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1INTRODUCTION TO HDFC BANK


1.1.1 INTRODUCTION-ORGANIZATION PROFILE The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

1.1.2 PROMOTER HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

1.1.3 BUSINESS FOCUS HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People.

1.1.4 CAPITAL STRUCTURE The authorized capital of HDFC Bank is Rs550 crore (Rs5.5 billion). The paid-up capital is Rs424.6 crore (Rs.4.2 billion). The HDFC Group holds 19.4% of the bank's equity and about 17.6% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 28% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 570,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB'. 1.1.5 TIMES BANK AMALGAMATION In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. The acquisition added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.

1.1.6 DISTRIBUTION NETWORK HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 1229 branches spread over 444 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE has a strong and active member base.

The Bank also has a network of about over 2526 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. 1.1.7 MANAGEMENT Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India. The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board. Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.

1.1.8 TECHNOLOGY HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). The Bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. The Bank's business is supported by scalable and robust systems which ensure that our clients always get the finest services we offer. The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its
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businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share. 1.1.9 BUSINESS FOCUS HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People.

1.1.10 RATING I. Credit Rating The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA ( ind )" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond
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issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.

II. Corporate Governance Rating The bank was one of the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest. 1.1.11 PRODUCT SCOPE: HDFC Bank offers a bunch of products and services to meet the every need of the people. The company cares for both, individuals as well as corporate and small and medium enterprises. For individuals, the company has a range accounts, investment, and pension scheme, different types of loans and cards that assist the customers. The customers can choose the suitable one from a range of products which will suit their life-stage and needs. For organizations the company has a host of customized solutions that range from Funded services, Non-funded services, Value addition services, Mutual fund etc. These affordable plans apart from providing long term value to the employees help in enhancing goodwill of the company.

The products of the company are categorized into various sections which are as follows: Accounts and deposits.

Loans.
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Investments and Insurance.

Forex and payment services.

Cards.

Customer centre

1.1.12 QUALITY POLICY SECURITY: The bank provides long term financial security to their policy. The bank Does this by offering life insurance and pension products. TRUST: The bank appreciates the trust placed by their policy holders in the bank. Hence, it will aim to manage their investments very carefully and live up to this trust. INNOVATION: Recognizing the different needs of our customers, the bank offers a range of innovative products to meet these needs.

1.1.13 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION 1) HR Department-The HR department of the organization consists of the people who employ the persons who they think would be able to do justice with the job handled. The total numbers of employees of the bank were 51,888 as of March 31, 2010. The Bank continued to focus on training its employees, both on-the-job as well as through training programs conducted by internal and external faculty 2) Administrative Department The administrative department of the organization consists of the director and the manager of the organization. They preside the organization and control all the operations of the organization such that the organization could run in a smooth and effective manner.

3) Executive Department the executive department of the organization consists of the various employees who execute the job undertaken by them. The employees consists of the team leaders, the Corporate financial consultants,. the telecallers, various staffs and junior staffs who are the main structural framework of the organization. 4) Technical Consultancy Department: The Technical Consultancy Department is responsible for technical appraisal of industrial projects. The mission of the division is aimed towards the verification of the technical viability of industrial projects and assisting the Funds management in taking the decisions that require technical expertise. Moreover, it is responsible for conducting technical studies and rendering technical consultancy BANK to certain industrial sectors for the purposes of investigating modern technologies and productivity levels for local manufacturing plants.

1.1.14 FINANCIAL ANALYSIS At present HDFC Bank is the leading bank in the housing and development sector and is growing very fast in the other banking sectors such as life insurance & mutual fund. The financial performance during the fiscal year ended March 31, 2010 remained healthy with total net revenues (net interest income plus other income) increasing by 14% to Rs. 12,194.2 crores from Rs. 10,711.8 crores in the previous financial year. Revenue growth was driven both by an increase in net interest income and other income. Net interest income grew by 13% primarily due to an increase in the average balance sheet size and an increase in full year net interest margins by 13 basis points to 4.3%. Bank's net profit for year ended March 31, 2010 was Rs. 2,948.7 crores, up 31.3%, over the year ended March 31, 2009. The Banks basic earning per share increased from Rs. 52.9 to Rs. 67.6 per equity share. The Bank's total balance sheet size increased by 21.4% from Rs.183,271 crores as of March 31, 2009 to Rs. 222,459 crores as of March 31, 2010. Total gross advances as of March 31, 2010 were Rs. 127,262 crores, an increase of 27.0% over March 31, 2009. Total deposits
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were at Rs. 167,404 crores, an increase of 17.2% over March 31, 2009. Savings account deposits grew 42.9% over the previous year to reach Rs. 49,877 crores, while current account deposits at Rs. 37,227 crores, registered a growth of 30.9% over the same period 1.1.15 PRODUCTS AND SERVICES OF THE ORGANIZATION HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized corporate and agro-based businesses. For these customers, the Bank provides a wide range of commercial and auctioned banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporate including multinationals, companies from the domestic business houses and prime public sector companies. It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks. Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2009, the bank had a total card base
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(debit and credit cards) of over 13 million. The Bank is also one of the leading players in the merchant acquiring business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

TREASURY

Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporate need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.

1. Personal Banking A. Accounts & Deposits

- Regular Savings Account - Savings plus Account - Savings Max Account - Senior Citizens Account - No Frills Account - Institutional Savings Account - Payroll Salary Account - Classic Salary Account - Regular Salary Account - Premium Salary Account - Defence Salary Account
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- Kid's Advantage Account - Pension Saving Bank Account - Family Savings Account - Kisan No Frills Savings Account - Kisan Club Savings Account - Plus Current Account - Trade Current Account - Premium Current Account - Regular Current Account - Apex Current Account - Max Current Account Reimbursement Current Account - RFC - Domestic Account - Regular Fixed Deposit - Super Saver Account - Sweep-in Account - HDFC Bank Preferred - Private Banking B. Loans - Personal Loans - Home Loans - Two Wheeler Loans - New Car Loans - Used Car Loans - Overdraft against Car - Express Loans - Loan against Securities - Loan against Property - Commercial Vehicle Finance - Working Capital Finance - Construction Equipment Finance
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- Offers & Deals - Customer Centre C. Investments & Insurance - Mutual Funds - Insurance - Bonds - Financial Planning - Knowledge Centre - Equities & Derivatives - Mudra Gold Bar D. Forex Services - Trade Finance - Travellers Cheques - Foreign Currency Cash - Foreign Currency Drafts - Foreign Currency Cheque Deposits - Foreign Currency Remittances - Cash to Master - ForexPlus Card E. Payment Services - Net Safe - Prepaid Refill - Bill Pay - Direct Pay - Visa Money Transfer

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- E-Monies Electronic Funds Transfer - Excise & Service Tax Payment F. Access Your Bank - One View - Insta Alerts - Mobile Banking - ATM - Phone Banking - Branch Network G. Cards - Silver Credit Card - Gold Credit Card - Woman's Gold Credit Card - Platinum plus Credit Card - Titanium Credit Card - Value plus Credit Card - Health plus Credit Card - HDFC Bank Idea Silver Card - HDFC Bank Idea Gold Card - Compare Cards - Transfer & Safe - Track your Credit Card

H. Get More from Your Card - Offers & Savings - My Rewards - Insta Wonder
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- Add-On Cards - Credit Card Usage Guide - Easy EMI - Net safe - Smart Pay - Secure Plus - My City Benefit Card - Debit Cards - Easy Shop International Debit Card - Easy Shop Gold Debit Card - Easy Shop International Business Debit Card - Easy Shop Womans Advantage Debit Card Prepaid Cards - Forex plus Card - Kisan Card 2. Wholesale Banking A. Corporate Funded Services Non Funded Services Value Added Services Internet Banking

B. Small & Medium Enterprises Funded Services Non-Funded Services Specialized Services Internet Banking

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C. Financial Institutions & Trusts Banks Financial Institutions Mutual Funds Stock Brokers

NRI Banking

Rupee Savings Accounts Rupee Current Accounts Rupee Fixed Deposits Foreign Currency Deposits Accounts for Returning Indians Quick remit (North America, UK, Europe, Southeast Asia) India Link (Middle East, Africa) Cheque Lockbox Telegraphic / Wire Transfer Funds Transfer through Cheques / DDs / TCs Mutual Funds Private Banking Portfolio Investment Schemes Loans
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Payment Services Net Banking InstaAlerts Mobile Banking InstaQuery ATM Phone Banking

1.2.1 INTRODUCTION TO HOME LOANS The concept of home loans in INDIA is of great importance keeping in view the population of INDIA is more than 110 crores and it increasing day by day. Even though our government is making efforts to control the population but it is exploding. In India every person has a desire to own a house. Due to scarcity of land and soaring prices of land, Real Estate has to be developed in a big way. Government of India has taken steps to boost the construction of housing in India. Government has given incentives under Income-Tax Act, 1961 by way of
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deduction for interest and for repayment of instalments paid during the financial year. During the last few years housing has picked up. Moreover with the liberalisation announced in India since nineties, most of multinational companies are coming to India and they have started their operations here. India is emerging as a great market and there is a tremendous scope for development of housing sector from the point of view of multinational banks, financial institutions etc. Financing of housing sector is considered as advance to priority sector up to twenty lakhs as per RBI norms. Housing loan portfolio occupies an eminent position, the scope of housing loan is immense due to increasing population, shortage of dwelling units, prevailing rate of interest, substantial tax benefits available to borrower, economic prosperity and increase in purchasing power of the people, large, middle income group in the country etc. Considering huge untapped market potential there is a great opportunity in housing loan segment. Housing loans are of large tenure during which the borrower are susceptible to risk of death due to accident, ill health or other natural causes in such unfortunate events the serving of housing loan will depend upon the financial capacity of the dependents of the deceased borrower. If the dependents cannot service the loan in time, it is likely that account turn into NPA forcing the bank to initiate to take legal action to take recovery. This can prove lethal for family; hence insurance scheme with insurance companies can be taken. Loans in India have made everything accessible to the people. Comprising mainly of the middle class, Indian society found certain commodities unaffordable to buy in one go. But with the advent of the loans facilities in India, bank loans available on easy loan schemes along with quick 24-hr loans, things that were considered luxuries for the rich have found their way into the hands of the masses. Everything is available on easy EMI payment system. An EMI loan calculator helps to estimate the per month payment that would be required to pay to the finance company. The term of repayment of the loan taken is also according to customers choice and convenience. 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 one of the most important functions of the Financial Services in India. Real Estate Consultants in India usually recommend that we
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undertake appropriate Home Loan or Mortgage Loan counselling so that one can buy Apartment in India at an affordable Mortgage Rate. Purchasing the home of dreams is not an easy task. Especially when plan is to buy a home on loan. Home loan means to buy a house on instalments. In simpler terms when one want to own a home and cant afford to pay the amount in lump sum, one can pay it in monthly instalments with an interest rate.

1.2.2 MEANING OF HOME LOANS Home loan means to buy a house on installments. In simpler terms when one want to own a home and cant afford to pay the amount in lump sum, one can pay it in monthly installments with an interest rate.

1.2.2.A Unique Features of house loan:

Purpose: For purchase of house from builder / resale and construction / extension of existing Loan amount: One can avail for Home loans ranging from Rs.2 lac to Rs.200 lac depending on eligibility, income and repayment capacity. Security: Home loan is a secured loan wherein collateral are required. Loan tenor: The maximum loan tenure is 20 years. house.

People take home loans to fulfill their basic necessity. It is very essential that they choose a right place to take loan for home. There are ample of companies that provide home loan, and they continue to exist to provide Basic Home Insurance as well as Home Loan Information

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including Home Loan Resources because of the very people who desire to own a house the soonest possible time. It is definitely one of the major things that one can board on in lifetime. However not everyone is financially strong enough to be able to build a house as soon as one wants to. Whether a person is Non Resident Indian or Resident of India, everybody is thinking of starting its journey of buying a new house, looking to move to a new house, investing in property or is looking forward to refinance. Before taking a home loan one must consider answering these questions:

Which type of home loan should be preferred? Will it be the best scheme that will be fitting his/her budget? Can any insurance plan cover for an unpaid monthly due? Is there a fine or penalty or even some reward as well if the whole amount of loan is paid ahead of the due date?

With so many real estates sites coming up in Indian market, finding an ideal house isn't that big an issue nowadays. A home loan, also popularly identified as a mortgage, is an easier financial option to own a house. Once it is decided to endeavor on a home loan, there are so many things that need to be informed with. Not only it is going to be an emotional experience, it is also going to be a very informative monetary journey, as one will be dealing with the mortgage process along the way. There are thousands of home loan companies waiting to provide people with their financial needs. Part of the success of this whole financial move is partly in their hands, the greater part relies on the efficiency with which the mortgage company is chosen.

1.2.3 TYPES OF HOME LOANS Owning a piece of land or property is a lifetime dream for every individual. There are many home loans provider in the market to make a dream come true. Before actually availing a loan it must be cleared as to for what purpose loan is to be taken. There are different types of home loans like Bridge Loans, Home construction Loans, Home Equity Loans, Home

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Extension Loans, Home Improvement Loans, Land Purchase Loans etc for different schemes available in the market. There are different types of home loans tailored to meet needs.

Home Purchase Loans: These are the basic forms of home loans used for purchasing a new home. Home Improvement Loans: These loans are given for implementing repair works, healing and renovations in a home that has already been purchased.

Home Construction Loans: These loans are available for the construction of a new home.

Home Extension Loans: These loans are given for expanding or extending an existing home. For example: addition of an extra room etc.

Home Conversion Loans: These loans are available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.

Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.

1.2.4 HOME LOAN PROCESS It is a systematic process where a loan application file goes through the hands of many experienced employees of HDFC. The applicant has to submit the original or photocopies of a few documents; he also has to correctly fill and give certain forms to state his requirements very clearly and to also communicate the information demanded by HDFC. 1.2.4.A STAGES OF HOME LOAN STAGE 1: FILLING UP OF APPLICATION FORM
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This is the first and foremost step in the process of Home Loan. The applicant is required to fill the Application Form. It should be signed by the applicant and co-applicant. If any amendment is to be made, it should be made in front of the appraiser only. The application reaches the concerned Service Centre. Here all the documents in the application are reviewed by the experienced staff present at the service centre. The HDFC employee who reviews the file checks to see whether all documents are present and in their proper place .He checks if the documents are duly filled, not fake, attested by authority in question and present in order .In case any document is missing the applicant is contacted electronically or by mail .The applicant is contacted by telephone and requested for the document until he denies it being with him. This exercise is called FOLLOW UP. The credit appraisal of the loan application starts at this stage. The service centre employees compute the gross salary, IIR, FOIR, Loan Eligibility ratio etc. The credit worthiness of the applicant is calculated here. The process of Credit Appraisal involves the calculation of two important ratios Income to Installment ratio Loan Eligibility ratio However ahead of that we need to compute the actual salary we are going to consider for Appraisal. Along with that we will compute the deductions that need to be reduced from the Salary. Step (i) The income slip of the applicant has many components. Firstly, calculate the GROSS SALARY of the applicant. It is the simple process of adding the various incomes and /or earning of the applicant how ever in HDFC the main aim is to provide convince to the customer through every stage. Hence a special procedure is used you will add various standard and uniform components that means that in the calculation of gross salary We shall consider 100 % of these components. this is because these earning will always be a part of his take home pay package .hence they are going to always be a fix constituent of his repayment capacity. After we have added to fixed components we will search for those items that do not appear as standard components in the income slip of current three months. These can be: A. Regular items
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These items are present in all the income slips .how ever their amount is variable. This is because they are linked to performance or their amount depends upon the discretion of the employer. E.g. additional HRM, vehicle allowance etc. We first calculate the average amount of these items. we then divide this average amount by two. This is because they are variable components of the repayment capacity.

Profit allowance OR some other

average of three months 2

B. Non Regular items These items are not present in all income slips. At HDFC for sake of the applicant these items are not considered to be affecting the repayment capacity of the applicant, the only affect is temporary. Step (ii) This step is the calculation of 1. Income to installment ratio. 2. Fixed obligation to installment ratio. INCOME TO INSTALLMENT RATIO (IIR) The ration reveals the available repayment capacity that HDFC can consider from the gross salary of the applicant IIR = EMI X 100

NET INCOME The percentage reveled in this calculation tells us what amount of gross salary the applicant has ,to repay HDFC loan IIR should lie between 35% to 50%.Only a very good profile will allow a person with IIR of above 50% to be consider for a loan FIXED OBLIGATION TO INSTALLMENT RATIO (FOIR)

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This ratio is an extended form of IIR. The nature of information revealed by this ratio is the same as IIR. However this ratio also shows the effect of the various obligations/liabilities on the repayment capacity of the applicant.

FOIR

EMI+OBLIGN * 100 GROSS INCOME

It should also lie between 35 to 50% .however in the case of a good profile there is a positive effect on FOIR same as IIR. If we are calculating FOIR then we dont need to calculate IIR Step (iii) LOAN ELIGIBILITY RATIO (LER) This is the most important and significant ratio that will reveal the maximum amount of loan that can be sanctioned to the applicant. It is the ration of the salary to be considered for repayment of the loan and the EMI per one lakh of the loan amount. The amount of the loan demanded by the applicant in the term for which it has been demanded must both fall with in the permissible limits as shown by the loan eligibility ratio. LER= (GROSS SALARY *45%)-OBLIGATIONS EMI PER 1 LAKH OF AMOUNT

The next and important processing performed at the service center is that of filling up a document known as the INTERVIEW SHEET for processing individual loans. Hence the interview sheet contains the important findings which the employee has collected after careful review of the various documents the interview sheet help to cut corners and help save time by not having other invoice employee to go through the document again and again. It hence acts as a source of quick reference. STAGE 2: LOGIN

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This stage is also called QUICK DATA ENTRY. The basic information of the applicant is captured in the system. It includes 1. Name of the applicant and co-applicant 2. Date of birth of the applicant and co-applicant 3. Type of loan 4. Amount of loan requested 5. Type of customer(e.g. walk-in etc) It is now that is a special and unique loan A\C is created under which all the loan processes will be carried out. The number has been generated is communicated to the applicant by means of a letter or electronic communication. The system of electronically recording the data helps to create ready reference, a proof helps in quick and processing of the data.

STAGE 3: DETAIL DATA ENTRY This entry is much more complex as compared to the earlier perform login. An exhausted amount and type of information has to be entered in to the Inquiry loan processing system. The entries include: 1. Personal details of the applicant/co-applicant. three entries are mandatory they are DOB ,fathers name and gender 2. Communication address of the applicant/co-applicant. Necessary entries are permanent and communication address, telephone no, area code, pin code 3. Employment details of the applicant/co-applicant. that is whether employed of self employed 4. Financial information of the applicant/co-applicants availability and sources of fund it includes savings investments fixed assets etc 5. Obligation of the applicant/co-applicant it includes loan availed /proposed. 6. Property details it includes property address ,area of the land, market value of the property etc 7. Sources of income
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8. Customer references

STAGE 4: FIELD CREDIT INVESTIGATION (FCI) It has been a very useful credit check that helps verify credentials and information given by customer on his occupation/residence. MODES: INTERNAL MODE Telecheck: Call employer and residence FCR prepared on the basis of visit by HDFC Staff to business premises/residence address. EXTERNAL MODE Outsource Agencies like ONICRA, INFOTECH ETC.

Kinds of verification 1. Nature of business 2. Level of business activity seen 3. No. of employees 4. Operations and existence of company 5. Facilities provided and internal dcor Residence verification 1. Assets seen(consumers durables included) 2. Internal dcor 3. Accessibility to address 4. Residing since how many years 5. Nature of ownership status-rented/owned etc. 6. Salary verification 7. Income tax Reports(ITR) verification 8. Rent deed verification STAGE 5: RECOMMENDATION OVER (ROVR)
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The Recommendation Over is also referred to as the first appraisal. At this stage certain specially appointed persons have been given the responsibility of recommending a loan. These people have to take special care of reviewing every document, and all the small details that need to be considered before recommending the loan application to be valid. At the time of recommendation, the appraiser needs to check the following: Detail Data should be complete. KYC norms should be complete Bank details are updated CIBIL is run CVR is updated Finances are updated

After this the file is sent to another specially appointed person as explained below. At this stage if any correction or mistake is present it can be sent back to the service center or to the related desk. STAGE 6: DOUBLE CHECKING OVER (DCOV) As the name suggests at this stage a specially appointed person will double check all the past proceedings. He will examine the Loan file for any discrepancies, any missing and/or Misplaced documents, the credit appraisal results, etc. This is very important stage and must be handled with exceptional care. This is because a mistake at this stage can cause a great loss to the company. The Double checker is responsible for the ultimate sanctioning of the loan. If any mistake is done at this stage there is no going back and hence no protection. HDFC takes great care while appointing double checkers. They should have completed a selected number of years with the company and should have shown exemplary performance and must possess experience. STAGE 7: SANCTIONING (SANC) An authorized sanctioning authority will go through the recommended loan amount and will calculate again considering the two ratios: IIR (Income to installment ratio)
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FOIR (Fixed obligation to income ratio) If it matches with the already calculated amount, then recommended amount is passed. It means the loan is sanctioned for the same amount. If there is any difference, then recommended loan amount will be affected. In sanctioning, an offer letter is created and signed by both the parties (HDFC and applicant).the original copy of the letter is to be kept by HDFC and duplicate copy is to be handed over to the applicant. In other words sanctioning means clear the screen. STAGE 8: DISBURSEMENT It is the last stage in the process Points to be kept in mind before making disbursement All the terms and conditions are fulfilled There is no pendency left to be cleared

The process of fixing includes the following: 1. Loan Agreement 2. Promissory Note 3. Disbursement Memo

Loan agreement: It is prepared at the time of fixing. The original copy is kept with the bank and duplicate is given to the applicant. The loan agreement is attached in the file Promissory note: It includes a written contract between HDFC and the applicant and contains details regarding the amount to be disbursed at a given rate of interest. Disbursement Memo: It includes the details of the cheque which has been fixed, property address and effective date of disbursement. When all the above mentioned steps are duly complied with the loan is finally disbursed. STAGE 9: FOLLOW UP
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A person who does not pay his EMI on time is called a Defaulter. Now recovery department becomes active. The recovery officers can know these customers through ORACLE software. After taking the data of defaulters, the first and foremost action is telle-calling. This is also called soft calling as these defaulters may have some genuine reasons. It is done by call centre employees. If the person does not pay the EMI even after tele-calling, then the junior field officers personally visits the customer. If they are not able to solve, then senior field officers handles the case. Even after all this, if the customer does not pay the EMI, then legal action will be taken. There are three ways: 1) Cheque bouncing under section 138. 2) Criminal suit/money suit/recovery suit. 3) Surfacing.

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