Chapter 1 : Introduction to Study

The study includes financial research and Analysis of Bajaj FinServ

Branch. Kolhapur. It thus also helps in studying the various aspects of a
finance Companies such as loan, insurance, stocks, credit cards etc.
Financial services provided by companies like Bajaj Finserv are an
essential tool for economic growth as it brings together one who needs
Funds and those who can supply Finance provided by Bajaj FinServ
enables people increase their living standards as they gets facility of
purchasing various products on hire purchase..

Study thus includes various types of barriers against risk arising from
various activities through insuring people against uses. The study makes
us understand different client. oriented problems regarding finance
process and other terms and conditions that includes credit required for
loan, cibil score, time period and source of income the study also focuses
on the loan process and different steps in applying credit cards.

The human resource scenarios are discussed in study with the help of tree
diagram. Study focuses both with customer as as well as providers frame
of reference. Finally it analyses the financial growth of Branch in past
few years and makes us understand the viability, stability and profitability
of the firm.

1.2 Research Design:

1) The company structure:
Understanding the company structure will help us understand the working
of company. It may thus clearly make us know the working module of the
company.

2) Customer EMI statements:

Analyzing the customers EMI statements would make us understand the
process of amount collection which has been financed.

Studying strategy of business would make us understand the advantages

and limitations of company/ Bramch both with frame of reference to
customers and providers. Which would help us relate it with the business
growth.
4) Understanding the Financial Services: Understanding the financial
services and process involved would make us understand the positive and
negative sides of finance companies.

3) The Business Strategies:

5) The Financial Analysis:

Considering the above factors and particularly studying the balance sheet
would clearly understand the companies finance process. Thus we would
reach to the conclusion and analyzing the study we would suggest the
solution.

1.3 Objectives of Study:

> To understand working procedure of financial services company.

To learn different financial services provided by the Bajaj finserv. To

learn EMI calculation and Payback Process and Period.

1.4 Scope of study:

> Conceptual scope: Study will be limited to financial section of the firm.
> Geographical scope: Study will be limited with Bajaj finserv Kolhapur.
(Store) ➤ Analytical Scope: Study will remain limited for analyzing the
financial Services of Kolhapur Region.

1.5 Importance of study:

> Study helps in understanding viability, stability and profitability of

firm.

> Research in the firm provides practical knowledge about analyzing and
implementing.

> Study gives exposure to different financial services related to consumer

durable loans.
> Study helps us understand the impact of business strategies and human
resource scenario on the business of the firm.
Study thus gives an idea of the Financial services and helps in
forecasting various business solutions to make the process strong.

.A. 0.

To analyze the financial section of the particular firm financial data is

required. Also the guidance of the employers and the manger is worthy
for understanding the

1.6 Research Methodology:

1.6.1 Data required for study.

financial services. Data sources:

1) Primary source: Service Prospects, Employee Guidance, Financial

Reports.

2) Secondary source: EMI statements, Chargesheets, Schemes prospect

etc.

1.6.3 Instruments:

In order to perform financial analysis of the firm and to understand the

financial

services some instruments needs to be referred. Financial service

prospects

Sales report monthly as well as quarterly.

EMI statements

1.6.4 Data analysis:

In involves evaluating companies historical data to better understand the

current and future financial health of company. By tracking firms
financial performance along with sales and purchasing data we can have
the access to financial truth.

1.7 Chapterization:

The project report on topic " Consumer Durable Loans" in reference to

'Bajaj finServ' is

chaptered as below:

1) Chapter 1- Introduction to study. 2) Chapter 2-profile of the

organization.

3) Chapter 3- The conceptual framework.

4) Chapter 4- Findings and suggestions.

Limitation of Study:

> Limited sources of information thus firm can only be seen in the way as
the

> Study is limited to Bajaj finsere Kolhapur Region only. The

confidential data cant be exposed by the firm.

representative of firms wants to show. > Due to the growing competition

fake data's are exposed in market which should not

be considered.

Limited time period for the report study.

Quality of information may not be pure.

Chapter 2:
Profile Of the Organization

Introduction
 Company Name Buldhana Bank
Founded In
Parent Company
Headquarter
Branch Chairperson
Website

Bajaj finserv is originated from the parent company Bajaj Auto limited.
Bajah finserv

independently run the core business of lending, Protection and Savings.

Bajaj Finserv limited is holding company for the businesses dealing with
the financial services of the Bajaj Group. It serves millions of customers
in the financial services space by providing solutions for asset acquisition
through financing. Asset protection through general insurance, family
protection and income protection in the form of life and health insurance
and retirement and savings solutions.

R.D.A

2.2 History Of Bajaj FinServ:

Bajaj Finserv was formed in April 2007 as a result of its demerger from
Bajaj Auto Itd as a separate entity to focus purely on the financial
services business of the group. The process of

demerger was completed in February 2008.

This demerger was not only to unlock the value in the high growth
business areas of auto ,insurance, Finance sectors and wind power but to
also independently run these core businesses and strengthen their
competencies.

The wind project,the stakes in the life and general insurance companies
and consumer finance along with their respective assets and liabilities got
vested in Bajaj Finserv Ltd. In addition to that,cash and cash equivalent
of INR 8000 million was also transferred to the

company.
The demerger has enabled investors to hold separate focused stocks and
also facilitated

transparent bench marking of the companies to their peers in their

respective industries.

2.3 Activities of the Organization:

To provide various financial services • To provide loan to New and

Existing Customers

To provide insurance both Product and customer life insurance.

2.4 Mission of the Organization:

Mission of the organization can be categorized with reference to dealer,

customer and Bajaj

FinServ.

a) With reference to dealer:

1.
brand i.e. Bajaj FinServ. b) With reference to Customer:

The constantly changing demographics and dynamics of Indian economy

has led to creation of various needs of the customer. The Indian customer
now demands proper avenues of channelizing their savings financial
protection and is also desirous of spending more on valuable goods and
services. All these wants need to be met by dynamic players in the
financial services space. Bajaj Finserv was formed specifically to cater to
these needs. The company was also formed to touch and improve the
lives of a growing number of people in the country. And in doing
so,deliver superior corporate values to its shareholders.

The operating companies carry with them the bajaj brand, which carries
with it decades of commitment to business ethics, integrity and highest
standards of fiduciary responsibility.

110 GA
To provide EMI schemes on direct purchase of product through Bajaj
finserv.

Dealer gets the customer attraction.

Dealers in region gets chance to partner with one of the top financial
sector

Sale of the dealer automatically increases as customer due to EMI

schemes tend to buy more products or combo products.

Customers can afford more products as compared to purchase with one

time payment

Due to services like VAS customer wishes to buy products with superior
quality along with the extra chargeable services.

For Example: If the customer buys an air conditioner but the installation
charges of an AC bought are high. Thus if customer buys the product
through

Bajaj finServ EMI,the AC price along with installation charges are

converted to EMI which makes buying AC affordable to Customer

Customer Thinks maintaining Cibil score and financial statements strong

to avail high loan limita

c) With reference to Bajaj Finserv:

i. Bajaj finserv aims to improve the lifestyle of a common man by

availing

the various financial services.

Schemes on EMI attracts customers towards more product buying.

Aims To be the top financial service sector company. To maximize the

brands all over the nation.
Providing Finance increases purchase capacity of people, which increases
demand for the products. This results positively to Indian Economy as
well

as Human Development Index of the Nation

2.5 Department Process:

2.5.1 The Loan Process:

Bajaj Finance Provides NO COST EMI's to the customer. • Availability

of loan for product is verified.

Documents are verified.(i.e. Bank Statement, PAN Card, Cibil Score etc)
Customer verification is done (i.e Adhaar Card, Fingerprints, Sign etc)

Approval Schemes are discussed. (i.e. Down payment and EMI's) Finally
the finance against the product bill is sanctioned.

2.5.2 Other services:

• Warranty extension services.

Health insurance for the customer..

• Add on cards availed for partner of customer.

[0:35 pm, 27/06/2022] kshitijakudache: Due to services like VAS

customer wishes to buy products with superior quality along with the
extra chargeable services.

For Example: If the customer buys an air conditioner but the installation
charges of an AC bought are high. Thus if customer buys the product
through

Bajaj finServ EMI,the AC price along with installation charges are

converted to EMI which makes buying AC affordable to Customer
Customer Thinks maintaining Cibil score and financial statements strong
to avail high loan limita

c) With reference to Bajaj Finserv:

i. Bajaj finserv aims to improve the lifestyle of a common man by

availing

the various financial services.

Schemes on EMI attracts customers towards more product buying.

Aims To be the top financial service sector company. To maximize the

brands all over the nation.

Providing Finance increases purchase capacity of people, which increases

demand for the products. This results positively to Indian Economy as
well

as Human Development Index of the Nation

2.5 Department Process:

2.5.1 The Loan Process:

Bajaj Finance Provides NO COST EMI's to the customer. • Availability

of loan for product is verified.

Documents are verified.(i.e. Bank Statement, PAN Card, Cibil Score etc)
Customer verification is done (i.e Adhaar Card, Fingerprints, Sign etc)

Approval Schemes are discussed. (i.e. Down payment and EMI's) Finally
the finance against the product bill is sanctioned.

2.5.2 Other services:

• Warranty extension services.

Health insurance for the customer..

• Add on cards availed for partner of customer.
(i.e. Product Price + Installation Charges - Total Price is converted to
EMIs)

VAS services for buying Combo Products

⚫ Every Bajaj EMI are to be paid on 02 date of Particular month. If the

02 date passes without the EMI payment customer is warned.

2.5.3 The Recovery Process:

• Second chance of EMI payment is given on 05 date of month.

⚫ Bucket 1 case: If not paid further the case goes to recovery department
and Next payment with fine of 499 is asked to pay.

• Bucket 2 case: Recovery warns to pay with certain fine charges

Bucket 3 case: legal actions are taken by the recovery department.

Chief Officer

Business Head

National Head

Regional Head

Area Sales Manger

Sales Manger
Frontline Staff (FOS)

Bajaj FinServ has recently launched its Health sector financial Services. >
Bajaj is also planning to launch itself in Banking Sector.

2.7 Future Prospects:

2.8 Administration of the Organization :

Bajaj Finserv mainly works with Regional Partner Stores. Region has its
Sales Manager under whom minimum 02 partner stores are But as other
firms Bajaj Finserv has

its administrative office in every regional zone.

Kolhapur Regions office is located at Shahupuri,Trade Centre (First

Floor),Near Shahupuri

Police Chowki, Kolhapur.

Total 30-35 employers work in the admin wing of Bajaj finserv,

Kolhapur.

The administrative office has its sections in the following way:

a) Loan product Section

b) Gold loan section

c) Cash counter

ual Framework.

d) Insurance section (Aditya Birla And Max Life Insurance) e)

Operational Desk (Analyzers)

f) Documentation Desk

g) Recovery Section
Gold Loan Section

Administrative Section
Customers Computer
Product Loan Section
Counterr
Insurance Section

Cash Counter

Office Counter
Operational Desk

Recovery Section
 Chapter 3 :

The Conceptual Framework

A consumer durable loan is a special type of personal loan that can be
used specifically to finance the purchase consumer durable goods such as
electronic gadgets households appliances,etc. Typically this personal loan
can be obtained for amounts of up to Rs. 15 lakh with a repayment tenure
ranging between a few days to 36 months. Also known as consumer
loans, these may be available at 0% interest rate subject to key terms and
conditions specified by the lender. Like other personal loans, a consumer
durable requires minimal documentation and features quick approval as
well as disbursal.

Most lenders offer consumer durable loans to both salalried self

employed individuals. The eleigibility criteria for a consumer durable
loan may vary depending upon the applicant category that you belong to
as well as from one lender to another. However,generally the following
key eligibility criteria need to be considered when applying for a
consumer durable
loan:

Particulars Self Employed Salaried

Age
Min. Income
Employment Stability

3.3 Types of consumer loans

A consumer durable loan is a from of credit that can be used to purchase

consumer durable goods such as household appliances, electronic
gadgets, etc. The most common type of consumer durable loan is termed
as an instalment loan. This type of personal loan differs from an EMI
conversion using a credit card/debit card as no card is used to complete
the purchase and or set up an instalment-based payment plan. Details of
an instalment loan and its various subtypes are as follows:

Installment Loans: These are the most common form of consumer durable
loans and are paid back in weekly, fortnightly, monthly or bi-monthly
installments according to a preset timetable. The interest rate charged on
these installments may be fixed or vary with time. Additionally, these
consumer loans may or may not require security or collateral. Based on
these unique features, installment loans may be further divided into the
following types:

Fixed rate consumer durable loan: Most consumer loans offered to

borrowers are fixed rate loans similar to the mechanism using which
other personal loan interest rates are applicable. As the name suggests,
these consumer loans have the same interest rate throughout the loan
tenure.

Variable rate consumer durable loan: In a variable rate consumer loan, the
interest rate charged on the outstanding balance varies with the change in
market interest rates. As a result, your interest payouts will vary as well.
However, these loans usually have limits on how high or low the interest
rate can be.

Secured consumer durable loans: Secured loans are those which are
secured against assets as collateral.

Unsecured consumer durable loans: Unsecured consumer durable loans

are the most common. The borrower does not have to provide any kind
of. Interest rates for unsecured loans can be higher than the secured
variant. 10

3.4 Objectives of a Consumer Durable Loan

Some key objectives of a consumer durable loan are as follows:

May be secured or unsecured: Some consumer durable loans may require

borrowers to provide a collateral/security to avail a loan, whereas, others
may be unsecured (not backed up by any collateral/security). Secured
consumer durable loans usually offer higher loan amounts, longer
repayment tenures and lower interest rates as compared. to unsecured
consumer durable loans

Flexible loan amount: You can avail a consumer durable loan ranging up
to Rs. 15 lakh. However, the amount that you are eligible to avail depends
upon the item being
purchased, your credit score, income level and other factors deemed
appropriate by the lender.

Flexible tenure: Consumer durable loans generally have flexible

repayment tenure of

up to 36 months. Minimal documentation: Usually minimal

documentation is required to avail a consumer loan. Some key documents
that lenders generally require include photo identity proof (such as
Aadhaar, PAN, etc.) income proof (such as Salary slip, ITR,

etc.) and address proof. Quick disbursal: Consumer durable loans are
disbursed almost instantly, once your loan application is approved.

178

3.5 Need for Consumer Durable Loans :

Consumer durable loans have instilled a sense of convenience in our

life .From refrigerators to high end mobiles,we are always on the hunt to
upgrade our life as per our convenience. You can avail a loan amount of
INR 11000 to INR 400000. You can choose from variety of top brands in
the market.

3.6 Factors affecting Consumer Durable Loans :

Though some lenders offer consumer durable loans at 0% interest rate,

there are some that do charge interest on these loans. The interest charged
by a lender not only varies with the financial institution, but also with the
individual applicant's profile. Given below are a few key factors that
affect interest rate charged to an individual:
Credit Score: Credit score is a 3-digit numeric summary of your credit
report/ credit history and ranges from 300 to 900. A score closer to 900
(such as 750 or above in case of CIBIL score) helps you secure a
consumer durable loan more easily as it indicates a higher credit-
worthiness. It also helps you avail it on better terms such as a lower rate
of interest.

Loan Amount: Higher loan amounts generally result in the applicant

being a higher rate of interest. This is because, higher loan amounts
generally lead to higher EMI payouts which increases the risk of default
for the lender.

Loan Tenure: Longer repayment tenures usually come with higher rates
of interest and vice versa.
Current Outstanding Debt: A higher rate of interest may be charged on
consumer loans in case of applicants with high existing debt as this is
perceived to increase the risk of default for the lender.

3.7 Scope of Consumer Durable Loans :

The affordable interest rates of consumer durable loans are major driver
for the growth of the market.

The interest rate of consumer durable finance is generally low and it

varies from company to company.

Some institutions such as Bajaj Finserv are offering consumer durable

loans even on a 0% interest rate.

. Customers can enjoy interest-free consumer durable loans with such

companies.

. Easy finance schemes are available at interest free EMI for consumer
durables.

Middle income group people are able to afford this sort of financing due
to low interest rates which is propelling the demand in the market.

3.8 Motives for Consumer Durable Loans :/

It is secured type of loan.

You can avail consumer durable loan to purchase expensive products.

. Availing a consumer durable loan will also help you build your credit
score as it has long as well as short repayment tenure.

You can pay off your entire product price by availing EMI with 0%
interest rate.

Best offers for personal loan starts at 0 down payment and 0% interest.
Chapter 4
Calculation
EMI Calculation.

4.1.1 Theory

Definition: An EMI is essentially a fixed amount of money that one have

to regularly pay their lender in order to repay the loan. This money is
usually paid monthly on a fixed date. either through a cheque or online
payment.

Components of an EMI: EMI have to components - Principal Amount,

Interest and Tenor.

Principal Amount: It is the amount you borrow and is the primary factor
that

decides your EMI. The higher the loan amount, the bigger is the EMI.

Interest Rate : Interest rete on your loan is another critical factor affecting
the EMI's. EMI's are directly proportional to the interest rate. Lenders
calculate the interest based on several factors like your income,
repayment capacity, credit history, prevailing Market situation,etc.

Tenor: This is the third factor that affects your EMI. Longer tenor
generally mean
lower EMIS and vice versa. However, longer tenors also mean a higher
interest

outgo.

Initially, the interest amount is higher than the principal amount. As the
loan tenor progresses,the interest amount reduces while the principal
amount goes up.

4.1.2 Formula:

The sum of principal amount and interest is divided by the tenure of the
loan. The interest component of the EMI is larger during the initial
months and reduces as the principal amount reduces with each payment.
The payment of the loan depends on the interest rate. While monthly EMI
payments don't change, the proportion of principal and interest
components change with each payment made, i.e., you pay more towards
the principal and less in interest.
The Mathematical formula to calculate EMI:

E=P. r.[(1+r)" / (1+r)" - 1],

Where,

E is Equated Monthly Installment (EMI)

Lis Loan Amount (Principal Amount)

r is monthly interest rate (i.e., r = Annual interest rate/12/100)

For example, if rate of interest is 12.5% per annum, then r=12.5/12/100-

0.01042

t is loan duration in months.

A.

4.1.3 Example:
Que. Suppose Rohan borrows a sum of INR 1.5 Lakhs at an interest rate
of 10% for a tenure of 3 years.

The yearly interest would be INR 15,000 and hence the interest for 3
years would be INR 45,000.

Based on this,

Calculation for this using flat interest rate EMI calculator would be:

EMI (150000+45000)/36-5416.67

For the same example, if we,

Calculate using the reducing EMI calculator:

EMI [150000 x 10/(100*12) x (1.0083) 36]/[{(1.0083)^36)-1]

= (1250 x 1.34823/0.3482

= 4840
Calculate EMI
Loan Amount ; ROI 10% Tenure : 36 Months
Rs. 150000
Break Up of Total Payment

Chart Title

Year Principal Interest

Total Payment Balance Loan Paid to date

Year Principal Interest Total Payment Balance Loan Paid to date

2021 -1951 26343.36 24392 195136 11.11%
 2022 122936 23416.32 146352 48784 77.78%
2023 42930 5854.08 48784 0 100%
EMI in Advance And EMI in Arrears:

4.2.1 Definition:

In an effort to attract more customers, lenders compete with each other by

offering flexible loan repayment options, instant loan approval and
disbursal, and minimal paperwork. Keeping the varying needs of the
customers in mind, banks offer different types of loan repayment options.
There are 2 types of EMI payments that a borrower can choose to make -
EMI in Advance and EMI in Arrears.

What is EMI in Arrears?

EMI in Arrears is also known as the Arrears EMI or the standard EMI.
Here, the borrower has to make EMI payments at the end of each month
over a specified loan tenure to repay the loan. In this case, the lender
disburses the entire principal loan amount minus the processing fee to the
borrower's bank account without any deduction for an advance EMI
payment. The Arrear EMI scheme is ideal if you don't have sufficient
funds to make a down payment on a car of your choice.

What is Advance EMI?

EMI in advance is also known as Advance EMI. This type of EMI

payment is offered by many banks in the country. Here, the first EMI
payment is made in advance to the bank wherein, the principal amount
minus the processing fee and the first EMI amount is disbursed. to the
borrower's bank account.
Advance EMI Arrear EMI
Make 1 EMI payment in advance at No advance EMI payments need to
the time of loan disbursal be Arrear EMI made
The principal loan amount minus The principal loan amount minus
the one time processing fee and one the one time processing fee is
advance EMI payment is disbursed disbursed to the borrower's bank
to the borrower's bank account (or account.
paid to the car dealer in the case of
car loan)..
The first EMI payment which is the All the EMI payments in this
 advance EMI payment consists of standard EMI scheme consists of
only the principal amount the principal amount and the
interest.
The Annual Percentage Rate (APR) The Annual Percentage Rate (APR)
of the loan (which is the total cost of the loan (which is the total cost
of the loan) is usually Lower in an of the loan) is usually higher in an
Advance EMI scheme. Advance EMI scheme.
The principal loan amount and The principal loan amount and
EMI payments are lower in an EMI payments are higher in an
Arrear EMI Arrear EMI
The down payment is lower in an The down payment is higher in an
Arrear EMI scheme. Advance EMI scheme.

Example And Calculation:

Ques. Let's say, the total price of the car you wish to buy is Rs.4.5 lakh,
the car loan amount you apply for is Rs.3 lakh at an interest rate of 12%
p.a. for a tenure of 3 years (36 months)

with a processing fee of Rs.3,000.

EMI Scheme arrear EMI Advance EMI

EMI Amount 9964 9866
Disbursed loan Amount 29700 287134
Down Payment 153000 162866
Total Cost Of the car 511704 508176

Solution

Chart Title
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
EMI Amount Disbursed loan Down Payment Total Cost Of the car
Amount

arrear EMI Advance EMI