1 Comparison of Loan Procedures of Major Housing Finance corporations WITH RESPECT TO pgdm 2009-2011 Institute For Technology & Management Under the guidance ofMr. GAURAV SHARMA Senior Officer, Operations HDFC LIMITED SUBMITTED BY-: ARPIT VERMA Roll No. 041
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Comparison of Loan Procedures of
Major Housing Finance corporations
WITH RESPECT TO
pgdm 2009-2011
Institute For Technology & Management
Under the guidance of
Mr. GAURAV SHARMA
Senior Officer, Operations
HDFC LIMITED
SUBMITTED BY-:
ARPIT VERMA
Roll No. 041
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Content Page No.
Table of Contents2
Acknowledgement 3
Introduction4
Industry Overview5
History of Indian Home Loans7
Company Profile16
Products of HDFC Limited
29
Home Loan Products33
Multiple Repayment Option for Home Loans42
Stages of Home Loan Process44
Comparative Analysis of Different H.F.C.¶s in India46
Latest Home Loan Rates47
Documents Required & Procedures of Major competitors of
H.D.F.C. Ltd. 51
Comparison on the basis of EMI¶s67
Detailed Analysis between HDFC & SBI71
Findings & Analysis72
Recommendations 75
Conclusion77
Bibliography78
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ACKNOWLEDGEMENT
There is always a sense of gratitude which one express towards others for their help
and supervision in achieving the goals. This formal piece of acknowledgement is an
attempt to express the feeling of gratitude towards people who helpful me in
successfully completing of my training.
I would like to express my deep gratitude to Mr. Aseem Vivek, the Deputy General
Manager, HDFC Limited. He gave me the unique and indispensable opportunity of
being summer trainee at HDFC Limited.
Secondly I would also like to thank Mr. Gaurav Sharma, Senior Officer Operation, who
looked after me during our entire summer training. This project would not have been
anywhere close to being successful had it not been for his help. His guidance has beenvital in my learning here at HDFC Limited. He was always there with his competent
guidance and valuable suggestion throughout the pursuance of this project.
I would like to thank Mrs. Anjali Nigam and Mr. Robin Sahu along with the entire staff
of HDFC Limited, Aliganj Branch who provided me with key learning points at every step
of the way. My learning experience would have not been the same had it not been for
their support and willingness to teach me all that they could.
ARPIT VERMA
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INTRODUCTION TO HOME LOANS
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and
above all gathering funds little by little to afford one¶s dream. Home is one of the thingsthat everyone one wants to own. Home is a shelter to person where he rests and feel
comfortable.
HDFC-(Housing Development And Finance Corporation) Home Loan, India have been
serving the people for around three decades and providing various housing loan
according to their varied needs at attractive & reasonable interest rates. Owing to their
wide network of financing, HDFC Housing Loans provides services at your doorstep and
helps you find a home as per your requirements.
Many banks are providing home loans at cheapest rate to attract consumers towardsthem. The more customer friendly attitude of these banks, currently offer to consumers
cheapest loan over homes. In view of acute housing shortage in the country, and
keeping in mind the social ±economic role of commercial banks in the present times, the
RBI advised banks to encourage the flow of credit for housing finance.
With the RBI reducing bank rate, the home loan market rates nose-diving by 50 basis
points. The HDFC Bank and Standard chartered bank has become the first player in this
sector to announce a housing loan for a 20 years period. No doubt it will enhance the
end cost people to plan their house over longer duration now; it has been made easy for
a person to buy that dream house which he dreamt of long ago.
HDFC also provides with Home Improvement Loan for internal and external repairs and
other structural improvements like painting, waterproofing, plumbing and electric works,
tiling and flooring, grills and aluminum windows. HDFC finances up to 85% of the cost of
renovation (100% for existing customers).
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INDUSTRY OVERVIEW
Housing is one of the bare necessities of life and is part of the basic level of Maslow¶sHierarchy Theory. Having established that, it is near about impossible to imagine human
beings without a shelter above their heads. Through the years, this basic housing
achieved many forms and value. Looking through ages, it all started with the caves, but
now, mansions are and cemented housing is the rule of the day. In this rat race, every
individual wishes to have a house or a property in their lifetime. Moreover, this has also
become a social status in the society today. Having invested in this asset, people
consider themselves to be financially stable. Hence, the fulfillment of this basic human
need is essential for all.
Home financing is the first step that is taken to attaining this fundamental human desire.Financing is a major part of this process as this investment is most of the times long
term and requires a heavy cash flow.
India is part of a global trend that is advancing towards an increasing urbanization,
according to which more than half of the world's population is living in towns and cities.
After 1950, the Government of India formulated ten five year plans aimed towards
housing and urban development, which led to the launch of Urban Poverty and
Alleviation Programme of Nehru Rojgar Yojana (NRY). These plans laid emphasis on
institution building and on construction of houses for government employees and
weaker sections. The Industrial Housing Scheme was widened to cover all workers. Asa follow-up of the Global Shelter Strategy (GSS), National Housing Policy (NHP) was
announced in 1988, whose long term goal was to eradicate the problem of lack of
housing, improve the housing conditions of the inadequately housed, and provide a
minimum level of basic services and amenities to all. The role of Government was
conceived, as a provider for the poorest and vulnerable sections, and as a facilitator for
other income groups and private sector by the removal of constraints and the increased
supply of land and services.
Against the milieu of rapid urbanization and a changing socio-economic scenario, the
demand for housing has grown explosively. The importance of the housing sector in theeconomy can be illustrated by a few key statistics. According to the National Building
Organization (NBO), the total demand for housing is estimated at 2 million units per
year and the total housing shortfall is estimated to be 19.4 million units, of which 12.76
million units is from rural areas and 6.64 million units from urban areas. The housing
industry is the second largest employment generator in the country. It is estimated that
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the budgeted 2 million units would lead to the creation of an additional 10 million man-
years of direct employment and another 15 million man-years of indirect employment.
Having identified housing as a priority area in the Ninth Five Year Plan (1997-2002), the
National Housing Policy has envisaged an investment target of Rs. 1,500 billion for thissector. In order to achieve this investment target, the Government needs to make low
cost funds easily available and enforce legal and regulatory reforms.
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THE HISTORY OF INDIAN HOME LOANS:- Home loans in India have made people Buy Property in India in spite of
the skyrocketing prices. Today, we find considerable Real Estate Investment in India,either in the field of Residential Property in India or Commercial Properties in India.
Home Loans in India are disbursed by many Banks as Loan Banking is on of the
most important function of the Financial Services in India. Property Dealers and
Real Estate Consultants in India usually recommend that we undertake appropriate
Home Loan or Mortgage Loan counseling so that we can Buy Apartment in
India at an affordable Mortgage Rate.Purchasing the home of your dreams is not
an easy task. Especially when you plan to buy a home on loan. Home loan means
that you buy a house on installments. In simpler terms when you want to own a
home and can¶t afford to pay the amount in lump sum, you can pay it in monthly
installments with an interest rate.The interest rates of home loans are expected to go down even further according
to analysts who foresee a cut down in the rates by the RBI in the wake of the
decision taken by US Federal Reserve to cut its rates by a significant margin.
There are number of companies offer cheap home loans at a low interest rate. You
can avail loan against existing house for renovation or expansion etc. There
are many nationalized banks that offer finance for affordable housing. India Housing
has put together a comprehensive data to provide you with the cheapest Home
Loans available in the market. We have listed all the important housing finance
institutes and some of the top home finance banks providing lowest interest rates.
In the last few years, housing loan scenario in India has changed drastically. It has
taken a front seat and people are looking forward to owning their own houses. It is no
more a dream that required lifetime saving and a difficult decision to make. Today the
new home purchase loan is much easily available and is much cheaper than what was
available earlier. Banks are now everywhere and the schemes are implemented even
in villages and smaller towns. The housing loans are popular there too, however,
the activity of building flats is little slow. It would not be wrong to say that there has
been a boom in the home loan market and with this boom; there is also a boom in
the Number of home loans mortgage brokers in India.The main reason for this boom
in home loan market is the change in government policies. It is our government¶smotivation that the home loan interest rates in India have fallen considerably. Lot
many banks are offering home loans and this is available at low EMIs (Equated
monthly Installments). High EMIs are now a thing of past. Today lending rate is in
the range of 7.5 to 15 %.
Again, there are different types of home loans available today. The interest rate
available is also of two different types. One is the fixed rate loan and the other is
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the floating rate loan. In the fixed rate loan, whatever interest is fixed on the start of
loan is carried on for the complete period. However, in the other one, the interest
rate is not fixed and as the interest rate goes up or low the effect is directly
transferred to the person who is taking the loan. In the last few years the floating
interest rate has been a favorite among most of the people taking home loans.There is also a trend to opt for home construction loan. This loan is available to
those who want to design their homes according to their requirement and taste. In
other words, this loan is meant for those who themselves want to construct their new
home.
As shared earlier, taking a loan is not a difficult task. However, before taking a
loan, one must realize that the relationship with the bank will be for a longer period
usually 15 to 20 years so one must ensure faith and integrity in bank. Apart from
low rate of interest, the bank should also provide some value added services. The
other thing is to look into is the property that is to be brought. Making sure that the
builder has all sanctions and facility to build a good building is very important.
Taking home loans these days has become simpler. With the RBI regularly bring
down interest rates; taking home loans have become extremely easy. Housing loans
which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates
going down, people increasingly number apply to take these loans. Some of the
leading banks offering home loans in India, including ICICI Bank, IDBI Bank, HDFC
Bank , Bank of Baroda, SBI, Standard Chartered Bank and Axis Bank .
1.2 ADVANTAGES OF HOME LOANS:-
The various benefits of home loans arising to the customers are:-
(i) Attractive interest rates:- The various banks offer attractive interest rates to boost
and help their customers. Many banks provide loans on fixed or floating rates to
facilitate consumers as per their needs.
(ii) Help in owning a home:- The home availed by a person with the help of banks,
because they provide technical and financial assistance to customers for owning their
dream home.
(iii) No requirement of guarantor:- The commercial banks now a day, liberlise their
laws regarding home loans. Some of banks don¶t even require the guarantor to grant
loan to their consumers. They also make consumers free by reliving him to find aguarantor to complete the proceedings of availing loan.
(iv) Door-Step Services:- These door to step services are provided from enquiry stage
to the final disbursement takes place such services are beneficial for customers in
present busy life. Banks like ICICI bank and standard chartered bank provide door to
step services to customers to borrow loan.
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(v) Loan period:- There are many banks which provide maximum loan tenures upto 15-
20 years based on the loan amount and the creatibility of customers. This relieves the
customers to repay loan amount till a long period.
(vi) For accidental death insurance :- Some banks provide free accidental death
insurance with housing loan which is also beneficial for the customers.
These benefits or advantages of home loans are responsible for making them so
popular among people who don¶t have their home and want to buy, they do it with home
loan. Home loans help such persons in making their dream home.
1.3 DISADVANTAGES OF HOME LOANS:-
The main disadvantages of home loans are high lightened as below:
(i) Delays in processing :- Many times, there are huge delays in processing of
providing home loans because various formulations to be fulfilled in this process. Due to
these delays customers feel mentally as well as financially weak.
(ii) Fluctuating interest rates :- Some banks give home loans at floating rates, which
fluctuate at Different intervals due to some reasons. These changes sometimes, may
lead to increase in interest rate which will increase the cost of home loans to the
customers
(iii) High Cost:- The public sector banks charge high processing cost for home loan¶s
sanctioning. They are forced to pay serious charges at various stages to fulfill the
requirements. Some consumers are not able to pay such charges so such people could
not avail the benefits of home loan schemes.
(iii) Problems in disbursement:- There are many problems in disbursement of homeloan amount. There are some delays in disbursement of loan amount to the customers
due to legal formalities. This causes problems to the customers.
These are limitations or disadvantages of home loans. But sometimes some banks
charges high installments to repay loan amount. Such also causes problem to
customers. These limitations can be removed by providing good and promote services
to the customers.
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Indian Market for Home loans is more than Rs.500,000crore:
Today, not only the metros are witnessing the housing crunch even the second tier
cities like- Jaipur, Bhubneshwar, Lucknow, Trivendrum etc. are falling into the dearth
of living space and wanting for more expansion.
India Report:
Indian credit report in comparison to the other Asian countries is shown in the
statistics below, which is among the lowest. It is Indian psyche that credit is termed
bad, Indian are traditionally not inclined to take credit this reflects in the figures below:- GRAPH :- 1
Indian home loans Industry:-
Indian Home loans industry is growing at a fast pace 30% per annum, this can be
seen in the stats shown below with average ticket size (loan size) and Amount
disbursed is rising every year the opportunities have become more dominant for different organization in India. The demand drivers are fast growing middle class
population, rise in working women workforce, bigger aspirations of youth, Tax saving,
Transparency in the real estate market.
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GRAPH:- .2
Still in comparison to other nations India has a long way to go, The figures shown
below shows that even the GDP/mortgage ratio is low which indicates that credit is
not well sought as figure below shows the average percentage of mortgage to GDP
GRAPH: 3
The India Mortgage industry until recently was an unorganized sector. But today
organized mortgage sector is witnessing steady growth. It is estimated to be US $18
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billion industry. Huge real estate requirements and its subsequent development has
fueled its growth.
Comparison with other nations India fall behind in terms of Mortgage Penetration
which directly demonstrates the potential in Indian market for Housingmortgage finance companies.
GRAPH:4
Sources: RBI
Real Estate is currently sought of as a great means of Investment, the prices of
residents have shot up very high which is clearly shown in the figure below, the
major cities have witnesses lot of development and price appreciation which
demonstrates the growing demand . more and more people are migrating to cities for
work / business. More and more jobs are created and price index rise becomes
inevitable.
Price Index: FIG-5
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Recent trends in home loan in India:In order to understand the recent trends we need to know or understand various
factors. These factors play vital role in Indian home loan market. These include
interest rate on which banks provide home loan, tax rebate on home loan and its
impact. Apart from this to understand the recent trend we need to compare the trends
of home loan of different years. Here we have compared the interest and other market
trends of year 2009 with 2007-08. This kind of comparison gives the result which
helps us to understand the trends of market of any industry. Apart from the impact of
present and past economic ups and down also affect the trends. Today the US
slowdown is the major issue which has affected almost all the industry. So we have
also discussed this issue in terms to define trend of home loan market in India.
Impact of slowdown on home loan market in India:- The fear of a recession looms over the United States. And as the clinch goes,
whenever the US sneezes, the world catches a cold. This is evident from the way the
Indian markets crashed taking a cue from a probable recession in the US and a
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global economic slowdown. U.S slowdown has affected almost all sectors not only in
US but to all over the world. Indian economy has also been affected by this slowdown
because India is a growing country and almost in all sectors various multinational
companies have major contribution. So the role of this slowdown is a major issue to
be discussed while talking about Home Loan Market in India.Bankers who were earlier falling over each other to dole out home loans, even for
soft furnishings, have suddenly become choosy. Banks like SBI, ICICI Bank, UTI
Bank, IDBI Bank and leading mortgage firm HDFC are now apparently making a
conscious attempt to curb their aggression in the home loan market.situation is like
that if a customer who recently approached a private sector bank for a home loan of
about Rs 10 lakh for a tenure of 15 years found, to his shock, that the eventual loan
disbursement was just Rs 5 lakh. Most bankers aren't willing to confirm any
slowdown in their home loan portfolio. On record, they attribute the marginal dip in
home loan disbursements to the recent hike in interest rate.
Privately, however, they have a different story to tell. "The slowdown in the home
loan market for select players like ICICI Bank was evident from January. ICICI
Bank's average home loan disbursement in a month is around Rs 2,500 crore in a
month, which has come down to almost Rs 2,000 crore in March," said a private
sector banker. ICICI Bank officials denied any slowdown in their home loan
portfolio and they say that the recent dip in interest rates has had some impact on
disbursals. However, in absolute terms, it is still low. Even this slowdown the deposit
growth for the sector as a whole is around
17%, while credit is growing at almost 28%, forcing banks to become selective.
Institutions now charge a floating rate of 8 to 8.25 per cent on home loans aboveRs 20 lakh. Initial estimates by bankers suggest that the increase in rate for home
loans and other segments would be around 25-50 basis points (0.25% to 0.5%). Even
as the provisioning requirement has gone up around 60 basis points, the hike in
interest rates may be lower as the impact would be felt for the first year. It would also
depend on how well capitalized the banks are as the rise in provisioning and risk
weightage would affect the return on equity for banks. Weaker banks and banks with
a large portfolio of these loans are likely to be more affected and may hike rates first.
Home loan growth of disbursals were at 20 per cent in 2007-08 according to a study
by the credit rating agency CRISIL, a Standard & Poor¶s company. This rate is lower
than the 30 per cent annual increase seen in the past three years, but in absolute
terms represents a substantial expansion. The slower growth reflects the impact of
rising property prices and interest.
Interest and market trends in year 2009:-
Home loan interest rates, especially on new home loan accounts, started softening
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from the beginning of this year when the Reserve Bank of India (RBI) announced
sharp cuts in the repo rate and cash reserve ratio (CRR). The RBI started slashing
the key policy rates since October last year, after taking into account the worsening
liquidity situation of banks here. The central bank has reduced its key policy interest
rates (repo and reverse repo) and reserve ratio (CRR) four times in the last sixmonths. The cut in the repo rate meant commercial banks would have funds
available at a lower cost. On the other hand, the cut in the CRR meant banks would
have to keep less money with the RBI and hence they had more money to lend.
Analysts believe that interest rates have not yet bottomed out and there will be
further cuts in borrowing rates over the next few months.
While the interest rate cut expectation is a thing of the past, the question is will it go
back to the old levels of 7-8 percent which contributed to a property boom?
Consensus is already building up for the fact that we are headed towards a low
interest rate regime in the coming couple of years, in line with global trends. In the
case of the domestic economy, the trigger for low interest rates has already happened
on the deposit front with banks reducing the rate by 1-2 percent in the last few
weeks. Now, the deposit rate has come down to single digit even with respect to
long term deposits (on 3-5 years) and that would mean banks have access to
cheaper funds. With inflation too sliding down at a rapid pace, there is hope for
continuance of a cheaper rate regime.
Following in State Bank of India¶s (SBI¶s) footsteps, other state-run banks may also
come out with scheme offering home loan at a fixed rate of 8%. The Indian
Banks¶ Association (IBA) would review the response of borrowers towards the SBI
scheme after three weeks and if it finds that there has been a good response, other banks will follow suit.
Last week, SBI had announced that it would offer home loans at a flat rate of 8% to all
borrowers and would freeze this rate for one year. The chairman of one of the major
banks, who asked not to be named, said SBI can afford to lend at such cheap rate
as it has one of the best current and savings account (CASA) deposit ratio. CASA
deposits are the cheapest source of funds for a bank and a high CASA deposit ratio
brings down their average cost of funds. This in turn helps the bank in offering
cheaper credit while maintaining their net interest margin (NIM). NIM is the difference
between the rates at which banks borrow and lend.
State-owned banks started cutting their home loan rates after country's largest lender;
State Bank of India froze its new home loan rates at eight per cent for one year
recently.
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COMPANY PROFILE
Housing Development Finance Corporation limited (HDFC) came into existence on 17th
October, 1977 by Hansmukhbhai Parekh with an initial share capital of Rs. 100 million.
Born in a traditional banking family in Surat, Gujarat, Mr. Parekh started his financial
career at Harkisandass Lukhmidass - a leading stock broking firm. The firm closed
down in the late seventies, but, long before that, he went on to become a towering
figure and a ray of hope for the Indian financial scene. He was a true development
banker. His building up HDFC without any government assistance is itself a brilliant
chapter in financial history. His wisdom and warmth drew people from all walks of life to
him, for advice, guidance and inspiration.
HDFC has provided home loans to more than three million customers. Since their setup,their objective has been to enhance residential housing stock and promote home
ownership. In recent times, the scope of service has increased from hassle free home
loans and deposit products to property related services and training facility.
HDFC has always been market-oriented and dynamic with respect to resource
mobilization as well as its lending programmed. This renders it more than capable to
meet the new challenges that have emerged. Over the years, 1-IDEC has developed a
vast client base of borrowers, depositors, shareholders and agents, and it hopes to
capitalize on this loyal and satisfied client base for future growth. Internal systems have
been developed to be robust and agile, to take into account changes in the volatileexternal environment.
HDFC has developed a network of institutions through partnerships with some of the
best institutions in the world, for providing specialized financial services, Each institution
is being fine-tuned for a specific market, while offering the entire HDFC customer base
the highest standards of quality in product design, facilities and service.
When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he said: "Taking
over from H.T. Parekh is a formidable task; his vision brought about not only aninstitution, but an entire concept which has proved itself to be of lasting importance."
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since
emerged as the largest residential mortgage finance institution in the country.
The corporation has had a series of share issues raising its capital to Rs. 119 Crores.
The gross premium income for the year ending March 31, 2007 stood at Rs. 2,856
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Crores and new business premium income at Rs. 1,624 Crores. The company has
covered over 8,77,000 lives year ending March 31, 2007.
HDFC operates through almost 450 locations throughout the country with its
corporate head quarters in Mumbai, India. HDFC also has an International Office in
Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is thelargest housing company in India for the last 27 years.
Business Objectives
y The fore most objective of HDFC is to enhance residential housing stock in the
country through the provision of housing finance in a systematic and professional
manner, and to promote home ownership.
y To increase the flow of resources to the housing sector by integrating the
housing finance sector with the overall domestic financial markets.y To anticipate the customer¶s needs and desires to work out ways by which
affordable homes can be a reality, not a dream.
ORGANIZATION GOAL
To develop close relationships with individual households
Maintain its position as the premier housing finance institution in the country
Transform ideas into viable and creative solutions
Provide consistently high returns to shareholders
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Widely quoted definition by the World Business Council for Sustainable Development
states that 'Corporate Social Responsibility (CSR) is the continuing commitment by
business to behave ethically and contribute to economic development while improving
the quality of life of the workforce and their families as well as of the local community
and society at large'. Although the term 'CSR' is of relatively recent vintage, it is this
commitment, which HDFC has exemplified with zeal, perseverance and enthusiasmsince its nascent years. Some of the initiatives undertaken by the Corporation from its
earliest days are Shelter Assistance Reserve, initiatives undertaken by HDFC
employees, continued bulk lending operations in the area of micro-finance and low-
income housing.
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MILE STONES
HDFC has already Crossed Rs. 1, 00,000 Crore in Home Loan Approvals.
Padma Bhushan for HDFC Chairman Deepak Parekh.
The ICAI Award Ms. Renu SudKarnad, Executive Director, HDFC receiving theICAI Award from Mr. P C Gupta, Honorable Union Minister of State for Company
Law Affairs.
ICAI confers gold shield to HDFC for 'The Best Presented Accounts'.
HDFC ranked 3rd amongst the Asian Banking and Finance Sector for µHighest
Return on Equity¶ by Asia-money.
HDFC Ranked amongst the Top 3 Best Managed Companies by Finance-Asia ±
2007.
Associate Companies HDFC Bank - HDFC holds 23.26%
y HDFC Mutual Fund
y HDFC Standard Life Insurance Company- HDFC holds 76%
HDFC SALES
HDFC Chubb General Insurance Company Ltd. - HDFC holds 79%
Intel net Global Services Ltd. - HDFC holds 50%
Other Companies Co-Promoted by HDFC
y HDFC Trustee Company Ltd.
HDFC Developers Ltd.
GRUH Finance Ltd.
HDFC property ventures Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
y HDFC Holdings Ltd.
Credit Information Bureau (India) Ltd.
HDFC Ergo General Insurance
HDFC is a professionally managed organization with a board of directors consisting of
eminent persons who represent various fields including finance, taxation, construction
and urban policy & development. The board primarily focuses on strategy formulation,
policy and control, designed to deliver increasing value to shareholders.
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Board of Directors
HDFC has a staff strength of approximately 1506 (as on 31st March, 2010), which
includes professionals from the fields of finance, law, accountancy, engineering and
marketing.
Sr.
No.
Name of Director Category No. of
Directorship
No. of Committees
Member Chairperson
1 Mr. Deepak S. Parekh Executive
Chairman
12 7 5
2 Mr. Keshub Mahindra Independent 5 1 1
3 Mr. Shirish B. Patel
Independent 1 0 0
4 Mr. B. S. Mehta Independent 14 9 5
5 Mr. D. M. Sukthankar Independent 4 1 1
6 Mr. D. N. Ghosh Independent 4 1 1
7 Dr. S. A. Dave Independent 11 9 0
8 Dr. Ram S. Tarneja Independent 13 7 2
9 Mr. N. M. Munjee Independent 13 9 4
10 Dr. Bimal Jalan Independent 0 0 0
11 Dr. J. J. Irani Non-
executive
10 2 0
12 Mr. D. M. Satwalekar Independent 5 2 2
13 Ms. Renu Sud Karnad Joint
Managing
Director
13 5 2
14 Mr. K. M. Mistry Vice
Chairman &
Managing
Director
12 8 3
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Consultancy Services HDFC is a unique example of a housing finance company which has demonstrated the
viability of market-oriented housing finance in a developing country. It is viewed as an
innovative institution and a market leader in the housing finance sector in India. The
World Bank considers HDFC a model private sector housing finance company in
developing countries and a provider of technical assistance for new and existing
institutions, in India and abroad. HDFC¶s executives have undertaken consultancy
assignments related to housing finance and urban development on behalf of multilateral
agencies all over the world.
Consultancy Assignments Undertaken:
Project Title Project Country Agency
State Mortgage Investment Bank Russia USAID
Review of Operations of Bank
Tabunga NegaraIndonesia
World
Bank
Detailed Analysis of Housing Situation BhutanGovt. of
Bhutan
Study of Housing Finance Sector GhanaGovt. of Ghana
/World
Bank
Management and Operations Audit Thailand C D C
Technical Assistance for Alliance
Housing BankOman Direct
Feasibility of Establishing a NewMortgage Finance Company
Mauritius C D C
Feasibility Study for a Second
Building SocietyMalawi Direct
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Workshop on µHousing Finance &
Managerial Effectiveness¶ for Housing
Professionals
GhanaWorld
Bank
Review of Nepal Housing
Development Finance Company
Limited (NHDFC)
NepalUSAID &
UNDP
Evaluation of an investment proposal
of Commonwealth Development
Corporation in Turks & Caicos Islands
Turks &
Caicos IslandsC D C
Evaluation of Caribbean Housing
Finance Corporation Limited, Jamaica
Jamaica C D C
Review of Mortgage Underwriting and
Servicing Manuals developed for
Bulgaria
BulgariaThe Urban
Institute
Workshop on Credit Appraisal & Loan
RecoveryPhilippines
The Asian
Coalition
Development of Mortgage ServicingManual Russia
Abt.
AssociatesInc.
HDFC Sales
HDFC Sales is a subsidiary of HDFC Ltd. It was created with the aim of providing
doorstep service to potential clients of HDFC. HDFC Sales offers financial management
solutions to individuals encompassing among other products Home Loans, Life
Insurance, Mutual Funds, Fixed Deposits and property solutions. HDFC Sales valuesintegrity, commitment, teamwork and excellence in customer service. Our most valuable
assets are our Human Resources. We are truly proud that today we have a highly
motivated team of sales persons and that we have the lowest employee turnover rate in
We can see that the sources of funds are increasing every year. For the year 05-06 they
were Rs. 55325.71 and it increased by 26% in the year 06-07, 32% in the year 07-08and by 19% in the year 08-09 to Rs.110109.1 crores.
The main reason for this substantial increase in the funds were
y due to shareholders fund which increased by 99% in the year 07-08 and is
currently Rs.13843.74 crores.
y Reserves and surplus were increased by 102% in the year 07-08 and are
currently valued at Rs.13559.29 crores.
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y Policy liabilities and Loan funds which are the primary sources of funds also
increased 17% and 21% respectively in the financial year 08-09. They are
currently valued at Rs. 9869.68 and 85940.64 crores respectively.
Now coming to the application of funds part we can see that it increased from Rs.55325.71 crores in the year 05-06 to Rs. 110109.1 crores in the financial year 08-09.
The main reasons were:
y Increase in Loans given. They increased by 26% then by 29% and in the year
08-09 by 17% to Rs. 87292.57. the fall in the percentage increase may be seen
as an outcome of the sub prime crisis in the real estate sector.
y Investments also rose by 51% in 06-07, 76% in 07-08 and 29% in the year 08-09
to Rs.19892.68 crores.
y There was a negative change in the net current assets in the year 06-07 and 07-
08. This was because of the reason that there was no :
y increase in the number of employees or offices in these years. But in the
year 08-09, net current assets increased by 30% to Rs. 2021.41 as the
company went into expansion by a small margin.
y Coming to the Fixed assets we can see that there was harldy any major
change in it. It rose from 939.09 in the year 05-06 to Rs 1082.71 crores in the
year 08-09.
y One important point to be considered here is that the goodwill on
consolidation rose by 142% which is a huge margin. The primary reason was the
trust HDFC enjoys and its sound management which made profits during the
recession phase.
Total approvals during the year stood at Rs. 49,166 crores as against Rs. 42,520 crores
in the previous year, representing a growth of 16%. Disbursements during the year were
Rs. 39,650 crores against Rs. 32,875 crores in the previous year representing a growth
of 21%. The demand for individual home loans continued despite the overall economic
slowdown and uncertainty. The average size of individual loans increased to Rs. 15.4
lacs during the year.
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Ratio Analysis
As on 31-Mar-09 31-Mar-08 31-Mar-07
Profitablility
Interest Income/Total Income (%) 83.20 81.60 81.40
Non Interest Income/Total Income (%) 16.80 18.40 18.60
Reported Net Profit/Total Income (%) 11.40 12.80 14.00
Net Interest Income/Total Income (%) 37.80 42.20 42.50
Net Interest Margin (%) 7.50 8.20 7.40
Return Related
ROE (%) 14.90 13.80 17.70
ROA (%) 1.20 1.20 1.30
Leverage & Capital Measures
Customer loans/deposits (%) 69.20 62.90 68.70
Investments/Deposits (%) 41.20 49.00 44.80
Total Liabilities/Networth 12.50 11.60 14.20
Growth (%)
Growth in Interest Income 61.47 52.15 48.55
Growth in Interest Expenses 82.34 53.71 64.78
Growth in Employee cost 71.99 67.51 59.58
Growth in PAT 41.17 39.31 31.08
Growth in Deposits 41.72 47.54 22.40
Growth in Borrowings -- 59.08 --
Per Share
Book Value Per Share (Rs) 344.30 324.40 201.40
Earnings Per Share (Rs) 52.80 44.90 35.70
Dividend Per Share (Rs) 10.00 8.50 7.00
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Products of HDFC Ltd
FIXED DEPOSIT:
Long-term investments form the chunk of everybody¶s plans. An alternative to simply
applying for loans, fixed deposit allows to borrow from their own funds for a limited
period, thus fulfilling needs as well as keeping savings secure. By investing in a HDFC
Ltd Fixed Deposit, money not only stays secure but also accumulates good interest over
the period of deposit. Partial withdrawal from Fixed Deposits before the date of maturity
can help in times of need.
HDFC has been able to mobilize deposits from over 10 lakh depositors. Outstandingdeposits grew from Rs. 1,458 crores in March 1994 to Rs 10,384 crores in March 2007.
Much of this success can be attributed to its strong brand image, superior services,
security and above all, the significant contribution made by HDFC¶s deposit agents.
HDFC has over 50,000 deposit agents and distributes all its retail savings (deposit)
products primarily through this channel.
HDFC has been awarded ³AAA´ rating for its deposits from both CRISIL and ICRA for
the THIRTEENTH consecutive year, representing highest safety as regards timely
payment of principal and interest
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There are various schemes offered under Fixed Deposits. They are listed below:
In 2007-2008 total disbursement of loan was Rs 32874.99Cr in 2008-2009 it increased
to Rs 39650Cr which shows that there was an increase of Rs 6775.01Cr in
disbursement of loan. If we come to deposits of HDFC Ltd total deposits with it in 2007-
2008 were Rs11296.25Cr and in 2008-2009 they were Rs19374.67Cr which means in 1
year it increase of Rs 8078.42Cr. As we compare the past performance of disbursement
of loan of HDFC Ltd since it has started lending loans there have been a continuous
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increase over the years when it started its operations in 1999-2000 at that time HDFC
Ltd disbursed loans of Rs4492.74 Cr and in 2008-2009 it have disbursed Rs 396500Cr.
But in case of deposits the pace is not continuous. In some years it had more deposits
and in some years it had less. HDFC Ltd started its operations in 1999-2000 with Rs
6223.85Cr and now it has deposits of Rs 19374.67Cr. In case of corporate deposits in2007-2008 HFDC Ltd Rs2057.88Cr but in next financial year it had Rs 1561.33Cr of
corporate deposits which means a decrease of Rs 496.55Cr.
Customers can be tension-free about the safety of their deposit money as HDFC Ltd.
utilizes the deposit amounts in the loan disbursement. Their loan products have AAA
rating by CRISIL that stands for the highest level of security and stability. Moreover,
HDFC Ltd. deposit products have FAAA rating from CRISIL which is the highest rating
for a fixed deposit scheme.
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Home Loan Products
1. Home loan
Purchase of:
Flat, row house, bungalow from developers.
Existing freehold properties.
Properties in an existing or proposed co-operative housing society or apartment
owner¶s association.
First Power of Attorney purchases in Delhi for DDA flats allotted before 1992.
Self Construction:
Features:
y Maximum loan 85% of the cost of the property (including the cost of the land) and
based on the repayment capacity of the customer.
y Maximum Term 20 years subject to the customer retirement age.
y Applicant and co-applicant to the loan-Home Loans can be applied for either
individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants applicants need not be co-owners.
2. Home Improvement Loan
2.1 Purpose:
y External repairs
y Tiling and flooring
y Internal and external paintingy Plumbing and electrical work
y Waterproofing and roofing
y Grills and aluminum windows
y Waterproofing on terrace
y Construction of underground/overhead water tank
y Paving of compound wall (with stone/tile/etc.)
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y Borewell
2.2 Maximum Loan
y Existing Customer ± 100% of the cost of improvement
y New Customer ± 85% of the cost of improvementy Subject to market value of the property
2.3 Maximum Term
y 15 years subject to your retirement age
3. Home Extension Loan
3.1 Purpose
y HDFC Home Extension Loan makes it convenient for you to extend or add space
to your home. Be it an additional room, a larger bathroom, or even enclosing an
open balcony.
3.2 Maximum Loan
y 85% of the cost of extension
3.3 Maximum Term
y 20 years subject to your retirement age
4. Short Term Bridging Loan
4.1 Purpose
y Short-Term Bridging loan makes the customer realize their dream of buying a
bigger and better home and gives them time to sell their existing property to pay
off the loan.
y This is a short term loan to help customers with the interim period between the
sale of your old home and the purchase of a new home. They can take the loan
even if they are an existing customer of HDFC.
4.2 Maximum Loan
y 90% of the cost of the new property
4.3 Maximum Term
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y 2 years
5. Land Purchase Loan
5.1 Purpose
y To purchase a plot of land
5.2 Maximum Loan
y 85% of cost of the land and based on the repayment capacity of the customer.
5.3 Maximum Term
y 15 years subject to customer retirement age.
6. Non-Residential Premises Loan
6.1 Purpose
y Purchase, Construction, Improvement of Office, Clinic
6.2 Eligible
y Doctors
y Chartered Accountants
y Lawyers
y Other self-employed professional
6.3 Maximum Loan
y 85% of cost of the property
6.4 Maximum Term
y 10 years Improvement 5 years. Non residential premises maximum term is 15
years, NRP improvement remains 5 years.
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7. Home Equity Loan (Lap)
7.1 Purpose
Loan can be for any purpose. However, the funds should not be used for speculation or
any illegal purposes.
Customers have benefited by taking loans to meet the following funding requirements
y Education
y Marriage Expenses
y Medical Expenses
7.2 Property
y Residential
y Non residential
- Should be Fully Constructed
- Should be a Freehold property having a clear and marketable title
7.3 Maximum Loan
y Existing Customers
Balance of 60% of the market value and present loan outstanding
y New Customers
50% of the market value of the property (including the cost of the land)
y Subject to:
yMinimum Market Value of the property being Rs.5,00,000 for Residential
property and Rs.7.50 Lacs for Non Residential Property
yRepayment Capacity of the customer
7.4 Maximum Term
Property Type Repayment Option No. of Years
Residential EMI Based 15
Non Residential EMI Based 10
Residential and Non
ResidentialSimple Interest 2
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y Subject to retirement age of the customer
8. Top-Up Loan
This product offers an existing resident Indian customer a loan against the mortgage of
the existing property.
8.1 Purpose
y It helps customers in encashing the investment in a house without having to
dispose it off to fund various needs related to Higher Education, Purchase of
Furniture, Business Requirements, etc.
8.2 Maximum Loan
y 60 % of the market value of the property less the outstanding loan
8.3 Maximum Term
y Current loan eligibility.
9.NRI loans (for Professional & Non-professional)
9.1 Purpose
y To purchase a flat
y Extension
y Construction
y Improvement of a dwelling unit
y To purchase a plot
9.2 Maximum Loan
y A maximum of 85% of the cost of dwelling unit (70% for land purchase)
9.3 Maximum Term
y Up to 20 years for Professionals
y Up to 7 years for Non Professionals
For all types of home loans:
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y Loan under Adjustable Rate is linked to HDFC¶s Retail Prime Lending Rate
(RPLR). The rate on your loan will be revised every three months from the date
of first disbursement, if there is a change in RPLR, the interest rate on your loan
may change. However, the EMI on the home loan disbursed will not change*. If
the interest rate increases, the interest component in an EMI will increase andthe principal component will reduce resulting in an extension of term of the loan,
and vice versa when the interest rate decreases.
y Fees
o 1% o f the loan amount applied plus applicable service taxes and cess.
Interest Rates:
Type of Loan Fixed Interest Rate Floating Interest Rate
Home Loan 13.75% 8.75%
Home Improvement
Loan
13.75% 8.75%
Home Extension Loan 13.75% 8.75%
Education Equity Loan 9.75%
Land Purchase Loan 9.25%
Non Residential
Premises Loan
11.25
Home Equity Loan 11.25%
Top Up Loan 10.25%
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Ratios calculated while giving a loan:
y L.C.R. : Loan to Cost Ratio. Max. 85%
y L.T.V. : Loan to Value Ratio.
y I.I.R. : Income to Instalment Ratio. Max. 35% - 40%
y F.O.I.R. : Fixed Obligation to Income Ratio. Max. 50%
EXAMPLE: A person wanting a loan of Rs. 10,00,000 for a period of 20 years @ 8.75%
p.a. for a flat worth Rs. 12,00,000 has a Net salary of Rs. 28,000 and Gross salary of
Rs. 35,000 and also has a car loan on him for which he pays Rs. 6000 as E.M.I. will
have the following ratios:
A loan of Rs. 10 lacs for 240 months @ 8.75% p.a. will have an E.M.I. of Rs. 8838.
L.C.R. :
I.I.R. :
F.O.I.R. :
Thus the applicant is credit worthy to be given the loan in case of fulfilment of other
rules and regulations.
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ADVANTAGES OF HDFC HOME LOAN:
HDFC has been a part of a 30 year journey with 33 lakh customers.
1. Home Loan Counselling
We have been a part of 30 year journey with our 33 Lakh customers. Our home
loan counsellors offer you the time tested advice. Be it legal documentation,
project or builder approvals, and technical advice. HDFC looks forward to sharing
with its customers and this service is absolutely free. HDFC project approval
facility provides its customers the comfort of purchasing properties from builders
who have complied with all basic documentation.
2. Door to Door Service
HDFC offers door step service. Various Sales Executives assist customers for this service. HDFC helps its customers to find their dream home. Customers can
buy, sell, lease residential or commercial properties through HDFC Realty.
3. Wide Product Range
HDFC provides loans to meet all the requirements that a customer might have to
make a plot of land their home. Home Loans, Home Improvement Loans, Home
Extension Loans, Loans to professionals for office or clinic, Home Equity Loans
(Loan against Property), Loan against Rent receivables, Short Term Bridging
Loan. Loans are available on either adjustable or fixed rate.
4. Wide network of financing
With over 200 offices, 90 outreach programs, HDFC is capable of providing
home loans in over 2400 locations in India. Customers can apply at their local
HDFC office for properties in locations where HDFC finances.
5. Post Disbursement Services
Income tax certificate to enable the customers to claim the tax benefits that are
sent to them. This service is provided without a charge.
6. Other facilities:
a. ECS facility
b. Post dated cheques ± no charges for replacement of cheques
c. Loan repayment at any HDFC offices
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Documents required for all loans:
Salaried Customers Self Employed
Professionals
Self Employed
Businessmen
Application form with
photograph
Application form with
photograph
Application form with
photograph
Identity and Residence
Proof
Identity and Residence
Proof
Identity and Residence
Proof
Latest Salary-Slip Education Qualification
Certificate and Proof of
Business Existence
Education Qualification
Certificate and Proof of
Business Existence
Form 16 Last 3 years Income TaxReturns (self and
business)
Business Profile
Last 6 months bank
statementLast 3 years Profit and
Loss and Balance Sheet
Last 3 years Income Tax
Returns(self and
business)
Processing Fee Cheque
Last 3 years Profit and
Loss and Balance Sheet
Last 6 months bankstatement
Last 6 months bankstatement
Processing Fee Cheque Processing Fee Cheque
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Multiple Repayment Option for Home Loans
STEP UP REPAYMENT FACILITY (SURF)
This facility gives loans to customers based upon the increase in their income that one
will have in the future.
FLEXIBLE LOAN INSTALLMENT PLAN (FLIP)
Often customers, parents and their children, wish to purchase properties together. The
parent is nearing retirement and their children have just started working. This option
helps such customers combine the incomes and take a long-term home loan where in
the installment reduces upon retirement of the earning parents.
TRANCHE BASED EMI
Customers purchasing an under construction property need to pay interest (on the loan
amount drawn based on level of construction) till the property is ready for use. To help
customer save this interest, they have introduced a special facility of Tranche Based
EMI. Customers can fix the installments they wish to pay till the time the property is
ready for possession. The minimum amount payable is the interest on the loan amount
drawn. Anything over above the interest paid by the customer goes towards Principal
repayment. The customer benefits by starting EMI and hence repays the loan faster.
ACCELERATED REPAYMENT SCHEME
Accelerated Repayment Scheme offers the customer a great opportunity to repay the
loan faster by increasing the EMI. Whenever they get an increment, increase in their
disposable income or have lump sum funds for loan prepayment, they can benefit by:
y Increase in EMI means faster loan repayment
y Saving of interest because of faster loan repayment
The customer can invest lump sum funds rather than use it for loan prepayment. The
return from the investments also gives them the comfort of paying the increased EMI.
SOURCES OF LOAN APPLICANTS
1) WALK IN :- This refers to the Applicants who apply for the loan by going to the
service centre or regional branch office .They may have come to know about HDFC s
home loan service from any source but this is their first contact with HDFC is in
absence of any intermediary like friends, sales men etc.The applicants who contact
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through or by the Website are also included in the walk in category. Walk-In applicants
are given concessions on fees and charges which is applicable from time to time.
2) CALLCENTRE LEADS: - The callcentre leads refer to the applicants that come in
contact with HDFC through HDFC Bank or through HLSIL .HDFC bank is thebanking section of HDFC which informs HDFC Ltd about persons who it thinks to
needing a loan .HLSIL which has been started by HDFC Ltd and refers to Housing
Loan Services India Limited.
This organization has been especially started by HDFC to assist persons
searching for home loans at easy rates and good service.HLSIL contacts probable
needfuls of home loan, contacts them, explains them the various advantages of an
HDFC home loan and get their loan application filled. Every HDFC service centre
has its own team which is managed by leader who reports directly to the Branch
Manager .In the India habitat centre the HLSIL team is under the leadership of ateam leader who reports directly to Mr. Prashant Malik(Branch MgrIHC /Ranked
2nd in the prestigious National Corporate Challenge 2005 conducted annually by
HDFC )
3) DSAs and BSAs; - These are respectively the Direct selling agents and the
Business selling agents. The DSAs refer to organizations which work in agreement
with HDFC and forwards them the loan requests of applicants they contact or those
that contact them on the other hand BSAs usually forward loan requests and assist
HDFC by forwarding them the names addresses contact nos etc of various probable
needful of home loans BSAs usually are Builders who book houses for sale in the
future they may also include Brokers.
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STAGES OF HOME LOAN PROCESS
HUB
IF NOT OK
OK
LOGIN
Q.D.E
A.P.P.R
D.D.E. + SCAN
L.A.R., T.A.R.,
C.I.B.I.L., F.C.I.
R.O.V.R
D.C.O.V.
SANCTION
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LIST OF ABBREVIATIONS
ABBREVIATIONS EXPANSION
ROVR RECOMMENDED OVER
QDE QUICK DATA ENTRY
APPR APPRAISAL
DDE DETAIL DATA ENTRY
LAR LEGAL APPRAISAL REPORT
TAR TECHNICAL APPRAISAL REPORT
CIBILCREDIT INFORMATION BUREAU
(INDIA) LIMITED FCI FIELD INVESTIGATION
DCOV DOUBLE CHECKING OVER
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COMPARATIVE ANALYSIS OF DIFFERENT
HOUSING FINANCE COMPANIES IN INDIA
Thanks to economic liberalization and ensuing policy changes, the housing finance
industry has undergone a paradigm shift over the last decade. Gone are the days, when
taking a loan meant entering a labyrinth of documentation and dealing with
condescending bank officials. Today, in the backdrop of intense competition, housing
finance companies are falling over each other to woo potential customers. Housing
finance being one of the safest lending avenues has also contributed to the emergence
of new players in the market.
The unique place that a house has in an individual's life plus the high proportion of the
customer's own money in the house provides considerable comfort for home loan
companies. In the present times, people are increasingly taking to credit, because of rising annual incomes and the series of tax sops that have become an annual ritual in
the Union Budget. With the constant rise in demand for residential and commercial
complexes, the growth of the real estate sector in India has witnessed at an exponential
rate over last five years.
Cut-throat competition among Indian housing finance companies has brought down the
interest rates by a few notches.. Today, apart from the resident Indians, even NRI's can
apply for a home loan. An applicant applying for a loan can either opt for fixed or floating
or a combination of both rates. The loan rates of companies today are in between
7.50% to 12 %, depending on the repayment years.
Following are the major players in this sector:y Birla Home Finance Limited
y Bank Of Baroda Home Loan (BOB)
y Canara Bank Home Loan
y Dewan Housing Home Loan
y General Insurance Corporations Home Loan (GIC)
y Housing Development Finance Corporation Home Loan (HDFC)
y HSBC Home Loan
y Industrial Credit and Investment Corporation of India Home Loan (ICICI)
y Industrial Development Bank of India Home Loan (IDBI)y Life Insurance Corporation Home Loan (LIC)
Finance and Aashray deposit. DHFL Home Loans are offered to individuals, co-
operative societies, corporate bodies and associations of persons. The maximum loan
offered by DHFL can go up to Rs 1 crore and the home loan finances up to 85%maximum of the cost of the property. In the following lines, we have provided in detail
analyses of DHFL's home loan.
Determining Factors For Loan Amount
y Repayment capacity
y Age
y Educational qualifications
y Stability and continuity of income
y Number of dependents
y Co-applicant's income
y Assets
y Liabilities
y Saving habits
Types Of DHFL Home Loans
y DHFL's Home Improvement Loans are offered to individuals to facilitate
renovation and repairing of homes. The tenure of the loan ranges from 1 to 10
years.
y DHFL's Home Extension Loans are offered to individuals, who want to extend the
existing accommodation by adding a room/bathroom/kitchen/prayer room. The
tenure of the loan ranges from 1 to 20 years.
y NRI Home Loans are offered to Non Resident Indians (NRIs), who wish to
purchase, construct, improve or extend their home. The tenure of the loan ranges
from 1 to 15 years.
y DHFL's Mortgage Loans are for professionally qualified individuals, who are
salaried or self employed. It is given against the mortgage of their residential
property. The tenure of the loan ranges from 1 to 7 years.y DHFL's Non Residential Property Loans (NRPL) is aimed at professionals such
as doctors, chartered accountants, architects and solicitors among others. The
loans would help them either buy or construct a property to operate their lines of
business. The tenure of the loan ranges from 1 to 10 years.
Common Factors In All Home Loans
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y The maximum loan offered by DHFL can go up to Rs 1 crore, but not exceeding
85% of the cost of the extension.
y The term however does not extend beyond the retirement age or 60 years
whichever is earlier (65 years for the self employed individuals).
y Prepayment of the loan partly or fully, is permitted subject to payment of nominalfees / charges, as stipulated by DHFL.
Samarth (Home Loan For Self Employed)
This is a special type of home loan initiated by DHFL, especially for the self employed.
One of the most ignored housing finance communities, self employed are a generally
rejected lot, as they have variable monthly income (some months with no income at all)
and even if they have the money, they do not have the necessary documentation to
prove the same. As such, DHFL has pioneered a process, which facilitates the
assessment of income through an independent source, other than the income tax
authority.
Eligibility Criteria
y The self employed person should be more than 18 years and less than 65 years
of age.
y The applicant is self employed /trader or engaged in service industry.
y The applicant should have been in the same line of business for a minimum
period of 5 years or should have inherited the business from parents.
y
The applicant should be able to contribute at least 40% of the total sum required.y Sales Tax Registration or any other registration of business required by statutory
authorities / local laws is mandatory.
y The business premises should be owned / inherited.
y Business premises should not be on encroachment land without title to property
or deviated in construction from approved plans.
3. GIC Home Loan
GIC Housing Finance Limited was established as 'GIC Grih Vitta Limited' on December
12, 1989 with the objective of granting housing loans to individuals and to
persons/entities engaged in construction of houses/flats for residential purposes. GIC
Housing Finance was promoted by the General Insurance Corporation of India, along
with financial institutions like UTI, ICICI, IFCI and HDFC. GICHFL has presence in 23
locations across the country for business. It has got a strong marketing team, which is
further assisted by sales associates (SAs). The company also has tie-ups with builders
to provide finance to individual borrowers. To get in detailed information about the
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various types of loans, read through the following lines.
Types Of Home Loan
Fixed Scheme GIC Fixed Scheme allows applicants to draw a maximum loan amount of 50 Lakhs,
against fixed rate of interest. As per this type of home loan, the rate of interest remains
unchanged for the entire duration of the loan. It will not be affected by any fluctuation in
the rate of interest in the market i.e. even if the rate of interest drops or rises. The
minimum and maximum tenure of repayment for such type of loan is 5 to 20 years.
Floating Scheme
GIC Floating Scheme allows applicants to draw a maximum loan amount of 50 Lakhs,
against floating rate of interest. In this scheme, the interest rate on the loan varies from
time to time depending on the Prime Lending Rate fixed by the Reserve Bank. The
minimum and maximum tenure of repayment for such type of loan is 5 to 20 years.
Flexi-Fixed Scheme
GIC home loans also provide the option of Flexi-Fixed rates of interest. In such a
scheme, applicants can avail the option of having their loan requirement split up into two
portions, one portion with a Floating rate of interest and the other with a fixed rate of
interest. The ratio of Floating to Fixed is purely dependent upon the convenience and
desire of the applicant, but care would be taken to round off the respective amounts to
the next upper Rs. 1000/-. A maximum loan amount of 50 Lakhs is sanctioned. Theminimum and maximum tenure of repayment for such type of loan is 5 to 20 years.
Step Up/Down Schemes
GIC's Step Up/Down schemes are unique for the flexible repayment options. Borrowers
have the option to pay smaller amounts (EMI) initially and proportionally larger amounts
(EMI) during the later part of the tenure of the loan or vice-versa. Thus, these schemes
benefit both aspiring individuals moving up the career ladder and seasoned executives
approaching their retirement age. A maximum loan amount of 50 Lakhs is sanctioned,
under this scheme. The minimum and maximum tenure of repayment for such type of
loan is 5 to 20 years.
Mortgage Scheme
This type of home loan is given against property and is simed at solving only the
commercial purpose of the borrower. The maximum loan amount sanctioned for this
type of scheme is 50 Lakhs, against floating rate of interest. The applicants, in this
scheme do not have the facility of Step up/Step Down or Zig Zag Mode of Payment. The
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minimum and maximum tenure of repayment for such type of loan is 5 to 10 years.
There is no free insurance cover against this loan.
Eligibility For Loan Amount
y The amount of loan repayment that you can afford to make every month.
y A percentage of the cost of the property.
y Existing loan would affect the repayment capacity, thereby affecting eligibility
criteria.
y The age should not exceed 60 years (as per the retirement age defined at the
firm) for salaried employees and not exceed 65 years for self employed
professionals.
4. IC
IC
I Home LoanSince making its maiden venture in the home loan segment in 1999, ICICI Bank has
been breathing down the neck of market leader HDFC, with its aggressive marketing
strategy. Quality and value-added service - rather than interest rate - have been the
hallmark of ICICI, with the company capitalizing on the absence of `door delivery' for
housing loans. In a marked shift from the existing industry norms, ICICI carved a niche
for itself by going to the potential borrower rather than waiting for him to come to them.
Check out more information on the housing loans provided by ICICI bank.
ICICI Housing Loans
Products
y ICICI 'MaxMoney' Home Loans offer the unique advantage of higher loan
eligibility, with a lower initial installment. One can get up to 30% higher amount
against one's current income and the installment amount gets stepped up over
the years.
y ICICI 'SmartFix' Home Loans combine the safety of fixed rates plus the
advantages of floating rates. For the first 3 years the borrower gets a fixed
interest rate and the fourth year onwards, the loan gets switched to the prevailing
floating interest rate.
y ICICI Bank offers Home Improvement Loans for renovation /refurbishment of
one's home. One can avail of loan up to Rs. 50 Lakhs and the interest rate is
same as that of the Home Loans. The loan covers up to 70% of the cost of
improvement and the repayment period is 15 years.
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Features
y ICICI bank offers home loans for the first purchase in ready construction, under
construction property, purchase in re-sale, self construction and extension of
existing living space.y The loan amount can be up to 80% of the Cost of Property.
y The applicant can conveniently repay the loan over a period up to 25 years.
y The bank provides the choices of both Floating rate of Interest or at the Fixed
rate of Interest or at the combination of both Fixed & Floating rates, for the
repayment of the home loan.
Eligibility
y The loan must terminate before or when the borrower turns 65 years of age or before retirement, whichever is earlier.
y The applicant must be 21 years of age, at the time when the loan amount is
sanctioned.
y The applicant must be either self employed or salaried individual, with a regular
source of income.
y An Indian resident, whether salaried or self-employed, can apply for ICICI Home
Loan. In case if the applicant is an NRI, he/she should be salaried.
Documents Required
For Salaried Applicant
y Duly Completed Application Form with One Passport Size Photograph
y Identity, Residence Address and Age Proof
y Fee Cheque
y Signature Verification Proof
y Last 3 months Salary Slip
y Form 16
y
Bank Statement for last 6 months from Salary Accounty Repayment Track record of existing loans / Loan closure letter
For Self-Employed Applicant
y Duly Completed Application Form with One Passport Size Photograph
y Identity, Residence Address and Age Proof
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y Income Tax Return / Computation of Total Income / Auditors Report / Balance
Sheet / Profit & Loss Account certified by Chartered Accountant for last 2 years
(3 years for Home Equity) (both for business and personal of partners/directors)
y Bank Statement for last 6 month from operating account
y Repayment Track record of existing loans / Loan closure letter y Board Resolution in case of a company
y Signature Verification is required to be provided for all the main partners /
directors.
Benefits
y ICICI home loans come with benefits like easy interest rates, simplified
documentation, doorstep service and free personal accident insurance.
y The facility of 'Loan On Phone' is beneficial for salaried or self-employed
residents of India, applying for an ICICI Home Loan. The facility provides easy
loan to the customer, with minimum documentation.
5. IDBI Home Loan
IDBI is one of the premier lending institutions in the home loan segment in India. The
bank provides home loans for constructing a home, purchasing a ready built house/flat,
residential plot and for re-financing existing loans the customer may have availed from
other banks or housing finance companies. In case you want to construct or purchase
your dream home, then you can resort to avail the home loan facility, then approachIDBI bank, complete few simple formalities and submit the required documents. To
know more about IDBI Home Loan, go through the following lines.
IDBI Housing Loan
Eligibility
y To qualify for a home loan sanctioned by IDBI, the applicant (resident Indian) has
to be a salaried employed, with regular source of income.
y The applicant can also be self employed or a businessperson, residing in India.y NRIs are also eligible to apply an IDBI Home Loan.
Documents Required
For Salaried Applicant
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y Completed Application Form with one Passport Size Photograph
y Identity and Residence Proof
y Latest Salary Slip
y Form 16
y Last 6 months Bank Statementsy Processing Fee Cheque
For Self-Employed
y Completed Application Form with one Passport Size Photograph
y Identity and Residence Proof
y Education Qualifications Certificate and Proof of Business Existence
y Business Profile
y Last 3 years Profit/Loss and Balance Sheet
y Last 6 months Bank Statements
y Processing Fee Cheque
Features
y The tenure of an IDBI home loan can be up to 25 years for a resident Indian. For
NRIs, the tenure of the home loan is 15 years.
y The bank finances up to 90% maximum of the property value subject to credit
discretion.
y Loan repayment can be done through Equated Monthly Installments (EMIs)
comprising both principal and interest.
y IDBI housing loans come with IDBI insurance cover, which is a group life
insurance protection scheme. Under this scheme, the borrower can insure
himself up to the amount (maximum Rs 50 lakhs) and tenure (maximum 25
years) of the loan availed. This risk cover is made available in specially
discounted insurance premium rates.
y The common parameters considered for the sanction of an IDBI Home Loan shall
include the applicant's age, income, number of dependents, financial stability and
the co-applicant's income.
y The attractive rate of interest makes IDBI Home Loan one of the attractiveproducts of the bank.
Benefits
y IDBI Home Loan customers enjoy the flexibility of choosing between Floating or
Fixed interest rate.
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y The bank provides personalized doorstep service for a hassle-free experience.
y Other assorted benefits of availing a home loan from IDBI bank include legal and
technical assistance, and reassessment and adjustment of applicant's loan
eligibility in case of change of income and residence status.
y The bank provides legal and technical assistance to its customers.y Maximum funding is one of the key benefits of IDBI Home Loans.
y Simple documentation enables the applicant easier to repay and complete all the
formalities for the sanction of the loan.
y In case of change of income or the residence status, the applicant's loan
eligibility is reassessed and adjusted, which is another benefit of IDBI Home
Loan.
6. LIC Home Loan
LIC Housing Finance Limited is one of the leading players in the home loan segment.
Incorporated on June 19, 1989 and promoted by the Life Insurance Corporation of India,
LIC Housing Finance Limited boasts of an extensive distribution network and a massive
brand presence, by virtue of being one of the earlier entrants in the market for housing
loans. LIC offers home loans for construction/purchase of house/flat and for renovation
of existing flat/house as well. To know more about LIC Home Loan, go through the
following lines.
Life Insurance Corporation Of India Housing Loans
Products
y LIC Griha Prakash and Griha Laxmi loans are for purchase and construction of
properties and the maximum loan offered can go up to Rs 1 Crore. In both the
cases, the home loan finances up to 85% maximum of the cost of the property,
which is inclusive of agreement value, stamp duty and registration charges.
y LIC Griha Sudhar Loan facilitates repairs/renovation of properties. The maximum
loan amount can be up to Rs.10 lakhs and the loan to property cost won't exceed
85% of Cost of Repairs or 25% of Market Value of Property, whichever is lower.
y LIC Griha Prakash loans are meant for extension of residential units and the loan
amounts range from Rs. 25,000 to Rs.1,00,00,000. The company finances up to
85% of the total cost of the property including Stamp Duty and Registration
Charges. The maximum repayment period can be up to 20 years or retirement
age or 70 years of age, whichever is earliest.
y The minimum loan amount of LIC Griha Shobha is Rs. 500000. The maximum
loan term for a non-professional applicant is 10 years, while it is 15 years for a
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professional. The product offers the facility of Equated Monthly Installments
(EMI) to its applicant.
Eligibility
y The net income of salaried as well as self-employed applicant should be Rs
150000 per annum.
y The minimum age limit for salaried employee is 25 years, while the maximum
age limit is 58 years. On the other hand, a self-employed person can apply for
LIC Home Loan, between the age of 21 and 70 years.
y In case if the applicant is an NRI, he/she should have a valid Indian Passport.
Documents Required
y Completed application form for the sanction of LIC Home Loany Copy of sanctioned plan and sanction letter.
y Copy of NA permission/ULC clearence, wherever applicable
y One guarantor form and his/her salary certificate in our format.
y If guarantor is in business or profession, a copy of his/her latest
I.T.returns/assessment order is required.
y Bank Pass-book or statements for the last two years
y Power of Attorney, wherever applicable
y In case the applicant purchases house from a builder, then he/she has to provide
a copy of Agreement for Sale, copy of Registration Receipt, Copies of Receipts
Of Payment already made and NOC from builders.
Additional Requirements
For Salaried Employees
y Employer's salary certificate in our format/and latest salary slip.
y Identity card of applicant
y TDS certificate of applicant
y PF/ESIS slip of applicant
For Businessmen Or Self-Employed Applicant
y Three years' income tax returns/assessment orders along with computation of
income and statements of accounts certified by C.A.
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7 . PNB Home Loan
PNB Housing Finance Limited is a wholly owned subsidiary of Punjab National Bank,
one of the leading nationalized banks of India. PNB provides a wide array of home
loans to address varied customer needs. The bank provides loans to individuals against
mortgage of their existing residential immovable property situated in urban/semi-
urban/metro centers. By mortgaging their existing immovable property, borrowers can
avail of loans for purposes such as education, marriage of children, family function,
foreign travel, medical expenses etc. Go through the following lines to get information
on PNB Home Loan.
Punjab National Bank Housing Loans
Products
y PNB Apna Ghar Yojana home loans are meant for construction or for
acquisition/purchase of house/flats. The minimum loan amount would be
Rs.50000 and maximum loan amount depends on the repayment capacity of the
borrower. In case of joint application, income of borrowers /co-borrowers is
clubbed together for calculation of loan eligibility. The loan repayment is in
Equated Monthly Installments (EMI) over a maximum period of 20 years.
y PNB Ghar Sudhar Yojana home loans are offered for up gradation, renovation or
repair of house/flat. It includes among others, internal and external repairs, water
proofing, roofing, flooring, electrical, woodwork etc. The loan amount ranges froma minimum of Rs 50,000 to a maximum of Rs. 1000000. Borrower's minimum
contribution will be 25% of the estimated cost of repairs/renovations.
Features
y PNB provides home loans for the construction or purchase of house/flat,
purchase of house/flat on First Power of Attorney basis from the original allottee.
y The home loan can also be availed for carrying out repairs, renovations,
additions, alterations to the existing house or flat of the applicant.
y A special feature of PNB Housing Loan is that it provides life insurance cover on
payment of one time premium.
y The bank finances 75% money required for the construction of house or for the
purchase of house/flat.
y If an individual avails home loan from the bank for the purpose of
repairs/renovation/additions/alterations of his/her home, then 75% of the
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estimated cost is financed by the bank, subject to a maximum limit of Rs 20
lakhs.
y The bank provides loan up to Rs 20 lakhs for the purchase of land or plot.
y If the applicant wants to furnish his/her house, then he/she can opt for PNB
Home Loan and avail of a maximum of Rs 2 Lakh loan amount.
Eligibility
y To qualify for PNB Apna Ghar Yojna, the applicants (residents of India or NRIs)
should be in a permanent service or having their own business.
y In case of service class, the age of the applicant should not cross 60 years, while
the maximum age limit for the applicant if he/she is business person or self-
employed is 65 years, at the time of the sanction of the loan.
y The self-employed or business person, not exceeding 60 years of age can apply
for PNB Ghar Sudhar Yojna.
8. SBI Home Loan
State Bank of India (SBI), the largest nationalized bank in India, is one of the market
leaders in the home loan segment. Apart from its myriad products and services, SBI
offers home loans for a variety of purposes, including purchase/construction of new
house/flat, purchase of an existing house/flat, purchase of a plot of land for construction
of house and extension/repair/renovation/alteration of an existing house/flat. SBI home
loans come with some unique features that make them stand out in the competition.Besides the standard package of home loans, SBI has some customized home loan
products in its kitty, which address the needs of niche customer segments. Explore the
article to know all about State Bank of India housing loans.
SBI Housing Loans
Features
y SBI Home Loan provides no cap on maximum loan amount for the
purchase/construction of house/flat.y There is an option to club the income of the applicant's spouse and children to
compute the eligible loan amount.
y The bank provides free personal accident insurance cover.
y A complimentary international ATM cum Debit card is also provided by SBI.
y On the spot "in principle" approval is a special provision for the applicant.
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y If all the required documents are submitted by the applicant, SBI Home Loan is
sanctioned within 6 days of the date of submission.
y The applicant can also consider SBI's Home Loan as a Term Loan or as an
Overdraft facility, in case he/she wants to save on interest and maximize gains.
y SBI Home Loan also provides free personal accident insurance cover up to Rs40 Lakhs.
y Repayment is permitted up to 70 years of age, which is an added advantage of
SBI Home Loan.
Products
y 'SBI-Flexi' Home Loans are designed to enable borrowers to hedge their Home
Loan against unfavorable movement in interest rates and gives the customers a
one time irrevocable option to choose one of the three customized combinations
of fixed and floating interest rates.
y 'SBI-Freedom' Home Loans are customized for high net worth individuals and
offer benefits such as 100 per cent finance of the project and no mortgage of the
property, provided the individual could show liquid securities such as LIC policies
or NSCs.
Eligibility
y The minimum age of the applicant is 18 years, on the date of the sanction of the
loan.
y The maximum age limit for a Home Loan applicant is 70 years. It is the maximum
age limit, within which the loan should be fully repaid.
y The applicant should consist of sufficient, regular and continuous source of
income for repaying the loan.
Documents
y Completed Application Form with one Passport Size Photograph
y Identity Proof - the applicant can make use of his/her PAN Card/Voter ID/
Passport/Driving License, for the purpose.
y Residence Proof - the applicant can make use of his/her Recent Telephone Bill/
Electricity Bill/Property tax receipt/Passport/Voters ID
y Proof of business address in respect of businesspersons/ industrialists
y Sale Deed, Agreement of Sale, Letter of Allotment, Non Encumbrance
Certificate, Land/Building Tax paid receipt etc.
y Copy of Approved Plan and approval from the Local Body
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y Statement of Bank Account/ Pass Book for last 6 months.
9. Axis Bank Home Loan
Features and benefits of Axis Bank Home Loan
Attractive Home loan rate of interest
Balance Transfer Facility
You can choose between floating rate of interest and fixed rate of interest
Loan can be sanctioned if you want to purchase any residential plot or a new
2. Finance Company: S.B.I. and Dewan Housing Finance Ltd.
Interest Rate 8.5% Monthly
EMI Rs 9847/-
REPAYMENT SCHEDULE
Years Principal
(Start)
Interest Principal
Repayment
Principal
(End)
Total Annual
Repayment
1 1000000 83677 34492 965508 118169
2 965508 80628 37541 927967 118169
3 927967 77310 40859 887108 118169
4 887108 73698 44471 842638 118169
5 842638 69767 48401 794236 118169
6 794236 65489 52680 741557 118169
7 741557 60833 57336 684221 118169
8 684221 55765 62404 621817 118169
9 621817 50249 67920 553897 118169
10 553897 44245 73923 479974 118169
11 479974 37711 80458 399516 118169
12 399516 30599 87569 311947 118169
13 311947 22859 95310 216637 118169
14 216637 14435 103734 112903 118169
15 112903 5266 112903 0 118169
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3. Finance Company: P.N.B. Housing Finance Ltd.
Interest Rate 9.25% Monthly
EMI Rs 10292/-
REPAYMENT SCHEDULE
Years Principal
(Start)
Interest Principal
Repayment
Principal
(End)
Total Annual
Repayment
1 1000000 91151 32352 967648 123503
2 967648 88028 35475 932174 123503
3 932174 84604 38899 893275 123503
4 893275 80850 42653 850621 123503
5 850621 76733 46770 803851 123503
6 803851 72218 51285 752566 123503
7 752566 67268 56235 696331 123503
8 696331 61840 61663 634668 123503
9 634668 55888 67615 567052 123503
10 567052 49361 74142 492911 123503
11 492911 42205 81298 411612 123503
12 411612 34358 89145 322467 123503
13 322467 25753 97750 224717 123503
14 224717 16318 107185 117531 123503
15 117531 5972 117531 0 123503
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4. Finance Company: G.I.C. Housing Finance Ltd.
Interest Rate 10.5% Monthly
EMI Rs 11054/-
REPAYMENT SCHEDULE
Years Principal
(Start)
Interest Principal
Repayment
Principal
(End)
Total Annual
Repayment
1 1000000 103630 29018 970982 132648
2 970982 100432 32216 938766 132648
3 938766 96882 35766 903000 132648
4 903000 92940 39708 863292 132648
5 863292 88564 44084 819208 132648
6 819208 83706 48942 770267 132648
7 770267 78312 54335 715931 132648
8 715931 72325 60323 655608 132648
9 655608 65677 66971 588637 132648
10 588637 58296 74352 514285 132648
11 514285 50102 82545 431739 132648
12 431739 41006 91642 340097 132648
13 340097 30906 101742 238356 132648
14 238356 19694 112954 125402 132648
15 125402 7246 125402 0 132648
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DETAILED ANALYSIS BETWEEN HDFC & SBI
Basis HDFC SBI
Processing Fees 0.5% of Principal Amount 0.5% of Principal Amount
Home loans for Society or
Avas Vikas/LDA
Avas Vikas/ LDA and Society Avas Vikas/ LDA
Slab Rates Amount < 30 Lakhs ± 8.75%
Amount > 30 Lakhs ± 9.00%
Amount<30Lakhs ± 8.5%,
Amount >30 lakhs 8.75%
Legal Procedures Contract signed by both the
parties
Contract signed by both
the parties
Technical Fees No technical fees No technical fees
LCR/LTV rates 85% of value of property 85% of value of property
Loan given on Net/Gross
Income
Gross Income Net Income
Default Penalty 1.5 per month on default
amount
1.5 per month on default
amount
Loan Sanctioning Time 7 to 10 days 7 to 10 days
Repayment Procedures Part payment or payment inwhole
Part payment or paymentin whole
Maximum age for loan
repayment
65 years 60 years(salaried), 70
years(self employed)
Conversion Fees 0.5% of Principal Amount 0.5% of Principal Amount
Hidden Costs No Hidden Costs Default Penalty after a
month is increased to 2%
Prepayment Charges 2% 2%
Governing Body National Housing Board Reserve Bank of India
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ANALYSIS & FINDINGS OF THE STUDYy HDFC Ltd. is the leader in the Home Loan Market, having a market share of
35%, followed by SBI and ICICI Bank Ltd. with 22% and 20% respectively.
y The main competitors of HDFC Ltd. are SBI, ICICI Bank Ltd. and PNB Housing
Finance Ltd.
y In future it may also face stiff competition from Axis Bank Ltd. and BOB Housing
Finance Ltd.
y SBI has an advantage of high level of reach to customers, including both urban
and rural people and especially in the rural area.
y
The loan procedure of HDFC Ltd. is so effective and complete that the defaultrate of HDFC Ltd. is lowest as compared to other Housing Finance
Corporations.
y The main reason of this is due to availability of sound and quality manpower.
y HDFC Ltd. has only 1506 number of employees, because of which the employee
turnover ratio is very high.
y HDFC Ltd. employees works on a software built by their own employees, from
the I.T. department, on Oracle which helps them to work efficiently and also
notifies immediately in case of any default.
y In terms of interest rates, its main competitors are SBI and other private players
like Dewan Housing Finance Ltd. which offer home loan at interest rate as low
as 8.00%.
y HDFC Ltd. has a good brand image in the minds of customers.
y Most of the customers are not aware of the products of HDFC home loans.
y Some of the customer¶s felt that the interest rates are high. However, as we
analyzed this was primarily due to lack of awareness on the part of the
customers. Customers were not aware of the governing body of HDFC which
is National Housing Board (NHB) and not Reserve Bank of India. HDFC is
governed by NHB because it is a non banking financial company. Despite of
this, some customers were understanding of the current high interest rate asthey were aware of the current economic situation and also that this was not
under control for HDFC.
y Some of the customer not having good faith on private banks.
y Most of the people are directly go to HDFC to apply a home loan due to its brand
image.
y Customer awareness is medium about HDFC products.
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y HDFC LTD providing good services to their customers.
y There is a high scope of home loans in the rural sector, but still rural people are
reluctant to take loans from corporations and banks because of documentation
involved as majority of them is ill-literate.
y The sales team of HFDC Ltd. does not indulge in any unethical practices just for
the sake of achieving targets. They are a part of the company and not
outsourced as in case of some private banks. Same goes for the recovery team
of HDFC Ltd.
y The legal team consists of lawyers who are appointed by HDFC Ltd. only. This
leads to a fair legal valuation on the part of legal assessment.
y Quality of portfolio of loans is also very good. HDFC Ltd. does not entertain any
dubious or risky cases.
y After (post) disbursement services of HDFC Ltd. are one of the main factors
which not only distinguish it with other H.F.C.¶s but also give it an upper edgefrom others. The customers are made feel welcome when they come to deposit
P.D.C.¶s or come for I.T. Statements which is not the case in other banks, where
I personally saw some customers waiting for hours to get I.T. Statement.
y HDFC Ltd. are the market leaders in home loans. Most of H.F.C.¶s finance those
projects which are approved by H.D.F.C. Ltd. first.
y The post disbursement services of HDFC are also very good and are one of
the most differentiating factors when compared to other Housing Finance
Corporations.
MARKET TRENDS
The housing sector is witnessing a clash between major players. HDFC has ruled
this sector with a lion¶s stranglehold for all these years, but since the entry of ICICI
home loans and other banks and private players the market share has gone on
decreasing for HDFC. But still it has the majority share i.e. of 35%.
However the industry is witnessing a boom at present boosted by generous budget
sops. Growth has been largely concentrated on urban areas and in the middle to
high income groups, focusing on salaried class. Nearly 25-30 lakh houses are built
every year in India. But, the nations requirement is around 67 lakh houses per
annum. The housing sector in India is facing an estimated shortage of 4.1 crore
houses, which will require an estimated investment of Rs. 170,570 crores.
Recent experience demonstrates that the formal housing finance sector continues to
grow, but still it is elusive for the lower- income groups. This issue needs to be
addressed by the State by taking appropriate measures.
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FUTURE OF HDFC LTD.
HDFC Ltd. has always been market oriented and dynamic with respect to resource
mobilization as well as its lending programme. This renders it more than capable to
meet the new challenges that have emerged. Over the year, HDFC Ltd. has
developed a vast client base of borrowers, depositors, shareholders and agents, andit hopes to capitalize on this loyal and satisfied client base for future growth. Internal
systems have been developed to be robust and agile, to take into account changes
in the volatile external environment.
HDFC Ltd. has developed a network of institutions through partnerships with some
of the best institutions in the world, for providing specialized financial services. Each
institution is being fine-tuned for a specific market, while offering the entire HDFC
customers the highest standards of quality in product design, facilities and services.
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Recommendationsy One of the major problems that came to the forefront was the lack of knowledge
about the governing body of HDFC Limited. Thus, customers should be told
about National Housing Board and how is slightly different from the Reserve
Bank of India.
y Emphasis should be laid upon the differentiating characteristic of HDFC Limited
which is the stability with respect to its employee base. Customers can almost be
certain that they will be dealing with the same employee for the entire term of
their loan. This assures them consistency in their relations with HDFC. Changing
employees is a major concern for a lot of customers and a firm employee base isthe strength of HDFC Limited.
y The value of one to one interaction time with the customers is immense and thus
employees should vouch for personal time with them to understand their needs
and problems better.
y To satisfy their customers and for good dealings in future, the HDFC LTD should
make prompt disbursement of loan amount to the customers so that they
can buy or construct their dream home as early as possible. Turn Over Time
(TAT) issues must be given the highest priority while aiming to provide the
customers with highly satisfying services. There were many complaints regarding
delays in construction and extension loan approval.
y Although the interest rates on specific norms, yet customers seek less interest
rate which can lower their cost of house. So banks should try to lower their
interest rates. Needles to say, that the bank which is having lower interest
rates, have the maximum clients for loans.
y The HDFC LTD should try to provide proper knowledge regarding their home
loan schemes, even to people who don't know about such schemes and
their benefits especially in rural areas. So they should provide knowledge to
the ignorant customers, especially in rural areas and backward urban area
So, above are the main suggestions provided to the HDFC LTD.y To explore new segments such as packages for professionals like doctors. The
prime customers of HDFC Ltd. are salaried individuals. Shifting focus to other
segments will provide productive results.
y Promote online services among customers further by educating them about the
benefits of online transactions. As a majority of dissatisfaction arose due to the
delays occurring in the organization due to heavy customer pressure at the
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HDFC Ltd. office, online solutions like Electronic Clearing System (ECS) must be
made mandatory for customers.
y Interest rate should be charged the same with new as well as the old
customer because it gives a negative impact to the old customer, they thinkthat this is a policy of the company to attract the new customer and no
importance is given to them. Losing an old customer is more costly to the
company than new because they will stop other prospects to take loan from
the company.
y The number of employees should be increased in the branches dealing with
disbursements. Presently, mostly 2 employees are there in every
disbursement branch. It should be increased especially in the last week of
every month as disbursement cases are highest during this time and due to
unavailability of enough staff, customers have to wait for a long period of time, which sometimes leads to dissatisfaction of customers.
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C
onclusion
The housing finance is currently one of the most competitive industries in India where it
is difficult to survive especially after the negative effects of recession which was brought
about by the subprime crisis. With such cut throat competition, it is imperative that
HDFC Limited stands strong and does not lose out upon customers. This can be
ensured by providing customers with what they want and how they want it. In short,
customer supremacy is what is required. With this in mind, HDFC needs to differentiate
itself with the use of this service and continue to forge headstrong into the housing
finance market.
Home loans have long period when compare to other personal loans and other loans.
So peoples are confused to take a home loan. Even though the interest rates are high
peoples are willing to take a loan from HDFC LTD due to the reasons mentioned
above. The interest rates also somewhat high when compare to other banks. The loan
sanction process is also fast when compared to other banks. For disbursement process
is also it will take less time when compare to other banks.
The changes mentioned are minor tweaks that can be brought about in the
operation of HDFC Limited which can help to develop a positive outlook towardsHDFC Ltd..