MINOR PROJECT REPORT

ON

Home Loans of HDFC Ltd

Submitted by

HARKANWALPREET KAUR

1603104207

KANIKA MITTAL

1603104208

Submitted to

UNIVERSITY SCHOOL OF MANAGEMENT STUDIES

In partial fulfillment for the award of the degree of

Masters of Business Administration

Rayat Bahra University, Mohali

 ACKNOWLEDGEMENT

We express my gratitude to Prof.Dr Balram Dogra sir, Dean of University school of management
studies And also for those who have guided and inspired me in completing this study. We would like to
express my deep sense of gratitude to my school mentor Prof. Dr. Hitesh Katyal Sir for giving me
support and helping me during my project study.

We would like to express my gratitude to my institute guide Prof. Dr.Hitesh Katyal sir for his
constant encouragement and guidance without whom the task would not have been completed.

Last but not the least we would like to thanks my parent and friends for their support.

THANKYOU ALL

HarkanwalPreet Kaur

Kanika Mittal
 Declaration

This is to declare that the Report entitled “Home Loans of HDFC Ltd” has been made by me in

partial fulfillment of requirement for the degree of Masters of Business Administration at

Housing Development Finance Corporation Limited.

I confirm that this Report truly represents my work undertaken as a part of my minor project.

This work is not a replication of work done previously by any other person. I also confirm that

the contents of the report and the views contained therein have been discussed and deliberated

with the Faculty Guide.

Harkanwalpreet Kaur

1603104207

Kanika Mittal

160314208

MBA 3rd Sem

 INTRODUCTION
HDFC home loans help Indians experience the joy of home ownership. The road to success is a
tough and challenging journey in the dark where only obstacles light the path. However, success
on a terrain like this is not without a solution. HDFC found out nearly three decades ago, in
1977, the solution for success is customer satisfaction. All one need is the courage to innovate,
the skill to understand clientele and the desire to give them best. Today, nearly three million
satisfied customers whose dream they helped realize, stand testimony to their success. Their
objective, from the beginning, has been to enhance residential stock and promote home
ownership. Now their offerings range from hassle–free home loans and deposit products, to
property related services and a training facility. They also offer specialized financial services to
the customer base through partnerships with some of the best financial institutions worldwide.

BACKGROUND
HDFC was incorporated in 1977 as the first specialized Mortgage Company in India with
primary objective of meeting a social need –that of promoting the home ownership by providing
long term finance to households for meeting their housing needs.

Its services are aimed at individuals as well as companies availing loans for housing purposes. It
also provides lease finance to companies and to development authorities for financing
infrastructure and other assets along with its property related services.

ORGANIZATIONAL GOALS

 Develop close relationships with individual households.

 Maintain its position as the premier housing finance institution in the country.
 Transform ideas into viable and creative solutions.
 Provide consistently high returns to shareholders.
 To grow through diversification by leveraging off the existing client base.
 Ir
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Vision of the organization
“HDFC is an organization that strives for excellence, with the twin objectives of enhancing
customer satisfaction and shareholder value”

Vision of HDFC
1. To enhance residential housing stock in the country through the provision of
housing finance in a systematic and professional manner and to promote home
ownership.

2. To increase the flow of resources to the housing sector by integrating the

housing finance sector with the overall domestic financial markets.
 NUMBER OF HOUSELESS HOUSEHOLDS & HOUSELESS POPULATION

Table 1

Year
Houseless Households Houseless Population

Total Rural Urban Total Rural Urban

1961 … … … 12.65 9.70 1.95

1971 5.65 3.88 1.77 19.86 15.20 4.66

1981 6.16 4.13 2.03 23.43 17.24 6.19

1991 5.22 3.05 2.17 20.07 12.82 7.25

2001 4.48 2.60 1.88 19.44 11.65 7.89

Population (In Lakhs)

Houseless Population
25
20
15
10
5
0
1961 1971 1981 1991 2001

Interpretation:

This graph shows that the total houseless population was highest in the census of
1981 before that it was raising but after that it reduced. As far as urban
houseless population is concerned it had been increasing since 1961 to 2001.
The total houseless population was reduced because of the reduction in
houseless population from rural sector

HOUSING SHORTAGE DURING 1961-2001

Table 2

Year 1961 1971 1981 1991 2001

Total 15.2 14.6 23.3 22.9 24.7

Rural 11.6 11.6 16.3 14.7 14.1

Urban 3.6 3.0 7.0 8.2 10.6

Housing Shortage in India

30

25
Housing Shortage (In Million)

20

15

10

0
1 2 3 4 5
Interpretation:

The above graph shows that in urban sector the housing shortage problem rises
since 1961 to 2001. Rural sector shortage has shown many changes, like it was
constant since 1961 to 1971, then housing shortage grew in 1981 but again fell
by the year 1991 which reduced by the difference of 0.6 by 2001.
 FINANCIAL HIGHLIGHTS

(As At March 31, 2017)

FIIs & FDIs 77%

Individuals 12%
Financial 5%
Institutions & Banks
Mutual Funds 4%
Others 2%

4% 2%
5%

FII & FDI

12%
Individuals
Banks & Insurance
Companies
Mutual Funds
77% Others

LOAN APPROVALS & DISBURSEMENTS

Year Approved Disbursements

FY13 197.15 162.07

FY14 256.34 206.7

FY15 333.32 261.78

FY16 425.2 328.75

FY17 478.9 396.5

 600

500

400
Approved
300
Disbursements
200 Column1

100

0
FY13 FY14 FY15 FY16 FY17

OPERATIONAL & FINANCIAL HIGHLIGHTS

97% OF HDFC MORTGAGES ARE SOURCED BY THEMSELVES OR THROUGH

THEIR AFFLIATES

Direct Walk-In 30% Sources Of Mortgages

HDFC Sales Pvt. 40% 3% Walk-ins
Ltd 27% 30%
HDFC sale
HDFC Bank 27%
HDFC Bank
40%
DSAs 3% DSAs
HDFC HOME LOAN PRODUCTS

HOME IMPROVEMENT LOAN

HOME EXTENSION LOAN

SHORT TERM BRIDGING LOAN

LAND PURCHASE LOAN

LOANS TO PROFESSIONALS FOR NON RESIDENTIAL PREMISES

HOME EQUITY LOAN

HOME LOAN

HOME IMPROVEMENT LOAN

Home Improvement Loan facilitates internal and external repairs and other structural
improvements like painting, water proofing, plumbing and electric works, tiling and flooring,
grills and aluminum windows. HDFC finances upto 85% of cost of renovation (100% for
existing customers). Maximum term of loan is 15 years subject to retirement age.

PURPOSE

External repairs Tiling and flooring

Internal & External Painting Waterproofing and roofing

Plumbing and electrical work Grills and aluminum windows

Construction of underground/upper water tank Paving of compound wall (with stone/tile/etc.)

Bore well Waterproofing on terrace

MAXIMUM LOAN
 For Existing customers : 100% of the cost of improvement
 For New customers : 85% of the cost of improvement
MAXIMUM TERM

15 years subject to your retirement age.

HOME EXTENSION LOAN

Home Extension Loan facilitates the extension of an existing dwelling unit. This type of loan
makes it convenient to extend or add space to home.

PURPOSE

This loan is specifically for the extension purposes. Be it an additional room, a larger bathroom,
or even enclosing an open balcony.

MAXIMUM LOAN

85% of the cost of extension

MAXIMUM TERM

20 years subject to your retirement age

SHORT TERM BRIDGING LOAN

PURPOSE

Short Term Bridging Loan makes customer realize their dreams of buying a bigger and better
home and gives them time to sell their existing property to pay off the loan. This is a short term
loan to help customers with the interim period between the sale of their old homes and the
purchase of a new home. Customers repay the loan by paying monthly installment or interest on
the loan with a lump sum payment within 2 years. Hence customer gets 2 years to sell the
property and prepay the loan.

MAXIMUM LOAN

90% of cost of new property

MAXIMUM TERM

2 years
LAND PURCHASE LOAN
PURPOSE

HDFC Land Purchase Loan is a convenient loan facility to purchase land, whether it be to build
the house or as an investment.

MAXIMUM LOAN

85% of cost of the land and based on the repayment capacity of the customer.

MAXIMUM TERM

15 years subject to customers retirement age.

LOAN TO PROFESSIONALS FOR NON RESIDENTIAL PREMISES

This loan facilitates professionals to purchase or construct their own office premises or even
renovate their existing office premises.

PURPOSE
 Purchase
 Construction
 Improvement of office

MAXIMUM LOAN

85% of cost of property

MAXIMUM TERM

10 years, Improvement 5 years. Non residential maximum term is 15 years.

ELIGIBILITY

Doctors, Lawyers, Chartered Accountants, Other self employed professionals.

SUPPORTING DOCUMENTS

Application form with photograph

Identity and Residence proof

Education Qualification Certificate and Proof of business existence

Last 3 years Income Tax Returns (self and business)

Last 3 years Profit/Loss and Balance Sheet

Last 6 months bank statements

Processing fee cheque

INTEREST RATES

AMOUNT VARIABLE RATE BASIS %

UPTO Rs 99.99 lacs 13.25% RPLR-0.75

Rs 1 crore and above 13.00% RPLR-1.00

HOME EQUITY LOANS

HDFC Home Equity Loans helps to encash the present market value of the property by taking a
loan by mortgaging the property.

PURPOSE
 Higher education of children
 Marriage expenses
 Medical expenses
 Business purpose

MAXIMUM LOAN

For Existing customers: 60% of the market value and present loan outstanding.

For New customers: 50% of the market value of the property

MAXIMUM TERM
PROPERTY TYPE REPAYMENT OPTIONS NO.OF YEARS

RESIDENTIAL EMI BASED 15

NON RESIDENTIAL EMI BASED 10

BOTH Simple Interest 2

HOME LOAN
HDFC offers home loan for individuals to purchase (fresh/resale) or construct houses. Home
Loan can be applied individually or jointly. Proposed owners of the property will have to be co-
applicants. However, the co-applicants need not be co-owners.

PURPOSE

 Purchase of flat, row house, bungalow from developers.

 Existing freehold properties.
 Property in an existing or proposed cooperative society or apartment.
 Self construction.
MAXIMUM LOAN

85% of the cost of property (including the cost of land)and based on the repayment capacity of
the customer.

MAXIMUM TERM

20 years subject to the retirement age

ELIGIBILITY

 Salaried employees.
 Self employed professionals
  Self employed businessman
 Applicants can either be Resident or Non- Resident
 Age of the applicant should not be more than 65 years.

TERMS AND CONDITIONS

HDFC has always been market oriented and dynamic with respect to resource mobilization as
well as its lending programme. It provides loans to meet all the requirements of the customer to
make that house a home. However, following are the conditions which are to be met by the
customer before applying for a loan.

LOAN AMOUNT

 HDFC finances upto 85% maximum of cost of the property (agreement value + stamp
duty + registration charges) and also based on the repayment capacity of the customer.

 Repayment capacity takes into consideration factors such as income, assets,

qualifications, number of dependents, spouse income, liabilities, stability and continuity
of occupation and savings history.

 The loan amount of the individual is also subject to Installment to Income ratio (IIR)
which is 40% and Fixed Obligation Income Ratio (FOIR) which is 45%.

 Maximum loan amount to an individual cannot exceed Rs 1, 00, 00,000.

MARGIN

The borrower’s contribution shall be minimum 15% of the total cost of the project (including
stamp duty and registration charges).

TENURE

Maximum term is 20 years, under both FRHL and ARHL, subject to retirement age (In case of
salaried individuals) or 65 years (for others).

LENDING RATES

HDFC offers a choice between Fixed Rate Home Loans (FRHL) and Adjustable Rate Home
Loans (ARHL).

Adjustable Rate is linked to HDFC’s Retail Prime Lending Rate (RPLR).The rate on the loan
will be revised every three months from the date of first disbursement, if there is a change in
RPLR, the interest rate on your loan may change. However the EMI (Equated Monthly
Installment) on the home loan disbursed will not change. If the interest rate increases, the interest
component in an EMI will increase and the principle component will decrease resulting in an
extension of term of the loan and vice versa. FRHL is a loan where the interest rate becomes
fixed throughout the life of the loan.

Alternatively, an individual can avail part of the loan under FRHL and balance under ARHL or
can switch between schemes for a nominal fee. Conversion charges from Fixed to Floating are
0.5% and from Floating to Fixed is 1.75% of outstanding principal.

TABLE
Negotiated Floor Fixed Rate % Variable Rate % Basis %
Rates

Rack Rates 13.25 12.50 RPLR- 1.50

Upto 20 lacs 13.25 11.00 RPLR-3.00

Rs 20 lacs & above 13.25 11.25 RPLR-2.75

SECURITY

Security for the loan is a first mortgage of the property to be financed, normally by way of
deposit of title deeds and/or such other collateral security as may be necessary. Interim security
may be required, if the property is under construction. Collateral or interim security may be
required, the surrender value of which is at least equal to the loan amount, guarantees from sound
and solvent guarantors, pledge of shares on such other investments that are acceptable to HDFC.
Liquid securities in the form of shares, fixed deposits etc. may be accepted as additional
securities on a selective basis. Title to the property should be clear, marketable and free from
encumbrances.

DISBURSEMENTS

 Disbursements will be made after the property has been technically appraised and all
legal documentation has been completed.

 The borrower has to invest his proportionate share of the cost, prior to disbursement of
the loan.
  Loan is disbursed in full or in installments (normally not exceeding three in number)
taking into account the requirement of funds and progress of construction, as assessed by
HDFC and not necessarily according to a builders agreement.

 For houses/flat under construction, the loan amount will be disbursed in stages based on
the progress of construction.

FEES AND OTHER CHARGES

A Processing fee of 0.5% of the loan amount applied is payable when the application form is
submitted. This amount is not refundable. On sanction of loan and acceptance of offer, an
administration fee of 0.5% of the loan sanctioned is payable. The processing and administration
fees can be paid upfront i.e. 1% of the loan at the time of submission of the loan application
itself. Taxes as applicable will be charged on the fees collected.

For FRHL an early redemption charge of 2% is payable on repayment of a loan. Under ARHL
this charge is applicable in case of commercial refinance.

Conversion Charges from Fixed to Floating is 0.5% and from Floating to Fixed is 1.75% of
outstanding principal.

Payment of such fees and charges can be made through cheque marked “Payee’s account only”
drawn on a bank in a city where HDFC has an office or by demand draft (payable at par to
HDFC).

REPAYMENT

Loan is repaid in EMIs comprising principal and interest. EMI commences from the first day of
the month following the month in which the disbursement of the loan has been completed. Due
date of payment of first EMI is the 5th day of the month following such month.

Interest is paid on the portion of the loan disbursed which is called Pre – EMI. Pre – EMI
interest is payable every month from the date of each disbursement upto the date of
commencement of EMI. Customer may opt to pay the EMIs by direct deduction of monthly
installments by his employer, issuing post dated cheques, issuing standing instructions to his
bankers, or can pay the installments at any of HDFC’s collection centers.

FLEXIBILITY IN REPAYMENT

Following are the repayment option features being offered by HDFC to its customers:

Step up Repayment Facility (SURF): This scheme helps young executives to take a
much bigger loan today based on an increase in their future income; this helps executives
buy a bigger home today.
 Flexible Loan Installment Plan (FLIP): Often customers, parents and their children
wish to purchase properties together. The parent is nearing retirement and their children
have just started working. This option helps such customers combine the incomes and
tale a long term home loan wherein the installment 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, HDFC has introduced a special facility of
Tranche Based EMI. Customers can fix the installments they wish to pay till the time the
property is ready for possession. The minimum amount payable is the interest on the loan
amount drawn. Anything over 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 an

opportunity to repay the loan faster by increasing the EMI. Whenever the customer gets
an increment, increase in its disposable income or have lump sum funds for loan
prepayment, he can benefit by an increase in EMI which means faster loan repayment
resulting in saving of interest due to faster loan repayment.

Balloon Payment: Balloon Payment is an enhancement tool, which increases the loan
eligibility of the customer without increasing the EMI by assigning securities like
National Savings Certificate (NSC), LIC policies etc. to HDFC.

BENEFITS OF HDFC HOME LOANS

 Choose from Fixed or Floating Rate with options to structure loans as partly fixed or
partly floating.

 Flexible repayment options to suit individual needs.

 Home Loan Protection Plan: HDFC along with HDFC standard life insurance has a
home loan protection plan that ensures that the outstanding loan, upto the amount
insured, is repaid in the event of death of the borrower, which is a huge security during
the term of the loan. This plan is a single premium decreasing term assurance plan and so
by reducing the sum assured as years go by, it ensures that the customer only pays for the
protection that is required. To avail of this policy, one only needs to pay a single
premium in advance.

 of this policy, one only needs to pay a single premium in advance.

 Automated Repayment of Home Loan EMI: A customer can provide standing
instructions to repay his home loan EMIs directly from his HDFC Bank Saving Account,
thus, saving him the trouble of procuring, signing and tracking post-dated cheques.

 Safe Document Storage Facilities: HDFC has a state of art storage facilities which are
theft and fire proof, at various locations where loan and property documents are stored. In
this way valuable documents are stored safely over the period of the loan and are released
almost immediately after a customer repays his loan
OBJECTIVES
 RESEARCH METHODOLOGY
Research methodology may be defined as, scientific and systematic search for information
require on a specific topic. In short research is an art of scientific investigation. Thus it is a
movement, i.e. from unknown to known.

Research comprises defining and redefining problems formulating hypothesis or suggested

solutions. Research methodology refers to the tools and methods used for obtaining information
for the purpose of the subject under study.

Research Design:

Research design is the framework of conducting the research problem. It specifies the detail of
the procedure necessary for obtaining the information needed to structure. Customer’s perception
is descriptive research which is a formal and structured research that has major objective to
determine, evaluating and selecting. Descriptive research design requires 6Ws (who, what, when,
why, where and way) for defining the research.
It is a single cross-sectional design which requires the information only once. The customers of
HDFC Ltd. were used as sample for the study and information was collected only once through
the questionnaire. The survey method used structured questionnaire which was given to the
customers and designed to elicit specific information.
DATA COLLECTION

Secondary data has been collected by using secondary sources of information like Company
Brochures, Journals, Magazines and Websites.
SECONDARY DATA
Secondary data refers to the one which has already been collected by someone else. The
secondary data was collected from the office account records and annual report of the company.
Secondary data sources for this study are:

 Websites of HDFC and other financial institutions . Annual report

 Pamphlets/Brochures/Magazines . Newspapers/Articles
 CONCLUSION

HDFC is India’s premier housing finance company and enjoys an impeccable track record in
India as well as in International markets.

HDFC home loans help customers experience the joy of home ownership. The road to success is
a tough and challenging journey in the dark where only obstacles light the path. HDFC found out
nearly three decades ago, in 1977, the solution for success is customer satisfaction. Today, nearly
three million satisfied customers whose dream they helped realize, stand testimony to their
success. Their objective, from the beginning, has been to enhance residential housing stock and
promote home ownership. Now, their offerings range from hassle-free home loans and deposit
products, to property related services and a training facility. They also offer specialized financial
services to the customer base through partnerships with some of the best financial institutions
worldwide.

HDFC has developed a significant expertise in home loans to different market segments and also
has a large corporate client base for its housing facilities.
 Bibliography

The following books and Internet Websites and Web pages have been used for

Collecting information relevant to the topic:

 Kothari C.R., Research methodology, New Age Publishing House, Second Edition
 Beri G.C., Marketing research, Tata McGraw Hill Publishing House, Third Edition.
 Gupta, S.P, Statistical Methods, Sultan Chand and sons, New Delhi, 2004
 Kotler Philip (2003), Principals of Marketing, Pearson publishing, New Delhi
 http://www.indiastat.com/default.aspx`
 http://www.apnaloan.com/home-loan-india/
 http://indiabudget.nic.in
 www.nhb.org.in
 HDFC intranet
 www.hdfc.com