hdfc_finallllll report bank
TRANSCRIPT
`SUMMER PROJECT REPORT
ON
“Process management of Mortgages and Analysis of customer who
have taken loan against Gold from the Bank.”.
At
Housing development finance corporation bank (HDFC) ,Jaipur.
In the partial fulfillment for the requirement for Award of
“Post Graduate Diploma in Business Management”
Submitted by:
Corporate Guide
Kavita jain
Mr. Vinod Vijay
Sapna sharma Regional
credit Manager (LAP)
Mr. Gaurav
Gattiwal
Asst.Credit
Manager (Tw/Gl)
HDFC BANK JAIPUR
INSTITUTE OF RURAL MANAGEMENT, JAIPUR
Faculty of Management Studies
Institute of Rural Management, Jaipur
CERTIFICATE
This is to certify that the summer training report titled “Process
management of mortgages and analysis of customer who have
taken gold loan from bank ” is a record of project work done jointly by Ms
kavita jain & Ms Sapna sharma under my guidance and supervision and that
it has not previously formed the basis for the award of any degree, fellowship
or associate ship to her.
Date:
Prof.Tarjini goyal
Place: (Faculty Guide)
DECLARATION
I, do hereby declare that the report entitled “Process Management of
Mortgages and Analysis of customer who have taken Gold loan from
the bank” is an original piece of work carried out by me at HDFC Bank
Jaipur.
The abstract or any form of report has not been published earlier and it
presents the original work done by me during the Summer Internship
Programme under Post Graduate Diploma in Business Management, Faculty
of Management Studies - Institute of Rural Management (FMS-IRM), Jaipur
from 16th May, 2010 to 30th June 2010, from Housing development finance
corporation Jaipur.
Place: Jaipur Kavita jain
Date: Sapna Sharma
ACKNOWLEDGEMENT
“The completion of any project depends upon the co-operation, coordination and combined
efforts of several resources of knowledge, inspiration & energy”. I always knew that in an
organization, the work atmosphere yields enormously on an individual’s productivity and quality
of work.the competence and expertise of people around me at HDFC bank Jaipur. Was a factor
that motivated me to strive and achieve nothing short of perfection.
I owe a great many thanks to all those, without whom this project wouldn’t have been as much a
learning experience and as successful. To those, who helped and supported me during the course
of this project.
My deepest sense of gratitude for the Faculty-in-Charge, Prof. Tarjini Goyal,FMS-IRM,Jaipur,
for constant guidance, professional help and support during the course of the project, for .guiding
me and helping me at all times during the project. She was the key inspirer for me and without
his guidance this project would have been a distant reality.
I express my thanks to the Company Guide, Mr.Vinod Vijay (Regional credit Manager) & Mr
Gaurav Gattiwal ( Asst.credit manager) HDFC bank for extending his support and guidance for
this project. Thanks and appreciation to the helpful people at bank Branch, for their support.
Iam hereby thankful to; Ms yashasvi jain , Mr vipul sogani Mr deepesh mishra, Mr sharad
Ahuja, (credit managers mortgages).Mr Ashish sharma Ms deepshika saraswat (credit
managers gold loan) .
I thank my colleagues and friends for providing constant encouragement and help. I am indebted
to them for their timely help & the enthusiasm they expressed in helping me bring this project to
the fruitful end.
Henceforth I would also like to extend my sincere token to our Director, “Brig, S.K. Gaur” for
his relentless spirit to lend a helping hand to the students. I am highly grateful to FMS-IRM,
Jaipur for their benevolent assistance.
(Kavita jain
(Sapna sharma)
Table Of ContentsSr. No. Particulars Page No.
Executive summary 7
Chapter 1 1.1 Statement of problem 8
1.2 objective of study 9
1.2.1 primary objective 9
1.2.2 secondary objective 9
1.3 practical utility of the study 10
1.4 limitations of the study 10
1.5 Research methodology 10
1.5.1 Research design 10
1.5.2 Area of sampling 10
1.5.3 Sampling technique 10
1.5.4 Sample size 11
1.5.5 Data collection method 11
1.5.6 Tools of data collection method 11
1.5.7 Tools of analysis 11
Chapter 2 HDFC Company profile 12-19
2.1 Introduction to banking sector 12-13
2.2 Introduction of company 14-18
2.3 Company history 18-19
2.4 Services offered by the company 19
Chapter 3 HDFC bank mortgage service 20-21
3.1 objectives of mortgage service 20
3.2 features of mortgage service 20
3.3 offerings of mortgage service 21
3.4 mortgage credit loan product 21
Chapter 4 PHASE 1 HDFC BANK MORTGAGE PRODUCTS 22-39
4.1 Loan against property 22-23
4.1.1 Steps in Application process 23-25
4.1.2 Documents required while applying Lap 25-27
4.1.3 Flow chart for Lap 28
4.1.4 credit mortgage process-(Lap) 29-32
4.1.5 FTR/FTNR guidelines 32-33
4.1.6 kyc guidelines 33-35
4.2 Loan against Gold 36
4.2.1 what is gold loan 36-37
4.2.2 process of gold loan 37
4.2.3 kinds of gold loan 37
4.2.4 features &benefits of gold loan 37-38
4.2.5 Eligibility criteria 38
4.2.6 Documentation required while applying gold loan 38
4.2.7 processing fee & charges 38
4.2.8 flow chart for gold loan 39
Chapter 5 CUSTOMER SATISFACTION SURVEY ON GOLD
LOAN
40-43
Chapter 6 SWOT ANALYSIS 44-45
6.1 swot analysis on Loan against property 44
6.2 swot analysis on gold loan 45
Chapter 7 FINDING 46
Chapter 8 SUGGESTIONS 46
Chapter 9 CONCLUSION 47
Chapter 10 BIBLIOGRAPHY 48
Chapter 11 ABBREVATIONS 49
Chapter 12 ANNEXURE 50-51
EXECUTIVE SUMMARY-
The summer training of a management student plays an important role to develop him into a well
groomed professional. It gives theoretical concepts a practical shape in the field of applications.
The project at HDFC bank dealt with Process Management of Mortgages and Analysis of
customer who have taken gold loan from the Bank.
The forthcoming project report is divided in phases:
Phase 1: 1. To study about the process of loan against property
2. To study about gold loan provided by the HDFC bank
Phase 2: 1. Comparison of HDFC Lap & Gold loan with other banks.
2. Analysis of customer who have taken loan against gold from Bank.
The research methodology was conclusive, tentative and descriptive in nature. Both the
secondary and the primary data collection methods were taken into consideration and the
conclusions of the report were derived fundamentally on the basis of the primary data collected
and thus analyzed accordingly.
Questionnaires were circulated and mailed randomly. A few Statistical Analysis Tools like,
mean, pie charts, were used to draw inferences based on the survey .
After doing the thorough analysis it can be concluded that a vibrant and a well-developed market
which has been shown to facilitate consumption & investment, by providing loans to different
segments has a lot of potential in the coming years. The lenders as well as borrowers in the
country are growing at a very fast pace and so is their knowledge about the different products,
e.g. loan against property & loan against gold. The awareness among the Indian demographic
regarding risk and return of their repaying capacity is increasing. This ensures the long life of the
industry and banks retail asset centers.
Thus, it was a great experience to work with a company of such a high reputation.
1.1 Statement of the problem –.Banking sector is consider as one of the tentative sector of the economy where the products are
being designed according to the market need of the economy, my project report is basically on
process management mortgages & analysis of customer who have taken gold loan from the bank.
the major problem which were identified before going on for the project is reason behind
dissatisfacion & area of improvement of the customers.
1.2 . OBJECTIVE OF THE STUDY:
At HDFC Bank I was working with the Retail credit(mortgages) department, which caters
specifically to providing HDFC services to individuals meeting the necessary requirements.
1. As a part of my project I had to study the Process of Loan against Property & Gold
loan provided by the HDFC bank and to make analysis of HDFC Lap & Gold loan in
comparison to other banks & Analysis of customer who have taken gold loan from
the HDFC bank.
2. The report is divided into 2 parts : PRIMARY & SECONDARY OBJECTIVES:
1.3 Practical utility of study:
This study gives an insight that at what level HDFC bank has its reach to the general
mass. This study will help to know the current business potential for the bank. Interaction
with public helped me to know the products and services they want. Also the analysis
made by me will help HDFC to customize the product to cater their need.
1.4 Limitations of the Study-
Limited access to software of the bank
Confidential information of the bank cannot be disclosed.
1.TO STUDY ABOUT THE PROCESS OF LOAN AGAINST PROPERTY TO STUDY ABOUT GOLD LOAN PROVIDED BY HDFC BANK
2.COMPARISON OF HDFC LAP & GOLD LOAN IN COMPARISON TO OTHER BANKSANALYSIS OF CUSTOMER WHO HAVE TAKEN GOLD LOAN FROM HDFC BANK
Biased response of customers.
1.5 Research Methodology
The study undertaken by me was regarding a Process Management of mortgages and analysis of
customer who have taken loan against gold from the bank.
1.5.1 Research design:
The research conducted for Phase I is a library research. It includes:
Analysis of historical records.
Analysis of documents.
The research conducted for Phase II was descriptive research
1.5.2 Area of sampling:
The survey was broadly carried out in Rajasthan.
1.5.3 Sampling Technique:
The type of sampling taken was census sampling.
1.5.4 Sample size
Target population: The universes of the study are existing customers of HDFC bank..
200 Responses were elicited.
1.5.5 Data collection method:
Data is Collected through the questionnaires filled from telephonic interview by customer.
1.5.6 Tools of data collection method:
Primary data
Secondary data
Primary Data: Collected through the questionnaires filled from telephonic interview by
Customer.
Secondary data: Through annual report, internet, magazines, journal and websites.
1.5.7 Tools of analysis:
Presentation tools:
Pie charts
Bar graphs
Flow charts
Statistical tools:
Percentages
2. COMPANY PROFILE
2.1 INTRODUCTION TO THE BANKING SECTOR
Banking, the business of providing financial services to consumers and businesses. The basic
services a bank provides are checking accounts, which can be used like money to make payments
and purchase goods and services; savings accounts and time deposits that can be used to save
money for future use; loans that consumers and businesses can use to purchase goods and
services; and basic cash management services such as check cashing and foreign currency
exchange. A broader definition of a bank is any financial institution that receives, collects,
transfers, pays, exchanges, lends, invests, or safeguards money for its customers.
DEFINITION:
Engaging in the business of keeping money for savings and checking accounts or for
exchange or for issuing loans and credit etc.
Transacting business with a bank; depositing or withdrawing funds or requesting a loan
etc.
A banker or bank is a financial institution that acts as a payment agent for customers, and
borrows and lends money.
A banker or bank is a financial institution whose primary activity is to act as a payment
agent for customers and to borrow and lend money.
Banking Industry in India
The first bank in India, though conservative, was established in 1786. From 1786 till today, the
journey of Indian Banking System can be segregated into three distinct phases. They are as
mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after 1991.
2.2 INTRODUCTION TO THE COMPANY
Background
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered
office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank
in January 1995.
HDFC Bank's objective is to build sound customer franchises across distinct businesses so as to
be the preferred provider of banking services for target retail and wholesale customer segments,
and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank
is committed to maintain the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance. HDFC Bank's business philosophy is based on four core
values: Operational Excellence, Customer Focus, Product Leadership and People.
Capital Structure
As on 31st March, 2011 the authorized share capital of the Bank is Rs. 550 crore. The paid-up
capital as on the said date is Rs. 465,22,56,840/- (46,52,25,684 equity shares of Rs. 10/- each).
The HDFC Group holds 23.35% of the Bank's equity and about 17.44% of the equity is held by
the ADS / GDR Depositories (in respect of the bank's American Depository Shares (ADS) and
Global Depository Receipts (GDR) Issues). 28.53% of the equity is held by Foreign Institutional
Investors (FIIs) and the Bank has 4,11,464 shareholders.
The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange
of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York
Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts
(GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002.
Distribution Network
HDFC Bank is headquartered in Mumbai. As on March 31, 2011, the Bank has a network of
1986 branches in 996 cities across India. All branches are linked on an online real-time basis.
Customers in over 800 locations are also serviced through Telephone Banking. The Bank’s
expansion plans take into account the need to have a presence in all major industrial and
commercial centres, where its corporate customers are located, as well as the need to build a
strong retail customer base for both deposits and loan products. Being a clearing / settlement
bank to various leading stock exchanges, the Bank has branches in centres where the NSE / BSE
have a strong and active member base.
The Bank also has a network of 5471 ATMs across India. HDFC Bank’s ATM network can be
accessed by all domestic and international Visa / MasterCard, Visa Electron / Maestro, Plus /
Cirrus and American Express Credit / Charge cardholders.
Financials
The Bank’s total income for the quarter ended March 31, 2011, was Rs. 6,724.3 crores. Net
revenues (net interest income plus other income) at Rs. 4,095.2 crores for the quarter ended
March 31, 2011 increased by 24.0% over Rs. 3,302.1 crores for the corresponding quarter ended
March 31, 2010. Net interest income (interest earned less interest expended) for the quarter
ended March 31, 2011 was Rs. 2,839.5 crores as against Rs. 2,351.4 crores for the quarter ended
March 31, 2010. This was driven by loan growth of 27.1% and a core net interest margin for the
quarter of 4.2%
Credit Rating
The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research
Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programme
has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered
to be "of the best quality, carrying negligible investment risk". CARE has also rated the bank's
Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for
repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary
of Fitch Inc.) has assigned the "AAA ( ind )" rating to the Bank's deposit programme, with the
outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection
factors are very high"
The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and
Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated
by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated
Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the
outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the
Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA /
Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the
cases referred to above, the ratings awarded were the highest assigned by the rating agency for
those instruments.
Business Profile
Wholesale Banking
The Bank’s target market is primarily large, blue-chip manufacturing companies in the Indian
corporate sector and to a lesser extent, small & mid-sized corporates and agri-based businesses.
For these customers, the Bank provides a wide range of commercial and transactional banking
services, including working capital finance, trade services, transactional services, cash
management, etc. The bank is also a leading provider of structured solutions, which combine
cash management services with vendor and distributor finance for facilitating superior supply
chain management for its corporate customers. Based on its superior product delivery / service
levels and strong customer orientation, the Bank has made significant inroads into the banking
consortia of a number of leading Indian corporates including multinationals, companies from the
domestic business houses and prime public sector companies. It is recognised as a leading
provider of cash management and transactional banking solutions to corporate customers, mutual
funds, stock exchange members and banks.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,
Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the
financial markets in India, corporates need more sophisticated risk management information,
advice and product structures. These and fine pricing on various treasury products are provided
through the bank’s Treasury team. To comply with statutory reserve requirements, the bank is
required to hold 25% of its deposits in government securities. The Treasury business is
responsible for managing the returns and market risk on this investment portfolio.
Retail Banking
The objective of the Retail Bank is to provide its target market customers a full range of financial
products and banking services, giving the customer a one-stop window for all his/her banking
requirements. The products are backed by world-class service and delivered to customers
through the growing branch network, as well as through alternative delivery channels like
ATMs, Phone Banking, NetBanking and Mobile Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the
Investment Advisory Services programs have been designed keeping in mind needs of customers
who seek distinct financial solutions, information and advice on various investment avenues. The
Bank also has a wide array of retail loan products including Auto Loans, Loans against
marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider
of Depository Participant (DP) services for retail customers, providing customers the facility to
hold their investments in electronic form.
HDFC Bank was the first bank in India to launch an International Debit Card in association with
VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank
launched its credit card business in late 2001. By March 2010, the bank had a total card base
(debit and credit cards) of over 14 million. The Bank is also one of the leading players in the
“merchant acquiring” business with over 90,000 Point-of-sale (POS) terminals for debit / credit
cards acceptance at merchant establishments. The Bank is well positioned as a leader in various
net based B2C opportunities including a wide range of internet banking services for Fixed
Deposits, Loans, Bill Payments, etc.
2.3 HDFC Bank history:
The merged entity now holds a strong deposit base of around Rs. 1,22,000 crore and net
advances of around Rs. 89,000 crore. The balance sheet size of the combined entity would be
over Rs. 1,63,000 crore. The amalgamation added significant value to HDFC Bank in terms of
increased branch network, geographic reach, and customer base, and a bigger pool of skilled
manpower.
In a milestone transaction in the Indian banking industry, Times Bank Limited (another new
private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks in
the New Generation Private Sector Banks. As per the scheme of amalgamation approved by the
shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received
1 share of HDFC Bank for every 5.75 shares of Times Bank.
HDFC Bank offers a wide range of commercial and transactional banking services and treasury
products to wholesale and retail customers. The bank has three key business segments:
Wholesale Banking Services - The Bank's target market ranges from large, blue-chip
manufacturing companies in the Indian corporate to small & mid-sized corporates and agri-based
businesses.
Retail Banking Services - The objective of the Retail Bank is to provide its target market
customers a full range of financial products and banking services, giving the customer a one-stop
window for all his/her banking requirements.
Treasury - Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. The Treasury
business is responsible for managing the returns and market risk on this investment portfolio.
HDFC Securities (HSL) and HDB Financial Services (HDBFSL) are its subsidiaries.
2.4 Services offered by the company:
Personal Banking
Accounts & Deposits
Loans
Cards
Forex
Investments & Insurance
NRI Banking
Accounts & Deposits
Remittances
Investments & Insurance Loans Payment Services
Wholesale Banking
Corporate
Small & Medium Enterprises
Financial Institutions & Trusts
Government Sector
3. HDFC BANK MORTGAGE SERVICE
Housing Development Finance Corporation (HDFC) Bank Mortgage Service is leader in the
Indian mortgage market at present with the State Bank of India (SBI) following the lead. The
total worth of the India Mortgage Market presently is nearly US $ 18 billion. The gross domestic
product to mortgage ratio in India is very low in comparison to other developed countries. The
ratio in the foreign countries ranges from 25% to 60% whereas in India the ratio is 2.5%. The
India Mortgage Market is showing fast growth in the past few years. The foremost players in this
sector are the finance corporation but presently the commercial banks are also started playing an
important role in the development and growth of the India Mortgage Market.
3.1 OBJECTIVES OF MORTGAGE SERVICE:
To provide the customer with the best possible services
To focus on cost management and management of gains
To put emphasize on the quality of the credit and advance in form of mortgage loan
3.2 THE SALIENT FEATURES OF HDFC BANK MORTGAGE SERVICE:
The mortgage based loans provided in order to acquire real estate for commercial
purposes, and as working capital
The funding is done upto 3/4 of the cost of the project and the balance is the customers
contribution
The customer has to provide collateral securities against the loan
The main purpose of HDFC Bank Mortgage service is to provide easy access to refinancing,
renovating or owning commercial real estate through the disbursement of loans against
mortgages. The HDFC Bank Mortgage service also provide mortgage based loans as working
capital. The HDFC Bank Mortgage service is provided against presentable security such as
residential house or apartment, industrial property, urban commercial complex, possessed in the
name of the receiver of the loan. The security such as rented house can be accepted if the same
property is on a lease and the person should also have the authority to collect the rent under the
power of attorney.
3.3 OFFERINGS OF HDFC BANK MORTGAGE SERVICE:
Debt consolidation service
Home equity loans
New home loans
Latest mortgage quotes
Mortgage refinancing
Real estate lending
3.4 Mortgage credit loan product
o LAP (Loan Against Property)
o LARR (Loan Against Rental Receivables)
o DOD (Drop line overdraft mortgages)
o LCP (Loan Against Commercial Property)
o LAG (Loan Against Gold)
PHASE I: 4 HDFC BANK PRODUCTS
4.1 LOAN AGAINST PROPERTY(LAP)
LAPGOLD LOAN
A loan against property (LAP) is a loan against your house or even a plot. If all the land titles
are in place and you have an income, this is a cheaper loan option if you want some liquidity
in double quick time. Though the interest rates on this loan are higher than that of a home
loan, it is cheaper than that a personal loan or a loan against security. Loan against Property
refers to the secured loan category where the borrower gives a guarantee by using his
property as a security. The right of ownership of the property is still with the borrower, and if
he/she is unable to repay the loan amount, he/she can sell the property to pay off the debts.
In other words it actually means - a loan given or disbursed against the mortgage of property.
One can now take a loan against one's self occupied residential or commercial property, to
expand his business, plan a dream wedding, or fund one's child's education and much more.
However, one needs to give a declaration stating that these funds will not be used to carry out
any illegal activities or for any speculative purpose. The loan is given as a certain percentage
of the property's market value (usually around 40 per cent- 65 per cent). But the threshold
amount is generally defined by most lending institutions. Usually, banks and other lenders
extend a loan against property as a security, for up to 50 per cent of the market-value of the
property. However, the extent of the loan is also subject to your eligibility as per income
norms which also are stricter than home loan norms.
A loan against property gets you capital based on the value of your property. It is available
for both salaried and self-employed persons and against commercial as well as residential
property. All this and, you don't have to sell your property to raise the capital. It's all yours
to keep if you repay the loan taken.
4.1.1 Steps involved in the application process are:
1. Application
2. Processing
3. Documentation
4. Sanctioning of the loan
5. Valuation and legal check
6. Disbursement
1. Application
Just as in case of every loan, the loan application begins the whole process. You will need to
fill in a loan application with details, personal and professional, loan requirement, details of
the property intended for mortgage etc. Make sure the details are filled in accurately.
2. Processing
Next comes the loan processing stage, the stage at which the loan process gains actual
momentum. This could start with a personal discussion followed by the bank's field
investigation. Along with the application form and the credit documents, you may have to
pay a processing fee to the bank, which could be 1-2 per cent of the intended loan. An
upfront fee could be collected to maintain your loan account records, sending income tax
certificates every year, maintaining post-dated cheques, etc. When you go for a personal
discussion, carry all the original documents pertaining to the information provided on the
application form. Do not submit any forged documents or lie about the financial details
requested. The bank's field investigation will follow; the bank might outsource this task to
third-party verification agents.
3. Documentation
Documentation includes the following;
Proof of income: Copies of last three years income tax returns (along with copies of
Computation of Income/Annual accounts, if any), Form 16/Form 16A, last three months
salary slips, copies of the last 6 months statements of all the active bank accounts that reflect
your salary/business income details etc.
Age proof: Copy of the school leaving certificate/driver's licence/passport/ration card/PAN
card/voter identity card etc.
Address proof: Utilities bills, such as phone and electricity bills, need to be provided to
prove that you are actually staying at your current address.
Identification proof: Documents with your photograph. Sometimes, one document, if it
contains a photograph, the current residential address, and the correct age can be the proof
for all three mentioned above.
Employment details: If your company is not well-known, a short summary about the nature
of the company, its business lines, its main customers, its competitors, number of offices,
number of employees, turnover, profit, etc. may be needed. Usually, the company profile that
is available on the standard website of the company is enough.
Property papers: The bank may require title deeds and other documents relevant to the
property. This will be important as the loan can be taken only against free-hold property.
Also, it can be only about 40-60 per cent of the cost of property. It is important for the bank
to establish the value of the property and its legal status before the offer can be
considered.
Meanwhile, bank verifies your personal and employment details. The bank also does a
valuation of the property.
4. Sanctioning of the loan
Loan sanction is the next process in the series. At this stage, the bank has checked your
financial credentials based on criteria such as your income, age, qualifications, experience,
employer, nature of business (if self employed), etc. They work out the maximum loan
eligibility, and an indicative loan amount that the bank is willing to offer.
5. Valuation and legal check
Valuation and legal check on property and papers is the next stage where the focus of the
bank will shift to the property that you intend to mortgage. Make sure the property papers
and the relevant NOCs are in place. The bank's lawyer will check the property papers for
their legality. The bank may also send an expert to visit the property. This expert could be a
bank employee or an associate with a realty firm.
6. Disbursement
Once the bank has ascertained all that it needs to be assured of you as a client, the property as
a security, and your repayment capacity, it will disburse the loan. The bank does not enquire
about the purpose for which you use the loan. Though, it stipulates that the loan should not
be utilized in speculative activities.
4.1.2 DOCUMENTS REQUIRED WHILE APPLYING LOAN AGAINST PROPERTY:
Documents required
Completed loan application form with one passport size photograph
Passport
Photo PAN card
Voter's identity card
Income proof statement
Driving license
Financial documents (all of the following)
Salaried individuals
Latest salary slip showing statutory deductions AND Form 16 (Declaration from the
employer giving the details of income and deductions, duly signed by an authorized
signatory of the Company) OR
Latest acknowledged IT returns AND
Bank statements for the last 3 months
Self-employed individuals / Proprietor
Computation of income for the last 2 years certified by a C.A. OR
P&L and balance sheet for the last 2 years certified by a C.A. AND
Copies of acknowledged IT returns for the last 2 years AND
Bank statements for the last 6 months
Partnerships
Computation of income for the last 2 years certified by a C.A. OR
P&L and balance sheet for the last 2 years certified by a C.A. AND
Copies of acknowledged IT returns for the last 2 years AND
Partnership Deed, Letter of Authority, Bank statements for the last 6 months,
CPA TO BANK
Application form
Financials & banking
Valuation Report (if loan amt is more than 50 lacs then 2 valuations required)
Cibil & Sas Report
Kyc Documents
Dedupe Report
CREDIT MANAGER TO OPERATION LOGIN
Credit Approval Memo (CAM)
Ric Sampled (Red) or Ric screened (Blue)
If the Case is greater than 1 Crore then Profile Check is also required.
Personal Discussion (pd) sheet
Valuation Report (If loan amount is more than 50 lacs then 2 valuations required)
Legal Report with a Search Receipt (check legal entry in the system)
Roc search report in case of pvt. Ltd companies.
Corporate Cibil In case of partnership companies.
RBI
FI report
The responsibility of the credit manager is to the decisioning of the file within the
defined TAT as per the policy.
4.1.3 Flow Chart For LAP
4.1.4 CREDIT MORTGAGE PROCESS -(LAP)
In this entire credit process of mortgage loans has the activities and responsibilities clearly
entrusted to the respective roles i.e. CPA,ADFC and CREDIT MANAGER
PROCESS FOR LAP:
1. objective
To ensure the following
mortgage credit product loans are decisioned as per policy
timeliness and accuracy are adhered
Credit process model-
In our model cpa is an outsourced agency who manage loan processing while Adfc are resources
from Adfc ltd. And credit managers are bank officers managing the cpa& Adfc staff wherein the
final responsibility of credit process at the location lies with them.
For processing the loan applications, HDFC bank use lasersoft system(LS) which is a web based
front end system with limited access to the system depending on functional role.
The process model briefly described below:
1. Login stage
2. Data entry and process checks initiation
3. Credit appraisal stage
1.login stage
Short proposal entry(SPE)shall be done by sales irrespective of the fact,whether the file is
sourced from hub or spoke location.in case of spoke sourced cases,SPE can be done from
respective spoke or from nearest processing hub depending on system accessibility.
Once SPE is done by sales,file will be submitted at CPA desk for checking compliance to MDCP
(minimum document credit parameters).guidelines.cpa will check for the presence of lasersoft
number on the file,check if the file has moved to PSDR stage,application sign date is mentioned
on application form or not,completeness of documentation &adherence to mdcp checklist.if
mdcp check is ok,file will be logged by selecting “FTR” in the document field &remarks&psdr
will be completed for the respective file.Appropriate entry will be made in the login register .on
the other hand if the MDCP check is not OK then the file would be returned to the sales staff
post updating FTNR code as per FTNR guidelines.
The discrepant file will be returned back to concerned sales representative post entry in the login
register.
If FTNR file is being logged–in, necessary approval/confirmation needs to be taken from credit
manager & PSDR is to be completed by selecting “FTNR_CRE”.i.e.FTNR with credit sign –off
in document field.
For non CPA locations,above mentioned login process shall be carried out by ADFC or credit
manager.
2.Data Entry &Process checks Initiation:
Once a file is logged,first check/data entry at DPE has to be of application date.needs to be
necessarily mentioned at DPE by CPA/ADFC/CM manually as per application form.The field
should not be skipped or left blank as otherwise system will capture DPE date as application date
by default &thus leading to incorrect data capturing in LS.
Partial data entry would be done at DPE by creating client profile for all applicant/co applicants
& updating minimum required income/banking/obligation information depending on credit
program as per DPE guidelines.system will then allow moving stage from DPE .simultaneously
the file would be handed over to RIC for screening/sampling.
Immediately post completion of partial DPE ,request would be sent for bank statement greater
than 6 months for HDFC bank account holders & all process checks need to be
initiated(valuation/legal/cpv)on system.if two valuations are required,both should be initiated
simultaneously.legal should be initiated upfront for all cases.
No document in any form should be handed over to external vendors for completion of process
checks till the time process checks are initiated on system.
Along with the above checks ,RBI dedupe would be initiated offline,pd would be initiated offline
as per the PD grid. ROC &LIP would be initiated offline to the concerned agency if applicable.
DEDUPE(CIBIL & SAS) will be auto triggered from system post move stage from DPE.
The CPA should also complete full DPE after initiating all process checks in the system.post
partial DPE, proposal will move to under writing bucket &would not be available at DPE stage
for completion of data entry.however, DPE can be accessed from u/w stage.CPA/ADFC/CM will
access DPE from U/W stage& complete DPE in terms of data entry.
All the verifications/checked initiated should be checked if received as specified in the process
flow and the same should be printed & attached in the file before sending the same to the credit
manager for decisioning.
3.Credit Appraisal Stage
Credit manager needs to ensure all the process checks are received & attached in the file before
decisioning.corporate CIBIL needs to be initiated for all cases GREATER THAN RS.1 CRORE.
Credit will appraise the file basis credit policy guidelines & process check reports. One of the
below four decisions can be assigned to a file ie, Approve, Reject, Forward or pending.
Approved file shall be kept with CPA/CREDIT till final approval including legal clearance &
closure of credit related subjective approvals.in case any re-look on the approved file is required
for loan amount or any other reason by the sales Team,communication regarding any
additional mitigant/document required will be made post the clarification /documentation
receipt.The application will be accorded a final decision.
For reject &pending cases ,the file shall rest with credit for a maximum period of 5 days for re-
look/query resolution &submission of additional documents, if any,& clearance of
pendancies.post the requisite information/documents,a final decision will be taken on the
application the file will then be sent to the CPA, if no change in decision & can be sent to
operations if it’s a complete approved case,including legal clearance & closure of credit related
subjective approvals.
In caseof any change in the credit promo/scheme,the necessary changes need to be made in DPE
& the necessary process check need to be initiated.
At the time of decisioning ,the credit manager needs to check the need for an additional SPE.in
case, if an additional SPE is required ,the same needs to be communicated to sales.An additional
file would not be required,but the additional proposal number would be mentioned on the file.
4 REFERENCES:
FTNR guidelines
KYC guidelines
4.1.5 FTR / FTNR Guidelines
Process for capture of FTR /FTNR capture in mortgages
Process for capture of codes
Every case logged in at CPA should have at least any of the codes, FTR, FTNR, or FTNR credit
ok captured in PSDR module
HUB LOCATION
FTNR cases
on login of a file in CPA, CPA staff will check for MDCP compliance as per the MDCP
checklist. Post checking MDCP compliance, the login status of the file, namely, FTR, FTNR, or
FTNR credit OK needs to be captured in the login register &on lasersoft. These discrepancies
should be captured on the system in the relevant FTNR codes.
Eg: Application form not signed by the applicant, would be FTNR A and in the “Remarks /
Description field, CPA will capture the Actual discrepancy in detail.
In FTNR cases, the file should be returned to sales for curing only post capturing of the FTNR
codes and detailed discrepancy. Once the file is cured and retured to CPA again, the CPA staff
should check for completeness of the FTNRs raised. If the file is clear, then login register should
again have another entry which would marked as “FTR” for that case. Once all the discrepancies
are resolved, CPA will MOVED STAGE and the file would be considered as logged in.
FTNR CREDIT OK
In cases pf any document or information discrepancies in the file, the sales staff may take credit
approval to log in the post which the file would be marked “ FTNR CREDIT OK’’ in the login
register.
FTR cases
If the file is complete in the first instances, the CPA should mark “ FTR” on both lasersoft and
the login resigter and do PSDR move stage to log-in the file.
SPOKE LOCATION
If the reaches the CPA from a spoke location, the CPA staff would first check for completeness
of the file, and do the SPE of the file and follow the process as for HUB location.
FTNR CODES IN PSDR STAGE
For every cases logged in at the CPA, ANY ONE of the below codes must be captured on the
system in PSDR stage. This can be view by sales through viewer right.
1 FTR(First time right)
2 FTNR( first time not right)
3 FTNR with credit OK (OK to login)
The below FTNR codes are created under the ‘ Document list’ available in PSDR.
FTNR will be marked in a file for the below reasons through the mentioned codes:
FTNR A – Application form realted
FTNR B –KYC Related
FTNR C-Banking related
FTNR D –Fiancials realted
FTNR E –Income norms related
FTNR F- Loans detailed/ repayment track related
FTNR G- Self attestation / OSV/ DSA Stamp related
FTNR H- Property plan / sanction plan related
FTNR I -Others
4.1.6 Know your Customer (KYC) Guidelines:
The Reserve Bank of India (RBI) has advised banks to follow a 'KYC guidelines', where in
certain personal information of the account-opening prospect or the customer is obtained. The
objective of doing so is to enable the Bank to have positive identification of its customers. This
is also in the interest of customers to safeguard their hard earned money.
The KYC guidelines of RBI mandate banks to collect three proofs from their customers. They
are
• 1. Photograph
• 2. Proof of identity
• 3. Proof of address
KYC is the initial and the most critical procedure before any customer is entertained. Therefore
to begin with I would like to bring forth some Frequently Asked Questions (FAQ) regarding
KYC.
What is KYC?
Know Your Customer - KYC enables banks to know/ understand their customers and their
financial dealings to be able to serve them better and manage its risks prudently.
Why KYC?
To establish the identity of the customer : This means identifying the customer and verifying
his/ her identity by using reliable, independent source documents, data or information. For
individuals, bank will obtain identification data to verify the identity of the customer, his
address/ location and also his recent photograph. This will be done for the joint holders and
mandate holders as well.
Are KYC requirements new?
No, KYC requirements have always been in place and Banks have been taking KYC
documents in accordance with the guidelines issued by RBI from time to time. RBI has
revisited the KYC guidelines in the context of recommendations made by the Financial
Action Task Force (FATF) on Anti Money Laundering standards and on Combating
Financing of Terrorism and enhanced the KYC standards in line with international
benchmarks.
Is KYC mandatory?
Yes. It is a regulatory and legal requirement.
Regulatory: In terms of the guidelines issued by the Reserve Bank of India (RBI) on 29th
November 1704 on Know Your Customer [KYC] Standards – Anti Money Laundering
[AML] Measures, all banks are required to put in place a comprehensive policy framework
covering KYC Standards and AML Measures.
Legal: The Prevention of Money Laundering Act, 1702 (PMLA) which came into force from
1st July, 1705 (after “rules” under the Act were formulated and published in the Official
Gazette) also requires Banks, Financial Institutions and Intermediaries to ensure that they
follow certain minimum standards of KYC and AML as laid down in the Act and the “rules”
framed there under.
When does KYC apply?
KYC will be carried out at the following stages:
Opening a new account
Opening a subsequent account where documents as per current KYC standards not been
submitted while opening the initial account
Opening a Locker Facility where these documents are not available with the bank for all the
Locker facility holders
When the bank feels it necessary to obtain additional information from existing customers
based on conduct of the account
When there are changes to signatories, mandate holders, beneficial owners etc
KYC will also be carried out in respect of non-account holders approaching the bank for high
value one-off transactions.
4.2 LOAN AGAINST GOLD
Gold Loan
For Indians, gold is considered as an essential investment from a cultural, emotional and safety
perspective. One bought, is a dead investment. It tends to lie in the locker not earning you any
money. Why not make use of it in your time of need? You can onetize this idle asset to help you
tide over your financial need. So if ever you find yourself in need of money, consider gold loans
as an option. Goldloans also know as gold deposits are loans given by banks/ NBFCs by taking
gold as a security.
Gold loans are not new to the Indian market. It existed but in the unorganized sector where
money lenders used gold as a security for providing loans. Now banks have entered this space in
a big way because the market is very large considering the fact that most Indians tend to have
sufficient investment in gold. More importantly, with more and more women working in the
family, people have become broadminded. So the social stigma that was once attached to taking
a loan on gold is gradually being eliminated. Off late, this product has become popular because
of the substantial rise in gold prices. The quantum of loan that one can get by giving gold as
security has increased tremendously making it an attractive loan proposition.
4.2.1 What is Gold Loan?
As the name suggest its loan against Gold. It’s the most convenient way to receive cash in no
time from any NBFC/Bank by pledging your Gold ornaments/Coins/bars/Exchange traded funds
ETFs/ SBI gold certificates etc., this is one loan product which comes with minimal
documentation & no processing time in short its over the counter product.
Product is designed in a way it ensures hassle free process for the customer & loan availed can
be put to any use.
Loan amount eligibility is evaluated basis on the Gold value banks usually fund 70-80% of the
gold market value & on repayment of the loan gold deposits are returned back to the customer.
This loan comes much cheaper than personal loan as it’s a secured product & rate of interest
ranges between 11.5-24% per annum.
Rate of interest is decided on two factors risk criteria ( What % of market value of Gold you are
availing loan if its 90% of the Gold market value then interest charged will be higher & vice a
versa for lower loan amount as compared to gold value) & customer relationship with the bank.
4.2.2 PROCESS OF GOLD LOAN
You offer your jewellery to the lender who can be a bank or an NBFC. The lender will evaluate
the purity of the jewellery. The charge for evaluation is generally borne by the borrower. Once
the evaluation is done, the paper work for the mortgage is done. Banks will ask you to produce
personal documents such as Pan Card, address proof among other things. The lender will give
you a loan which in most cases can be up to a maximum of 80% of the value of the jewellery.
After having repaid the loan, you get your gold back from the lender.
4.2.3 HDFC bank has two kinds of gold loan:
a) Loan Against Gold
b) Overdraft Against Loan
A- LOAN AGAINST GOLD
The HDFC Bank has offers quick and easy loan amount against gold. You can get instant loan
against your gold jewellery and ornament. You may use the loan amount for your personal uses
like gift your love one, house renewal, celebration, purchase home appliance, purchase vehicle or
repairing etc. The Loan features and benefits are as below
4.2.4 Features and Benefits of gold loan
Bank has provided loan up to Rs.10 lacs on 90% value.
Your Gold Jewelery & ornament will safe and secure at bank.
Available Any Time Liquidity (ATL) facility.
No EMI, you can enjoy loan facility with lower interest rate.
If you are HDFC bank customer, so you have special interest rate.
4.2.5 Eligibility Criteria
Applicant age should not be more than 65 years.
The Gold jewelery or ornament should be owned or any of the family member.
4.2.6 Documentation Requirement
Applicants have compulsory Proof of Identity (Voter ID Card/ Passport/ Driving License)
Address Proof (Ration Card/ Telephone or Electric Bill/ Shop & Establishment copy)
Signature Proof (Passport copy/ Driving License/ Banker’s verification/ Cheque0
Two Passport size photographs.
Latest three months Salary slips for salaried person.
4.2.7 Processing fee & Charges
Processing Charges – 1.50% or Rs. 750/-, whichever is higher.
Valuation fee charges – Nil
N.O.C. Charges – Nil
Charges for late payment of loan amount Nil
Non standard Repayment Charges – Nil
Outstation clearing charges – Nil
Cheque swapping charges – Nil
Loan cancellation/ Re-book Charges – N/A
Cheque bounce charges – Nil
Statement Charges – Nil
Renewal Processing fee charges – Rs. 500/-.
Duplicate Repayment schedule charges – N/A
4.2.8 Flow Chart for GOLD LOAN
Approach bank/nbfc for loan against gold.
Evaluation of purity of gold.
Paperwork for mortgage.
Disbursal of loan.
On repayment of the loan,you get your gold back from the lender.
5.1 . Customer satisfaction survey on gold loan
1. customer satisfaction towards rightly guidance by the bank executive at the time
of loan application-
Findings : Maximum no of customers said that they are guided rightly by the bank
executive at the time of loan application.
2. Time taken by valuer in valuation:
25%
40%
25% 10%
valuation done
5-15min
15-30min
30min- 1hr
more than 1 hr
Findings: out of 200 customers 65% customers get their valuation done in 5 min to 30 min. this
shows that maximum customers are satisfied by the time taken by the bank in valuation done.
3 Satisfaction of customer on amount calculated by gold valuer on gold?
satisfied 72%
Netural10%
Dissatisfied 18%
Customer satisfaction
satisfied
netural
dissatisfied
Findings: out ot 200 customers 72% customers are satisfied by the amount calculated by the
gold valuer on the gold loan.
4 Time taken in telephone verification?
42%
25%
33%
Time taken
5-15min
15-30min
more than 1hr
Findings: maximum customer tvr was done in 5-15 min
5 Customer satisfaction towards different banks:
(a) ease of documentation
HDFC 86%
OTHER
14%
EASE OF DOCUMENTATION
HDFC OTHER
Findings: most of the customers said that HDFC bank take less documents in comparision to OTHER banks.
(b) speed of approval:
Findings: out of 200 customers 65% customers are satisfied by speed of approval of gold loan provided by HDFC bank.
HDFC 65%
OTHER35%
SPEED
HDFC OTHER
6 Satisfaction of customer towards gold loan provided by HDFC bank?
Satisfied 65%
Dissatisfied35%
Customer satisfaction
satisfieddissatisfied
Findings: maximum no. of customers are satisfied by the gold loan provided by the HDFC bank.
6. SWOT ANALYSIS
6.1 SWOT ANALYSIS ON LOAN AGAINST PROPERTY:
STRENGHTS
Laser software (LS) has helped in making the credit appraisal procedure easier and less time consuming.
More services to privileged/ priority customers.
Easy sanctioning for the account holders.
WEAKNESS
Too many formalities. Customers get depressed due to prolonged legal and technical formalities.
OPPORTUNITY
Great potential in smaller town and cities
Branch expansion will help acquire more customers and thereby help multiply retail banking business.
Can increase customer base through marketing of the products. Campaigns about the products and services offered can be boon for bank.
Ever growing competition is a motivator for bank to always keep marching ahead.
THREATS
Changing market conditions. Constant renewal of policies by other
banks..
6.2 SWOT ANALYSIS ON LOAN AGAINST GOLD:
STRENGHTS
Right strategy for Right products. Superior customer service
vs.competitors. Strong capital raising ability Dedicated workforce aiming at making
a long-term career in the field. High degree of customer satisfaction.
WEAKNESS
Gold loan business constituted 98.5% of revenues. So any major decline in gold prices in future can adversely impact the company’s revenue.
Customer service staff need training.
OPPORTUNITY
Profit margins will be good. The gold loans market is significantly
under-penetrated and is expected to continue growing at the rate of 35-40% in the future.
an unfulfilled customer need. Changing customer attitude and life
style.
THREATS
Great risk involved. Very high competition prevailing in the
industry.
7. FINDINGS
Eligibility criteria for banks is “almost” same, not entirely
Maximum number of borrowers were satisfied due to the lower rate of
interest.
HDFC bank takes lesser documentation in gold loan and maximum number of
documentation in lap.
Valuer was not available at the time of valuation.
Customers have to wait for more than 2hrs to receive money after valuation.
Valuation was not according to customer requirement.(expectations)
Slow disbursement process of loan money.
8. SUGGESTION:
Improves disbursement process in gold loan.
Bank should appoint two or more valuers at a time so the valuation
process takes less time in gold loan.
Charge low processing fees in LAP.
9. CONCLUSION
There is a great scope for further improvements in loan division. Overall the
schemes are pretty good.
No competitive marketing strategy has developed to gain the business.
Tough competition.
Good coordination between organization and customers, which reveals the
importance the importance of fair and clear business.
Reasons behind unsatisfaction /area of improvement in gold loan:
Customer have to wait for more than 2hr to receive money after valuation.
Fast process requirement.
Valuation was not according to customer requirement or expectation.
Delay in valuation.
Valuer was not available on time.
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10. BIBLIOGRAPHY
WEBSTIES:
www.hdfcbank.com
www.icicibank.com
www.wikipedia.com
www.Sbibank.com
www.bseindia.com
www.google.com
www.manappuram.com
OTHER SOURCES:
HDFC annual reports 2010-2011.
MAGAZINES:-
1 Business world.
2 Business Today
NEWSPAPERS:-
1. Times of India.
2. Economic Times.
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11. ABBREVIATION
CPA- central processing agency
CM- credit managers
SPE-short proposal entry
DPE-detail process entry
MDCP-minimum document credit parameters
PSDR-pre sanction document receipt entry
RIC-risk intelligence & control unit
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12. ANNEXURE
11.1 QUESTIONAIRE
Customer satisfaction survey on gold loan
1 Do you feel you were guided rightly by the bank exec.at the time of loan application?
Strongly agree Agree netural strongly disagree disagree
2 How much time was taken in getting valuation done from the time of walk in the branch?
5-25min 25-50min 50-75min 75-100min
3 How was the behaviour of the valuer? Polite Average Rude
4 Were you satisfied with the amount calculated by the valuer of the jewelery? Satisfied Netural Dissatisfied
5 After how much time the tvr was done? 5-15min 15-30min
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More than 1hr
6 How was the conduct of the person doing the CPV? Polite Average Rude
7 Do you feel any questions were asked that you were uncomfortable answering?
Yes No
8 How much time you have to wait in the branch after getting the valuation done?
1hr 1-2hr More than 2hr
9 How was your overall experience while taking loan from HDFC bank? Good Average Poor
10 Which one would you prefer basis the following parameters?
Ease of documentation Speed of approval Timely disbursement of money Verification process Responsiveness of bank employees to your
needs
+
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11 Customer satisfaction? Satisfied Unsatisfied