Project

“COMPARATIVE STUDY ON CONSUMER DURABLE LOANS PROVIDED BY BAJAJ FINSERV LENDING LTD VS CAPITAL FIRST”

A Project report submitted to Jawaharlal Nehru Technological University, Hyderabad, for the award of degree

MASTER OF BUSINESS ADMINISTRATION

By

B.ARCHANA

Reg. No. 11241E0063

Under the Guidance of

Prof. M.SESHAGIRI RAO

Department of Management Studies

Gokaraju Rangaraju Institute of Engineering & Technology

(Affiliated to Jawaharlal Technological University, Hyderabad)

Hyderabad

2011-2013

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OBJECTIVE

● To find out Competitors similar to Bajaj Fin.Serv.ltd

● To find out the best financing services offered by the lenders.

● To Analyze Competitors schemes with reference to Bajaj Fin.Serv’s Products.

● To find out the customer perception about Bajaj Finserv.

PURPOSE FOR THE STUDY

Main purpose of this study is to identify the best finance provider in the consumer

durable goods and to increase the finance penetration

RESEARCH METHODOLOGY

Research methodology is considered as the nerve of the project. Without a proper well-organized

research plan, it is impossible to complete the project and reach to any conclusion. The project

was based on the survey plan. The main objective of survey was to collect appropriate data,

which work as a base for drawing conclusion and getting result.

The study mainly based on primary data. Samples size selected for the study is 100 respondents

of the selected consumer durables Samples are drawn on convenience sampling technique/

method. The data for the study are drawn sample respondents through questionnaires and

schedules. Require information were also collected from dealers, wholesalers, retailers. Collected

information from the sample respondents on consumer behavior on consumer durables are

classified, tabulated & graphed and analyzed in a systematic manner. While analyzing data

simple percentages and ratios are used, and for clear understanding charts like simple bar charts

and column charts are used.

The present study is empirical & analytical in nature. The relevant necessary relevant

information has been collected from sample respondents through questionnaires. The collected

data on consumer behavior on consumer durables are classified, tabulated & graphed and

analyzed in a systematic manner

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RESEARCH DESIGN

Research design is important primarily because of the increased complexity in the market as well

as marketing approaches available to the researchers. In fact, it is the key to the evolution of

successful marketing strategies and programmers.

It is an important tool to study buyer’s behavior, consumption pattern, brand loyalty, and focus

market changes. A research design specifies the methods and procedures for conducting a

particular study.

According to Kerlinger, “Research Design is a plan, conceptual structure, and strategy of

investigation conceived as to obtain answers to research questions and to control variance.

DESCRIPTIVE STUDY

The type of research adopted for study is descriptive. Descriptive studies are undertaken in many

circumstances when the researches is interested to know the characteristic of certain group such

as age, sex, education level, occupation or income.

A descriptive study may be necessary in cases when a researcher is interested in knowing the

proportion of people in a given population

In particular manner, making projections of a certain thing, or determining the relationship

between two or more variables.

The objective of such study is to answer the “who, what, when, where and how” of the subject

under investigation. There is a general feeling that descriptive studies are factual and very

simple. This is not necessarily true.

Descriptive study can be complex, demanding a high degree of scientific skill on part of the

researcher. Descriptive studies are well structured.

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An Exploratory study needs to be flexible in its approach, but a descriptive study in contrast

tends to be rigid and its approach cannot be changed every now and then. It is therefore

necessary, the researcher give sufficient thought to framing research.

Questions and deciding the types of data to be collected and the procedure to be used in this

purpose

Descriptive studies can be divided into two broad categories:

Cross Sectional and Longitudinal Sectional.

A cross sectional study is concerned with a sample of elements from a given population. Thus, it

may deal with household, dealers, retail stores, or other entities. Data on a number of

characteristics from sample elements are collected and analyzed.

Cross sectional studies are of two types: Field study and Survey. 

Although the distinction between them is not clear- cut, there are some practical differences,

which need different techniques and skills.

Field studies are ex-post-factor scientific inquiries that aim at finding the relations and

interrelations among variables in a real setting. Such studies are done in live situations like

communities, schools, factories, and organizations.

 Another type of cross sectional study is survey result, which has been taken by me. A major

strength of survey research is its wide scope. Detail information can be obtained from a sample

of large population .Besides; it is economical as more information can be collected per unit of

cost. In addition, it is obvious that a sample survey needs less time than a census inquiry.

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DATA COLLECTION PROCEDURE

After the research problem, we have to identify and select which type of data is to research. At

this stage; we have to organize a field survey to collect the data.

One of the important tools for conducting market research is the availability of necessary and

useful data.

Primary data

Field survey was conducted for getting the information from consumers regarding

certain aspects of consumer behavior over consumer durables

Secondary data

Details are collected from journals and various literature studies that are important

sources of secondary data

SAMPLING DESIGN

Sampling Method

Simple Random sampling method was adopted for this study.

Sampling Size

Sampling size is 100

LIMITATION OF THE STUDY

The study is confined to the extent of interpreting data which is collected only from 100

respondents of selected consumer durables. As the sample was chosen randomly this

might not be an actual representative of the total population

The study is based on primary data. The respondents are chosen randomly from the

different places of Hyderabad

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LITERATURE REVIEW

CORPORATE CATALYYST INDIA’s research on consumer behavior financing reports that customers who are seeking finance are conscious about interest being charged for white goods there is perceptible shift towards low cost financing schemes. India’s consumer market is riding the crest of the country’s economic boom. Driven by a young population with access to disposable incomes and easy finance options, the consumer market has been throwing up staggering figures. The market share of MNCs in consumer durables sector is 65 per cent. MNC's major target is the growing middle class of India. MNCs offer superior Technology to the consumers whereas the Indian companies compete on the basis of firm grasps of the local market, their well acknowledged brands, and hold over wide distribution network. India officially classifies its population in five groups, based on annual household income (based on year 1995-96indices). These groups are: Lower Income; three subgroups of Middle Income; and Higher Income. Household income in the top 20 boom cities in India is projected to grow at 10 per cent annually over the next eight years, which is likely to increase consumer spending on durables. With the emergence of concepts such as quick and easy loan, zero equated monthly installment (EMI) charges, loan through credit card, loan over phone, it has become easy for Indian consumers to afford more expensive consumer goods.

Key Industry Dynamics

Industry Size : Rs. 350 billion

Key Categories : White Goods, Brown goods and Consumer electronics.

Competitive land scape : Dominated by Korean majors like LG and Samsung in most of the segments

Margin Profile : Low margin, dependant on volumes

Growth opportunities : Lower penetration coupled with increasing disposable income

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Based on study of Ali Hortaçsu (Department of Economics, University of Chicago and NBER), GregorMatvos(University of Chicago Booth School of Business & NBER), Chad Syverson (University of Chicago Booth School of Business and NBER) and SriramVenkataraman (UNC Kenan-Flagler Business School) financial distress affects consumer markets in a profound manner.

The Durable goods channel is a potentially important source of indirect costs of financial distress. Domestic durable goods manufacturers alone account for about 7 percent of U.S. value added, and many other products and services have long-lived “durable-like” elements in their provisions, making them subject to the mechanism described above.

Automobiles, the specific subject of our study, represent a significant fraction of household wealth. They account for about 5 percent of consumption in the U.S.and are the nonfinancial asset most commonly held by households (Bucks et al. (2009)). Prima facie evidence suggests the mechanism does in fact operate in the auto industry: In a 2006 survey, 23 percent of consumers who avoided the “Big 3” (more recently referred to as the “Detroit 3”) brands listed those companies’ financial conditions as a reason for avoidance (J.D. Power (2006)). Moreover, despite the lack of evidence, policy programs aimed at helping U.S. car manufacturers were based on the premise oflargeindirect costs of financial distress, through warranties in particular. Measuring the size of any such effect is empirically challenging, however. While financial distress can reduce the demand for durable goods, causality can also operate in the opposite direction: negative demand shocks affect firms’ cash flows and therefore can induce financial distress. This generic problem has plagued the literature on the effects of financial distress and indirect costs of bankruptcy, whether these indirect costs are from the consumer, supplier, or employee side.Our study, besides focusing on an inherently interesting set of products and firms, can avoid many of these identification issues.

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We study the effect of financial distress on the prices of used cars in car auctions conducted by a major car auction house in the United States from January 1, 2006 to November 14, 2008. We compare shifts in the prices of a manufacturer’s cars to a measure of that manufacturer’s likelihood of bankruptcy.

As we discuss below, we believe our data is rich enough to provide sources ofidentification of the links between cars’ values and their manufacturer’s financial distress that are unlikely to be driven by reverse causation, where price drops lead to distress rather than vice versa.

Looking for such effects in used car auctions holds several advantages over new car markets.Wholesale car markets are very liquid; prices can rapidly adjust to changes in the economic environment.Their decentralized nature makes them less exposed to strategic pricing, and their participants are autodealers who are knowledgeable about the product and the final demand environment. Additionally, unlike a drop in new car prices, a decrease in used car prices does not directly affect manufacturers’ cash flows, decreasing the potential for reverse causality.

Titman (1984)& researchers have reportedthat during boom period consumer durable buyers do not care about high interest cost lending whereas during recession lower interest costs are mandatory to increase the white good .

In consonance with the global trend, over the years, demand for consumer durables has increased with rising income levels, double-income families, changing lifestyles, availability of credit, increasing consumer awareness and introduction of new models. Products like air conditioners are no longer perceived as luxury products.

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ABSTRACT

Consumer durable financing is highly influenced by demographic factors, the demographic variables such as Age, Gender, Marital status, Income, Education… affect the purchasing behavior of customers.

Distribution of population with reference to location such as rural, urban, semi-urban also has an impact on purchasing behavior.

Marketers can make better marketing decisions only when they know why and how individuals make their consumption decisions.

If marketers are able to understand the behavior of company precisely, they could consumers are likely to react to various informational and environmental aspects and could shape their marketing strategies in such a way that they can achieve a great competitive advantage in the market.

The objective of the study is find out the important factors which influence the consumer loan purchases and their perception towards lenders with special reference to Bajaj FinServ.ltd.

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LIST OF ABBREVATION

AMFI Association of Mutual funds in India

IRDA Insurance Regulatory and Development authority

TAT Turn Around Time

FCU Fraud Control unit

KYC Know Your Customer

CPV Customer Perceived Value

EMI Equated Monthly Installment

EMI card Existing Member Identity

ECS Electronic Clearing Services

CIBIL Credit Information Bureau India Limited

EDC Electronic Data Capture

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COMPANY PROFILE OF BAJAJ FINSERV LENDING LTD

Bajaj Finance Limited (BFL), formerly Baja Auto Finance Limited, is a diversified non-banking financial company. It is engaged primarily in the business of financing. It provides two and three wheeler financing, consumer durables financing, personal loan cross-sell, personal and small business loans, vendor financing, mortgages, construction equipment finance and infrastructure finance. During the fiscal year ended March 31, 2013(fiscal 2013), its two and three wheeler financing acquired over 5,22,000 customers.

BFL’s Two Wheeler financing was made available across 351 Bajaj Auto dealer locations and 1,170 sub-dealers in India. Consumer durables financing business is present in 71 cities in India. Personal loan cross-sell is present across 81 cities of India. Personal and small business loans business operates in 23 cities in India. BFL launched three new product lines, which include construction equipment finance, retail loans against securities and home loans.

Bajaj Finserv Lending offers loans for various needs and offer loans for Bajaj Auto Two Wheelers under the name of Bajaj Finance Ltd. We offer Consumer Durable Loans, Personal Loans, Loan Against Property, Small Business Loans, Construction Equipment Loans, Loan Against Securities and Insurance Services under the name of Bajaj Finserv Lending.

Bajaj Finserv Lending is one of the most diversified NBFCs in the market catering to more than 5 million customers across the country. Apart from being a well recognized organization, we pride ourselves for holding the highest credit rating of FAAA/Stable for any NBFC in the country today. Our product offerings include Consumer Durable Loans, Personal Loans, Loan Against Property, Small Business Loans, Two-wheeler and Three-wheeler Loans, Construction Equipment Loans, Loan Against Securities and Insurance Services.

Our unique products feature across all categories and offer a compelling value proposition to our customers. Our strong presence in the Indian market for over 23 years has enabled us to establish a strong foothold here and we aim to continuously provide our customers with premium service and exclusive benefits.

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COMPANY STRUCTURE

Change in the name and status of the Company

Name of the Company has changed from ‘Bajaj Auto Finance Limited’ to ‘Bajaj Finance Limited’ consequent to the fresh Certificate of Incorporation issued by the Registrar of Companies, Maharashtra, Pune w.e.f. 6 September 2010. The Company has become a subsidiary of Bajaj Finserv Limited w.e.f. 5 July 2010.

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MANAGEMENT

Board of directors:

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CREDIT RATING

Despite a tough economic environment, the Company managed to retain all its credit ratings owing to high capital adequacy, strong promoter support, tightened credit acceptance criteria and robust asset-liability management. CRISIL has re-affirmed the highest rating of “FAAA/Stable” for the Fixed Deposit program of the

Company. This rating indicates very strong degree of safety with regard to timely payment of interest and principal. The Company is one of the very few

Non-Banking Financial Companies (NBFCs) which enjoy the highest rating.

The Company also enjoys the highest rating of “P1+” from CRISIL and “A1+” from ICRA for Short Term Debt program. The Long Term Non-Convertible Debentures have been assigned “AA+/stable” rating by CRISIL indicating high degree of safety with regard to timely payment of interest and principal and high

Credit quality rating of “LAA+” with stable outlook by ICRA.

The Company has also been assigned “ AA+/ Stable ” rating by CRISIL and “LAA+” with stable outlook by ICRA for ` 400 Crores Lower Tier II Bond programme. As regards the latest Bank Loan Ratings for the bank facilities stipulated by RBI, as a part of BASEL II guidelines, CRISIL has assigned “AA+/Stable” rating for the Company’s Cash Credit/ Working Capital Demand Loan amounting to ` 1,035 Crores and Long Term Bank facilities amounting to ` 2,515 Crores and “P1+” rating for the Short Term Bank facilities amounting to ` 950 Crores.

VISION, STRATEGY AND POSITIONING

Its goal is to be the preferred provider of financing services in the rural and semi – urban areas of India

Its strategy is to provide the largest range of financial services to its consumers through its extensive network of branches, spread out over India

They would like to position themselves as the lucrative option between the organized banking sector and the money lenders, providing their customers with a mix of personalized,flexible and efficient lending services .

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PRODUCT AND SERVICES

Two and Three Wheeler Financing

Riding on the back of robust Two Wheeler sales growth, loan deployment in this segment grew by 49% to 2,034 Crores. The Company acquired over 5,22,000 customers during the year representing 38% growth over the previous year. BFL’s

Two Wheeler financing was made available across 351 Bajaj Auto dealer locations and 1,170 sub-dealers across the country. BFL had launched a Direct Cash Collection model in FY2010 to attract financially responsible customers with no banking habits and history in the semi-urban and rural markets. In FY2013, the Company acquired over 1,57,000 such customers. The competitive environment had remained benign for most part of the year.

Consumer Durables Financing

This business is present in 71 cities across India. Loans disbursed under this segment grew by 118% to ` 2,262 Crores in FY2013, which was higher than an estimated industry growth of 31%. Competition was benign due to the high up-front investments required in distribution, technology and processes to compete in this relatively low ticket size, high volume business. The Company acquired around 9,69,000 new customers, and is present at over 2,000 points of sale across the country. BFL’s strategy of focusing on relatively affluent customers and major dealerships has yielded significant benefits through lower operating costs and improved risk performance. At present, the Company is financing one out of every five LCD and plasma TVs in the country, and finances products of all leading consumer durable manufacturers. It continues to invest in technology to improve its operating leverage, risk performance and offer better consumer finance

Personal Loan Cross-Sell

Present across 81 cities of India, this business targets customers with good repayment history of their Two Wheeler and/or consumer durable loans to cross-sell a personal loan. BFL continued to grow this business in a cautious manner in FY2013, with an eye to optimizing the risk-reward equation and hence profitability. During the year, loan deployment in this segment grew by 66% to ` 375 Crores. BFL financed around 67,000 new customers in the year under review.

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Personal and Small Business Loans

This business operates in top 23 cities across India. Small Business Loan deployments grew by 51% to 663 Crores in FY2013. The Company’s strategy of focusing on affluent small businessmen coupled with its cautious approach has helped it to grow this business in a steady manner. BFL’s relationship model of lending, where knowing the client is paramount for relatively big ticket items, has significantly helped in improved risk performance.

Vendor Financing

The Company started to grow this new line of business in the year under review. It focuses on short and medium term lending needs of vendors of large auto manufacturers. BFL deployed short term loans of ` 1,255 Crores and medium term loans of ` 91 Crores during FY2013.

Mortgages

This business is present across 23 cities of India. It targets affluent and high net worth small business customers, and offers loans against the mortgage of retail, residential and commercial premises. Aided by a strong revival in the mortgage business in the second half of FY2011, the portfolio increased in line with the industry’s growth. Loan against property deployments grew by 35% to ` 1,440 Crores. The Company also launched home loans for affluent and high net worth self-employed customers, and deployments stood at ` 232 Crores in its first half year of launch of this line of business.

Construction Equipment Finance

The Company launched its construction equipment finance business in FY2011. It focuses on financing small, mid and strategic contractors for their construction equipment financing needs. This is asset backed lending, collateralized by construction equipment assets. During the first year of operation, BFL deployed 694 Crores and added some 2,900 customers.

Infrastructure Finance

The Company has started its foray in infrastructure finance business towards the end of the fiscal year.

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BAJAJ FINANCE – INVESTMENT ADVISORY SERVICES AND INVESTMENT PLANNING

At Bajaj Finserv Wealth Management assist clients by preparing a comprehensive financial plan for the long term based on their current investments, savings potential, risk profile and time horizon. This enables clients to assess the future impact of their present and subsequent investment decision

To start with, Bajaj finserv want to serve the growing middle-class segment and help them understand how to manage their savings by taking more informed decisions so that it helps them better plan their financial objectives. It is the objective to give access to the vast population of India, financial advisory services at an affordable cost, which till now, were available only to the high net worth population who were willing to invest large sums of money for receiving financial advice.

The company also provides its clients with regular updates through the several publications that are published by the in-house research team. The entire bouquet of services is available to the clients for a nominal flat fee and the customer has the option to continue availing this every year by paying the annual service fee

The company has started offering personalized solutions to its clients through a network of four branches in Pune, Aurangabad, Chandigarh and Ludhiana and is looking at opening eleven more branches in the next financial year in the Tier I and Tier II cities. The company would continue to expand the network over the next few years and plans to add 10-15 branches every year.

This company has registered itself with the Association of Mutual Funds in India (AMFI) and is empanelled with the large Asset Management Companies as a distributor of mutual fund products. It has also obtained the approval from IRDA and is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited. This makes it qualified to advise clients for their investment and protection needs. All customers who avail of this service and subsequently want to execute their investments through us, have to meet the prescribed Know Your Customer norms.

The subsidiary company, Bajaj Financial Securities Ltd. has also registered itself with the Association of Mutual Funds in India (AMFI) in addition to being a member of the Bombay Stock Exchange, National Stock Exchange and the Central Depository Services Limited, thereby providing its clients, a seamless and a cost effective transaction execution platform for the Indian securities market and to buy and sell Mutual Funds units and also hold their investments in dematerializedform.

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This securities company, through its investment platform, enables its clients with electronic execution of all their investment transactions including units of Mutual Funds and get benefit of a consolidated view of their investments routed through us. The company will also conduct investor awareness and education seminars on a pan India level to further the cause of financial inclusion in the country.

Investment planning focuses on identifying effective investment strategies according to an investor’s risk appetite and financial goals. There is a wide variety of investment options, including shares, bonds, mutual funds, bank deposits, real estate and futures and options. Through investment planning, one can identify the most appropriate portfolio mix.

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FINANCIAL PLANNING:

Financial planning starts with identifying your goals and objectives. Goals are long-term description of a future condition whereas objectives are the short term steps to a goal. Each of your financial goals should have an amount and time frame attached to it. Moreover it is also important to distinguish these goals based on their importance as needs and requirements. This information would help you in determining the returns, which would be required to meet your financial objectives. While determining the required returns attention needs to be given to inflation. Another important factor in the financial planning process is determining your risk tolerance. This refers to the tolerance for the magnitude and the variability of the future returns or loss. The risk tolerance is a combination of your risk taking ability and the willingness to take risk. Risk taking ability is determined by factors like financial position, age and the liabilities while the willingness to take risk is determined by your attitude towards risk.

The next step involves evaluating your current financial position in terms of income, expenditure, assets and liabilities. A budget helps to look at ways to increase income or reduce expenditure so that there are sufficient savings to meet the financial goals. Similarly, it is necessary to determine whether your current asset allocation is in alignment with your risk tolerance and would generate returns, which are sufficient to meet the stated goals. If not, then it would be necessary to modify the asset allocation so that the income generated meets the financial objectives.

The other factors, which you should take into consideration while deciding the financial plan, are the time horizon of investment, the liquidity requirements and your tax status. Generally, lower the time horizon of the investment; lower would be the risk tolerance of the investment. Many times the investment choices are also dependant on the tax concessions available. For example, investments in fixed income made through mutual funds are more tax friendly than direct fixed income investments. Hence, tax benefits offered by an investment product play an important role while deciding on the investment options

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STEPS FOR GOOD A FINANCIAL PLANNING

In summary, good financial planning involves the following key steps

1. Gathering your financial data which includes details of your income and expenses, cash flow, current portfolio of investments and assets and liabilities

2. Identifying your goals and objectives

3. Analyzing current situation and determining if you can realistically meet your financial goals

4. Preparing a financial plan based on your analysis of your attainable needs. This could involve rationalization of expenses, change in the current asset allocation mix and some crucial decisions like postponement of retirement age or tempering down of your lifestyle expectations

5. Implementing the plan is an very important step, problem solved on paper is an useless exercise unless implemented on

6. Periodic reviews, financial planning is an ongoing process and requires regular monitoring and review as financial and personal conditions change over a period of time.

The Bajaj Finserv Wealth Management Advantage

At Bajaj Finserv Wealth Management provide a comprehensive financial planning service offering, which intends to help you keep your finances in shape and achieve most of goals and objectives through a planned financial life cycle. Our service offering comprises of a detailed risk profiling process using a scientific “investment risk’ assessment technique and two comprehensive financial planning packages ‘VALUENHANCE’ and ‘VALUENALYSIS’.

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Risk Profiling

Our risk profiling report is designed from the personal information furnished to us by you. This report gives you a systematic approach that suits you in making your long term financial plan. It gives you an outlook of your current risk profile keeping in view your risk tolerance and your risk taking capacity. You can refer to your risk profile to make future financial decisions.

Once you agree with your risk profile category, we offer you two comprehensive financial planning packages:

VALUENHANCE

VALUENHANCE' service offering will help you assess your current financial health and assist you in preparing a detailed financial plan for achieving your short and long term goals. Our expertise in financial planning and well researched investment recommendations will help you structure your finances so that you do not miss out on any of your major goals. The recommendation you receive will be customized to suit your needs and will be based on the information you provide us during your risk profiling and fact finding process.

The benefits of our 'VALUENHANCE' service offerings are:

Comprehensive financial planning

Customized investment solution as per the determined risk return profile.

Regular access to investment seminars and recommendations from experts

Access to monthly publications

Periodic reviews with financial planners

VALUE ANALYSIS

The 'VALUENALYSIS' service offering will help you assess your current financial health and provide you with a gap analysis between your desired goals and current provisions so as to enable you to prepare a detailed financial plan in the future

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CREDIT PROGRAMS CODE

Program type

(1) Credit card – 2.1

a. Category of card - CAT A , CAT B, CAT C

b. Surrogate Norms : Card to be in the name of the customer and to carry customer’s name , card swipe should be for a minimum amount of 5000 or actual down payment whichever is lower

c. Credit Document : Original charge slip of down payment

(2) MNC companies – 2.2

a. Management levels – Senior, middle and junior management

b. Surrogate Norms : Confirmed salaried individual working in 2000 list of companies or government scale 2 officers

c. Credit Document : Employee id + latest salary slip ( last three months)

(3) 4wheeler – 2.3

a. Category of car - CAT C &D , CAT B, CAT C

b. Surrogate norms : 4wheeler shall be in the name of the customer

Maximum 5 yrs old car are allowed

No funding for vehicles which are used as taxi

c. Credit Documents : RC copy of the vehicle showing ownership

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(4) BAFL RTR -2.5 ( old customers)

a. Surrogate norms : Basic Dedupe logic built in system

b. Credit documents : none

(5) CIBIL – 2.6

a. Surrogate norms: score >=700 – eligible

Score <700 ,-1,0 no match – not eligible , (or) last 6 months bank statement showing min 6 EMI debit with no DPD or EMI dishonor

(6) SALARIED – 2.7

a. Based on salary

For > 50000 loan amnt = Rs.1,00,000

For >25000 loan amnt = Rs.75,000

For >15000 loan amnt = Rs.25,000

b. Surrogate norms should be a confirmed employee of private ,public ,PSU or Govt Department (or) Employees working in proprietorship , net salary should be minimum 4 times of the EMI

c. Credit Documents : latest salary slip + ATM slip showing salary credit (salary slip shall be one in last 2 months)

(7) INSTANT – 2.11

a. Maximum Net Exposure Amount = 35,000

b. Surrogate Norms : Mobile Bill in the name of the customer only, if landline bill is in the name of spouse/parents, relationship proof to be provided

c. Credit Documents : Latest orginal landline/postpaid telephone bill (last two months)

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(8) BANKING SURROGATE – 3.14

a. Maximum net exposure amount = 50,000

b. Profile : self employed

c. Surrogate norms : Account to be in the name of the customer , customer’s name ,address, account no. to be available on bank statement

(9) DEBIT CARD – 2.21

a. CATEGORY OF CARD- CAT A, CAT B ,CAT C

b. Surrogate Norms : Applicable for salaried profile only , Card to be in the name of the customer and to carry customer’s name

c. Credit Document : Original charge slip for down payment , charge slip to carry the name of the customer .

Process for financing a customer for Consumer Durable products in Baja Finserv Lending

Selection of the product by the customer

Customer approaching for the loan

Verification of customer details by the sales executive

Verification of CIBIL score if any

FCU (Fraud Control Unit ) is referred if the sale executive has any doubt with regard to any specific customers

If the details are accurate and if the CIBIL score is matching the requirement that is >=750 then loan can be sanctioned based upon the EMI schemes and offers

Product will be delivered to the customer in a duration of one day gap.

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A FLOW CHART ON THE PROCESS OF FINANCING A PRODUCT OF CUSTOMER IN A SHOWROOM BY BAJAJ FINSERV

Ccd

Status rejected

Status approved

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CUSTOMER SELECTS THE PRODUCT CUSTOMER APPORACHING FOR LOAN

DOCUMENTAION DONE BY SALES EXCEUTIVE with the bases of CREDIT PROGRAM and its respective surrogates

LOGIN FOR APPROVAL

PRODUCT CANNOT BE FINANCED BY BAJAJ FINSERV

CUSTOMER PURCHASES THE SELECTED PRODUCT

PRODUCT IS DELIEVERED TO THE CUSTOMER IN A ONE DAY GAP

ELIGIBILITY AND DOCUMENTRY PROCESS

Eligibility of Customer:

If a customer is said to be a salaried person then their age should be between 21years to 60years or if the customer is a self employed then their age should be 21 to 65years .

9.5 DOCUMENTATION: Documents

Documents required Salaried Self Employed

Photo Id Proof

Residence proof

One Cheque in case of ECS

Credit program specific documents ( Any one of the following)

Credit Card front side photocopy

Visiting Card & Employee Id proof -

Photocopy of RC book (Not applicable for vehicles registered after 2004 & commercial cars)

Bajaj Finserv Lending existing loan Repayment Loan Account Number / Schedule (subject to not later than 18 months old)

Any other Bank/NBFC Repayment Schedule

Salary Slip -

Banking Details (latest 6 months) Account Type- OD/ CC -

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EXTENDEND WARRANTY:

What is Extended Warranty?

Bajaj Allianz' Extended Warranty Policy can be purchased when a customer is buying a consumer durable product. The Extended Warranty covers the cost of repair/ replacement of the consumer durable appliance (i.e. insured asset) arising out of unforeseen defects in material or workmanship with in the policy period.

Features of Extended Warranty

Insurance coverage of upto 12 months after expiry of manufacturer’s product warranty.

Hassle free claim settlement.

Ensures repair at authorized service centers.

Repair as well as replacement costs of the consumer durable appliance are covered.

Fees  & Charges

Amount Financed Slab Processing Fees

Upto 15000/- Rs.499/- to Rs.599/-*

Between Rs.15001/- & upto Rs.30,000/-* Rs.599/- to Rs.699/-

Rs.30,001/- & above Rs.699/- to Rs.799/-*

Other Charges Amount

Foreclosure Charges NIL

PDC Swapping Rs. 500

Bounce ChargesCheque Bounce - Rs. 350 per chequeLate payment penalty - Rs. 150

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HIGH TECHNOLOGY ORIENTAION AND ROBUST RISK MANAGEMENT

High technology orientation and robust risk management is advance work process done in Bajaj finserv lending the usage of today’s technology with high end chambers of work department are the root cause for the success of Bajaj finance among the competitors and stays 1st position in market with people’s choice

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INSURANCE:

If the customer is interested in taking up the insurance then the (documentation process could be rejected)

If the is not interested in taking up insurance then the insurance could be collected in terms of documentation fee

- Other insurance company (5000 premium)

- Bajaj has tie-up with Indian Health Organization and the insurance is paid in connection with EMI ( Equated monthly Installments)

- Minimum insurance to be covered is Rs.1050

- Insurance is made only on age basis

- 12/4 ; 8 months insurance ( according to insurance scheme 5-6years

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EMI CARD ( Existing Member Identification )

Bajaj finance has a unique concept of EMI (Existing Member Identification) Card. Bajaj finance EMI card is to provide existing customers with easy access to consumer durable loan at 0%.

About EMI

EMI card is a closed loop magnetic card that contains all information about customer.

With this card one can “Swipe, sign and Go” with their favorite durables.

With Easy EMI options customers can have durable purchase empowers to get their dream products on the spot without any wait

Benefits & Features

With Bajaj finance EMI one can go for LCD, refrigerator, air-conditioner, washing machine e.t.c. with ease & no additional documentation. Major benefits with Bajaj Finance EMI

Card Are As Follows:

Options available with 0% finance.

No documentation with simple process

Easy& fast process

It also includes Indian Health Organization (IHO) membership.

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Bajaj Finance is collaborated with Indian health Organization that offers Health plan membership to all its bajaj finance limited EMI card members. This membership provides benefit for free/concessional healthcare options that can be availed from high quality medical establishments collaborated with Indian Health Organization.  Services are valid on both treatment & consultation for dental, medical, pathology & radiology practitioners.

Applying For Bajaj Finance EMI Card

If one wants to apply for Bajaj Finance EMI then they need to visit authorized dealers & there they need to apply for consumer durable loan with us after this they become eligible for a bajaj Finance EMI Card. For customers Bajaj finance EMI is simple and most convenient because one just gets the things they want in installments without any interest. One can check out the entire dealers list for bajaj finance EMI card on the website itself for address & other details. Customer care of bajaj finance also provides more information about the centers and EMI card.

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STEP BY STEP PROCESS : “ To use the EMI card “

To use the EMI card a customer has to follow the bellow step by step process

Select your choice of consumer durables

Swipe your EMI card

Enter your 4-digit card PIN

Sales executive will enter the product details on EDC (Electronic data capture) machine as per customer choice

Finally the customer has to sign on loan detail slip

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STEP - 1

STEP - 2

STEP -3

STEP -4

STEP -5

CONSUMER DURABLE:

Consumer durables involve any type of products purchased by consumers that are manufactured for long-term use. As opposed to many goods that are intended for consumption in the short term, consumer durables are intended to endure regular usage for several years or longer before replacement of the consumer product is required. Just about every household will contain at least a few items that may be properly considered to be of a consumer durable nature.

One of the most common of all consumer durables would be the furniture found in the home. This would include items such as sofas, chairs, tables, bed frames, and storage pieces such as chests of drawers and bookshelf units. While once thought to be limited to only items made of sturdy metal or wood, any type of furniture today that is intended for use over the period of at least a few years can rightly be classified as consumer durables.

Another common example of customer durables in the possession of most households is appliances. These items may include ovens, refrigerators, toasters, and gas or electric water heaters. Consumer durables of this type are intended for use on a continuing basis, and often are sold with some type of warranty or service contract that helps to ensure the appliance will continue working for an appreciable period of time.

BENEFITS IN CONSUMER DURABLE LOAN

Part Prepayment facility (applicable following 1st EMI clearance)Now customers can be rewarded for repaying their loan on time and reduce their EMI or tenor or both by using the part prepayment facility .They can prepay up to 6 times in a calendar year at any interval with the minimum amount per prepay transaction being not less than 3 EMI’s and there is no limit on the maximum amount.

0% finance options available (for select schemes)

Simple process with minimum documentation.

On the spot approvals with fastest processing.

Flexible repayment options.

ECS clearing, reducing hassle of arranging cheques.

Pre-approved personal loan offers for existing customers (subject to timely payment of EMI )

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COMPANY PROFILE OF CAPITAL FIRST

Capital First is a provider of Financial service across consumer and wholesale business, with aspirations to grow into a significant financial conglomerate.

Capital First Ltd is a systematically important NBFC with record of consistent growth and profitability. Capital First has a comprehensive product suite to meet multiple financial needs of customers including Consumer Lending. Corporate Lending and Wealth Management services.

Capital First largely focuses on providing financial services to retail and MSME customers.

Capital First aims to be a company focusing and specializing in retail financing businesses.

Towards this end the company has increased its retail financing contribution from 10% in FY10, 28% in FY11, 56% in FY12, and 74% as on march 31,2013. Capital First has loan assets under management of Rs.75 billions as of March 2013.

Capital First has maintained high asset quality over the years.Gross and Net NPA of the company stood at 0.11% and 0.01% respectively as of march 2013.

Capital First has strong distribution network of 180 branches and 1232 employees across India covering 40 cities as of 31 march 2013.

The net worth of Capital First is Rs.9.61 billion as of March 2013. The capital adequacy is 22.84% as of March 31, 2013, after payment of dividend of 18% for the FY 2013.

VISION

To be a leading Financial service provider, admired for higher level of customer service, and respected for ethics, values and corporate Goveranance.

To provide Micro, Small, and Medium Enterprises in India with debt capital and services to support the growth of the MSME sector.

To Finance the growing consumption needs of the Indian consumers,Which is driven by increased affluence, growing aspirations and favourable demographics.

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VALUES

Responsibilty

We respect the fact our investors have entrusted us with their capital, our partners with their faith, our customers with their confidence and our employees with their aspirations. We will measure our success by the success of our stakeholders and will work diligently to ensure that we fulfill our fudiciary responsibility.

Integrity

We firmly believe that the difference between the good business and a great organization is the integrity of its people. We will conduct ourselves ethically and transparently in our dealings, both internal and external.

Leadership

We will maintain an environment which fosters creativity and encourages innovation. We believe that is enable us to attract, retain and nurture the best talent and develop the business thought leaders of tomarrow.

Mutual Respect

We will build an organization which has a positive mindset. By conducting every interaction with respect and consideration. We create a self reinforcing culture of success.

Community

We believe that it is our responsibility to contribute to the environment in which we operate. By investing in our community, we will not only improve our surroundings today, but also provide better opportunities for future generations.

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PRODUCTS OFFERING

CONSUMER DURABLE LOANS

Capital First provides financing for consumer electronics goods like LED, LCD TV s, Washing machine, laptop, furniture through easy EMIs to Salaried and Salaried Self employed customers.

FEATURES

Affordable EMI Low Down payment Speedy processing

ELIGIBILITY

ELIGIBILITY SALARIED SELF EMPLOYEDMinimum Age 18 years 21 yearsMinimum Work Experience 6 Months 2 YearsIncome Eligibility As per form16 As per ITR

DOCUMENTATION

Latest photograph Photo identity proof Address proof Income documents Bank continuity

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GOLD LOANS

Gold makes for a very viable investment as its value keeps rising. Capital First can provide loans up to Rs.10 Lacs with customized repayment options.

FEATURES

Loans up to Rs.10 lacs Customized repayment options such as EMI holidays and Bullet payments Avail of tenures up to 12 months

ELGIBILITY

Above 21yearsof age when the loan is sanctioned The loan must terminate before or when you turn 65 yrs of age or before retirement,

whichever is earlier Must be employed or self employed with regular source of income Gold purity has to be 20 karat and above

DOCUMENTATION

Photograph Photo identity proof Signature verification proof Residence address proof

REPAYMENT PROCEDURE

How is the loan repaid?

Interest paid every month Interest paid upfront Through EMI

When does repayment start?

After 30days from disdursal

How is the EMI paid?

Monthly in arrears

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LOANS AGAINST PROPERTY

You can mortgage your property as collateral to avail of an attractive loan. Capital First Mortgage Loan, a loan against property, is offered against residential premises, plots of land or commercial properties. Avail a loan of up to Rs.10 cr for tenure of up to 15 yrs.

FEATURE AND BENEFITS

At Capital First we finance the following types of properties:

Self occupied residencies Self occupied commercial property Leased commercial property Leased residential property Lease rental discounting against residential and commercial properties Loans up to Rs. 10 crores Avail of tenures upto 15 years

SPECIAL SERVICES

To meet the needs of all customers we bring you a complete suite of programs that are tailor made to your requirements, you can avail a loan under any one of the following programs:

NORMAL INCOME PROGRAM DEBT CONSOLIDATOR BALANCE TRANSFER PROGRAMS REPAYMENT TRACT RECORD

BUSINESS LOANS

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Every small and medium sized enterprise needs access to working capital. The business installment loan not only helps you meet your working capital needs, but also helps fulfill your aspirations of expanding your business.

FEATURE AND BENEFITS

The Capital First Business Installment Loan offers you some great advantages like:

Quick Decisions Loans up to 50 Lakh No security/collateral required Repay with easy equated monthly installments Simple documentation Speedy loan processing

ELIGIBILITY

Business installment loan can be availed by:

Small enterprises segment engaged in retail and wholesale trade, manufacturing and service comprising of:

Self employed individuals/professionals Sole proprietorship firms Partnership firms Private limited companies and closely held limited companies Doctors

TWO WHEELER LOANS

FEATURES

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Affordable EMI Low Down payment Speedy processing

ELIGIBILITY

ELIGIBILITY SALARIED SELF EMPLOYEDMinimum Age 18 years 21 yearsMinimum Work Experience 6 Months 2 YearsIncome Eligibility As per form16 As per ITR

DOCUMENTATION

Latest photograph Photo identity proof Address proof Income documents Bank continuity

BIBLIOGRAPHY

Company profile by www.bajajfinservlending.in with some facts about the company

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Process of work flow , documentation and ideas by practical experience in On Job Training at Bajaj Finserv lending

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