CHAPTER-1

BANKING SECTOR DEVELOPMENT

A bank is a financial intermediary that accepts deposits and channels those deposits into lending
activities, either directly or through capital markets. A bank connects customers with capital
deficits to customers with capital surpluses.
Banking is generally a highly regulated industry, and government restrictions on financial
activities by banks have varied over time and location. The current set of global bank capital
standards is called Basel II. In some countries such as Germany, banks have historically owned
major stakes in industrial corporations while in other countries such as the United States banks
are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a
cross-share holding entity known as the keiretsu. In Iceland banks had very light regulation prior
to 2008 collapse.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1472.

HISTORY OF BANKS IN INDIA

Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of
the country. This is one of the main reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalization of 14 major private banks of India.
Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or
for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient
bank transferred money from one branch to other in two days. Now it is simple as instant
messaging or dials a pizza. Money has become the order of the day.
The first bank in India, though conservative, was established in 1786. From 1786 till today, the
journey of Indian Banking System can be segregated into three distinct phases. They are as
mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III.

Phase I:
2

The General Bank of India was set up in the year 1786. After, came The Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay
(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These
three banks were amalgamated in 1920 and Imperial Bank of India was established which started
as private shareholders banks, mostly Europeans shareholders.
In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National
Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of
India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore
were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the
functioning and activities of commercial banks, the Government of India came up with The
Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per
amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive
powers for the supervision of banking in India as the Central Banking Authority.
During those days public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal department
was comparatively safer. Moreover, funds were largely given to traders.
Phase II:
Government took major steps in this Indian Banking Sector Reform after independence. In 1955,
it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially
in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI
and to handle banking transactions of the Union and State Governments all over the country.
Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July,
1969, major process of nationalization was carried out. It was the effort of the then Prime
Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were
3

nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with
seven more banks. This step brought 80% of the banking segment in India under Government
ownership.
The following are the steps taken by the Government of India to Regulate Banking Institutions in
the Country:
1949: Enactment of Banking Regulation Act.
1955: Nationalization of State Bank of India.
1959: Nationalization of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalization of 14 major banks.
1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.
1980: Nationalization of seven banks with deposits over 200 crores.
After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.
Phase III:
This phase has introduced many more products and facilities in the banking sector in its reforms
4

measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his
name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The entire
system became more convenient and swift. Time is given more importance than money.
The financial system of India has shown a great deal of resilience. It is sheltered from any crisis
triggered by any external macroeconomics shock as other East Asian Countries suffered. This is
all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not
yet fully convertible, and banks and their customers have limited foreign exchange exposure.

CHAPTER- II
THE BANKING SECTORS
Banking in India originated in the last decades of the 18th century. The first banks were
The General Bank of India which started in 1786, and the Bank of Hindustan, both of
which are now defunct. The oldest bank in existence in India is the State Bank of India,
which originated in the Bank of Calcutta in June 1806, which almost immediately became the
Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of
Bombay and the Bank of Madras, all three of which were established under charters from the
British East India Company. For many years the Presidency banks acted as quasi-central banks,
as did their successors. The three banks merged in 1921 to form the Imperial Bank of India,
which, upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and
still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company
that issues stock and requires shareholders to be held liable for the company's debt) It was not the
first though. That honor belongs to the Bank of Upper India, which was established in 1863, and
which survived until 1913, when it failed, with some of its assets and liabilities being transferred
to the Alliance Bank of Simla.
When the American Civil War stopped the supply of cotton to Lancashire from the Confederate
States, promoters opened banks to finance trading in Indian cotton. With large exposure to
speculative ventures, most of the banks opened in India during that period failed. The depositors
lost money and lost interest in keeping deposits with banks. Subsequently, banking in India
remained the exclusive domain of Europeans for next several decades until the beginning of the
20th century.
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Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;
branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in
Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the
British Empire, and so became a banking center.
The Bank of Bengal, which later merged with the Bank of Bombay and the Bank of Madras to
form the Imperial Bank of India in 1921.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in
Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in
1895, which has survived to the present and is now one of the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a relative period
of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial
and other infrastructure had improved. Indians had established small banks, most of which
served particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange banks and
a number of Indian joint stock banks. All these banks operated in different segments of the
economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign
trade. Indian joint stock banks were generally undercapitalized and lacked the experience and
maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon
to observe, "In respect of banking it seems we are behind the times. We are like some old
fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome
compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi
movement. The Swadeshi movement inspired local businessmen and political figures to found
banks of and for the Indian community. A number of banks established then have survived to the
present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank
and Central Bank of India.

In the favor of Swadeshi movement lead to establishing of many private banks in Dakshina
Kannada and Udupi district which were unified earlier and known by the name South Canara
( South Kanara ) district. Four nationalized banks started in this district and also a leading private
sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian
Banking".

CHAPTER-III
PRIVATE BANKING SECTOR- INDIA
Private Banks in India started way back and has a history due to the fact that in the past years
they were originally working in private during those days they were supposed to handle the more
able and Indians with their banking services and other banking needs that they would require all
this activities happened around 1921.
During that time there was the Bank of Bengal, Banks of Bombay, and Bank of Madras all this
formed the Imperial Bank of India.
In the year of 1935 the reserve Bank of India was build and it became the centre of all the other
banks taking away the imperial responsibilities that includes the transfer of commercial banking
completely. Whereby in 1955 the Imperial bank of India was renamed and transformed into the
State Bank of India.
The private banks in India after the changes a lot of other Banks occurred in India on 19th July
1969. The government of India had given out an ordinance and nationalized 14 big commercial
banks that includes Punjab National Banks, Allahabad Bank, Canara Bank, Central Bank of
India among others, other public Banks came up to take leading roles in the banking routine.
In the year 1994, the Reserve Bank of India handed out policy this policy was supposed to
control the number of private Banks that were coming up and werent taking care of the
customers or the Indian people in general. The policy was of liberation to license and limits the
number of Private Banks which is known as New Generation tech-sway banks.
The global Trust Bank became the first private bank then later was unified with Oriental Banks
of Commerce. The Housing Development Finance Corporation Limited became the first and
which still exists to get a principle approval from the Reserve Bank of India as a Bank in the
private sector.

10

Presently, Private Banks in India that continued giving out services to the Indian people includes

CHAPTER- IV
HOUSING DEVELOPMENT FINANCIAL CORPORATION (HDFC)
HDFC Bank Ltd. is a major Indian financial services company based in Mumbai, incorporated
in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The
Bank was promoted by the Housing Development Finance Corporation, a premier housing
finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 4,232
ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis.
As of 30 September 2008 the bank had total assets of INR 1006.82 billion.[4] For the fiscal year
2008-09, the bank has reported net profit of Rs.2,244.9 crore, up 41% from the previous fiscal.
Total annual earnings of the bank increased by 58% reaching at Rs.19,622.8 crore in 2008-09.[5]
History
HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited
(HDFC), India's largest housing finance company. It was among the first companies to receive an
'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private
sector. The Bank started operations as a scheduled commercial bank in January 1995 under the
RBI's liberalization policies.
Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders
of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than
1,000. The amalgamated bank emerged with a base of about Rs. 1,22,000 crore and net advances
of about Rs. 89,000 crore. The balance sheet size of the combined entity is more than Rs.
1,63,000 crore.
Business focus
HDFC Bank deals with three key business segments - Wholesale Banking Services, Retail
Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for
11

providing working capital finance, trade services, corporate finance and merchant banking. It is
also providing sophisticated product structures in areas of foreign exchange and derivatives,
money markets and debt trading and equity research.
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 agri-based businesses. For these customers, the
Bank provides a wide range of commercial and transactional 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. HDFC 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 products are backed by world-class service and delivered to customers
through the growing branch network, as well as through alternative delivery channels like ATMs,
Phone Banking, Net Banking and Mobile Banking.]] [[HDFC Bank was the first bank in India to
launch an International Debit Card in association with VISA (VISA Electron) and issues the
Master card 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 (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.
12

Treasury
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,
Local Currency Money Market & Debt Securities, and Equities. These services are 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.
Distribution network
HDFC Bank is headquartered in Mumbai. The Bank has a network of 1,725 branches spread in
771 cities across India. All branches are linked on an online real-time basis. Customers in over
500 locations are also serviced through Telephone Banking. The Bank has a presence in all major
industrial and commercial centers across the country. 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 3,898 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.
GROWTH OF HDFC IN EACH DECADE
1994
The Bank was incorporated on 30th August. A new private sector Bank promoted by
housing Development Corporation Ltd. (HDFC), a premier housing finance company. The
bank is the first of its kind to receive an in-principle approval from the RBI for establishment
of a bank in the private sector. Certificate of Commencement of Business was received on
10th October 1994 from RBI.
The Bank transacts both traditional commercial banking as well as investment banking.
HDFC, the promoter of the bank has entered into an agreement with National West minister
13

Bank Pc. and its subsidiaries (Natwest Group) for subscribing 20% of the banks issued
capital and providing technical assistance in relation to the banks proposed banking business.
2000
HDFC Bank also signed a memorandum of understanding with Singapore Telecom's ecommerce arm Sesami.Com Pvt Ltd.
The Bank latter also entered into a partnership agreement with National Computer
Systems, the e-commerce unit of Singtel.
A new company called SESAMi.com (India) has been formed by a strategic alliance
between HDFC Bank and Singapore Telecom's e-commerce company SESAMi.com, to
offer e-commerce solutions for the Indian market.
HDFC Bank entered into a tie-up with Telco by which the bank would provide
preferential financing options for Tata's range of passenger cars including the Indica,
Sumo, Safari, Estate and Sierra.
The Bank has tied up with financial portals, e-brokerages and the National Stock
Exchange to enable broker payments for e-broking ventures.
The Bank has set up 100 new electronic data capture (EDC)Terminals in Mumbai.
HDFC Bank has launched its first B2C payment gateway which allows Visa and
MasterCard credit card-holders to do transaction online and real time.
HDFC Bank has launched its 123rd outlet at Delhi Stock Exchange building at Asaf Ali
Road.

14

2005
TMB forges alliance with HDFC Bank
HDFC Bank inaugurates first ATM in Hotel
HDFC Bank ties up with the International Bank of Qatar (IBQ) to launch banking
services in Qatar.
HDFC Bank launches loyalty rewards programs for its debit and credit cardholders under
the name InstaWonderz.
HDFC Bank along with MasterCard International launched credit card targeted at small
and medium-sized enterprises
HDFC Bank has tied up with US-based WL Ross and company LLC for investing in
corporate restructuring
HDFC Bank unveils credit card for farmers
2006
HDFC sets up two more branches in AP
Osim to join hands with HDFC Bank for consumer loans
HDFC Bank inaugurates VbV facility for online shopping

15

2007
HDFC Bank has signed an agreement with Tata Pipes to offer credit facilities to farmers
across the country.
HDFC Bank Ltd has appointed Mr. Pandit Palande as an additional Director of the Bank
at the Board Meeting held today i.e. on 24th April 2007.
HDFC Bank Ltd has informed that the Board of Directors of the Bank at its meeting held
on October 12, 2007, has been appointed Mr.Paresh Sukthankar & Mr. Harish Engineer
as Executive Directors on the Board of Directors of the bank. Mr. Sukthankar & Mr.
Engineer have been senior employees of the Bank since 1994 and have held various
positions of responsibility.
The above appointments as Executive Directors of the Bank are subject to approval of Reserve
Bank of India and of the Bank's shareholders.
2008
HDFC Bank Ties Up With Postal Department, Extends Rural Reach
HDFC Bank Wins Nasscom IT User Award the Year'
HDFC Bank Opens Its First Overseas Branch in Bahrain
HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29
HDFC Bank Launches Indias First Rural Banking BPO at Tirupathi
HDFC Bank Launches Indias First Online Market Linkage Program for Self Help
Groups
16

2009
HDFC Bank Bags Asia money Award for the Best Domestic Bank
HDFC Bank offers electronic payment collection facility to Guruvayoor Devaswom.
HDFC Bank launches Meritus Scholarship Program.
The Asian Banker declares HDFC Bank the Best Retail Bank
2010
With a view to attract long term deposits and prevent premature withdrawal when the
interest rates peak, HDFC, the housing finance major, has decided to pay variable interest
rate on recurring deposits.
HDFC Bank on Feb 19 increased the fixed deposit rates by up to 150 basis points across
maturities, a move that follows the Cash Reserve Ratio hike of 75 basis points by the
Reserve Bank of India last month.

17

CHAPTER-VI
HOME LOANS PROVIDED BY BANKS IN INDIA
A person seeking investments for house or a property opts for Home Loans for a variety of
purposes ranging from construction to renovation. The Housing Finance Companies (HFCs) now
offer individuals with various alternatives to choose from while buying a home loan. And the
availability of Home Loans offered is as varied as their requirements.
Home Purchase Loans
Home Construction Loans
Home Improvement Loans
Home Extension Loans
Home Conversion Loans
Land Purchase Loans
Stamp Duty Loans
Bridge Loans
Balance Transfer Loans
Refinance Loans
Loans to NRIs
Home Purchase Loans
This loan is the basic home loan for the purchase of a new home.

18

Home Construction Loans

This loan is available for the construction of a new home on a said property. The documents that
are required in such a case are slightly different from the ones you submit for a normal Housing
Loan. If you have purchased this plot within a period of one year before you started construction
of your house, most HFCs will include the land cost as a component, to value the total cost of the
property. In cases where the period from the date of purchase of land to the date of application
has exceeded a year, the land cost will not be included in the total cost of property while
calculating eligibility.
Home Improvement Loans

These loans are given for implementing repair works and renovations in a home that has already
been purchased, for external works like structural repairs, waterproofing or internal work like
tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility
of a home improvement loan, after obtaining the requisite approvals from the relevant building
authority.
Home Extension Loans

An extension loan is one which helps you to meet the expenses of any alteration to the existing
building like extension/ modification of an existing home; for example addition of an extra room
etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite
approvals from the relevant municipal corporation.
Home Conversion Loans

This is 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 a home
19

conversion loan, the existing loan is transferred to the new home including the extra amount
required, eliminating the need for pre-payment of the previous loan.
Land Purchase Loans

This loan is available for purchase of land for both home construction or investment purposes
Stamp Duty Loans

This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of
property.
Bridge Loans

Bridge Loans are designed for people who wish to sell the existing home and purchase another.
The bridge loan helps finance the new home, until a buyer is found for the old home.
Balance-Transfer Loans

Balance Transfer is the transfer of the balance of an existing home loan that you availed at a
higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower
rate of interest.
Re-finance Loans

Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you
have taken drops over the years and you stand to lose. In such cases you may opt to swap your
loan. This could be done from either the same HFI or another HFI at the current rates of interest,
which is lower.
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NRI Home Loans

This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or
property in India. The HFCs offer attractive housing finance plans for NRI investors with
suitable repayment options.

CHAPTER- VII
HDFC HOME LOANS
The road to success is a tough and challenging journey in the dark where only obstacles light the
path. Individual aim is how to get success and the solution for success is customer satisfaction.
All we need is the courage to innovate, the skill to understand your clientele and the desire to
give them your best. Today, nearly three million satisfied customers whose dream we helped
realize, stand testimony to our success. Our objective, from the beginning, has been to enhance
residential housing stock and promote home ownership. Now, our offerings range from hasslefree home loans and deposit products, to property related services and a training facility. We also
offer specialized financial services to our customer base through partnerships with some of the
best financial institutions worldwide.
HDFC Housing Finance is a vital zone of HDFC bank, which has presented attractive housing
finance schemes for the customers. With more than 25 years of experience in Indian finance
market, HDFC stands head and shoulder above its competitors in the housing loan segment.
HDFC Housing Finance has got a strong impact on the customers who are looking for some
housing finance.

21

HDFC Housing Finance has got 3 types of housing finance for their customers. HDFC Housing
Finance provides Home Loans for the individuals to purchase fresh or resale house/flat as well as
to construct houses. Home Improvement Loans are for facilitating internal and external repairs
and other structural improvements like painting, waterproofing, plumbing and electric works,
tiling and flooring, grills and aluminum windows. Home Extension Loan is for the extension of
an existing dwelling unit. You can apply for HDFC Home Finance individually or jointly. Adding
up the income of the co-applicant would enhance your eligibility for the home loan. However,
the co-applicants need not to be a co-owner of the house.
HDFC Housing Finance pays a maximum of 85% of the total project cost. The maximum loan
amount is based on the repayment capacity of the applicant. You have to repay the loan amount
within 20 years, subject to your retirement age. You can definitely go for some lesser term loan.
There is an 'Adjustable Rate Home Loan' plan available in HDFC Housing Finance.
There are Multiple Repayment Options available in HDFC Housing Finance. Step Up
Repayment Facility, Flexible Loan Installment Plan, and Accelerated Repayment Scheme are
there to give you a wide range of options to choose your plan from.
When you go for HDFC Housing Finance, you have to pay a fee of 1% of the loan amount.
Service taxes are extra as applicable. There are no charges for prepayment. In order to learn more
about housing finance companies in India browse through the site.
Features
Home Loan Counseling - Sharing of over 30 years of home loan experience
HDFC have been a part of a 30 year journey with our 33 Lakh customers. Their home
loan counselors offer you the time tested advice.
Be it legal documentation, project or builder approvals, and technical advice, they look
forward to sharing with you and this service is absolutely free.
Their project approval facility provides our customers the comfort of purchasing
22

properties from builders who have complied with all basic documentation.
Door Step Service
They offer door step service. Call to HDFC Home Line call for their Sales Executive to assist
get in touch with the HDFC Office near you.
We can buy, sell, lease residential or commercial properties through HDFC Realty.

Wide Product Range

They provide loans to meet all our requirements to make that house a 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 on Adjustable Rate, Fixed Rate.
Multiple Repayment Option
Step Up Repayment Facility
Helps young executives take a much bigger loan today based on an increase in their future
income, this helps executives buy a bigger home today!
Flexible Loan instalments Plan
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
23

customers combine the incomes and take a long term home loan where in the instalment
reduces upon retirement of the earning parent.
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 . To help customer
save this interest, we have introduced a special facility of tranche Based EMI. Customers can
fix the instalments they wish to pay till the property is ready. The minimum amount payable is
the interest on the loan amount drawn. Anything over and 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 you a great opportunity to repay the loan faster by
increasing the EMI. Whenever you get an increment, increase in your disposable income or
have lump sum funds for loan prepayment, you can benefit by:
Increase in EMI means faster loan repayment
Saving of interest because of faster loan repayment
We can invest lump sum funds rather than use it for loan prepayment. The return from
the investments also gives you the comfort of paying the increased EMI
Wide network of financing
With over 200 offices, 90 outreach programs - HDFC is able to provide home loans in over
2400 locations in India. You can apply at your local HDFC office for properties in locations
where we finance.
Rate of Interest

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Float Interest Rate

Processing Fee
Late Payment Charges
Document Retrieval

:
:
:
:

9.5 %
0.50% to 1% of loan amount
NA
NA

CHAPTER-VII
TYPES OF HOME LOANS PROVIDED BY HDFC

NRI (Non Resident Indian) Home Loan

A new home brings with it new hopes, joys and emotions. At HDFC, they have shared new
hopes, joys and emotions with over 33 Lakh customers. Every customer has a specific and
unique concern. Having earned an experience of 30 years in home loans, Their home loan
product is customised to provide you solutions for our unique concern.
Features
Maximum loan
85% of the cost of the property (including the cost of the land) and based on the
repayment capacity of the customer.
Maximum Term
Certain Professionals - 20 years
Others - 7 years
Applicant and Co- Applicant to the loan
Home Loans can be applied for either individually or jointly. Proposed owners of the
25

property will have to be co-applicants. However, the co-applicants need not be coowners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on our loan will be revised every three months from the date of first disbursement, if
there is a change in RPLR, the interest rate on our 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 and the principal component will reduce resulting in
an extension of term of the loan, and vice versa when the interest rate decreases.
Fixed Rate

Purpose:
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.

Existing Loan Customers

1. Home Improvement Loans
This loan facilitates internal and external repairs and other structural improvements like Painting,
Waterproofing and Roofing, Plumbing and Electrical Works, Tiling and Flooring, Grills and
Aluminium Windows compound walls and almost all improvements. etc. One can borrow a
maximum of Rs. 100 lacs or 100% of the cost of renovation, whichever is lower against a new
customer who can borrow only Upto 85 % or Rs 100 lacs whichever is lower.

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Features:
Purpose
o External repairs
o Tiling and flooring
o Internal and external painting
o Plumbing and electrical work
o Waterproofing and roofing
o Grills and aluminum windows
o Waterproofing on terrace
o Construction of underground/overhead water tank
o Paving of compound wall (with stone/tile/etc.)
Maximum loan
o Existing Customer
100% of the cost of improvement
o New Customer
85% of the cost of improvement
o Subject to market value of the property
Maximum Term
15 years subject to our retirement age

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 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 need not be coowners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on our loan will be revised every three months from the date of first disbursement, if
there is a change in RPLR, the interest rate on our 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 and the principal component will reduce resulting in
an extension of term of the loan, and vice versa when the interest rate decreases.
Fixed Rate
2. Home Extension Loans
HDFC provides Home Extension Loans specifically to facilitate the extension of an existing
dwelling unit. The maximum amount of such a loan is Rs. 100 lacs or 100% of the cost of
extension, whichever is lower. This loan can be taken for a maximum of 20 years and is to be
repaid in equated monthly instalments.

Features:
Purpose
HDFC Home Extension Loan makes it convenient for you to extend or add space to our
home. Be it an additional room, a larger bathroom, or even enclosing an open balcony.
Maximum loan
85% of the cost of extension
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 Maximum Term
20 years subject to our retirement age
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 need not be coowners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on our loan will be revised every three months from the date of first disbursement, if
there is a change in RPLR, the interest rate on our 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 and the principal component will reduce resulting in
an extension of term of the loan, and vice versa when the interest rate decreases.
Fixed Rate
3. Home Conversion Loans
Existing HDFC borrowers can avail of a Home Conversion Loan to acquire another dwelling
unit, through sale of the existing dwelling unit. The existing loan can be transferred to the new
property with an increase in loan amount based on the current eligibility. This saves the customer
from the hassle of prepaying the first loan and availing of new loan thus saving them prepayment
charges and processing charges to the extent of loan conversion.

4. Top - Up Loans
This product offers an existing resident Indian customer a loan against the mortgage of the
existing property. It helps in encasing 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. The maximum loan amount under this product is 60 % of the market value of
the property less the outstanding loan and is subject to the current loan eligibility.
29

The maximum term of the loan is 10 years. Top up loans can given after 1 to 2 years [based on
our discretion], of the final disbursement of the existing loan or upon possession/completion of
the existing financed property.

E.g.:
Existing outstanding Loan

Rs 3 lacs.

Current market value of property

Rs 10 lacs
60% of market value i.e.

Maximum loan eligibility

Rs 6 lacs
Rs 6 lacs less Rs 3 lacs =

Actual Loan Eligibility

Rs 3 lacs

Property identification and sales service

HDFC's Property Services Group assists individuals and corporate to locate suitable residential
accommodation in certain major cities and towns in India. These facilities are also available to
Non-Resident Indians.
Property valuations
HDFC undertakes valuation of commercial and residential premises for corporate clients.

Deposits: Individuals (Fixed & Variables)

HDFC has instituted well-defined service standards for both depositors and deposit agents.
HDFC has been able to mobilise deposits from over 10 lac depositors. Outstanding deposits grew
from Rs. 1,458 crores in March 1994 to Rs 23,081 crores in March 2010. Much of this success
can be attributed to its strong brand image, superior services, security and above all, the
30

significant contribution made by HDFC's deposit agents. HDFC has over 15,000 deposit agents
and distributes all its retail savings (deposit) products primarily through this channel.
HDFC has been awarded AAA rating for its deposits from both CRISIL and ICRA for the
FIFTEENTH consecutive year, representing highest safety as regards timely payment of
principal and interest.
Benefits of an HDFC Individual Deposit:
Highest Safety
Tax Benefits
Attractive Returns
Quick Loan Facility
Nomination Facility
Demand Draft Facility
High Service Standards
Electronic Clearing Service
Tax Benefits
TDS: No tax deduction at source on interest from deposits up to Rs. 5,000/- per branch in a
Financial Year.
Attractive Returns
HDFC deposits are Available throughout the year and offer Attractive, Assured returns to
investors. Interest rates offered are higher than that offered by most of the commercial banks.

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Quick Loan Facility

Loan against deposit is available after 3 months from the date of deposit up to 75% of the deposit
amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be
2% above the deposit rate.
Nomination Facility
Individual depositors, singly or jointly, can nominate under this facility. In case the deposit is
placed in the name of a minor the nomination can be made only by a person lawfully entitled to
act on behalf of the minor. Power of attorney holder or any person acting in representative
capacity as holder of an office or otherwise cannot nominate. The nominee shall have the right to
receive the amount due in respect of deposit on death of all the depositors and payment by
HDFC to the nominee shall constitute full discharge to HDFC of its liability in respect of the
deposit.
Demand Draft Facility
Outstation depositors can send demand drafts after deducting demand draft charges. This facility
is not available to investors under Easy way Savings. This facility is applicable for places where
HDFC does not have an office.
High Service Standards
Depositors are offered across the counter services for new deposits, renewals, repayments and
loan against deposit facility. Further, all enquiries through email, post, telephone and in person
are attended to immediately.
Electronic Clearing Service
This facility is provided to depositors in select centres whereby the interest will be credited
directly to the depositors' bank account. The depositor would receive a credit entry "ECS HDFC"
in his passbook/bank statement. Intimation of interest credited would be sent on an annual basis.
Our bank will not levy any charge for this facility as per present RBI guidelines.
Presently this facility is being offered are at the following centers
ECS Centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai,
Hyderabad, Jaipur, Kanpur, Lucknow, Mumbai, Nagpur, Nasik, New Delhi, Pune and Vadodara.
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5. Short Term Bridging Loan

Short-Term Bridging loan makes you realise our dream of buying a bigger and better home and gives you time to
sell our existing property to pay off the loan.
This is a short term loan to help customers with the interim period between the sale of our old
home and the purchase of a new home. You can take the loan even if you are an existing
customer of HDFC.

Features
Maximum loan
90% of cost of new property
Maximum Term
2 years
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 need not be coowners.
Fixed Rate
6. Land Purchase Loan
Features
Maximum loan
85% of cost of the land and based on the repayment capacity of the
customer.
Maximum Term

33

15 years subject to our retirement age.

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 coapplicants need not be co-owners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending
Rate (RPLR). The rate on our loan will be revised every three months
from the date of first disbursement, if there is a change in RPLR, the
interest rate on our 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 and the principal component will
reduce resulting in an extension of term of the loan, and vice versa
when the interest rate decreases.
Fixed Rate

Non Residential Premises Loan for Professionals

Features
Purpose
Purchase, Construction, Improvement of Office, Clinic
Eligibility:
o Doctors
o Chartered Accountants
o Lawyers

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o Other self-employed professional

Maximum loan
85% of cost of the property
Maximum Term
10 years Improvement 5 years. Non residential premises maximum term is 15 years, NRP
improvement remains 5 years.
Applicant and Co - Applicant to the loan
Loans can be applied for either individually or jointly. Proposed owners of the property
will have to be co-applicants. However, the co-applicants need not be co-owners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on our loan will be revised every three months from the date of first disbursement, if
there is a change in RPLR, the interest rate on our loan may change. However, the EMI
on the loan disbursed will not change. If the interest rate increases, the interest
component in an EMI will increase and the principal component will reduce resulting in
an extension of term of the loan, and vice versa when the interest rate decreases.
Fixed Rate
7. Home Equity Loan
HDFC Home Equity Loans helps you encash the present market value of the property by taking a
loan by mortgaging the property.
Features
Purpose
Loan can be for any purpose. However, the funds should not be used for speculation or
any illegal purposes.

35

Customers have benefited by taking loans to meet the following funding requirements
o Education
o Marriage Expenses
o Medical Expenses
Property
o Residential
o Non Residential
- Should be Fully Constructed
- Should be a Freehold property having a clear and marketable title.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The
rate on our loan will be revised every three months from the date of first disbursement, if
there is a change in RPLR, the interest rate on our loan may change. However, the EMI
on the home equity loan disbursed will not change. If the interest rate increases, the
interest component in an EMI will increase and the principal component will reduce
resulting in an extension of term of the loan, and vice versa when the interest rate
decreases.
Fixed Rate
Maximum Loan
o Existing Customers
- Balance of 60% of the market value and present loan outstanding

36

o New Customers
- 50% of the market value of the property (including the cost of the land)
o Subject to
- Minimum Market Value of the property being Rs.5,00,000 for Residential
property and Rs.7.50 Lacs for Non Residential Property
- Repayment Capacity of the customer

CHAPTER- VIII
HDFC HOME LOAN RATES
When it is a question of purchasing a home with a home loan, the primary
objective of the borrowers is to find a cheap interest rate loan. HDFC Bank
India home loans rates are one of the cheapest rates that are available in the
Indian home loan market
The home loan offered by HDFC Bank for purposes like home construction or
purchase of houses (new/resale). You can make either a single or joint loan
application. With an HDFC Bank home loan, you have the opportunity to
37

finance up to 85% of the value of the property (comprising stamp duty plus
contract value along with registration fees) on the basis of the ability for
repayment of the applicant. But in the case of land loans, the finance is
provided up to 70% of the value of the property. Also, the land purchase
loans are provided only for DTP approved sites and not for panchayat
approved sites.
About HDFC Bank India Home Loans Rates
HDFC Bank India home loans rates are one of the most competitive rates
available in the home loan market. The table given below will give you an
idea about these rates
Plan

Minimum Interest Maximum Interest

EMI

Processing Fee

Rate

Rate

8.25%

8.25%

19,403 0.50% to 1% of loan amount

14.25%

14.25%

26,972

8.25%

8.25%

19,403 0.50% of loan amount

8.25%

8.25%

19,403 0.50% of loan amount

Home loan Plot of Land

HDFC - Special Scheme 3 Active
Residential Home loan
HDFC - Fixed
HDFC - Special Scheme
3

0.50% to 1% of loan amount, subject to a

maximum of Rs. 10,000.

HDFC Ltd. Other Plans

HDFC - Special Scheme 3

Briefly the interest rate of each loan mentioned in the above chapter can be charted as per
the current trend can be explained as below
LOAN
HOME PURCHASE LOAN

PURPOSE
Purpose of buying residential

HOME CONSTRUCTION

building
Building new residential

8.25%

LOAN
HOME IMPROVEMENT

space
For altering the internal

8.25%

LOAN
HOME EXTENSION

infrastructure of the residence

Building a new building upon

8.25%

LOAN

the existing one

38

INTEREST RATE
8.25%

MORTGAGE (HOME

Pledging on home

EQUITY LOAN)
LAND PURCHASE LOAN

Buying construction land

10.5%
8.25% (within city limit)
11.77% (out of city limit)

Advantages offered by HDFC Bank India home loans

Given below are some important advantages offered by HDFC Bank India home loans:
Flexible repayment terms
All the home loans offered by HDFC Bank India are available with convenient and flexible
repayment terms. The repayment terms have been scheduled to fit the requirements of the
borrowers.
Automated repayment of EMIs (Equated Monthly Installments) on home loans
The borrower has the facility to provide standing instructions to pay off their home loan
installments directly from their savings account with HDFC Bank. This helps you in avoiding the
hassles of collecting, signing and monitoring post-dalted cheques.
Both fixed and floating rate loan options are available
The borrowers have the option of selecting from fixed and floating rate loans. Borrowers are also
allowed to design their loans as partially floating and partially fixed rate loans.
Loan Coverage Term Assurance Plan
This is an insurance policy offered by HDFC Standard Life Insurance Company Limited, which
has been planned to make sure that unforeseen events in your life dont hamper the interest of
your family and your prized home. The Loan Cover Term Assurance Plan (LCTAP) offers a
onetime payment on the ill-timed death of the life insured. This is a kind of sure risk strategy
39

which has been devised in such a manner so that the cover reduces while you gradually pay off
your home loan, turning it into an affordable insurance premium plan.
In-house inspection of property deeds
HDFC Bank also gives you the opportunity to scrutinize your property deeds in your home for
your absolute peace of mind.
Customer privileges
In case you are an existing customer of HDFC Bank home loan, then you can get other loans
from HDFC Bank like car loans, personal loans, loan against securities and two wheeler loans at
cheaper interest rates.

Schedule of Charges on HDFC Bank India Home Loans

The table given below will help you understand the various charges associated with HDFC Bank
India home loans:
Types of Charges

Ecbop Home Loan

No prepayments permitted during first 6 months
6 months - 5 years - 1.5% of original loan amount
5 years -10 years - 0.75% of original loan amount
Over 10 years - No closure charges
eBOP customers :

Foreclosure penalties

Loan repaid from own funds - no foreclosure penalties

Loan repaid from other funds - usual foreclosure penalties.

For Gold Category

6 months - 5 years - 2% of original loan amount
Over 5 years - No closure charges
Cheque swapping charges

Rs 500/-

Fees for delayed payment of EMI

2% per month

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Duplicate Statement Charges (per statement)

Rs 100/- per page subject to a maximum of Rs. 300/-

Bounce Cheque Charges

Rs. 500/-

Issue of Duplicate Interest Certificate

Rs. 300/-

Issue of Duplicate Provisional Interest Certificate

Rs. 300/-

Issue of Amortization Schedule (Duplicate)

Rs. 300/-

Duplicate Balance Certificate

Rs. 300/-

Switch from Fixed to Floating

Not Applicable

Switch from Floating to Fixed

Not Applicable

Photocopy of Documents

Rs. 500/-

CHAPTER- IX
MONETARY GRADES OF HDFC- 2010
The Board of Directors of Housing Development Finance Corporation Limited (HDFC)
announced its results for the first quarter of the financial year 2010-11, following its meeting on
Wednesday, July 14, 2010 in Mumbai. The accounts have been subject to limited review by the
Corporations statutory auditors in line with regulatory guidelines.
FINANCIAL RESULTS
For the quarter ended June 30, 2010, HDFC reported a profit before tax of Rs. 966.59 crores as
compared to Rs. 779.92 crores in the corresponding quarter of the previous year an increase of
24%. During the quarter profit on sale of investments was Nil as compared to Rs 51.31 crores in
the corresponding quarter of the previous year.
After providing Rs. 272 crores for taxes, the profit after tax for the quarter ended June 30, 2010
amounted to Rs. 694.59 crores as compared to Rs. 564.92 crores in the corresponding quarter of
the previous year an increase of 23%.
TOTAL ASSETS

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As at June 30, 2010, the total assets of HDFC stood at Rs. 1,16,111 crores as against Rs. 97,479
crores as at June 30, 2009 an increase of 19%.
Loan Book
As at June 30, 2010, the loan book stood at Rs. 1,01,625 crores as against Rs. 87,046 crores as at
June 30, 2009. Loans sold during the preceding 12 months amounted to Rs. 5,636 crores. The
growth in the loan book inclusive of loans sold is 23%.
The spread on loans over the cost of borrowings for the quarter ended June 30, 2010 stood at
2.34% compared to 2.31% for the year ended March 31, 2010.

Investments
As at June 30, 2010, the unrealised gains on HDFCs listed investments amounted to Rs. 16,775
crores (previous year Rs. 11,662 crores). This excludes the appreciation in the value of unlisted
investments.
Lending Operations
Individual business for the quarter ended June 30, 2010 was robust with individual approvals
growing by 56% and disbursements growing by 62% as compared to the corresponding quarter
in the previous year. The high growth rates are also partly reflective of a lower base in the
previous year.
Non-Performing Loans
Gross non-performing loans as at June 30, 2010 amounted Rs. 905.03 crores. This is equivalent
to 0.89% of the loan portfolio (previous year 0.98%) This is the twenty-second consecutive
quarter end at which the non-performing loans have been lower than the corresponding quarter in
the previous year.

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Based on a six months overdue basis, the non-performing loans as at June 30, 2010 stood at
0.54% of the loan portfolio as against 0.58% in the previous year.
In terms of the prudential norms as stipulated by the National Housing Bank, the Corporation is
required to carry a provision of Rs. 332.68 crores in respect of non-performing assets and general
provision on outstanding standard non-housing loans.
The balance in the provision for contingencies account as at June 30, 2010 stood at Rs. 696.73
crores, which is equivalent to 0.68% of the portfolio. The Corporations net non-performing
loans stood at 0.21%.

Resources
As at June 30, 2010, deposits stood at Rs. 23,906 crores as against Rs. 19,728 crores on the
corresponding date last year, registering a growth of 21%. HDFCs deposits carry a AAA
rating from both, CRISIL and ICRA.
During the first quarter of the financial year, loans drawn from commercial banks, financial
institutions and National Housing Bank amounted to Rs. 9,275 crores.
HDFC raised Rs. 3,850 crores through private placements of non-convertible debentures (NCDs)
during the quarter ended June 30, 2010. The NCDs were AAA rated by both, CRISIL and
ICRA.
Capital Adequacy Ratio
HDFCs capital adequacy ratio stood at 14.8% of the risk weighted assets, as against the
minimum requirement of 12%. Tier 1 capital was 13.6% against a minimum requirement of 6%.
Distribution Network

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HDFCs distribution network spans 277 outlets that include 64 offices of HDFCs distribution
company, HDFC Sales Private Limited (HSPL). In addition, HDFC covers over 90 locations
through its outreach programs. Distribution channels form an integral part of the distribution
network with home loans being distributed through HSPL, HDFC Bank Limited and other few
third party direct selling associates.
To cater to non-resident Indians, HDFC has offices in London, Dubai and Singapore and service
associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Saudi Arabia Al Khobar, Jeddah
and Riyadh.

CHAPTER- X
SUGGESTION AND CONCLUSIONS
Suggestions
The net profit should be improved by concentrating on the operating
expenses.
The future trend of companys share falls year by year. This indicates that the
performance of the bank is not at a satisfactory level. So the market value of
shares is to be improved.
The fixed asset should be increased, so steps to be taken for improving the
present level of fixed asset.

Conclusion

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The performance of HDFC during the study period reveals that operating and financial
performance of HDFC has been good.
The profitability position was also generally good, and the percentage of profit would
make the shareholders more satisfied. Turnover ratio also indicates the effective utilization of
resources by HDFC home loans during the study period. By implementing suggestions offered
thorough this study, the performance of HDFC would improve further in the years to come.

45