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The Difference Between Home Loans and Educational Loans in HDFC Bank
The Difference Between Home Loans and Educational Loans in HDFC Bank
The Difference Between Home Loans and Educational Loans in HDFC Bank
The need for shelter has skyrocketed in recent years in response to rapid urbanisation and
shifting socioeconomic conditions. A few significant data highlight the housing sector's
significance to the economy. The National Building Organisation (NBO) reports that there is
a need for an additional 19.4 million dwellings throughout the country, of which 12.76
million are in rural regions and 6.64 million are in urban areas. Each year, there is a need for
2 million dwellings. When it comes to creating jobs, the construction of dwellings is second
only to the transportation sector. The extra 10 million man-years of direct work and the
additional would result from the anticipated 2 million units. Knowledge shortens the length
of a year, information technology spreads over the globe, gaining speed and new possibilities
emerge quickly. The twenty-first century is arrived. Years that propel us to greater difficulties
at every turn. That's motivation enough to set lofty goals, for sure. With the aforementioned
guiding principle in mind, the purpose of this project is to analyse the Home Loans process at
HDFC Bank Ltd. and determine the essential requirements of potential candidates.
The study covers a wide range of topics, including:
Topics Covered Include: • Home Loan Business Procedures • Appraisal Varieties • Property
Documentation • Know Your Customer Regulations
Credit History Repayment Progression Finding out how many people asked for a bank loan
analysing the population of people interested in Home Loans using a sample size of 40 is the
report's ultimate goal.are only few of the products launched by the bank and detailed in the
report. It includes a questionnaire that was used to analyse the report's findings.
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CHAPTER-I
INTRODUCTION
INTRODUCTION
HOME LOANS
A bank's primary goal is to increase its market share, or its proportion of total industry
revenue, through making loans at competitive interest rates. Only by constructing a smaller
fraction of financing options for clients would this be possible.
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Better loan products, especially for homes, are essential for any bank to thrive in today's
highly competitive market. Banks and other financial institutions now provide a wide variety
of products and services, including mortgage loans, and they use a wide range of tactics to
stay competitive.
To demonstrate the significance of house loans to the economy, consider the fact that one can
now acquire a dream home because to the abundance of vehicle loan options now accessible
in India. There is no need to put together a sizable down payment all at once. It's simple: save
enough for the down payment, then take out a loan to cover the balance of the cost. The
nicest aspect about getting a mortgage is that you may get a loan for an older property as well
as a new one. People are in such a hurry to acquire houses now.
Student Loans
A student may take out a loan to cover the costs of attending any postsecondary
institution, including but not limited to universities, vocational schools, preparatory schools,
and private institutions. Most students rely on student loans to finance their education. Tax
exemptions apply to student loans as well. There are a number of variations on the student
loan format. Private loans, parent loans, and student loans all fall under this category. Loans
might also be guaranteed or unsecured. Although many private organisations do government
services, the federal government often backs student and parent loans.
overseas, the educational landscape has expanded to include a plethora of new
degrees. Human capital development is of paramount importance, thus it is everyone's
mission to ensure that no qualified student is unable because of financial constraints.
Education loans in the country's future economic growth and prosperity. In the years to
come, economic expansion would be propelled by the dissemination of new knowledge and
data.
OBJECTIVE OF THE STUDY
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• The primary purpose of the research was to learn about home lending schemes and the
qualifications of potential borrowers.
• The purpose of the research is to learn about the home loan scheme's documentation and the
repayment methods used by different banks and HFCs (Housing Finance Corporations).
• The purpose of is to help meritorious and worthy students get bank loans so that they may
attend college in India or elsewhere. The primary goal is to ensure that every deserving
student, regardless of their family's financial situation, has access to the banking system's
inexpensive financial aid for higher education. No qualified student is unable to continue
their study due to a lack of funds.
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NEED FOR THE STUDY
Many financial institutions have found success by expanding into retail banking. The
housing market is the retail banking industry's most attractive area, with an expected over
30% over the next five years. As a result of the government's commitment to infrastructure
investment and the announcement of new tax Many banks have been enticed to join the
housing industry by offering home equity lines of credit (HELOCs), yet the unorganised
HELOCS market accounts for more than 75 percent of all new homes built in the country.
Significant changes have taken place in the housing market over the last four to five years,
with the assistance of the expanding home finance business and student loans.
The Housing and country's first mortgage lender when it opened for business in 1977. NHB
was established after the passage of the National Housing Bank Act, 1987; its mandate is to
supervise and provide refinancing to housing finance firms throughout India. It wasn't until
1988 that government-sponsored banks were first able to provide home loans to individual
borrowers.
HDFC Bank offers the "HDFC Home" home loan programme, and also offers the "Griha
Sewa" programme for salaried employees. The bank's retail assets section has developed a
successful product. Home loans have been disbursed according to the bank's standard
operating process.
My research has also shed light on the many forms and complexities of obtaining a mortgage.
Due to rising competition among HFIs, the home loan market has introduced a number of
extensions to its portfolio. Attempts have been made to comprehend the many banking-
provided perks and expansions.
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SCOPE OF STUDY
• The research spans the years 2019 through 2023. Several factors contribute to the
decision to focus on this time frame.
• The Bank has expanded internationally over the last five years, and as a
consequence, the firm has seen several political and economic shifts.
Many policy choices in the banking sector, capital markets, and licencing policy have
all contributed to the fast transformation of the company over the previous five years.
• This research is conducted on HDFC Bank exclusively. People who want to realise
their goal of owning a house may find this research particularly relevant.
• The focus of the research focuses on loans made by HDFC bank alone.
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Convenience sampling was used to choose the sample. b) Secondary Data Collection
Secondary data collection included but was not limited to periodicals, journals,
newspapers, HDFC reports, websites, circulars, brochures of the banks, clippings, and
so on.
Academic Timeframe
The surveys were filled out over the course of three months.
Methods of Statistics
The gathered information was reviewed and revised. Using the software "Statistical
Package for the Social Sciences" (SPSS), we analysed the cleansed data, drawing
conclusions via the use of statistical methods such the chi-square test and the
construction of simple and two-way tables. For the purpose of reviewing the
aggregate data from the sample, a simple table was created. Two-way tables were
built for the purpose of study and comparison between two variables. Finally, the chi-
square test was used to examine the relationships between the various variables.
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Limitations of study
• The study's limitations in conceptualizing mortgages and student loans made it difficult to
extrapolate to real-world settings.
This article does not aim to be an exhaustive examination of home loan schemes; rather, it
focuses on the novel aspects of the different HFIs' offerings.
• The research did not address the dangers associated with taking on high-interest mortgages
and student loans in exchange for lower rates.
Due to the novelty of the mortgage house loan market, its size and impact analyzed.
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CHAPTER-II
REVIEW OF LITERATURE
9
REVIEW OF LITERATURE
According to Vidhayavathi. K.'s (2022) research, the growth of the housing finance
industry is affected by a number of factors beyond just the rate of interest advertised by
financial institutions. These factors include the quality of service provided, the friendliness of
staff, and the speed with which customers receive their loans.
According to Goyal and Joshi's (2011) research on the "Social Industry," banks may
position themselves as socially and morally minded organisations by simply lending money
to groups with similar aims.
Kumar and Gulati, in 2010, looked at how having property impacts the viability of
small banks in India. The effectiveness score of open and private division banks was recorded
using a non-parametric, deterministic, and direct programming based approach. Using
operational cross-sectional data of public and private area banks during the fiscal years 2005-
06 and 2006-07, we found that (1) De novo private division banks command the development
of effective boondocks of the Indian household saving money industry; (2) primarily, the
entire specialised public and private parities are similar in size, the private banks have a
greater impact on the economy. In general, it is assumed that the Indian local savings
business is not capable of being owned by a single entity.
The role of microfinance in attaining monetary inclusion was investigated by Naveen
K. Shetty and Dr. Veerashekharappa in 2009. The study focuses on the impact on home loan
progress of the widening gap between the demand for and availability of financial services in
India, which has kept the country's growing population outside of the official financial credit
system.
According to the data Kerry D. (2008) analysed, housing prices increased
dramatically between 1998 and 2008, but dropped unexpectedly after that. The primary
motivations for these price shifts in the housing market were monetary in nature. As a result,
the problem was not caused by subprime lending but by emotional declines at the Fed; soon
after, in the early to mid-2000s, there was an increase in premium rates; construction of new
homes was focused on industries with severe supply-side constraints, making price
fluctuations more likely. Similarly, rather than a shortage of credit, the growth and
contraction of certain house loan items may have caused the underlying problems.
The Reserve Bank of India (RBI) has stated that the shift towards a universal currency
should result in greater fiscal dependability and efficiency. However, the RBI cannot, on its
own, provide a workable solution to the operational issues faced by individual businesses,
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such as credit capitalization, abnormal NPA states, resource liabilities that cross over,
liquidity issues, and so on. The approval of Universal Banks is necessary for the general
monetary development of our country, but economy, the magnitude of the resistance is one
variable to be dealt with. Gradually, we may be shifting from the management of many
smaller banks to that of a smaller number of larger ones. This example is possible because to
the concept of universal account management, which will unquestionably strengthen the
banking industry.
In her 1999 book, Leelamma Kuruvilla sheds insight on the federal government's
emerging housing finance initiatives. She suggested that the housing crisis may be alleviated
by changes to the legal casing process, a revised approach for allocating housing funds, and
active government participation in the housing sector.
According to Talwar (1996), who writes about the state of savings accounts and the
need for a change in the system, one of the main goals of implementing a new arrangement is
to improve banks' financial stability. By making sure banks understand the risks and potential
rewards of their loan portfolios, prudential regulations help establish a more stable financial
system.
Usha Patel (1996) made it clear that financing a home with a bank's funds was a part
of the necessity lending done by banks at the current time. Each year, nationalised banks are
also expected to set aside a certain percentage of their assets for housing-related investments
and lay out a strategy for funding both direct and indirect housing programmes.
Pillai Kalathil, S.R.(1996) argued that all government agencies and community
housing money associations should adopt a central pool strategy for advising potential
borrowers. The law has to be reorganised.
Interest rates on loans, savings account zeal, and notoriety are the last topics covered
in Boyd's (1994) research. All of these factors have been critical to a bank's ability to attract
and retain clients and to effectively manage its finances in the business world. However,
other elements, such as the level of agreeability of representatives, product, online offices,
paperwork, and preliminary, are also important to clients.
Spencer (1991) highlighted the value of bank imagery as a targeted method of
increasing the flow of business from existing customers. Among the most important findings
were the following: college students' preference for banks as providers of financial services;
increased confidence in large and medium-sized banks; the importance of customers to the
workforce; specialised savings rates; and easy access to credit.
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In 1991, the Narasimham Committee Narasimham Committee emphasised the many
developments in our country's monetary system during the last two decades. There has been
development up to this point. They learned where to concentrate and how to climb the
corporate ladder in this bank. A bank framework may lose its efficiency, efficacy, and profit
from a variety of directions. takes bold, long-term economic bets to modernise India's
banking system.
When the owner does not have sufficient assets available to pay for the land and the
whole cost of construction, Mathurn (1991) argues, the financial often high. Therefore, he
should devise strategies to amass reserves from several sources.
Theoretical review
When a person needs money to buy a home, improve or expand an existing one, or do any
combination of these things, they often turn to a home loan programme for assistance.
The house loan portfolio includes a number of different, comprehensive programmes, such
as:
A house purchase loan is the most common kind of mortgage used to finance a home
purchase.
Home improvement loans may be used for everything from little touch-ups to major
overhauls of a property you already own.
A house construction loan may be used to fund the building of a brand new residence.
If you already have a house loan but need a little additional money to buy and move into a
new property, you may qualify for a home conversion loan. With a home conversion loan,
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you may avoid making a prepayment on your current mortgage by simply transferring it to
your new property along with any additional funds you may need.
The amount of a Griha Home Loan might be anything from 1 50,000. The length of time you
have to pay back a loan depends on your ability to do so, which might be anything from one
year to twenty.
Eligibility:
Minimum Age Requirement: .Maximum: You must be at least 65 years old (or the age you
want to retire) when the loan matures.
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Individuals: Two years of service is required (including one year in the present position).
Salary workers must earn a minimum of Rs. 6,000/- per month in take-home pay, while
company owners and independent professionals must have a yearly income of a minimum of
Rs. 1.20 lakh. Income from a spouse or co-applicant may be counted towards the total.
Salary or self-employed workers, professionals, and company owners are all welcome to
apply. This loan is not available to 2. sole proprietorships, HUFs, partnership businesses, or
limited liability corporations, although any individual partner may apply for it.
All HFIs have requirements for who may apply for a loan, and one of those requirements is
that all joint property owners must also apply for the loan. The combined income of many
owners might be used to qualify for a larger loan. No one under the age of majority may
become a co-owner, and only blood relations are allowed
Students from economically weaker sections who wish to pursue technical or professional
education in India may be eligible for interest subsidies from the central government through
the Central Scheme to Provide Interest Subsidy During Moratorium on Educational Loans
Borrowed from Scheduled Banks under the Educational Loan Scheme of the Indian
Banks'Association.
The government has made it a priority to guarantee that economic status does not
prevent anybody from receiving a quality education. The goal of the Indian Banks'
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Association (IBA) model educational loan plan is to ensure that meritorious students in need
of financial aid to attend college in India or elsewhere get it. Loans taken out by students
from to enrol in any of the approved courses of study in technical and professional streams at
recognised institutions in India will now have their interest completely subsidised by the
government of India during the moratorium period.
apply only to academic pursuits in India that are of a technical nature. Students enrolled in
approved professional programmes in India (after completing high school) at recognised by
the concerned Statutory Bodies, Indian Institutes of Management (IIMs), and other
institutions set up by the Central Government will be eligible for interest subsidies through
the Indian Banks' Association's (IBA) existing Education Loan Scheme.
(ii) The government will cover the student's share of the interest on their during the
moratorium period (i.e., the length of the course plus either one year or six months after the
student begins working). After the moratorium ends, the student is responsible for paying the
interest accrued on the outstanding loan amount in line with the terms of the current any
amendments thereto.
iii) The Scheme's advantages will be available to students from economically disadvantaged
backgrounds whose families have an annual income of less than Rs. 4.5 million.
(iv) Eligible students may only receive the once, and that will be for either their first
undergraduate degree or a postgraduate degree or certificate. However, combined
undergraduate and graduate courses will be eligible for interest assistance.
Canara Bank, as Development's nodal bank, would be responsible for carrying out the
Scheme. The Canara Bank will be consulted when the implementation and monitoring system
is finalised.
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The rising cost of higher education has led to seek financial aid from financial institutions in
order to cover the costs of attending university or a vocational school.
The number of students requesting for loans has more than quadrupled between 2005 and
2010, according to data compiled (IBA). From 2005-2011, the amount that was owed
increased to Rs 40,497.46 crore.
According to the IBA, which compiles yearly statistics from the books of all 28
nationalised , the number of applications increased from 1.48 lakh in 2004-05 to 3.25 lakh in
2009-10. In 2005, there were 4,68,207 accounts in arrears; by 2010, that number had
increased to 19,28,350. From 2005’s Rs 6,713.16 cr to 2010’s Rs 35,628.33 cr, the
comparable outstanding loan amount increased dramatically.
Bankers attribute the increase in applications to the high costs, the availability of
loans, and the low interest rates. The expense of higher education has increased, and student
loans are widely accessible. According to Prabhuta Vyas, vice president of the IBA's social
banking section, banks have been more aggressive in promoting their products. They have
begun scouring campuses in search of potential borrowers. According to her, since banks
would lend up to Rs 4 lakh without security.
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When looking for a loan, students prioritise a streamlined application procedure,
competitive interest rates, little red tape, and a trustworthy lending institution. Graduate
Westminster University in the United Kingdom, Shiv Shetty, borrowed money from a
government-owned bank. He said that applying to the institution was difficult since it was not
computerised.
What are the Best Indian Banks to Apply for a Student Loan?
Student loans are available from the vast majority of the world's banks, both public and
private, as well as international and domestic financial organisations. These are some of the
most common bank loans:
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Copies of the scholarship acceptance letter.
Bank statements over the past 6 months for the borrower.
Inventory and balance sheet of the borrower
A student may to fund their education in India without giving a margin or security. If you
need more than this, you may get a loan with a 5% margin and a third-party guarantee for up
to 7.5 lakh (INR). Loans for international students are available for sums above 7 lakh (INR)
secured by non-convertible savings certificates, fixed deposits, real estate, and so on, with a
lending margin of 15%.
In order to cover the costs associated with higher education, many students take out education
or student loans from financial institutions like banks. To further assist their students, several
educational institutions have formed partnerships with private and nationalised banks. There
is a 7.5-lakh INR (about $15,000) cap on loans for study at any institution inside India, and a
15-lakh INR cap on loans for education overseas.
In India, parents may apply for a student loan if their child is under the age of eighteen. A
loan may also be guaranteed by a third party, who might be a family member, close friend, or
even a neighbour. Loans are available to help students over the age of 18 with their
educational expenses. often have lower interest rates than other forms of loans. Student
grants are a kind of financial help that is not often expected to be returned by the recipient. In
India, most public and commercial lenders need a school's stamp of approval before making
any loans to students. Tuition, room and board, and other educational expenses are often
covered by these loans.
Procedure:-
A loan application form, similar to those for other types of loans, may require the borrower to
provide personal information as well as academic and employment background. Please be as
precise as possible while filling out this form.
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After the form is filled out, the applicant (the student) may be asked a series of questions
about his or her academic history, the course(s) of study, intended institution(s), and so on.
Now is the time to have a crystal-clear understanding of the financial possibilities of your
chosen path. It's common knowledge that certain banks place a greater emphasis on academic
credentials than others. One need not have a perfect grade point average to benefit from this.
But make sure there are solutions to the problems that might have arisen in the classroom.
In contrast to other loans, where discussion of relevant paperwork may enter the picture later
and create delay, such paperwork is required here. Before a bank would even look at an
application for a student loan, the borrower must provide proof of enrollment. The bank will
contact the school to confirm the client's enrolment. If you need a loan of more than Rs. 4
lakh, you may be asked to provide collateral security in the form of mortgage documents.
Other types of loans, such as personal and house loans, often need a co-guarantor. A
guarantor is required to apply for a student loan. A student's parents or legal guardian(s)
might serve as guarantors. Before approving the loan, the bank will investigate the reliability
of the guarantee. After all is said and done, the loan might be approved or declined.
Although the parents or guardians may sign as guarantors on the loan, ne who will be
repaying it. After a loan is approved, the student often signs a promissory note with the
lending institution.
The bank will release the loan after all the paperwork is in order (this may include submitting
extra papers and postdated checks). The college or university may receive the tuition payment
straight from the bank.
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Submitting Forms Online
Today, getting a loan to pay for school is simpler than ever. One may now fill out a loan
application for school entirely online. The bank will only approve the loan in principle; the
borrower will need to follow up with the institution to arrange for loan disbursement.
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CHAPTER-III
COMPANY PROFILE
CHAPTER III
COMPANY PROFILE
With total assets of roughly Rs.2, 518.89 billion (US$ 56.3 billion) as of March 31, 2006,
HDFC Bank is India's second-largest bank. The bank's profit after tax for the year ended
March 31, 2006, was Rs.25.40 billion (US$569million), up from 2005.The HDFC Bank
network consists of nearly 2,200 automated teller machines (ATMs) and Counters. HDFC
Bank provides a wide variety of banking products and financial services to corporate and
retail customers through its specialised capital, and asset management, as well as a number
of other delivery channels. In fiscal 2002, HDFC Bank established its international banking
21
business to meet the demands of its overseas clientele and to expand its product offerings
outside its home market. HDFC Bank presently has branches there. Russia and Canada, as
well as offices in the Middle East, Asia, and Africa , and the world's financial hub (Dubai),
thanks to a network of branches.
Our British affiliate has opened up shop in Belgium. Market capitalization-wise, HDFC Bank
in India is far and by the leader.
Both list HDFC Bank's equity shares, while the New York Stock Exchange (NYSE)
features its American Depositary Receipts (ADRs).
The directors and staff of HDFC Bank are required to abide by Ethics. Here's the code if you
want to see it (Click Here).
The HDFC Bank. HDFC Bank was the third largest company listed on India's stock markets
as of June 5, 2006, with a of around Rs.480.00 billion (US$10.8 billion).
In 1994, HDFC Bank was founded as a wholly-owned subsidiary of the Indian financial
organisation HDFC Limited. Following a public offering of shares in India in fiscal 1998, an
equity offering in the form of American Depositary Receipts listed on the New York Stock
Exchange in fiscal 2000, HDFC Bank's and 2002, HDFC's shareholding in HDFC Bank was
reduced by 46%.At the suggestion India, and the members of the Indian business
community, HDFC was established in 1955.
Because of the combined company's improved access to low-cost deposits, more potential to
produce fee-based revenue, and capacity offer transaction-bank services, the merger would
increase value for HDFC shareholders. The merger's strong capital base and scope of
operations would increase shareholders. access to HDFC's huge talent pool, which has been
developed over the course of five decades, ease of entrance into new business areas,
increased market share in numerous business segments (especially fee-based services), and so
on. Shareholders of HDFC and HDFC Bank approved the merger in January 2002, the High
Court of Gujarat at Ahmadabad approved it in March 2002, and both approved it in April
2002. The merger was approved by the Boards of Directors of HDFC and HDFC Bank in
October 2001.
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3. The minimum age for the applicant and the co applicant to become eligible for the
commencement oft eh loan is 23 years, and co applicant can be of 19 years of age if their
income is not clubbed to calculate the loan eligibility.
4. The maximum age at the time of loan maturity for applicant or co-applicant is 60 years
or the retirement age whichever is earlie
Second, a copy of the most recent six months' worth of bank statements from all operational
and payroll accounts. If you're self-employed, you'll need to provide six months' worth of
bank statements for any active accounts. Additional copies of investment documents as may
be requested by the HFIs
The most recent credit card statement, in copy form.
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4.A picture that is passport-sized
5. Your bank will double-check your signature.
Residency documentation:
If you are presently renting, you will also need to bring your rent agreement, PAN card,
passport, and ration card.
If you are staying in corporate housing, your firm must provide you an allotment letter.
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25
THE PARAMETERS INVOLVED IN HOUSING LOAN EVALUATION
The house loan's repayment term, or "tenure," is the amount of time the borrower has to make
payments.
While most mortgages have a maximum term of 20 years, some providers go up to 30
(HDFC has just introduced a 30-year loan). A consumer will pay more in interest throughout
the life of the loan, but their lower.
The customer's income and savings may then be used to determine the most suitable option.
Most banks and HFIs stipulate that the loan must be paid in full before retirement. The
borrower is free to prepay the loan in full at any time before the due date.
As the loan's term length increases, the consumer incurs additional interest payments,
typically between 0.25 and 0.5% higher than the rates for conventional mortgages.
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Without a question, the single most crucial aspect of a house loan is the interest rate. Interest
rates might vary from 7.25% to 7.75% to 9%, depending on the lending institution. Equated
monthly installments (EMIs) are the method of repayment. The longer the term, the higher
the interest rate will be, but the lower your monthly payment would be.
There are two types of interest rates that a client may choose from: fixed and floating.
Loans with fixed interest rates have the same interest rate for the whole loan term.
Interest rates that "float" up and down in response to market conditions are called "variable,"
and they are subject to periodic adjustments by the Reserve Bank of India (RBI).
The house loan edict issued by the finance minister does not apply to private financial
institutions. HDFC Bank, India's second-biggest bank, the country's top supplier of house
loans, increased its home loan rates by 1% on Tuesday. The interest rate on bank deposits has
also been raised.
calls for interest rates of 10.5% on floating-rate mortgages and 12.5% on fixed-rate
mortgages. The new rate adds Rs70 to the monthly payment for a loan of Rs1,000,000
payable over 20 years.
While some public sector financial institutions only do this once a year, private sector
financial institutions may do it as often as once every three months. A lender that adjusts your
variable rate more regularly may offer a cheaper interest rate initially, but a client will save
more money if the rate is adjusted less frequently.
Investors may switch from a fixed-rate loan to a floating-rate loan, but doing so will cost
them a premium.
DIFFERENT COSTS
In addition to his regular monthly payments, the client must additionally account for and pay
the HFC's processing fees; thus, he must exercise caution while selecting his HFC.
The typical range for such fees is between 2.5% and 3%. A loan of Rs. 5,000,000 would cost
you an extra Rs. 10,000 in administration and processing fees, for a total of Rs. On the other
hand, there may be a single cost (for administration or processing) that is much more than
average—say, 2.5% or 3%. In addition to the margin amount, there are a number of extra
costs that must be paid.
a) Handling Charges
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A loan application fee is money that goes straight to the lender. It might be a set dollar sum
independent of the loan, or it could be a proportion of the money borrowed. It is possible for
the consumer to obtain a lower loan amount after paying the processing charge. It is assessed
at the time an application is submitted and serves to pay the costs associated with doing so.
Prepayment Fees: b)
Some financial institutions and businesses levy a prepayment penalty of 1% to 2% of the loan
balance if it upon term.
c) Administrative Fees: The HFI will add an administrative fee to the total loan amount
approved for the client. This charge is often due at the moment an offer letter is accepted. It is
assessed primarily to cover operational costs during the life of the loan.
Other: (d)
Summer vacations:
The principal/loan amount you borrowed will decrease by this amount each year. The
Equated Monthly Installments (EMIs) under an annual repayment plan are computed once
every year.
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Interest has a larger role in the early years, but principle takes over and interest gradually
decreases as more time passes. That is to say, the EMI's interest rate will fall each year as the
principle balance grows.
The term "monthly reducing balance" or "principal" describes this process. Similar to the
aforementioned procedure, the monthly balance is computed by dividing the EMI by 12 to
get the primary amount at the beginning of the next month. Since HFIs often operate on a
monthly rest basis, it is in the best interest of the client to switch to this kind of system. The
monthly rests scheme has been implemented by several banks recently.
The bank has provided Borrower with three different payback schedules to choose from.
Payments will be made in Equated Monthly Installments (EMI), a consistent monthly amount
that includes interest, for the first five years, and then in EMI for the next ten years.
The first five years are interest alone, the second five years are principle plus interest, and the
last ten years are principal plus interest.
For newly constructed homes, repayment begins one month after the first payout and 19
months from the commencement of construction. All accrued interest will be paid in full and
on time. However, if a co-borrower is used, a longer repayment period of up to considered, as
long as the loan is paid off before the borrower or co-borrower reaches the age of 70 and no
longer has the financial wherewithal to do so.
HOW HDFC BANK'S LOAN PROCESS WORKED
Any bank's home loan disbursement process begins with the client submitting a fully
completed and filed home loan application form.
The client is given a checklist of criteria, and they must submit all papers (copies), which are
then checked to ensure that all information was entered accurately and that all documents
were included.
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Whether or not any supplementary loans are necessary. As part of their all-encompassing
house loan programme, several banks provide supplemental lending options.
30
RISK CAPTURING MECHANISM
Making sure the person applying for the loan is legitimate is a crucial part of the mortgage
financing process. HDFC's home loan disbursement process for males is based on their credit
score.
The way of measuring risk in order to determine whether or not a borrower is a good bet.
Several factors are used to evaluate the loan applicant's profile, and then each factor is given
a score that is included into the final decision.
regarded excellent, 55 is above ordinary, and 25 is below average out of a possible 100. The
projected percentage of loan applicants who end up taking out a mortgage is 55 on a scale
from zero to 100.
1. ECONOMIC STRUCTURE
Sub-parameters that make up the demographic profile are: age, education, dependents,
marital status, and education.
The borrower's demographic profile may get points.
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3. MODEL OF REVENUES
The bank's income module has settings for things like: • Gross Monthly Eligible Income •
IRR (Income to Installment Ratio) • Net Take Home Income
A perfect is awarded to the revenue model.
32
The practise known as retail processing requires meticulous account auditing. Before a loan is
dispersed to a consumer, HDFC Bank utilises a specialised technology to review their
finances. When applying for a loan, you'll first create the following primary categories:
Group of Retail Management Newcomers:
The data entering is handled by this team. After finishing data input, the team transmits it
team for checking; any minor differences are sent back to the data entry team for correction.
Please provide the following information for each type of application: • Address information
for verification of identity • Information about your current or most recent salaried
employment • Information about your current or most recent business employment •
Information about your current or most recent income, assets, bank accounts, and credit
cards.
Details on the financial institution offering the mortgage loan (in the event of a takeover), the
loan's purpose, and the loan amount, among other things.
Acquisition information including Gee information, loan amount suggested, and branch name
desired by client.
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Possibility under the Law
Manager RM will review the files and provide the following information firm:
a) Report of Field Research:
Household and Reference Telephone Check
The applicant's and the co-applicant's full legal names and residential and/or business
telephone numbers.
• Declaration of Earnings.
The reports must be submitted by an authorised employee of the relevant approved agency,
using the agency's letterhead and rubber stamp. The RM is responsible for verifying that the
information provided on the house loan application form is consistent with the information
provided by the field investigation agency handling .
The IT-Return must be totaled in accordance with the books of the office.
For salaried applicants where the disbursement is larger than 10 lacks, and in the case of
businessmen where the disbursement is greater than 10 lacks, the manager RM should do
agency.
The manager RM is responsible for sending the necessary documentation to the bank's
appointed attorney for review.
The lawyer has to review a number of papers, including but not limited to:
• The agreement between the landowner and the contractor in the event of a home building
project.
The following is a checklist of materials that an attorney should review. Managers are
responsible for providing document copies, which must include complete and accurate
information about the application, the property, and the papers attached.
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ANALYSIS, PART III: FINANCIAL
The HFI also visits the customer's property before making a payout to check for the
following.
For properties that are still in the building process:
• Space for adding notes to the document without marking up the original.
You may attach scanned photos to any email message.
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Because of the speed with which information can be sent and the increased flexibility in loan
processing, this promotes the swift payout of funds.
1. SURF AS A CONCEPT
The novel idea behind which is a plan offered to recent graduates and other young
professionals because of the expectation that their earning potential would rise consistently
over the course of their careers.
The plan expands a customer's loan eligibility and repayment capability by factoring in the
customer's projected future income growth.The SURF idea is new to the home loan
programme of Corporation Bank.
The 'Corp Flexi Home Loan,' offered by Corporation Bank, is a new kind of mortgage that
includes the convenient — that is, payments that rise in tandem with the borrower's wage
over time.
As part of the Corp Home Scheme, a "step-up installment facility" is made available. There
are two plans available under the Corp-Flexi umbrella.
Option 1 allows the borrower to take out a larger loan (180% of the authorised amount under
the usual plan) based on their current income, with payments set to a percentage of their
income at the outset and increasing over the course of the payback term.
Second Choice: The loan will be approved based on the applicant's usual eligibility, but with
the option to make smaller payments at first (70% of the typical EMI), and then larger
payments later in the payback term.
a game-changing innovation in home loans that reduces your interest payments and shortens
your loan term.
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A house loan with interest rates between 7.75% and 8% is available through Standard
Chartered Bank's "home saver advantage" programme.
Instead of letting your hard-earned money sit idly in various accounts, put it towards your
home each month with Home Saver. Because interest is computed daily based on the amount
outstanding, any and all deposits will serve to minimise your interest due.
The longer your money stays in Home Saver, the more interest you'll earn. With a debit card
that is accepted across the world at ATMs, you have access to your money whenever you
need it. The loan applicant must have an active in order to qualify for the home saver
discount.
The Home Savers Plan is one of a kind because it gives you the flexibility to save more, pay
off your loan sooner, and access your money whenever you need it.
The cities of Bangalore, Chennai, Delhi, Kolkata, Mumbai, and pune all have access to Home
Saver right now.
More money may be saved with Home Saver than with a conventional low-interest mortgage.
Interest is accrued daily, so even if your extra funds are just a day, you may significantly
lessen your interest costs. Interest is calculated daily and is reduced if the amount is paid off
early.
Taxes on interest generated are avoided since interest saved is not considered income.
With Home Saver, you may shorten the term of your loan whenever you choose, without
incurring any fees or penalties.
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You may use it like a regular bank account, with the ability to deposit and withdraw funds at
your convenience. Home Saver includes a debit card that may be used at any of the more than
2,000 participating ATMs nationwide, at no cost.
HDFC pioneered the 20-year home-loan programme, making it available to borrowers for the
first time.
HDFC has always been the country's most prominent private bank. It pioneered the idea of
issuing mortgages with a 20-year repayment period.
This mortgage loan has a fixed interest rate for the whole 20-year term.
HDFC house loans have the following interest rate structure term:
The projected value of retail financing disbursements in 2021-22 is RS. 250 million,
representing a compound annual growth rate (CAGR) of over 30% during the preceding three
to four years.
It is predicted that the yield on a housing fiancé will be about 11–12%. With 0.5-0.8
percentage points in operational expenses and 0.1-0.5 percentage points in credit losses.
One to two point one five percent is projected to be the company's net margin.
The projected increase in direct housing payments from 2018-2019 to 2021-22 is 2,401%.
The percentage of HFCs in the market is expected to drop from 5902 percent to 5401 percent.
During this time frame, the banks' market share is projected to rise from 3.40% to 41.40%.
WHERE MARKET PARTICIPANTS GO FROM HERE
HFCs, together with commercial banks and scheduled commercial banks, are the industry's
dominant participants.
Over 19.3 percent growth in home financing businesses' additional disbursements is projected
for 2021–2022.
Leading HFCs, such as HDFC and Can find houses, have boosted their distribution in
comparison to the previous year. But because of: • increased competition from the banks •
decreased availability of low cost funds • tightening interest spreads, dropped by 3.9%.
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There was a 10.1% rise in the bank's market share of all banks in incremental direct
disbursement, bringing the total to 34.8%.
The decreased loan sector and the lower costs of banking have been major factors in the
expansion.
This demonstrates the potential for an increase in bank disbursements without substantial
maturity mismatch issues in compared to housing finance disbursements.
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40
CHAPTER-IV
DATA ANALYSIS
41
42
Interpretation of Balance sheet
1) The bank's current assets have decreased by 5%. Despite a 38% drop at
RBI and a 3% drop in advances, this was still the case. But there was an increase
of 1800% in bank accounts and money available on short notice. Total current
liabilities are down by 7% as well. This signifies that both the bank's shrank.
In contrast, the bank's operating capital was Rs.100.28 crores at the end of
2022 and Rs.118.40 crores in 2023. The company's existing financial situation will
improve as a result of the rise in working capital.
Two, the bank's long-term liabilities rose by 9%. This implies there will be
more money in the bank. That's how the bank gets people to put money into it.
However, there was an 18% decline in fixed assets. As a result, make any
significant new investments this year. To put it another way, grow its fixed assets
by taking on new long-term obligations. The bank's long-term financial outlook is
unimpressive since it diverged from the concern's financial strategy.
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Interpretation Of The Income Statement
The entire revenue of the bank is reduced by 20% in the income statement. As a result
of lower interest rates and a 3% drop in the bank's total loans, the bank's interest
income dropped by 23%. There was a 10% rise in the bank's ancillary revenue. This
indicates that the bank's supplementary offerings will expand.
There was a 20% cut to the bank's overall budget as well. During that 20%
stretch, the total amount of interest paid by banks fell by 23% as a result of an increase
in deposits of 11%. The overall amount of interest paid has reduced despite an
increase in deposits due to interest rate variations.
44
Business Profile Interpretation (2022-23)
45
Agriculture, socially and economically disadvantaged industries, and other
key areas, etc.
There was a reduction in farm loans of Rs.5 crores, or 19%, from the
previous year's level. This compares to an annual average of Rs.27 crores in
the prior year. The SSI loan process has not changed. However, funding for
other critical sectors was cut from Rs. 8 crores, for a net drop of Rs. 2
crores, or 20% from the previous year's level.From the previous year's base
level, the bank's total priority sectors have declined by Rs.7 billion, or 19%,
to Rs.38 billion.There was a reduction of Rs.11 crores (or -7% from the prior
year's level) in the other sectors' advances, crores.
A net growth of Rs.1 crore, or 9% over the base year, can be seen in
the bank's export credit 2023.
A 19% rise from the base year was seen in the bank's operational profit of
Rs.26 crores in 2023, up from Rs.22 crores the previous year.
The bank has seen a rise in net income from 2010 levels, when it was 24
crores, to 2023 levels, when it was 27 crores, an increase of 3 crores or 18%
from the base year.
In both 2022 and 2023, the bank's nonperforming loans will be Rs.18 crores.
The deposits and advances of banks typically drop in the fiscal year
2022-23. There has been a rise in export credit, operational profit, and net
profit. This indicates that the bank has made a profit while seeing a decline
in deposits and advances. NPA at banks is unchanged. As a result, the bank
will not get any NPA for the year. The RBI mandates that banks maintain a
nonperforming asset ratio of no more than 3%. This 18% increase from the
bank came as a surprise. In order to recover the NPA as soon as possible,
HDFC has begun a number of initiatives.
46
BUSINESS PROFILE INTERPRETAION (2022-23)
There was a 54% growth from the base year to the current year in the bank's
current deposits, which went 2022. The SD increased crores, an increase of Rs.1
crore or 9 percent over the previous year's level. The bank's TD has dropped a
47
decline of 3 percent.There is an increase of Rs.18 crores ($105) in the bank's total
deposits from Rs.125 crores ($125M) ($188M) in 2022.
Second, the bank's advances included both priority and non-priority lending. The
likes of agribusiness, SSI, and operations are among the prioritised industries. An
rise of Rs.3 crores, or 19% over the previous year's base level, was seen in
agricultural advances, which went crores. Overall, the SSI advances declined by
Rs.1cr, or -12%, Rs.7 crores compared to the base year. However, Ops' access to
credit remains unchanged.
The entire allocation for the priority sector grew by Rs.2 crores, or 5%,
2022.The other sectors' share of advances declined a drop of Rs.9 crores or -6%
from the previous year's level.
A -4% shift from the base year was seen in the bank's total advances, which
fell 2022.
The bank's operating profit has dropped a fall of Rs.4cr (or 25%) compared to the
prior-year period.
The bank's net worth (NP) has dropped representing a net fall of Rs.5 crores (-
19% from the previous year's level).
Compared to the previous year's baseline, the bank's nonperforming loans (NPA)
have dropped (a reduction of Rs.3cr, or 23%). When the NPA is fully analysed, it
is found that a 23% drop from positive indicator of bank health.
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As can be seen from the preceding research and interpretation, the bank
had a better than expected financial year in 2022/23.
CREDIT SCHEMES
49
ICICI BANK
50
Money for School
The purpose of is to help qualified students afford higher education opportunities in India or
beyond.
An Indian national who has been accepted to a professional or technical programme on the
basis of an entrance exam or a merit system is eligible.
Courses Valid Research in India Includes:
Courses leading to diploma/degree etc. conducted by colleges/universities Evening courses of
approved institutes, Courses like ICWA, CA etc. conducted by IIM, IIT etc., Courses offered
in India by reputed foreign universities, Courses leading to degrees or diplomas in education,
such as those in teaching, nursing, or the Bachelor of Education (B.Ed), are required.
Cost of studying away from home; funding for international student travel.
Investing in computers, which are essential for passing the class
The costs associated with any additional course-related activities, such as field trips, group
projects, a thesis, etc.
Quantity in economics: limits apply to need-based loans that are repaid by the parents or
students.
India's Academic Scene Up to INR 10,000,000
For Overseas Education, Up to Rs. 20.00 Cr.
Up to four million rupees in margin Nil
Over four million rupees: India's Academic Scene 5% Abroad Study 15%
Security:Loans Up to INR 4,000,000 Parents share the responsibility.
In cases when parents are not available, banks may accept grandparents as co-borrowers
based on their financial stability.
In the range of Rs. 4,000,000 to Rs. 7.5,000,000
valid third party guarantee for the full amount of the loan is required, as is the co-obligation
of the parents.
In excess of Rs. 7,500,000
Parental cosigning and collateral worth 100% of the loan's value are required.
Loan payments for all loans are assigned to the student's future income.
A student's co-obligator must be a parent or legal guardian. If an individual is married, their
parents or parents-in-law may act as co-obligators.
IBAR (not exceeding BPLR) applies to loans up to Rs. 4 lacs, whereas BPLR + 1% applies to
loans beyond Rs. 4 lacs.
taken out by female students to finance their pursuit of higher education in India or
elsewhere should be lowered by at least 0.50%.
Interest penalties of 2% every month.
The repayment moratorium will last for the longer of one year after the completion of the
course or six secures gainful employment.
After payments has begun, the loan is due in 5-7 years.
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HDFC BANK
The goal of HDFC's student loans is to help defray the cost of attending a college or
university to study a subject that has been pre-approved by HDFC. Students who are legal
residents of India may apply for a loan. solid academic history and be accepted into a
reputable institution to study for a well recognised credential.
Students who are currently enrolled in an accredited educational institution and would want
to apply for a student loan must have a co-applicant who is a wage earner in order to qualify.
Education loans are now available primarily to new students enrolling at a small number of
highly regarded universities around the country. If you need a list of acceptable schools,
contact the HDFC office in your area.
Loan Amount: Loans are available up to 90% of HDFC's estimated total cost. Course fees,
library fees, dormitory and dining hall fees, and the price of books and supplies would all be
included in these totals. HDFC's maximum loan amount for a student loan is Rs. 2,00,000.
The length of the loan would depend on the specifics of each application, but never exceed 5
years. After graduation, the student's repayment schedule might be adjusted to take into
account the student's anticipated income level. HDFC's primary goal is facilitating the
borrower's ability to repay the loan in a convenient manner.
Interest Rate:- How Much Did You Borrow?Annual Percentage Yield ""
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5.Details of the Plans:Subsidy of Interest on Student Loans
The Government of India's Department of Education, which falls under the has introduced an
interest subsidy plan to aid students from economically disadvantaged backgrounds. Canara
Bank will serve as the Scheme's Nodal Bank after being selected by the MoHRD.
is limited to loans taken out at Scheduled Banks for the purpose of enrolling in one of many
post-high school technical and professional programmes at recognised institutions** in India.
Students from low-income families, defined as those with a combined yearly of less than or
equal to Rs 4.50 Lakh. Submit a certificate to that effect issued by the appropriate State
Government officials.
Income certification from the scheme's competent authority (original) Interest subsidy
documents.
Provisional eligibility for subsidies under the MoHRD's Central Sector Scheme
Financial statement:
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54
CHAPTER – V
FINDINGS
SUGGESTIONS
CONCLUSIONS
55
FINDINGS
Customers have a positive impression about HDFC BANK.
Second, HDFC housing loans and educational loans are mostly unknown to the
general public.
Third, some clients have complained about the charges being too exorbitant.
4. Some clients have lost trust in private financial institutions like Standard
Chartered and HSBC.
5. The majority of home loan applicants go straight to HDFC.
There are already happy customers thanks to HDFC's services.
7 There is a moderate amount of customer recognition for HDFC goods.
HDFC Bank is an excellent financial institution.
SUGGESTIONS
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surprise that borrowers choose to work with the bank that offers the lowest
interest rates.
5) HDFC BANK gives out loans based on the customer's eligibility and ability
to repay. Because of this, some clients are denied the full amount of the loan
they need. Therefore, HDFC BANK should relax its loan-amount requirements.
Sixth, the business must take care of raising client awareness of its goods and
services.
The company must lower its prices for mortality and administration, which
brings us to number 7.
Eighth, the firm must lower rates on mortgage-related offerings.Nine) The
business should figure out who its target market is.
Ten) The company has to take into account the current competition and the
demands of its customers.11) HDFC BANK should educate those who are
unaware of the advantages of home loan programmes, particularly those living
in rural regions. Customers in rural regions and less-advanced parts of cities, in
particular, need to be educated. The HDFC BANK has been given the
aforementioned recommendations. The HDFC BANK may grow their home-
loan clientele by thinking about these ideas. They need to be more customer-
oriented and helpful if they want to keep their clients. All of this should assist
them better meet the needs of their clientele.
CONCLUSIONS
57
In the end, a methodical approach was taken to the study process, and precise
findings were obtained. All of the investigation and results goals. However,
there were also significant constraints on the study that made it difficult to
complete, including a shortage of time, data, responses, and willing participants,
as well as the unwillingness and illiteracy of respondents. However, due care
was taken to conduct research in an appropriate manner and draw a fair
conclusion for HDFC BANK, which might help the bank attract and retain a
larger clientele.
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BIBLIOGRAPHY
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