“A Study of Credit Appraisal Policy in HDB Financial Services &

Analysis on Customer Perception towards HDB Funding”

1Source HDB portal

SUMMER INTERNSHIP PRESENTATION

Presented by- Harpreet Singh (PGFA1521)

Source Self 2

FLOW OF

PRESENTATION

1• About the Industry

2.• About the Company

3. • Objectives

4.• About credit appraisal

5. • Research Study

6.• Findings

7.• SUGGESTIONS & RECOMMENDATIONS

8.• Conclusion

NBFC

A Non Banking Financial Company

(NBFC) is a company registered

under the Companies Act, 1956

of India, engaged in the business of

loans and advances, acquisition of

shares, stock, bonds, insurance

business or chit business but does not

include any institution whose

principal business is that includes

agriculture or industrial activity or the

sale, purchase or construction of

immovable property.

Regulated by the Reserve Bank of

India (RBI)

3Source google

NBFC Universe

NBFCs

Regulated by RBI

1. AFCs

2. LCs

3. ICs

4. IDF-NBFCs

5. RNBCs

6. GL-NBFCs

7. IFC-NBFCs

8. NBFC-Factors

Regulated by NHB

Housing finance

Companies

Regulated By SEBI

1. Merchant Banking Companies

2. Stock Broking

3. Collective Investment Schemes

4.Venture Capital Fund Companies

Regulated by MCA

1. Nidhi Companies

2. Mutual Benefits Companies

Regulated By State

Govt.

Chit Fund Companies

Regulated by IRDA

Insurance Companies

Source: Google 4

Company Profile

Industry Non Banking Financial

Institution (NBFC)

Founded In2007 , HDFC

16508, Employees

Headquarters Mumbai, India

Area served India

Key people Ramesh G, chairman & MD

Products Personal loan, Businessloan, Loan against shares,Loan against property,Loan against gold

5Source HDB portal

Products offered by HDBHDB

LOANS

Secured

loans

1. Loan against securities

2. Loan against Shares

3. Loan against Property

4. Loan against Gold

5. Car Loans

6. Enterprise Business Loan

7. Equipment Loans

Unsecured loans

1.Personal loans

2.Business Loans

INSURANCE

1.Life Insurance

2.GeneraInsurance

6Source HDB portal

7

JOB DESCRIPTION

Title of the Job: InternDepartment: Credit DepartmentKey Result Areas (KRAs):

Checking all the documents which are required before login

Login the loan file and generate the LOS ID (unique ID)

Generating all the other documents i.e. the CIBIL

Report, e-tax payment slip, tracker in HDFC Or HDB in

any branch ,if any

•Meeting the customer personally as PD

(Personal Discussion)

•Preparing the CAM (Credit Approval Memo)

Making the Cases in the given format by the company

which is to be send above level for the approval.

OBJECTIVE OF THE

STUDY

“statements describing what

the project is trying to

achieve & the effect or

change that the project is

supposed to cause”

To study the meaning and importance of Credit appraisal

To study the credit appraisal process

To understand the financial tools required for credit appraisal

To understand the basic fundamentals of credit department

To study and understand the terms and conditions of sanctions and advances

To study the entire loan system

8

Character

(integrity/willingness)

Capacity

(ability/financial

soundness)

Collateral

(security)

Capital

(funds availability)

Conditions

(Reference check)

5C’s

CREDIT

APPRAISAL

“An investigation/assessment

done by the company before

providing any loans & advances

also checks the commercial,

financial & technical viability of

the project proposed its findings

pattern and further checks the

collateral security cover for the

recovery of such funds”.

Source: Google9

CREDIT

APPRAISAL

PROCESS

Post sanction activities such as bank account review

Disbursement of loan

Final assessment of documentations, mortgages, agreements

Sanction/Approval of proposal by concerned authority

Assessment of the proposal (ABB bank balance, gross income)

Preparing the financial data

Preparation of CAM (credit approval memo)

Check for the RBI defaulter list, CIBIL check, POSIDEX, ITR

Pre sanction visit by the credit officer (Personal Discussion)

Receipt of documents (Balance sheet, KYC, Gas receipt, Bank balances, Stability proof)

Receipt of application from the applicant

10Source google

SURVEY

“procedure for collecting

data to be analyzed”

•To study

consumer

perception

towards HDB

financial

services

funding

•The Research

Design used

is descriptive

research

design

•Primarydata•Survey•Interview

•Samplesize-50

•RandomlyLoanApplicant

OBJECTIVERESEARCH

DESIGNDATA

COLLECTION

SAMPLINGSIZE &

METHOD

11

TOOLS ON WHICH DATA ANALYZED IS CONDUCTED

“excel is used to interpret the results”

1. Sole banking with the parent bank HDFC

36%

64%

Sole Banking with HDFC

Yes No

2. Already financed by HDB Financial services

28%

72%

Finance from HDB

Yes No

12Source Self

3. Services provided by HDB financial services

Excellent

Good

Satisfactory

Bad

Very Bad

1

19

22

7

1

Services provided by HDB

Excellent Good Satisfactory Bad Very Bad

4. Aware of loan charges

56%

44%

Aware of loan charges

Yes No

13Source HDB portal

FINDINGS

5. ROI provide by HDB

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

1

11

26

11

1

ROI by HDB is High

Strongly Agree Agree Neutral Disagree Strongly Disagree

Credit and risk go hand in hand

For each type of loan, there are different types of parameters

After studying few cases, I found that in some cases, loan is

sanctioned due to strong financial statements

Credit appraisal mainly depends on the one most important

factor which is the rate of interest as due to the competition.

14

Source self

SUGGESTIONS &

RECOMMENDATIONS Branch credit limit should be exceeded as it helps to reduce the

work load of all the related people

Moderate rate of interest

Policies and norms should be strictly followed for any cases

by everyone

Credit and other departments should work

independently; no other departments should interfere in

each other work

Login of cases to be done with complete documents,

incomplete documents will stretch the work and time of credit

team

Data Authentication

15Source Self

CONCLUSIONS

Credit appraisal should be

based upon

Financial performance

Business performance

Industry outlook

Quality of management

Usually, it is seen that the credit appraisal isbasically done on the basis of fundamentalsoundness. But after seeing different types ofcases , it can be concluded that credit appraisalsystem is not looking on the financial parameters,there are other factors also.

In all, the viability of the project from everyaspects analyzed, as well as type of thebusiness, promoters past records, experience,long term plans plays a crucial role inincreasing chances of getting project approvedfor loan.

16Source Self

Questions & Comments?

Contact Details:

Harpreet Singh

PGFA 1521

MOB. No: +91 9675297500

Email Id: harpreet.singh@jaipuria.ac.in17