and money back policies only after they’ve acquired a surrender value.
These policies acquire a surrender value only after paying regular premiums continuously for 3
years.
4. Gold loans
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For the longest time, gold has been one of the most favored asset classes. The organized Indian
gold loan industry is expected to touch Rs.3,101 billion by 2019-20, according to a KPMG
report, thanks to flexible interest rates offered by financial institutions.
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A gold loan requires you to pledge gold jeweler or coins as collateral. The loan amount
sanctioned is a certain percentage of the gold’s value pledged. Gold loans are generally used for
short-term needs and have a short repayment tenor compared to home loans and loan against
property.
5. Loans against mutual funds and shares
An ideal vehicle for long-term wealth creation, mutual funds can also be pledged as collateral
for a loan. You can pledge equity or hybrid funds to the financial institution for availing a
loan. For doing so, you need to write to your financier and execute a loan agreement.
Your financier then will write to the mutual fund registrar and a lien on the certain number of
units to be pledged is marked. Typically, you can get 60-70% of the value of units pledged as a
loan.
Similarly, with shares, financial institutions create a lien against shares against which the loan is
taken and the loan value is equivalent to a percentage of the value of the shares.
6. Loans against fixed deposits
The humble fixed deposit not only offers assured returns but can also come handy when you
need a loan. The amount of loan can vary between 70-90% of the FD’s value and varies
across lenders.
However, it’s essential to note that the loan tenor can’t be more than the FD’s tenor.
II. Unsecured loans
These are loans that do not require collateral. The lender lends you the money based on past
associations, and your credit score and history. Thus, you have to have a good credit history
to avail these loans. Unsecured loans usually come at a higher rate of interest due to the lack
of collateral.
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Types of unsecured loan:-
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1. Personal loan
Offering an instant flush of liquidity, a personal loan is one of the most popular types of
unsecured loans. However, since a personal loan is an unsecured mode of finance, the interest
rates are higher compared to secured loans. A good credit score along with high and stable
income ensures you can avail this loan at a competitive rate of interest. Personal loans can be
used for the following purposes-
- Manage all expenses of a family wedding
- Pay for a vacation or an international trip
- Finance your home renovation project
- Fund the cost of your child’s higher education
- Consolidate all your debts into a single loan
- Meet unexpected/ unplanned/ urgent expenses
2. Short-term business loans
Another type of unsecured loans, a short-term business loan can be used to meet their
expansion and daily expenses by various entities and organizations.
- Working capital loans
- Machinery loans and equipment finance
- Small business loans for msmes
- Loans for women entrepreneurs
- Loans for traders
- Loans for manufacturers
- Loans for service enterprises
Flexi Loans
A facility whereby you can avail funds from your approved limit and as when required and pay
interest only on the amount used. You can withdraw on your loan limit, any number of times and
prepay when you have extra cash, at no extra cost. Such a unique facility gives you the freedom
to be in full control of your finances unlike rigid term loans and offers you savings on your emis
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by up to 45%. Here, you also have the option to pay only interest as emis, with the principal
payable at the end of the tenor.
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Based on what they are used for, loans are classified mainly into:
1. Education loans
Aspiration for higher education from reputed institutions have bolstered the demand for
education loans in the country. This loan covers the basic fees of the course along with allied
expenses such as the accommodation, exam fee, etc. In this loan, the student is the main
borrower while parents, siblings and spouse are co-applicants.
An education loan can be taken for a full-time, part-time or vocational course along with
graduation and post-graduation course in the fields of management, engineering and medicine,
among others. The loan must repaid by the student once the course is complete.
A unique feature of an education loan is the moratorium period, wherein the student has the
option of not paying the emis until after 12 months of completing the course or 6 months after
he/she starts working, whichever is earlier.
2. Vehicle loans
A vehicle loan is extended in the form of a two or four-wheeler loan which helps you to buy your
dream vehicle. Vehicle loans are offered either on purchase of a new vehicle or a used one. Your
credit score, ratio of debt to income, loan tenor, etc., play a crucial role in determining the loan
amount.
With Bajaj Finserv you can get pre-approved offers on all the above-mentioned loans and there
are no queues, forms or details needed. Here, your loan offer is already approved, so you can
avail instant financing. All you need to do is simply provide some basic details and get your
pre-approved offer.
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Documents required for the loan
approval:- Personal Loan:-
One of the options to get money from reputed banks for all needs is through personal loan.
And, to apply successfully for a personal loan an applicant needs to provide certain set of
documents.
These documents helps lender (be it a Bank or a NBFC) to know and understand the financial
stability of the borrower and analyze the credit risk. Apart from that it helps a lender know and
verify all the details about the applicant such as age, income, address, employer and employment.
It is on the basis of this a lender decides whether to lend or not to the applicant.
As personal loans are unsecured loans, the lender does not takes anything as collateral for the
lending amount, hence there is always a potential risk of borrower defaulting or absconding on
the loan. Hence to be double triple sure a lender asks for a certain set of documents so that it can
learn and analyse the applicant and then decide.
The documents required for personal loan help a lender to know and understand the following
about the applicant:
1. Identity
2. Age
3. Income
4. Address
5. Existing Loans
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6. Repayment History (if any)
Once a lender has these details, they can know and understand the applicant better. And,
using the information provided, they can come up with the best loan offer for the applicant.
As such, providing the required documents while applying for a personal loan, helps the
applicant to get the best offer.
Above is the checklist of all the required documents for a personal loan.
Home loan:-
Here is a checklist of the documents required to apply for a home loan.
1. Passport Size Photographs
2. Identity Proof: Passport / Driving License / Voter ID / PAN Card / Aadhaar Card.
3. Address Proof: Driving License / Registered Rent Agreement / Electricity Bill (up to 3
months old) / Passport.
4. Employment Appointment Letter: Required if the current employment is less than 1-year old.
5. Financial Documents:
 Last3monthssalaryslip
 6monthbankstatement
 2 year Form 16
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6. Property Documents: Sale deed, Khata, transfer of ownership.
7. Advance Processing Cheque: A cancelled cheque for validation of bank account.
8. Financial Documents:
 For Salaried Individual: 3 month salary slip, Form 16 and bank statement
 For Self-Employed Individual: IT returns for last 2 years along with computation of
income tax for past 2 years certified by a Chartered accountant
 For Self-Employed Non- Professionals: IT returns for last 3 years along with
computation of income tax for past 2 years certified by a Chartered accountant
9. Complete Home Loan Application form duly filled
Vehicle Loan:-
Here is the checklist of the documents required to apply for a car loan:
 Proof of age
 Identification proof
 Application form
 Passport size photograph
 Proof of residence
 Income proof
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 Bank statement
 Signature verification proof
 Pro-forma Invoice or Rate List
Reasonable interest rates, affordable emis, simplistic paperwork, and quick disbursement are a
few reasons why car loans have become such a comfortable option for today’s common man.
Now the dream of owning a car is no longer far-fetched- a few documents are all you need.
Predominantly, the lender banks look for proof that you are a good credit risk and are in a
position to repay the car loan. This information, along with your credit report and score, will
directly impact the interest rates that you are charged.
Since your credit rating will be assessed while applying, it is worth cleaning up any existing
debts before you lodge your initial application. This is sure to improve your chances of approval.
If you havea bad credit history, the lender bank will also want to see your credit card statements,
mortgage details and verification of other loans that you hold.
Educational Loan:-
Documents required for an Educational Loan:
For students seeking a loan for studies within the country, they can provide the following documents.
 Duly-filled application form.
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 2 passport size photographs.
 Graduation, Secondary School Certificate, or High School Certificate or mark sheets
 KYC documents that include ID, address, and age proof.
 Signature Proof
 Income Proof of parents or guardian
 If collateral is required, documentation for Immovable property, fds, etc.
 For students interested in a loan to study abroad, they will need to provide the documents below.
 Duly-filled application form.
 2 passport size photographs.
 KYC Documents that include ID, residence and age proof.
 A copy of statement of marks or certificates of last examination passed.
 Proof of admission to the university and the course
 Schedule of course expenses
 If you have received a scholarship, a copy of the scholarship letter is needed.
 Copy of Foreign Exchange permit if you have it.
 Bank account statement for last six months of the borrower, parents or guardian.
 Last 2 years’ Income Tax assessment of the borrower, parents or guardian.
 For loans with collateral, the details of security offered must be furnished. You might
also be required to provide an advocate’s search and report about its marketability, mortgage
ability, etc.
 Proof of the source of margin is required.
Educational loans are a sector which is promoted as it gives students the opportunity to study
further. It enhances the growth and development of the citizens and the country. Educational
loans are an investment into the future, so it is important to do your research and take your time.
Government and banks also offer subsidies and lower interest rates to promote education for all.
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Gold loan:-
 Two passport size photograph
 ID Proof such as Driving License / PAN Card / Form 60/61 / Passport Copy / Voter ID
Card / Aadhaar Card / Ration Card. Any one document needs to be submitted
 Address Proof such as Driving License / Voter ID Card / Ration Card / Aadhaar Card /
Passport Copy / registered lease agreement with not older than 3 months utility bills in the
name of landlord (any one)
 Proof of land holding in case of agriculture loan of more than Rs. 1 lakh
Terms and conditions of loan agreement:-
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What is a Loan Agreement?
 Few people sail through life without borrowing. With few exceptions, almost everyone takes
a loan to buy a car, finance a home purchase, pay for a college education or cover a medical
emergency. Loans are nearly ubiquitous and so are the agreements that guarantee their
repayment.
 Loan agreements are binding contracts between two or more parties to formalize a loan
process. There are many types of loan agreements, ranging from simple promissory notes
between friends and family members to more detailed contracts like mortgages, auto loans,
credit card and short- or long-term payday advance loans.
 Simple loan agreements can be little more than short letters spelling out how long a
borrower has to pay back money and what interest might be added to the principal. Others,
like mortgages, are elaborate documents that are filed as public records and allow lenders to
repossess the borrower’s property if the loan isn’t repaid as agreed.
 Each type of loan agreement and its conditions for repayment are governed by both state and
federal guidelines designed to prevent illegal or excessive interest rate on repayment.
 Loan agreements typically include covenants, value of collateral involved, guarantees,
interest rate terms and the duration over which it must be repaid. Default terms should be
clearly detailed to avoid confusion or potential legal court action. In case of default, terms of
collection of the outstanding debt should clearly specify the costs involved in collecting the
debt. This also applies to parties using promissory notes as well.
Purpose of a Loan Agreement:-
The main purpose of a loan contract is to define what the parties involved are agreeing to,
what responsibilities each party has and for how long the agreement will last. A loan agreement
should be in compliance with state and federal regulations, which will protect both lender and
borrower should either side fail to honor the agreement. Terms of the loan contract and which
state or federal laws govern the performance obligations required by both parties, will differ
depending upon the loan type.
Most loan contracts define clearly how the proceeds will be used. There is no distinction made
in law as to the type of loan made for a new home, a car, how to pay off new or old debt, or how
binding the terms are. The signed loan contract is proof that the borrower and the lender have a
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commitment that funds will be used for a specified purpose, how the loan will be paid back
and at what amortization
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Rate. If the money is not used for the specified purpose, it should be paid back to the lender immediately.
Other Reasons for Using Loan Agreements:-
 Borrowing money is a huge financial commitment, which is why a formal process is in place
to produce positive results on both sides.
 Most of the terms and conditions are standard fare – amount of money borrowed, interest
charged, repayment plan, collateral, late fees, penalties for default – but there are other
reasons that loan agreements are useful.
 A loan agreement is proof that the money involved was a loan, not a gift. That could become
an issue with the IRS.
 Loan agreements are especially useful when borrowing or loaning to a family member or
friend. They prevent arguments over terms and conditions.
 A loan agreement protects both sides if the matter goes to a court. It allows the court to
determine whether the conditions and terms are being met.
 If the loan includes interest, one side may want to include an amortization table, which
spells out how the loan will be paid off over time and how much interest is involved in each
payment.
 Loan agreements can spell out the exact monthly payment due on a
loan.It is safe to say that anytime you borrow or lend money, a legal loan agreement should
be part of the process.
On Demand vs. Fixed Repayment Loans:-
Loans use two sorts of repayment: on demand and fixed payment.
Demand notes are usually used for short-term borrowing and are often used when people
borrow from friends or family members. Sometimes banks will offer demand loans to customers
with whom they have an established relationship. These loans typically don’t require collateral
and are for small amounts.
Their key feature is how they are repaid. Unlike longer term loans, repayment can be
required whenever the lender desires, as long as sufficient notification is given. The notification
requirement is usually spelled out in the loan agreement. Demand loans with friends and family
member might be a
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Written agreement, but it might not be legally enforceable. Banks demand loans are legally
enforceable. A check overdraft facility is one example of a bank demand loan – if you don’t have
the money in your account to cover a check, the bank will loan you the money and pay the check,
but you are expected to repay the bank quickly, usually with a penalty fee.
Fixed term loans are commonly used for large purchases and lenders often demand that the
item purchased, perhaps a house or a car, serve as collateral if the borrower defaults. Repayment
is on a fixed schedule, with terms established at the time the loan is signed. The loan has with a
maturity date when it must be fully repaid. In some cases, the loan can be paid off early without
penalty. In others, early repayment comes with a penalty.
Legal Terms to Consider:-
All loan agreements must specify general terms that define the legal obligations of each
party. For instance, the terms regarding repayment schedule, default or contract breach, interest
rate, loan security, as well as collateral offered must be clearly outlined.
There are some standard legal terms involved in loan agreements that all sides should be aware
of, regardless of whether the contract is between family and friends or between lending
institutions and customers.
Here are four key terms you should know before signing a loan agreement:
Choice of Law: This term refers to the difference between laws in two or more jurisdictions. For
example, the laws governing a specific part of a loan agreement in one state may differ from the
same law in another state. It is important to identify which state (or jurisdiction’s) laws will
apply. This term is also known as a “Conflict of Law.”
Involved Parties: This refers to personal information about the borrower and lender that should
be clearly stated in the loan agreement. That information should include the names, addresses,
social security numbers and phone numbers for both sides.
Severability Clause: This term states that terms of a contract are independent of each other.
Thus, if one condition of the contract is deemed unenforceable by a court, that doesn’t mean all
conditions are unenforceable.
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Entire Agreement Clause: This term defines what the final agreement will be and supersedes
any agreements previously made in negotiations, whether written or oral. In other words, this is
the final say and anything that was said (or written) before, no longer applies.
Interest Rate Determination:-
Many borrowers in their first experience securing a loan for a new home, automobile or
credit card are unfamiliar with loan interest rates and how they are determined. The interest rate
depends on the type of loan, the borrower’s credit score and if the loan is secured or unsecured.
In some cases, a lender will request that the loan interest be tied to material assets like
a car title or property deed. State and federal consumer protection laws set legal limits regarding
the amount of interest a lender can legally set without it being considered an illegal and excessive
usury amount.
If the loan includes interest payments, as most do, the terms will be spelled out in the loan’s
terms and conditions. Interest is either fixed fee or floating fee.
A fixed fee, or fixed rate, loan establishes an interest rates that remains unchanged during
the repayment of the loans. If you borrow money with a 4% annual rate, you will pay the lender
4% a year on the balance due until the loan is paid off. The amount of interest you pay will
decrease over time as the balance is paid down and the principal payment will increase. If you
borrow $200,000 to buy a house, the monthly payment will remain constant, but the portion of
the payment that goes to interest and principal will change each month as the loan is balance is
reduced.
Floating fee interest rates, also called variable rate loans, carry interest rates that change
over time. The amount of interest based on a benchmark rate, usually a widely followed index
like the LIBOR those changes regularly. Floating fee rates are adjusted periodically and generally
are only used in complex loans like adjustable-rate home mortgages.
Contract Length & Amortization:-
The length of a loan contract is determined by a lender’s reliance upon an amortization
schedule. Once the lender and the borrower have determined the amount of money needed, the
lender will use the amortization table to calculate what the monthly payment will be by dividing
the number of payments to be made and adding the interest onto the monthly payment.
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Unless there are certain loan conditions that penalize the borrower for early loan payment, it
is in the best interest of the borrower to pay back the loan as quickly as possible. The faster the
loan debt is retired the less money it costs the borrower.
Pre-Payment Fees and Penalties
While the goal to pay back a loan quickly is a financially sound practice, there are certain
loans that penalize the borrower with pre-paid fees and penalties for doing so. Prepayment
penalties are typically found in automobile loans or in mortgage subprime loans. They also can
occur when borrowers choose to refinance a home or auto loan.
Pre-payment penalties are applied to protect the lender, who expects a certain return on his
loan over a certain amount of time. For example, if the borrower repays a 5-year loan in three
years, the lender would be out the interest he expected the last two years of the loan.
Prepayment penalties usually are 2% of the amount due on the loan or six months of interest
payments. It can have a dramatic effect on the cost of refinancing a loan. Many sub-prime loans
include prepayment penalties, which opponents say target the poor, who usually are the ones with
subprime loans.
On the other side are homes financed through government-backed FHA loans. Federal law
specifically forbids prepayment penalties on FHA loans. The exception is if the borrower has
amortgage that contains a due-on-sale clause and the clause has been allowed as part of the
mortgage.
Breach or Default
If a loan contract is paid off late, the loan is considered in default. The borrower can be
liable for a myriad of potential legal damages to compensate the lender for any losses suffered.
The breached or defaulted lender can pursue litigation and have a court hold the borrower liable
for legal costs, liquidated damages and even have assets and property attached or sold for
repayment of thedebt. In addition, a breach or default of court judgment can be placed on the
borrower’s credit record.
Mandatory Arbitration:-
Mandatory arbitration is an increasingly popular provision in loan agreements that requires
parties to resolve disputes through an arbitrator, rather than the court system.
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More than 50% of lending institutions include mandatory arbitration as part of their loan
contracts because it is supposed to be faster and cheaper than going to court. Arbitration puts
the final decision in the hands of one person, who likely is more experienced and sophisticated
about the law than six jurors in a courtroom.
In most cases, mandatory arbitration clearly favors the lenders, who have legal counsel that
specialize in this area of law on their side. The borrower often has no lawyer or inadequate
representation because lawyers are not guaranteed payment in arbitration cases.
The borrower is at an even bigger disadvantage if the arbitration is binding, meaning there
can be no appeal. The rules in the Fair Credit Reporting Act and the Truth in Lending Act have
no bearing in arbitration cases, which also favors the lender.
Members of the military are especially vulnerable to loan agreements that include
mandatory arbitration. A solider serving out of the country may not be able to attend or have
competent representation at an arbitrary hearing and because of that, lose possession of a car or
other asset. The arbitrator’s decision can’t be appealed, so there is no recourse if the decision
goes against the soldier.
Before you sign a loan agreement, read it closely and if it includes a mandatory arbitration
clause, decide whether you are comfortable with that as a means of settling disputes.
Usury and Predatory Protections
Several federal and state consumer protection laws protect consumers against predatory and
usury loan tactics used by lenders. The Truth In Lending Act, Real Estate Settlement Act and the
Home Owners Protection Act federally protect borrowers against predatory lenders.
Many states enacted companion consumer predatory and usury protection acts to protect
borrowers. Both parties benefit because lenders make reasonable interest repayment rates and
borrowers receive a much- needed loan.
Several federal and state consumer protection laws protect consumers against predatory and
usury loan tactics used by lenders.
Promissory Notes:-
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Promissory notes resemble loan agreements but lack complexity. Often, they are little
more than commitment-to-pay letters like ious or simple payment on demand notes. Usually
the borrower
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Writes a letter specifying how much money he or she is borrowing and the terms under which it
will be repaid. They are almost always used for small loans between people who know one
another well.
Promissory notes are signed and dated and can be legally binding. Promissory notes can be
secured or unsecured. Secured loans offer the lender collateral is the loan isn’t repaid, while
unsecured loans don’t use collateral. They can contain terms about installment payments and
interest, though theymight not.
Unlike loan agreements, which can contain complex payment terms, promissory notes are
more like paper trails that document that one person has lent money and that the borrower
agrees to repay the money within a certain amount of time, either in a lump sum or in
installments. It’s used primarily to avoid financial misunderstandings and shouldn’t be confused
with a loan agreement, which contains an assortment of legally enforceable terms and remedies.
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CHAPTER-II
INDUSTRY PROFILE & COMPANY PROFILE
NBFC IN INDIA
NBFC - INDUSTRY OVERVIEW:-
A Non-Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other
marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business
but does not include any institution whose principal business is that of agriculture activity,
industrial activity, purchase or sale of any goods (other than securities) or providing any services
and sale/purchase/construction of immovable property. The NBFC sector is an important part of
the Indian financial sector. They have shown dynamism in delivering innovation and in assisting
financial inclusion.
Nbfcs typically have several advantages over banks due to their focus on niche segment,
expertise in the specific asset classes, and deeper penetration in the rural and unbanked markets.
However, on the flip side, they depend to a large extent on bank borrowings, leading to high cost
of borrowings and face competition from banks which have lower cost of funds.
The growing asset size of the NBFC sector has increased the need for risk management
in the sector due to growing interconnectedness of nbfcs with other financial sector
intermediaries. The Reserve Bank of India (RBI) has been in the recent past trying to strengthen
the risk management framework in the sector, simplify the regulations and plug regulatory gaps
so as to prevent regulatory arbitrage between banks and nbfcs.
The Reserve Bank of India released the ‘Revised Regulatory Framework for nbfcs’ on
November 10, 2014 which broadly focuses on strengthening the structural profile of NBFC
sector, wherein focus is more on safeguarding of the depositors money and regulating nbfcs
which have increased their asset-size over time and gained systemic importance.
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Due to subdued economic growth, last two years, have been challenging period for the
nbfcs with moderation in rate of asset growth, rising delinquencies resulting in higher
provisioning thereby impacting profitability. However, comfortable capitalization levels and
conservative liquidity management, continues to provide comfort to the credit profile of nbfcs in
spite of impact on profitability.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM):-
Non-banking finance companies (nbfcs) form an integral part of the Indian financial
system. They play an important role in nation building and financial inclusion by complementing
the banking sector in reaching out credit to the unbanked segments of society, especially to the
micro, small and medium enterprises (msmes), which form the cradle of entrepreneurship and
innovation. Nbfcs’ ground- level understanding of their customers’ profile and their credit needs
gives them an edge, as does their ability to innovate and customize products as per their clients’
needs. This makes them the perfect conduit for delivering credit to msmes.
However, nbfcs operate under certain regulatory constraints, which put them at a
disadvantage vis- à-vis banks. While there has been a regulatory convergence between banks and
nbfcs on the assetside, on the liability side, nbfcs still do not enjoy a level playing field. This
needs to be addressed to help nbfcs realize their full potential and thereby perform their duties
with greater efficiency.
Moreover, with the banking system clearly constrained in terms of expanding their lending
activities, the role of nbfcs becomes even more important now, especially when the government
hasa strong focus on promoting entrepreneurship so that India can emerge as a country of job
creators instead of being one of job seekers. Innovation and diversification are the important
contributors to achieve the desired objectives.
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IMF (International Monetary Fund) cuts India’s growth rate to 4.8% citing slowdown in
local demand, stress in NBFC sector
 8 per cent for the current fiscal year which is expected to rise to 5.8 per cent in 2020?
 The IMF attributed the slash in growth rate to the slowdown in demand in the domestic
market and stress in the nonbank financial sector.
 “India’s growth is estimated at 4.8 percent in 2019, projected to improve to 5.8 percent in
2020 and 6.5 percent in 2021,” said IMF in a statement.
 The 5.8 per cent estimate in 2020 is down by 0.9 per cent from the previous estimate.
 The steep cut in India’s growth rate has affected the IMF’s projection on the world economy,
which is now expected to expand 2.9 per cent in 2019 as compared with the previous
forecast at
3.0 per cent.
 In its World Economic Outlook Report, IMF stated that the growth markdown largely
reflects a downward revision to India’s projection, where domestic demand has slowed more
sharply than expected amid stress in nonbank financial sector and a decline in credit growth.
 According to IMF, the global economy is expected to accelerate to 3.3 per cent in 2020 from
2.9 per cent in 2019. Further, it is expected to rise to 3.4 per cent in 2021.
 However, the IMF has in its latest estimates trimmed the global growth rate by 0.1 per cent
each for 2019 and 2020 and by 0.2 percentage for 2021.
 Earlier in December, IMF chief economist Gita Gopinath had estimated a likely cutdown in
India’s growth estimate during the January review.
 United Nations had also cut down India’s growth estimate for Financial Year 2020 to 5 per
cent from 5.7 per cent. World Bank had also cut its estimate to 5 per cent from its earlier
prediction of 6 per cent
NBFC crisis:-
The continuing liquidity crunch facing non- banking financial companies is likely to result in
creasing bad loans risks for banks both from these shadow banks as well as from companies
relying on such lenders for funding, warns a report.
The spillover of stress among nbfcs to borrowers, and ultimately to banks, will hinder
improvements in banks' asset quality, profitability and capital, which is credit negative.
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Owing to liquidity crisis, nbfcs are forced to reduce lending, leading to funding
constraints for borrowers relying on non-bank lenders.
This increases the risk of loan losses for nbfcs, and as a result, they will continue to have
difficulty in obtaining funding.
 Also, as NBFC customers' financials weaken, banks will reduce lending to them, which in
turn will further worsen their funding stress and can lead to more bad loans from these
companies for banks, it warned.
 A type of NBFC credit to controlling shareholders, or promoters, of large listed companies
across various industries is also emerging as a source of asset risk for banks.
 Corporate promoters use their company shares as collateral to borrow, mostly from nbfcs or
mutual funds, typically for the purpose of making investments, including in external
businesses
 "The risk for banks is that promoters with weak governance can use company resources to
repay their debt, causing financial damage to their businesses, which as a consequence, can
default on their own loans from banks, the report said.
 Refinancing can be difficult for promoters of companies as investments they make using
 Loans are often illiquid, a problem made worse by tighter availability of credit from nbfcs.
 The report further said the non-bank lenders collectively have a large market share in retail
and SME loans, a segment that has grown rapidly in recent years and now is susceptible to
asset quality deterioration as the economy slows.
 "A curtailing of lending by nbfcs will add to risks from retail loans for banks by reducing the
availability of credit that individuals can use for refinancing and by contributing to the
slowdown," the agency said.
 The report also said real estate companies are under significant stress, and tighter funding
will further increase stress in the sector. It could lead to more npls for banks because they
have large exposures to nbfcs active in real estate lending.
 Banks also have direct exposures to real estate companies, and the growing stress in the
NBFC sector will result in more impairment of bank loans to these borrowers.
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SWOT Analysis of nbfcs
Strengths:-
 High on service aspect
 Strong last-mile approach
 Focus on recovery
 Easy and fast appraisal and disbursements
 Regional linkages
 Able to generate higher yield on assets
 Attained critical mass in terms of size
 Own employees versus dsas
Weaknesses:-
 Weak in urban markets
 Weak credit history of most nbfcs
 Largely restricted to the regional markets (say South India)
 Weaker risk management and technology systems
 Too much of diversification from core business
 Higher regulatory restrictions
Opportunities:-
 Augmentation of capital and leveraging for growth
 Large untapped market, both rural and urban and also geographically
 Demographic changes and under-penetration
 New opportunities in credit card, personal finance, home equity and distribution of
mutual fund schemes
 Tie-up with global financial sector giants
 Blurring gap between banks in terms of costs of funds
 Securitization, to liberate funds to fuel asset growth
Threats:-
 Weak financial health of many of the nbfcs
 High cost of funds
 Asset quality deterioration may not only wipe out profits but also net worth
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 Entry of foreign players in post-2009 scenario
 Growing retail thrust within banks
CRISIL NBFC REPORT:-
"However, increases in banks' real estate npls will be marginal as their direct exposures to real
estate companies remain small, growing more slowly than NBFC loans to the sector," it said
After witnessing healthy growth over the past few years, non-bank credit growth slowed down
in the second half of fiscal 2019 due to the tight liquidity conditions that engulfed the sector.
Consequently, Non Bank Financial Companies (nbfcs) which were gaining market share from
banks across major asset classes in the past could not do so in fiscal 2019.
Going forward, nbfcs will need to recalibrate their strategies in order to deal with the
changing business dynamics. How would this impact the credit growth of the sector? When is the
liquidity situation going to improve? Can nbfcs achieve pre-2018 growth in the medium term or
will the growth remain anemic?
What are the key factors that will drive their growth? Will their earnings growth trajectory
be lower? What will be the capital that they will need over the next 1-2 years? What will separate
the winners from the losers? Where are the opportunities for growth?
CRISIL Research's NBFC Report, 2019 delves deep into the fast-changing industry
landscape to come up with the answers. The report contains CRISIL Research's perspective on
growth prospects, competitive scenario and the attractiveness of the 11 segments in which nbfcs
operate and also gives a perspective on the emerging fintech market.
The coverage also includes:
 Outlook on growth and delinquencies, credit costs by segment
 Segment-wise profitability outlook, considering business growth, resource profile
and asset quality
 Detailed assessment of competitive scenario with banks and market share of nbfcs in
various segments
 Perspective on regulatory direction in each segment
 Financial and operational benchmarks across various segments
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 Profiles of over 200+ nbfcs, detailing key operational and financial parameters
 Details of fund-raising in various NBFC segments
 Level of digital medium usage in origination and appraisal process
Product segments covered
Housing finance Low cost housing finance
Infrastructure finance MSME finance - secured (including LAP) and unsecured
Auto finance Wholesale finance
Micro finance Gold loans
Consumer durables finance Construction equipment finance
Education loans
Coverage
Overview For each of the segments covered
Outlook on yields and spreads in fiscals 2019 and 2020 Overall growth in the industry
Relative attractiveness of the NBFC segments based
on growth and profitability outlooks
Market share of nbfcs vs banks
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Competitive positioning of nbfcs across key segments Growth outlook for nbfcs
Outlook on asset quality in the NBFC industry Profitability of nbfcs: Review & outlook
View on the borrowing mix of nbfcs Asset quality: Review & outlook
Capital-raising requirement in the medium term Key growth drivers and challenges
Growth in NBFC:-
 The challenges faced by non-banks in access to funding following the credit cliff event in
September 2018 and recent defaults by some large non-banks has only increased the risk
aversion of lenders and investors.
 A clear differentiation is visible between groups of non-banks. At an overall level, players
with a strong parentage are still getting funds, while those without any parentage continue to
face challenges.
 Bifurcating this further, wholesale nbfcs without strong parentage are the worst hit. Home
loan- and retail- focused non-banks are relatively better off.
 With all of this, growth in the second half of fiscal 2019 was around half of what was seen in
the first half. But given the strong growth in the first half, growth in overall non-bank credit
in fiscal 2019 was still at ~15%, with assets under management reaching Rs 23.7 lakh crore.
 Growth is expected to be remain subdued at least in the first half of fiscal 2020, with overall
assets under management growth for the year estimated at 12-13%. With securitization
expected to sustain as a preferred funding mode, the on-balance growth of non-banks is
expected to be lower.
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COMPANY PROFILE:-
BAJAJ GROUP:-
Bajaj Group is an Indian conglomerate founded by Jamnalal Bajaj in 1926, Mumbai. Bajaj
Group is one of the oldest & largest conglomerates based in Mumbai, Maharashtra. The group
comprises 34 companies & its flagship company Bajaj Auto is ranked as the world's fourth
largest two- and three- wheeler manufacturer. Some of the notable companies are Bajaj
Electricals, Mukand Ltd & Bajaj Hindustan Ltd. Involvement in various industries that include
automobiles (2- and 3-wheelers), home appliances, lighting, iron and steel, insurance, travel and
finance. The Group is headed by Rahul Bajaj.
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BAJAJ GROUP OF COMPANIES:-
 Bachhraj & Company Pvt. Ltd.
 Bachhraj Factories Pvt. Ltd.
 Bajaj Allianz General Insurance Company Ltd.
 Bajaj Allianz Life Insurance Company Ltd.
 Bajaj Auto Finance Ltd.
 Bajaj Auto Holdings Ltd.
 Bajaj Auto Ltd.
 Bajaj Electricals Ltd.
 Bajaj Finserv Ltd.
 Bajaj Holdings & Investment Ltd.
 Bajaj International Pvt. Ltd.
 Bajaj Sevashram Pvt. Ltd.
 Bajaj Ventures Ltd.
 Baroda Industries Pvt. Ltd.
 Hercules Hoists Ltd.
 Hind Lamps Ltd.
 Hind Musafir Agency Ltd.
 Jamnalal Sons Pvt. Ltd.
 Jeevan Ltd.
 Maharashtra Scooters Ltd.
 Mukand Engineers Ltd.
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 Mukand Global Finance Ltd.
 Mukand International Ltd.
 Mukand Ltd.
GROUP STRUCTURE:-
BAJAJ FINSERV LIMITED:-
Bajaj Finance Limited, a subsidiary of Bajaj Finserv, is an Indian Non-Banking Financial
Company (NBFC). The company deals in Consumer Finance, SME (Small and Medium-sized
Enterprises) Commercial Lending, and Wealth Management. Originally incorporated as Bajaj
Auto Finance Limited on March 25, 1987, the non-bank singularly focused on providing two and
three wheeler finance. After 11 years in the auto finance market, Bajaj Auto Finance Ltd
launched its initial public issue of equity share and was listed on the BSE and NSE.. At the turn
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of the 20th century, the companyventured into the durables finance sector. In the subsequent
years, Bajaj Auto Finance diversified into
lOMoARcPSD|28755613

Business and property loans as wellhttps://en.wikipedia.org/wiki/Bajaj_Finance - cite_note-3. In the
year 2006, the company’s assets under management hit the Rs.1,000 crore mark and is currently
at Rs.52,332 crore. 2010 saw the company’s registered name change from Bajaj Auto Finance
Limited to Bajaj Finance Limited.
 Bajaj Finserv was formed in April 2007 as a result of its demerger from Bajaj Auto Limited
as a separate entity to focus purely on the financial services business of the group. The
process of demerger was completed in Feb 2008.
 This demerger was not only to unlock the value in the high growth business areas of Auto,
Insurance, Finance sectors and Wind Power but to also to independently run these core
businesses and strengthen their competencies.
 The wind power project, the stakes in the life and general insurance companies and
consumer finance along with their respective assets and liabilities got vested in Bajaj Finserv
Limited. In addition to that, cash and cash equivalent of INR 8,000 million (then market
value) was also transferred to the company.
 The demerger has enabled investors to hold separate focused stocks and also facilitated
transparent benchmarking of the companies to their peers in their respective industries.
 The constantly changing demographics and dynamics of the Indian economy, has led to
creation of various needs of the customer.
 The Indian customer now demands proper avenues of channelizing their savings, financial
protection and is also desirous of spending more on valuable goods and services.
 All these wants need to be met by dynamic players in the financial services space. Bajaj
Finserv was formed specifically to cater to these needs.
 The company was also formed to touch and improve the lives of a growing number of
people in the country, and in doing so, deliver superior corporate values to its shareholders.
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 He operating companies carry with them the Bajaj brand, which carries with it
decades of commitment to business ethics, integrity and highest standards of
fiduciary responsibility.
Vision and Mission of the Organization:-
Vision:
Bajaj Finserv has a vision to become a full-fledged financial services company and be the
financial partner to the Indian consumer and help him across his financial needs, whether for
finance, for investment management, for protection or for post-retirement support,
throughout his lifecycle.
Mission:
Bajaj Finserv aims to be the most useful, reliable and efficient provider of Financial Services. It
is our continuous endeavor to be a trustworthy advisor to our clients, helping them achieve their
financial goals.
Area of operation:
 Consumer Durable Finance
 Two and Three Wheeler Finance
 Lifestyle product finance
 Vendor finance
 Construction Equipment Finance
Objective of the Organization:
Our main objects as contained in our Memorandum of Association include:
1. To Finance industrial by way advance ,deposit or lend money, securities and propertied or
with any Company, Body corporate, trust, firm, person or association whether falling under
the same management or otherwise, with or without security and on such terms as may be
determined from time to time, and to carry on and undertake the business of finance and
investment and to provide venture capital, seed capital, loan capital and to participate in
equity preference share capital or to give guarantees on behalf of the company in the matter
and to promote companies engaged in industrial and trading business and to act as Financial
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Consultants, Management Consultants, Brokers, Dealers, Agents and to carry on the
business of share broking, money broking ,exchange
lOMoARcPSD|28755613

Departments
Administration Collections Marketing
Human Resources Operations
Credit Team Sales
Product
Broking, bill broking and general brokers for shares ,debentures, debenture-stock, bonds,
units, obligations, securities ,commodities, bullion currencies and to manage the funds of any
person, firm, body corporate or trust by investment in various avenues like Growth Fund,
income fund, risk fund, tax exempt funds, pension /superannuation funds and to pass on the
benefits of portfolio investments to the investor as dividends, bonus, interest, etc.
2. To carry on the business as an investment company and to underwrite, sub-underwrite, to
investigating , and acquire by gift or otherwise and hold, sell, buy or otherwise deal in shares
debentures, debentures-stocks, bond, units, obligations and securities issued or guaranteed by
Indian or Foreign Governments, States, Dominions, Sovereigns, Municipalities.
Different Departments
Organization structure
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Organization Hierarchy:
A key issue in accomplishing the goals identified in the planning process is structuring the work of
organization. Organizations are group of people, with ideas and resources working toward common
goals. The purpose of the organizing function is to make the best use of the organizations resources to
achieve organizational goals. Organizational Structure is the formal decisions making framework by
which job tasks are divided, grouped and coordinated. Formalization is an important aspect of
structure. It is the extent to which the unit of organization is explicitly defined and its policies,
procedures and goals are clearly stated. It is the official organizational structure conceived and built by
top management. The formal organization can be seen and represented in chart form. An organization
chart displays the organizational structure and shows job titles, lines of authority and relationship
between departments. Organizational Structure allows the expressed allocation of responsibilities for
different functions and processes to different entities. Ordinary description of such entities is as branch
site, department, work group and single group of people.
RAHUL BAJAJ
[Chairman]
NANOO PAMNANI
[vice-chairman]
SANJIV BAJAJ
[CEO]
SANDEEP JAIN
[CFO]
RAJIV JAIN
[Managing Director]
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Deepak bagati
[President collections & SME]
ASHISH PANCHAL
[President – Rural, Insurance & Liabilities and Chief of Staff]
M M Muralidharan
Treasurer
ANUP SAHA
[President Consumer business]
Management:
Name Designation
Rahul Bajaj Chairman
Ranjan Sanghi Director
Rajiv Bajaj Director
Rajendra Lakhotia Director
D J Balaji Rao Director
lOMoARcPSD|28755613

Omkar Goswami Director
Madhur Bajaj Director
Dipak Poddar Director
D S Mehta Director
Gita Piramal Director
Rajeev Jain Managing Director
Nanoo Pamnani Vice Chairman
Sanjiv Bajaj CEO
Product Profile of the Organization:
Bajaj Finserv Lending offers loans for various needs. We offer loans for Bajaj Auto Two Wheelers under
the name of Bajaj Auto Finance Ltd. We offer Consumer Durable Loans, Personal Loans, Loan against
Property, Small Business Loans, Construction Equipment Loans, Loan against Securities and Insurance
Services under the name of Bajaj Finserv Lending. Bajaj Finserv Lending is one of the most diversified
nbfcs in the market catering to more than 5 million customers across the country. Apart from being a
well-recognized organization,they pride us for holding the highest credit rating of FAAA/Stable for any
NBFC in the country today. The product offerings include Consumer Durable Loans, Personal Loans, Loan
against Property, Small Business Loans, Two-wheeler and Three – Wheeler Loans, Construction
Equipment Loans, Loans against Securities and Insurance Services.
lOMoARcPSD|28755613

Home Loan
Construction
Equipment Loan
Consumer
Durable Loan
Product
Portfolio
Three/Two
Mortgage Loan
Wheeler Loan
Personal and
Small Business
Competitors for BAJAJ FINSERV:-
 IDFC FIRST BANK
 SHRIRAM CITY
 MAHINDRA FINANCE
 HDFC BANK
 DEAL 4 LOANS
 BANK BAZAAR
 MUTHOOT FINANCE
 EDELWISS
 RELIANCE CAPITAL
lOMoARcPSD|28755613

Consumer Finance
 Durable Finance
 Lifestyle Finance
 Digital Product Finance
 EMI Card
 2 & 3 Wheeler Finance
 Personal Loan
 Loan against FD
 Extended warranty
 Gold Loan
 Home Loan
 Retail EMI
 Retailer Finance
 E-commerce
 Co-branded Credit Card
 Co-branded Wallet
Today, we are the top consumer electronics, digital products, lifestyle products and personal loans
lenders in India.
SME Finance
 Home Loan
 Loan against Property
 Gold Loan
 Lease rental discounting
 Business Loan
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 Loan Against Shares
 Professional Loan
 Working Capital Loans
 Developer Finance
 Used Car Finance
Present in the top 40 cities in India, our SME business is growing at the rate comfortably
higher than the industry.
Commercial Lending
 Vendor Financing
 Large Value Lease Rental Discounting
 Loans against Securities
 Financial Institutions Lending
 Light Engineering Finance
 Corporate Finance
 Warehouse Financing
Investment
 Fixed Deposit
 Mutual Funds
Personal Loan Interest Rates & Charges
Bajaj Finserv offers attractive interest rates on personal loans up to Rs.25 lakh that can help you
meet a range of financial requirements. Get collateral-free loans, with minimum documentation,
flexible tenor and disbursal within 24 hours of approval.
With Bajaj Finserv Personal Loan, you do not have to worry about any hidden fees or charges.
Here are more details on the personal loan interest rates and charges:
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Rate of Interest on Personal Loans in India
Types of Fees Charges Applicable
Personal Loan Interest Rates 12.99% onwards
Processing fees Up to 4.13% of the loan amount(Inclusive of taxes)
Bounce Charges Rs. 600 - 1200 Per bounce (Inclusive of applicable taxes)
Penal interest 2% of EMI amount per month + applicable taxes or Rs. 200
per month (Inclusive of taxes), whichever is higher.
DOCUMENT/ STATEMENT
CHARGES
Statement of Account/
Repayment Schedule/ Foreclosure
Letter/ No Dues Certificate/
Interest Certificate/ List of
documents.
Download your e-statements/ letters/ certificates at no extra
cost by logging into Customer Portal – Experia.
You can get a physical copy of your statements/ letters/
certificates/ List of Documents from any of our branches at a
charge of Rs. 50/- (Inclusive of taxes) per statement/ letter/
certificate.
If you are a salaried professional aged between 25 and 58 years living in India, you can easily
qualify for a loan. As long as you match the personal loan eligibility criteria and minimum net
salary specified based on your city of residence, you can avail a loan with ease and best personal
loan interest rates.
Below is table for other fees and charges:
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Personal Loan Foreclosure Charges
Loan Variant Charges
Term Loan 4% plus applicable taxes on Principal Outstanding amount as on the date
of such full pre-payment
Flexi Term Loan 4% plus applicable taxes on total withdrawable amount* (*Total loan
amount that you can withdraw under Flexi Loan from time to time as per
the repayment schedule) on the date of levy of such charges).
Flexi Hybrid Loan 4% plus applicable taxes on total withdrawable amount* (*Total loan
amount that you can withdraw under Flexi Loan from time to time as per
the repayment schedule) on the date of levy of such charges).
Personal Loan Part-prepayment Charges
Borrower Type Time Period Part-Prepayment Charges
All borrowers More than 1 month from date of
loan disbursal
2% + applicable taxes on part-
payment amount paid*
 *Part-prepayment made should be more than 1 EMI.
 *These charges not applicable for Flexi Loan facility.
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Annual/Additional Maintenance Charges
Loan Variant Charges
Flexi Term Loan 0.25% plus applicable taxes, on the total with drawable amount irrespective of
utilization on date of levy of such charges
Flexi Hybrid Loan 0.25% plus applicable taxes, on the total with drawable amount irrespective of
utilization on date of levy of such charges
 *These charges will be levied annually.
Education Loan:- 10.45% per Anum
Gold Loan:-
Fees & Charges
Types of Fees Applicable Charges
Interest rate 12% p.a. Onwards
Processing fee Rs.25 to 50 Inclusive of taxes
Part payment NIL
Foreclosure NIL
Penal interest 3 % (inclusive of taxes)
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DOCUMENT/STATEMENT CHARGES
Statement of Account/ Repayment
Schedule/Foreclosure Letter/No Dues
Certificate/Interest Certificate/List of
documents
Download your e-
statements/letters/certificates at no extra
cost by logging into Customer Portal –
Experia.
You can get a physical copy of your
statements/letters/certificates/List of
Documents from any of our branches at a
charge of Rs. 50/- (Inclusive of taxes) per
statement/letter/certificate.
Business Loan Fees & Interest Rates
Bajaj Finserv offers the lowest rate of interest on Business Loan. Read more about our latest
interest rate and fees and charges below.
Business Loan Interest Rate in India
Rate of interest 18% p.a. Onwards
Processing fees Up to 2% of the loan amount (Inclusive of taxes)
lOMoARcPSD|28755613

Business Loan Interest Rate in India
DOCUMENT/STATEMENT
CHARGES
Statement of Account/
Repayment
Schedule/Foreclosure Letter/No
Dues Certificate/Interest
Certificate/List of documents
Download your e-statements/letters/certificates at no extra
cost by logging into Customer Portal – Experia.
You can get a physical copy of your
statements/letters/certificates/List of Documents from any
of our branches at a charge of Rs. 50/- (Inclusive of taxes)
per statement/letter/certificate.
Bounce charges Up to Rs. 3000 (Inclusive of applicable taxes)
Penal interest (Applicable in
case of non-payment of monthly
Instalment on/before the Due -
Date)
2% per month
Document processing charges Rs. 1449 + applicable taxes
lOMoARcPSD|28755613

Annual/Additional Maintenance Charges
Loan Variant Arges
Flexi Term Loan 0.25% plus applicable taxes of the Total Withdrawable Amount (as per the
repayment schedule) on the date of levy of such charges.
Flexi Hybrid Loan 1.0% plus applicable taxes of the Total Withdrawable Amount during initial
tenure. 0.25% plus applicable taxes of the Total Withdrawable Amount during
subsequent tenor.
Strategy Drivers:-
When we thought of our strategy to achieve the Big Goal, we kept in mind an important element:
what strength of our past do we want to carry into the future? Of all our options, one thought
resonated across, reflecting in all our outcomes over the course of our existence – Sustainability.
It is the legacy that our history has created. This is the outcome of over half a century of work
of our parent – theBajaj Group. Delivered through each business that the Group has ventured
into. Anything that we do has to pass through this critical filter. Each of the five drivers of our
strategy build on this core.
Focus on Existing Customers
More products per customer cannot be achieved by more customers but more satisfied
customers. More satisfied our customers, more likely they’ll partner with us for their next big
pursuit. More likely,they’ll recommend their family and friends to us. The more our customers
recommend us, the less we need to worry on getting new customers. The less we worry on
getting new customers the more we’ll focus on existing customers.
Perpetual State of Beta
In today’s world, innovative thoughts don't need years to become break-through realities, nor do
they take years to become a commodity. Newly received information becomes vapid in a few
lOMoARcPSD|28755613

hours, new products get duplicated overnight, one of many becomes one of one in days. The
point here is rather
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Simple—the need for continuous change, continuous improvement and continuous reinvention.
The reason for us to continue to be better than our previous best. At Bajaj Finserv, we call it the
Perpetual State of Beta. We were the first to introduce a 3-min on the spot approval for our
Durable Finance offer. We are now down to 3 seconds. By the time you have finished reading
this, we would haveadded another partner to our Lifestyle Finance portfolio. And some of our
customers would have already downloaded all their loan account statements through the online
portal. The result of our obsession with sustainability – even if it is about your efforts.
Invest Deep in Technology
Across industries, technology is changing the way enterprises operate and deliver products. At
Bajaj Finserv, we adopt to newer and emerging technologies keeping in mind the needs and
preferences of our customers. This complements our digital personalization framework enabling
our customers to transact without the restrictions of time, place and proximity. Can I apply
online? Yes. Will I get a regular statement of account? Yes. With every single detail of your loan?
Yes. Giving me access anytime, anywhere? Yes. Can I foreclose my loan? Yes. Will I be charged
for foreclosures? No. Can I borrow back some of the loan i’ve repaid? Yes. Without a human
interface? Yes.
We deploy technology not to take the human touch away but to give a richer customer
experience, allowing a customer to exercise choices even when it comes to being serviced.
Because technology alone is not the output, it is the creativity with which it is used that delivers
the objective.
Every year for the last five years, we have continued to increase our spends in technology by
putting money where our mouth is. This gives an unmatched flexibility of engaging with us for
every financing related need. The more delighted you are, the easier it will be for you to choose
us the next time you have a financial need.
Build Partnerships with the Best in the World
Our bias for the best in the world comes from our obsession for our Big Goal. We believe when
our customers buy a product or service from us, they are placing their trust in us. Trust itself is a
delicate matter. It needs both expertise and experience, together. When we partner with SFDC for
our online capabilities, with Microsoft for our software and with TCS for process mapping, and
CRISIL for auditing us, we believe we’re implementing zero tolerance to compromise.
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We’re not a blow-hot, blow-cold partner. We’re as determined in our relationship with our
partners as we are with each of you as customers. And even for our partnerships, we have created
benchmarks in innovation in how we have deployed their systems and processes to create bold
new realities.
lOMoARcPSD|28755613

CHAPTER- III
APPLICATION OF THEORETICAL
FRAMEWORK
RESEARCH METHODOLOGY:-
Review of literature:-
 Thilakam and Saravanan (2018) writes on “CAMEL Analysis of nbfcs in Tamil Nadu” in
‘International Journal of Business and Administration Research Review’. Financial
intermediation is a crucial function of Banks, Non Banking financial companies (nbfcs) and
DevelopmentFinancial Institutions(dfis) the post reform period in India is characterized by
phenomenal growth of nbfcs complementing the role of banks in mobilizing funds and making
it available for investment purposes. During the last decade nbfcs have undergone wide
volatility and change as an industry and have been witnessing considerable business upheaval
over the last decade becauseof market dynamics, public sentiments and regulatory
environment. To evaluate the soundness of nbfcs in Tamil Nadu over a decade, the authors
made an attempt of CAMEL criteria for analysis of selected Companies. Based on findings
the suggestions were offered to overcome the difficulties face by selected nbfcs in their
development.
 Shail Shakya (2017) published a working paper entitled “Regulation of Non-banking
Financial Companies in India: Some Visions & Revisions”. Non-Banking Financial
Companies are pioneer in their cash deployment, accessibility to the markets and others to
count. Nbfcs are known for their higher risk taking capacity than the banks. Despite being an
institution of attraction for the investors, nbfcs have played a significant role in the financial
system. Many specialized services such as factoring, venture capital finance, and financing
road transport were championed by these institutions. NBFC sector has more significantly
seen a fair degree of consolidation, leading to the emergence of large companies with
diversified activities. However, the recent financial crisis has highlighted the importance of
widening the focus of NBFC regulations to take particular accountof risks arising from the
regulatory gaps, from arbitrage opportunities and from inter-connectedness of various
lOMoARcPSD|28755613

activities and entities associated with the financial system. The regulatory regime is lighter
and different than the banks. The steady increase in bank credit to nbfcs over the recent
lOMoARcPSD|28755613

Years means that the possibility of risks being transferred from more lightly regulated NBFC
sector to the banking sector in India can’t be ruled out.
 Ravi Puliani and Mahesh Puliani (2016) writes a book entitled “Manual of Non-Banking
Financial Companies”. The book discussed the glossary of terms that are used in banking
operationsand non- banking activities. The book covers the circulars and directions issued by
Reserve Bank of India from time to time to control, manage and regulate the business of
nbfcs.
 Taxmann’s (2013) published “Statutory Guide for Non-Banking Financial Companies” is
published by Tax mann’s Publications, New Delhi. The book listed the laws relating to Non-
Banking Financial Companies. The rules and laws governing the kinds of businesses
undertaken by different types of nbfcs are also discussed.
 Amit Kumar and Anshika Agarwal (2014) published a paper entitled “Latest Trends in
Non- banking Financial Institutions” in ‘Academicia: An International Multidisciplinary
Research Journal’. In Indian Economy, there are two major Financial Institutions, one is
banking and other is Non-Banking. The Non-Banking Financial Institutions plays an
important role in our economy as they provide financial services on wide range, they also
work to offer enhanced equity and risk- based products, along with this they also provide
short to long term finance to different sectors of the economy, and many other functions.
This paper examines the latest trends in Non-Banking Financial Institutions. This paper
analyzes the growth and enhanced prosperity of financial institutions in India.
 A potential cash machine Subramaniam, Arun June 2012
The article focuses on the emergence and growth of the Bajaj Finserv, a new company in
financial services industry in India, under the leadership of Sanjiv Bajaj, an engineer. It
informs that the company is diversified, well capitalized and soundly managed as it owes its
success to its growth in retail industries. It also informs that the focus of the company is on the
lOMoARcPSD|28755613

customers of retail industries as it has trained its agents to sell wider range of insurance
products.
lOMoARcPSD|28755613

 Bajaj Finserv sacks some senior officials who were cutting deals to mask loan
defaults Finance Snapshot2014
The article reports that the Indian financing company Bajaj Finserv Ltd. Has fired some of its
senior executives who were cutting deals to cover loan defaults. It states that two senior
officials of the group company Bajaj Finance Ltd (BFL) were fired, while three other
employees left the company. It mentions that the irregular transactions of the officials which
aimed at showing the borrowers' accounts had bounced.
 EMI Finance App For Pre-Approved
Loans Business World (2015)
The article offers brief information on the Bajaj Finserv Experia equated monthly instalment
(EMI) finance app.
 Bajaj Finserv Launches India's First Consumer Durable Finance App With Instant
Loan Approvals(2015)
The article reports on the launch of India's first easy monthly instalment (EMI) finance app
from consumer durable finance company Bajaj Finserv. It says that the consumers will find
the app useful for buying items, including smartphones, furniture, and televisions, on emis.
Comments from Bajaj Finance Ltd.'s chief executive officer (CEO) Rajeev Jain are provided
STATEMENT OF THE PROBLEM
Loan is one of the major elements of finance to a common man. The banks advance money in no
of ways like Housing Loan, Education Loan, Property Loan, Personal Loan, Vehicle Loan, Etc.
Banks usually follow different procedure for advancing different types of loan and advances.
In order to know the different procedure in sanctioning different kinds of loans and the rate of
interest charged to different type of loan this study has been undertaken.
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OBJECTIVES OF THE STUDY
 To analyze different types of loans and advances made by Bajaj Finance Limited.
 To list out some important loans and advance of the Interest Bajaj finance limited and
there interest rates and security needed for granting loans and advances.
 To analyze the financial position of the Bajaj finance limited.
 To make suggestions and recommendations based on the study
SCOPE OF THE STUDY
The study covers the following: Meaning of loans and advances, Utility of loans and advances,
Borrowing rate and lending rate, Lending of money, Nature and security of loans, Procedure of
granting cash credit, overdraft and discounting bills, Statutory & other restrictions on loans &
advances, The Advantages and Disadvantages of Loans, Engaging recovery agents by banks,
Functions of commercial banks, The role of commercial banks, Types of loans granted by
commercial banks, The study is limited to the information provided by the bank officials.
SOURCES OF DATA
Primary Data:
The primary data has been collected directly from the executives and employees of the Bajaj
Finservby personal interview.
REFERENCE PERIOD
This reference period is selected for the study for last 5 years i.e. 2016-17 to 2020-21. This
study was done on interpretation what made by comparing various data during research work.
lOMoARcPSD|28755613

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