nitya sip final
TRANSCRIPT
2010-2012
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 1
A project Report on
"STUDY OF AUTO CAR LOAN AT HDFC BANK”
submitted for the
Partial fulfilment of 2 year MBA Programme
DBIM
[MBA( PART-I) – Regular] – Semester – I & II
in the subject of TWO MONTHS SUMMER TRAINING
Submitted to
DR. MANISH SIDDHPURIA
Submitted by
NITYA CHOWDHARY (13)
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT,
VEER NARMAD SOUTH GUJARAT UNIVERSITY – SURAT.
Batch
DECLARATION
I undersigned Miss Nitya Chowdhary declares that this project report entitled “Study of Auto
Car Loans at HDFC bank, Baroda.” is a result of my own work carried out during 16 th May to
15th July 2011 and has not been previously submitted to any other university or institution for
any other examination for any other purpose by any other person.
I will not use this project in future as submission of any other university, institution or any
other publisher without written permission of my guide.
The content that I have provided is true to the best of my knowledge.
Signature
Nitya chowdhary
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CERTIFICATE
This is to certify that Miss Nitya Chowdhary has carried out her summer project titled
“STUDY OF AUTO CAR LOAN AT HDFC BANK” at BARODA. During 16 th May to 15th
July and has submitted for the evaluation.
To the best of my knowledge, the report has not been submitted to any university/ institution
for the award of any certificate or diploma degree.
SIGNATURE
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EXECUTIVE SUMMARY
Loans have to be paid back one day. Had this been realized by all, how nice life would have
been on this Planet. It would not have prompted the poet to say “Neither be a Lender, nor a
Borrower Be.” Alas! Given the realities in life, this could remain at best a wishful thinking.
So their business is to lend and lend more. Their proficiency; skill; competency are all tested
in how much they lend and how much they RECOVER and how quickly. Suffice it would be
to state that this can be likened to the vigour and strength with which one goes about after
fully recovering from any ailment. It is agreed by all beyond doubt “Recovery” is essential
and get “recovery” is very essential.
We know right from the appraisal stage up to the actual repayment stage the banks need to be
careful. We also know that once the money is in the hands of a borrower, attitudinal changes
take place. The borrower, with some few exceptions may be, feels a bit more complacent as
after all it is not this “own money” which is at stake. Therefore an attempt is made here to put
all that we know already proper perspective.
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ACKNOWLEDGEMENT
This project is written in accordance with the Management in Business Administration course
prescribed by Department of Business and Industrial Management for two months summer
internship. I studied one of the main department of the HDFC bank i.e. auto car loan and its
related departments.
I would like to acknowledge my gratitude and Thanks to the head of the department, Dr.
Renuka Garg and my project guide Dr. Manish siddhpuria, who helped me in my project. I
am thankful for their constant guidance, support and inspiration.
And I express my deep gratitude to Mrs. Ritu Bhatia (Regional Sales Manager) and Mr.
Kalpesh dave (Sales Manager) and Mrs. Meghna pandya (Senior Co-ordinator) and other
staff members of auto car loan for guiding me and giving me immense knowledge about the
working of their respective departments.
I have tried my best to prepare this report as per the requirement of MBA programme. Still, it
is quite possible that there may be some errors of omission in this attempt. I sincerely
welcome any suggestions for the improvement of the contest of this project. My overriding
debt continues to my lovely parents and friends who provided with time, support and
inspiration to prepare my project.
Nitya chowdhary
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TABLE OF CONTENT
SR. NO. CHAPTERS PAGE NO.
Title Page
Declaration
Certificate
Executive Summary
Acknowledgement
Table of Content
1 Introduction to Banking
1.1 Meaning and Definition of Banking
1.2 Origin of word Banking
1.3 Origin of Banking
1.4 Introduction to Reserve Bank of India
1.5 Banking System in India
1.6 Status of Indian Banking Industry
1.7 Banking Structure in India
1.8 Banks in India
2 Company Profile
2.1 About HDFC bank
2.2 Product Scope
2.3 Awards and Achievements
2.4 Segment of HDFC Bank
2.5 Branch Network
2.6 Mission and Business Strategy
2.7 Relationship with Customers
2.8 SWOT Analysis
3 Auto Industry in India
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3.1 History
3.2 Overview
3.3 Growth potential of Indian Auto Industry
3.4 Michael Porter Five Forces Analysis
3.5 Major Manufacturers in India Auto Market
3.6 HDFC bank Flow Chart
3.7 Meaning of Loan and its Procedure
3.8 Auto Car Policy
3.9 Rate Chart
4 Activities Carried out at HDFC Bank
5 Research Methodology
5.1 Problem Statement
5.2 Research Objectives
5.3 Research Design
5.4 Data Collection
5.5 Limitations of Research
6 Analysis of the Data
Conclusions and Suggestions
Bibliography
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CHAPTER-1
INTRODUCTION OF BANKING
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1.1 MEANING AND DEFINITION:
Bank is an institution that deals in money and its substitutes and provides crucial financial
services. The principal type of baking in the modern industrial world is commercial banking
& central banking. Banking means: - Accepting deposits for the purpose of lending or
investment of deposits of money from the public repayable on demand otherwise and
withdraw by cheque, draft or otherwise."
-Banking Companies (Regulation) Act, 1949
The concise oxford dictionary has defined a bank as "Establishment for cus tody of money
which i t pays out on cus tomers order ." In fac t th is i s the function which the
bank performed when banking originated."Banking in the most general sense, is meant the
business of receving, conserving & utilizing the funds of community or of any special section
of it."
-By H.Wills & J. Bogan
"A banker of bank is a person, a firm, or a company having a place of business where credits
are opened by deposits or collection of money or currency or where money is advanced and
waned.
-By Findlay Sheras
Thus
A Bank:
1) Accept deposits of money from public,
2) Pays interest on money deposited with it.
3) Lends or invests money
4) Repays the amount on demand,
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1.2 ORIGIN OF WORD BANK:
The origin of the word bank is shrouded in mystery. According to one view point the Italian
business house carrying on crude from of banking were called banchi bancheri" According to
another viewpoint banking is derived from German word "Branch" which mean heap or
mount. In England, the issue of paper money by the government was referred to as a raising a
bank.
1.3 ORIGIN OF BANKING:
Its origin is in the simplest form and can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange the importance of banking was
developed as it provides the safer place to store the money. This safe place ultimately evolved
into financial institutions that accepts deposits and make loans i.e. modern commercial banks.
Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans
or cosmopolitans in India. In fact, Indian banking system has reached even to the remote
corners of the country. This is one of the main reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalisation of 14 major private banks of India. Not long ago, an account holder had to
wait for hours at the bank counters for getting a draft or for withdrawing his own money.
Today, he has a choice. Gone are days when the most efficient bank transferred money from
one branch to other in two days. Now it is simple as instant messaging or dials a pizza.
Money have become the order of the day.
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1.4 INTRODUCTION OF RESERVE BANK OF INDIA:-
A central bank, reserve bank or monetary authority is the entity responsible for the monetary
policy of a country or a group of member of state. Its prime responsibility is to maintain the
stability of national currency and money supply, but more active duties includes controlling
subsidize-loan, interest rates and acting as a lender or last resort to the banking sector during
financial crises. It could also have supervisory powers, to ensure that banks and other
financial institutions do not behave recklessly or fraudulently. The RBI handles the cash
reserves of other banks in the country. It acts as a "Bank of Banks". It makes the
transactions or transfers of money and payments occurring between the banks much easier.
1.4.1 FUNCTION OF RBI:-
The functions are classified into three heads, viz.,
A) Traditional functions
B) Promotional functions
C) Supervisory functions.
Let’s see the detailed account in these heads.
A) Traditional functions
1. Monopoly of currency notes issue
2. Agent and advisor to the Government
3. Custodian of the foreign exchange reserves
4. Maintaining the external value of domestic currency
5. Ensures the internal value of the currency
6. Publishes the Economic statistical data
7. Fight against economic crisis and ensure stability of Indian economy.
8. The banker to the Government of India and the State governments. It
manages the public debt. It undertakes to accept money on behalf of the
Government and make payment on its behalf etc.
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B) Promotional functions
1. Provides refinance for export promotion.
2. Expansion of the facilities for the provision of the agricultural credit
through NABARD.
3. Extension of the facilities for the small scale industries.
4. Helping the Co-operative sectors.
5. Prescribe the minimum statutory requirement.
6. Innovating the new banking business transactions.
C) Supervisory functions
1. Granting license to Banks.
2. Inspects and makes enquiry or determine position in respect of matters under
various sections of RBI and Banking regulations
3. Periodical review of the work of the commercial banks
4. Giving instruction to commercial banks
5. Control the non-banking finance corporation
6. Ensuring the health of financial system through on-site and off-site
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1.5 BANKING SYSTEM IN INDIA:-
1.5.1 A HISTORICAL PERSPECTIVE:
Banking in India has i t s or ig in as ear ly or Vedic per iod . I t i s be l ieved that
the transitions from many lending to banking must have occurred even before Manu,
the great Hindu furriest, who has devoted a section of his work to deposit and advances and
laid down rules relating to threat of interest. During the mogul period, the indigenous banker
played very important role in lending money and financing foreign trade and commerce.
During the days of the East India Company it was the turn of agency house to carry
on the banking business. The General Bank of India was the first joint stock bank to be
established in the year 1786. The other which followed was the Bank of Hindustan and
Bengal Bank. The Bank of Hindustan is reported to have continued till 1906. While
other two failed in the meantime. In the first half of the 19th century the East India
Company es tabl i shed there banks , the bank of Bengal in 1809, the Bank of
Bombay in 1840 and the Bank of Bombay in1843. These three banks also known as the
Presidency banks were the independent unit sand functioned well. These three banks were
amalgamated in 1920 and new bank, the Imperial Bank of India was established on 27th
January, 1921.With the passing of the State Bank of India Act in 1955 the undertaking of the
Imperial Bank of India was taken over by the newly constituted SBI. The Reserve
Bank of India (RBI) which is the Central bank was established in April, 1935 by
passing Reserve bank of India act 1935.T h e C e n t r a l o f f i c e o f R B I i s i n
M u m b a i a n d i t c o n t r o l s a l l t h e o t h e r banks in the country. In the wake of
Swadeshi Movement, number of banks with the Indian management were established
in the country namely, Punjab National Bank Ltd., Bank of India Ltd., Bank of Baroda
Ltd., Canara Bank. Ltd. on 19th July 1969, 14 major banks of the country were
nationalized and on 15th April 1980, 6 more commercial private sector banks were taken
over by the government.
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1.5.2 FUNCTIONS OF BANKS:
1) PRIMARY FUNCTIONS:-
Acceptance of Deposits
Making loans & advances
Loans
Overdraft
Cash Credit
Discounting of bills of exchange
2) SECONDARY FUNCTIONS:-
Agency functions
Collection of cheques & Bills etc.
Collection of interest and dividends.
Making payment on behalf of customers
Purchase & sale of securities
Facility of transfer of funds
To act as trustee & executor.
3) UTILITY FUNCTIONS:-
Safe custody of customer’s valuable articles & securities.
Underwriting facility
Issuing of traveller's cheque letter of credit.
Facility of foreign exchanges
Providing trade information
Provide information regarding credit worthiness of their customer.
1.6 STATUS OF INDIAN BANKING INDUSTRY:-
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It is useful to note some telling facts about the Indian banking industry juxtaposed with other
countries, recognizing the differences between the developed and the emerging economies.
First, the structure of the industry: In the world’s top 1000 banks, the there are many more
large and medium-sized domestic banks from the developed countries than from the
emerging economies. Illustratively, according to The Banker 2004, out of the top 1000 banks
globally, over 200 are located in USA, just above 100 in Japan, over 80 in Germany, over 40
in Spain and around 40 in the UK. Even China has as many as 16 banks within the top 1000,
out of which, as many as 14 are in the 500, India, on the other hand, had 20 banks within the
top 500 banks. This is perhaps reflective of differences in size of economies and of financial
sectors.
Second, the share of bank assets in the aggregate financial sector assets: In most emerging
markets, banking sector assets comprise well over 80 per cents of total financial sector assets,
whereas these figures are much lower in the developed economies. Furthermore, deposits as a
share of total bank liabilities have declined since 1990 in many developed countries, while in
developing countries public deposits continue to be dominant in banks. In India, the share of
banking assets is around 75 per cent, as of end-March 2004. There is, no doubt, merit in
recognizing the importance of diversification in the institutional and instrument specific
aspects of financial intermediation in the interest of wider choice, competition and stability.
However, the dominant role of banks in financial intermediation in emergence economies and
particularly in India will continue in the medium term and the banks will continue to be
special for a long time. In this regard, it is useful emphasis the dominance of the banks in the
developing countries in promoting non-bank financial intermediaries and service including in
development of debt market. Even where role of banks is apparently diminishing in the
emerging markets, substantively, they continue to play a leading role in non-banking
financial activities, including the development of finance markets.
Third, internationalization of banking operations: The foreign controlled banking assets, as a
proportion of total domestic banking assets, increased significantly in several European
countries (Austria, Ireland, Spain, Germany and Nordic countries), but increases have been
fairly small in some others (UK and Switzerland). Amongst the emerging economies, while
there was marked increase of foreign controlled ownership in several Latin American
economies, the increase has, at best, been modest in the Asian economies. Available evidence
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seems to indicate some correlation between the extent of liberalization of capital account in
the emerging markets and the share of assets controlled by foreign banks as per the evidence
available, the form of branches, seem to enjoy on par with domestic banks, as compared with
most of the other developing countries. Furthermore, the profitability of their operation in
India is considerably higher than the foreign banks operation in most other developing
countries. India continues to grant branch licenses more liberally than the commitments made
to the W.T.O
Fourth, the Share of state owned banks in total banking sector assets: Emerging economies
with predominantly government owned banks, tend to have much higher state ownership of
banks compared to their developed counterparts. while many emerging countries choose to
privatized their public sector banking industries after a process of absorption of the overhang
problems by the government, we have encouraged state run banks to diversify ownership by
inducting private share capital through public offerings rather than by strategic sales and still
absorb the overhang problems. the process has helped reduced the burden on the govt,
enhance transparency, encourage market discipline and improved efficiency as reflected in
stock market valuation promote efficient new private sector banks, while drastically reducing
the share of the wholly government owned public sector banks is a good example of a
dynamic mix of public and privet ownership in banks.
A noteworthy feature of banking reforms in India is the growth of newly licensed private
sector banks, some of which have attained globally best standards in terms of technology,
services and sophistically promoted banks have surpassed branches of foreign banks in India.
And could be a role model for other banks.
1.7 BANKING STRUCTURE IN INDIA:-
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(A) Scheduled Commercial Banks:-
Public sectorBanks
Private sectorBanks
Foreign Banksin India
Regional RuralBank
(27) (29) (31) (133)Nationalised bankOther public sector banks(IDBI)SBI and its associates
Old private banksNew private banks
(B) Scheduled cooperatives banks:-
Scheduled urban cooperatives banks(55)
Scheduled state cooperatives banks(31)
1.8 BANKS IN INDIA:-
In India the banks are being segregated in different groups. Each group has their own benefits
and limitations in operating in India. Each has their own dedicated target market. Few of
them only work in rural sector while others in both rural as well as urban. Many even are
only catering in cities. Some are of Indian origin and some are foreign players.
All these details and many more is discussed over here. The banks and its relation with the
customers, their mode of operation, the names of banks under different groups and other such
useful information’s are talked about. One more section has been taken note of is the
upcoming foreign banks in India. The RBI has shown certain interest to involve more of
foreign banks than the existing one recently. This step has paved a way for few more foreign
banks to start business in India
Major Banks in India
· ABN-AMRO Bank
· Abu Dhabi Commercial Bank
· Indian Overseas Bank
· IndusInd Bank
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· American Express Bank
· Andhra Bank
· Allahabad Bank
· Bank of Baroda
· Bank of India
· Bank of Maharashtra
· Bank of Punjab
· Bank of Rajasthan
· Canara Bank
· Central Bank of India
· Centurion Bank
· China Trust Commercial Bank
· Citi Bank
· Corporation Bank
· Dena Bank
· Deutsche Bank
· Development Credit Bank
· Dhanalakshmi Bank
· Federal Bank
· HDFC Bank
· HSBC ICICI Bank
· IDBI Bank
· Indian Bank
· ING Vysya Bank
· Jammu & Kashmir Bank
· Karnataka Bank
· Karur Vysya Bank
· Laxmi Vilas Bank
· Oriental Bank of Commerce
· Punjab National Bank
· Punjab & Sind Bank
· South Indian Bank
· Standard Chartered Bank
· State Bank of India (SBI)
· State Bank of Bikaner & Jaipur
· State Bank of Hyderabad
· State Bank of Indore
· State Bank of Mysore
· State Bank of Saurastra
· State Bank of Travancore
· Syndicate Bank
· UCO Bank
· Union Bank of India
· United Bank of India
· United Bank Of India
· UTI Bank
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CHAPTER-2COMPANY PROFILE:-
2.1 ABOUT HDFC BANK:-
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Bank is one amongst the firsts of the new generation, techno-savvy commercial banks of
India, was set up in January 1995, after the Reserve Bank of India allowed setting up of
Banks in the private sector. The Bank was promoted by the Housing Development Finance
Corporation Limited, a premier housing finance company (set up in 1977) of India.
The bank’s competitive strength clearly lies in the use of technology and the ability to deliver
world-class service with rapid response time. Over the last 15 years, the bank has
successfully gained market share in its target customer franchises while maintaining healthy
profitability and asset quality. 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. The Bank is also one of the leading players in the merchant acquiring business with
over 50,000 Point-of-sale (POS) terminals for debit /credit cards acceptance at merchant
establishments.
PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable track recording
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC
has developed significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities. With its
experience in the financial markets, a strong market reputation, large shareholder base and
unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian
environment.
BUSINESS FOCUS
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HDFC Bank's mission is to be a World-Class Indian Bank. The 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.
TIMES BANK AMALGAMATION
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. 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. The acquisition added
significant value to HDFC Bank in terms of increased branch network, expanded geographic
reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and
leverage alternative delivery channels.
DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network. All
branches are linked on an online real-time basis. Customers in over 120 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 the centres where the NSE/BSE has a strong and active
member base. The Bank also has a network of about over 5471 networked ATMs across these
cities. Moreover, 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.
BOARD OF DIRECTORS
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The Composition of the Board of Directors of the Bank is governed by the Companies Act,
1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian Stock
Exchanges where securities issued by the Bank are listed. The Bank has five independent
directors and six non-independent directors. The Board consists of eminent persons with
considerable professional expertise and experience in banking, finance, agriculture, small
scale industries and other related fields. None of the Directors on the Board is a member of
more than 10 Committees and Chairman of more than 5 Committees across all the companies
in which he/she is a Director. All the Directors have made necessary disclosures regarding
Committee positions occupied by them in other companies.
The Bank has not entered into any materially significant transactions during the year ,which
could have a potential conflict of interest between the Bank and its promoters, directors,
management and/or their relatives, etc. other than the transactions entered into in the normal
course of business. The Senior Management have made disclosures to the Board confirming
that there are no material, financial and/or commercial transactions between them and the
Bank which could have potential conflict of interest with the Bank at large.
List of Board of directors:-
Mr. C. M. Vasudev, Chairman
Mrs. Renu Karnad (up to 16.07.2010 & re-appointed on 27.01.2011)
Mr. Ashim Samanta
Dr. Pandit Palande
Mr. Partho Datta
Mr. Bobby Parikh
Mr. Anami N Roy
Mr. Keki Mistry (upto 26.03.2011)
Mr. Aditya Puri, Managing Director
Mr. Harish Engineer, Executive Director
Mr. Paresh Sukthankar, Executive Director
TECHNOLOGY
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HDFC Bank operates in a highly automated environment in terms of information technology
and communication systems. All the bank's branches have online connectivity, which enables
the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also
provided to retail customers through the branch network and Automated Teller Machines
(ATMs). The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class bank. The
Bank's business is supported by scalable and robust systems which ensure that our clients
always get the finest services we offer. The Bank has prioritized its engagement in
technology and the internet as one of its key goals and has already made significant progress
in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in
leveraging its market position, expertise and technology to create a competitive advantage
and build market share.
RATING
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".
Corporate governance rating
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The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating
Information Services of India Limited (CRISIL). The rating provides an independent
assessment of an entity's current performance and an expectation on its "balanced value
creation and corporate governance practices" in future. The bank has been assigned a
'CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth
creation for all its stakeholders while adopting sound corporate governance practices is the
highest.
2.2 PRODUCT SCOPE
HDFC Bank offers a bunch of products and services to meet the every need of the people.
The company cares for both, individuals as well as corporate and small and medium
enterprises. For individuals, the company has a range accounts, investment, and pension
scheme, different types of loans and cards that assist the customers. The customers can
choose the suitable one from a range of products which will suit their life-stage and needs.
For organizations the company has a host of customized solutions that range from funded
services, Non-funded services, Value addition services, Mutual fund etc. These affordable
plans apart from providing long term value to the employees help in enhancing goodwill of
the company.
The products of the company are categorized into various sections which are as follows:
Accounts and deposits.
Loans.
Investments and Insurance.
Forex and payment services.
Cards.
Customer centre
PRODUCTS AND SERVICES AT A GLANCE
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ACCOUNTS & DEPOSITS LOANS INVESTMENTS &INSURANCE
- Regular Savings Account
- Savings Plus Account
- Savings Max Account
- Senior Citizens Account
- No Frills Account
- Salary Account
- Kid's Advantage Account
- Pension Saving Bank A/c - Family Savings Account-Plus Current Account -Trade Current Account- Premium Current Account
- Regular Current Account
- Apex Current Account
- Max Current Account
- Merchant Current Account
- Regular Fixed Deposit
-Recurring Deposits.
- Super Saver Account
- Sweep-in Account
- HDFC BankImperia/Classic/Preferred Banking
- Personal Loans
- Home Loans
- Two Wheeler Loans
- New Car Loans
- Used Car Loans
- Overdraft against Car
- Express Loans
- Loan against Securities
- Loan against Property
-Loan against Rental Receivables
-Health care finance
-Tractor Loans
- Commercial Vehicle Finance
- Working Capital Finance
- Construction Equipment Finance
- Mutual Funds
- Tax Planning
- Insurance
- Bonds
- Financial Planning
- Knowledge Centre
- Equities & Derivatives
- Mudra Gold Bar
- Mudra silver Bar
FOREX SERVICES PAYMENT SERVICES
ACCESS YOUR ACCOUNT THROUGH
- Product & Services - Net Safe -Net Banking
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- Trade services
- Forex service Branch locater
- Forex Limits
- Forex Plus Card
- Prepaid Refill
- Bill Pay
- Direct Pay
- Visa Money Transfer
- E-Monies Electronic Funds Transfer
- Excise & Service Tax Payment
-Credit card Online
-One View
-InstaAlert
-Mobile Banking
-ATM
-Phone Banking
-Email Statements-Branch Network
2.3 AWARDS AND ACHEIVEMENTS OF HDFC BANK:
HDFC Bank began operations in 1995 with a simple mission: to be a "Worldclass Indian
Bank". We realized that only a single-minded focus on product quality and service excellence
would help us get there. Today, we are proud to say that we are well on our way towards that
goal. It is extremely gratifying that our efforts towards providing customer convenience have
been appreciated both nationally and internationally. Some appreciations received by HDFC
Bank:
In 2011 The Asian Banker - The strongest bank in the Asia Pacific Bloomberg UTV’s Financial Leadership awards – Best bank IDC FIIA Awards - Excellence in customer experience
In 2010 IBA Banking Technology Awards:-
Technology Bank of the Year Best Online Bank Best use of business intelligence Best Customer Initiative Best Risk Management system
Avaya Global Connect 2010 – Customer Responsiveness Award Business World Best Bank Awards – Best Bank (Large) Celent’s Banking Innovation Award – Model Bank MIS Asia IT Excellence Award – Best Bottom Line (IT Category) Dun and Bradstreet Banking Awards:-
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Overall Best Bank Best Private bank Best Private Sector Bank in SME
NDTV Business Leadership Awards – Best Private Sector Bank Economic Times Awards for Corporate Excellence – Business leader of the Year (ADITYA
PURI) Outlook Money Awards – Best Bank Global Finance Awards – Best Trade Finance Provider in India The Banker and PWM Global Private Banking Awards – Best Bank in India The Asset Triple A Award – Best Cash Management Bank in India Forbes India – Fab 50 Companies
HDFC Bank is aware that all these awards are mere milestones in the continuing, never-
ending journey of providing excellent service to our customers. We are confident, however,
that with your feedback and support, we will be able to maintain and improve our services.
2.4 SEGMENT OF HDFC BANK:-
2.4.1 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 banks requirements. The products are backed by world-class service and delivered to
the customers through the growing branch network, as well as through alternative delivery
channels like ATMs, Phone Banking, Net Banking and Mobile Banking.
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.
2.4.2 WHOLESALE BANKING SERVICES :
The Bank s target market ranges from large manufacturing companies in the Indian corporate
to small & mid-sized corporate and agri-based businesses. For these customers, the Bank
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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 corporate including multinationals, companies from
the domestic business houses and prime public sector companies. It is recognized as a leading
provider of cash management and transactional banking solutions to corporate customers,
mutual funds, stock exchange members and banks.
2.4.3 TREASURY SERVICES:
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, corporate 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.
The Bank offers derivative products to its customers, who use them to hedge their market
risks, within the framework of regulations as may apply from time to time. The Bank also
deals in derivatives on its own account and also for the purpose of its own balance sheet risk
management. The operations of HDFC Securities Ltd. have been classified under the retail
banking segment.
2.5 BRANCH NETWORK :-
Currently as on March 31, 2011, the Bank’s distribution network is increasing day by day and
has reached nearly to 2200 branches and ATMs in the country are also increasing day by day
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and has nearly reached to 6000 ATMs in the country. The number of cities has also increased
and nearly reached to 1100 cities in the country and there is a wide scope of increase in the
number of cities as the bank is still in the growth stage. The bank offers many innovative
products & services to individuals, corporate, trusts, governments, partnerships, financial
institutions, mutual funds, insurance companies. It is a path breaker in the Indian banking
sector.
2.6 MISSION AND BUSINESS STRATEGY:-
Our mission is to be "a World Class Indian Bank", benchmarking ourselves against
international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. We are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance. HDFC Bank is a young and dynamic bank, with a youthful and
enthusiastic team determined to accomplish the vision of becoming a world-class Indian
bank.
2.6.1 HDFC bank’s business strategy emphasizes the following:-
Increase our market share in India’s expanding banking and financial services industry by
following a disciplined growth strategy focusing on quality and not on quantity and
delivering high quality customer service.
Leverage our technology platform and open scale cable systems to deliver more products
to more customers and to control operating costs.
Maintain our current high standards for asset quality through disciplined credit risk
management.
Develop innovative products and services that attract our targeted customers and address
inefficiencies in the Indian financial sector.
Continue to develop products and services that reduce our cost of funds.
Focus on high earnings growth with low volatility.
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HDFC Bank business philosophy is based on four core values – Customer Focus, Operational
Excellence, Product Leadership and People. We believe that the ultimate identity and success
of our bank will reside in the exceptional quality of our people and their extraordinary efforts.
For this reason, we are committed to hiring, developing, motivating and retaining the best
people in the industry.
2.7 HDFC BANK TRIES TO MAINTAIN RELATIONSHIP
WITH CUSTOMER IN FOLLOWING WAYS:
HDFC BANK GIVIES INFORMATION:
You can get information on interest rates, common fees and charges through any one of the
following: Looking at the notices in our branches; phoning our branches or help-lines;
Looking on our website; Asking our help desk; Referring to the service guide.
HDFC BANK HELPS YOU TO UNDERSTAND HOW THERE
FINANCIAL PRODUCTS AND SERVICES WORK BY:
HDFC Bank provides you information about them in any one or more of the following
languages: Hindi, English or the appropriate local language.
Ensuring that there advertising and promotional literature is clear and not misleading.
Ensuring that you are given clear information about their products and services, the terms
and conditions and the interest rates/service charges, which apply to them.
HDFC Bank provides you information on what are the benefits to you.
How you can avail of the benefits, and whom you can contact for addressing you queries.
Advise you what information/documentation we need from you.
HDFC BANK HELP YOU USE YOUR ACCOUNT OR SERVICE BY:
Provides you a Relationship manager or personal banker which helps you in assisting your
transactions.
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Providing you regular appropriate updates.
Keeping you informed about changes in the interest rates, charges or terms and conditions.
BEFORE YOU BECOME A CUSTOMER HDFC BANK WILL:
Give you clear information explaining the key features of the services and products you
tell us you are interested in;
Give you information on any type of products and services which we offer and that may
suit your needs;
Tell you if we offer products and services in more than one and tell you how to use them;
Tell you what information we need from you to prove your identity and Address.
DEAL QUICKLY AND EFFECTIVELY WITH YOUR QUERIES AND
COMPLAINTS BY:
Offering channels for you to route your queries.
Listening to you patiently.
Accepting our mistakes, if any.
Correcting mistakes/ implementing changes to address your queries
Communicating our response to you promptly.
Telling you how to take your complaint forward if you are not satisfied with the response.
HDFC BANK EFFORT TO ENSURE SATISFACTION OF
CUSTOMERS:
Promote good and fair banking practices by setting minimum standards in dealing with
you.
Increase transparency so that you can have a better understanding of what you can
reasonably expect of the services;
Encourage market forces, through competition, to achieve higher operating standards;
Assisting a personal banker to customers who can look after his accounts and give timely
updates.
Promote a fair and friendly relationship between you and your bank;
2.8 SWOT ANALYSIS OF HDFC:-
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SWOT Analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It
involves specifying the objective of the business venture or project and identifying the
internal and external factors that are favourable and unfavourable to achieving that
objective. The technique is credited to Albert Humphrey, who led a convention at
Stanford University in the 1960s and 1970s using data from Fortune 500 companies.
The swot analysis of HDFC bank is as follows:-
STRENGTHS:-
1. HDFC is the strongest and most venerable play on Indian mortgages over the long
term. The management of the bank is termed to be one of the best in the country.
2. HDFC has differentiated itself from its peers with its diversified network and
revamped distribution strategy
3. HDFC has been highly proactive in passing on the cost and benefit to customers.
4. Besides the core business, HDFC’s insurance, AMC, banking, BPO, and real estate
private equity businesses are also growing at a rapid pace and the estimated value of its
Investments/subsidiaries explain ~30% of HDFC’s market capitalization.
5. High degree of customer satisfaction.
6. Lower response time with efficient and effective service.
7. Dedicated workforce aiming at making a long-term career in the field.
8. Products have required accreditations.
9. Superior customer service vs. competitors
10. Large share of low-cost deposits, higher net interest margin
11. Better quality of assets, NPA of 0.4 per cent
12. Free float available, FIIs can buy its stock
13. Higher profitability
WEAKNESSES:-
1. High dependence on individual loans.
2. Major stake held by American financial groups which are under stress due to economic
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slowdown.
3 .Customer service staff needs training.
4. Processes and systems, etc need to be better managed
5. Management cover insufficient.
6. Sectoral growth is constrained by low unemployment levels and competition for staff
7. Marginal international presence
8. Not very aggressive in MOA space, growing only organically
9. Possible takeover target from the foreign banks.
OPPURTUNITIES:-
1. Fast growing insurance business in the country.
2. Untapped rural markets.
3. Could extend to overseas broadly
4. Fast-track career development opportunities on an industry-wide basis.
5. An applied research centre to create opportunities for developing techniques to provide
added-value services.
6. Unique partnership to create job opportunities for IFBI’s PGDBM students
7. HDFC bank automates business processes with Staff ware; HDFC Bank anticipates
major cost savings whilst maintaining high levels of customer service thanks to new
enterprise software agreement.
8. HDFC Bank plans to set up a non-banking finance company (NBFC) to undertake
fund-based activities.
9. After showing a significant growth overall, India is able to attract many international
financial & banking institutes, which are known for their state of art working and keeping
low operation costs.
THREATS:-
1. Loss of market share to commercial banks and HDFC
2. Higher than expected increase in funding cost.
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3. Risk of fraud and NPA accretion due increasing in interest rates and fall in property
prices is inherent to the mortgage business
4. Lack of infrastructure in rural areas could constrain investment.
5.High volume/low cost market is intensely competitive.
6. Very high competition prevailing in the industry
7. Extension overseas holds a lot of risk
8. Threat from the collections dept.
9. Varying and In-Convenient ECS dates.
10. Unlike Government Banks, an account needs a minimum balance of Rs.10, 000.
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CHAPTER-3
AUTO INDUSTRY IN INDIA
3.1 History:-
The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in
very small numbers. Embryonic automotive industry emerged in India in the
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1940s. Mahindra & Mahindra was established by two brothers as a trading company in 1945,
and began assembly of Jeep CJ-3A utility vehicles under license from Willys. The company
soon branched out into the manufacture of light commercial vehicles (LCVs) and
agricultural tractors.
Following the independence, in 1947, the Government of India and the private
sector launched efforts to create an automotive component manufacturing industry to supply
to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s
due to nationalisation and the license raj which hampered the Indian private sector. After
1970, the automotive industry started to grow, but the growth was mainly driven by tractors,
commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers
entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number
of foreign firms initiated joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for
building motorcycles and light commercial-vehicles. It was at this time that the Indian
government chose Suzuki for its joint-venture to manufacture small cars. Following the
economic liberalisation in 1991 and the gradual weakening of the license raj, a number of
Indian and multi-national car companies launched operations. Since then, automotive
component and automobile manufacturing growth has accelerated to meet domestic and
export demands.
Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed
restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti
Suzuki and Mahindra and Mahindra, expanded their domestic and international operations.
India's robust economic growth led to the further expansion of its domestic automobile
market which has attracted significant India-specific investment by multinational automobile
manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000
units and have since grown rapidly to a record monthly high of 182,992 units in October
2009. From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with
only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in
Switzerland for example) this progression is unlikely to stop in the coming decade.
Congestion of Indian roads, more than market demand, will likely be the limiting factor.
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SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and
international, in India.
3.2 Overview:-
The Automotive industry in India is one of the largest in the world and one of the fastest
growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4
wheeled) and exports about 2.33 million every year. It is the world's second largest
manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's
passenger car and commercial vehicle manufacturing industry is the seventh largest in the
world, with an annual production of more than 3.7 million units in 2010. According to recent
reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer
in the world, growing 16-18 per cent to sell around three million units in the course of
2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars,
behind Japan, South Korea, and Thailand. As of 2010, India is home to 40 million passenger
vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an
increase of 33.9%), making the country the second fastest growing automobile market in the
world. According to the Society of Indian Automobile Manufacturers, annual car sales are
projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020. By
2050, the country is expected to top the world in car volumes with approximately 611 million
vehicles on the nation's roads.
A chunk of India’s car manufacturing industry is based in and around Chennai also known as
the ‘Detroit of India” with the India operations of ford, Hyundai, Renault and Nissan
headquartered in the city and BMW having an assembly plant on the outskirts. Chennai
accounts for 60 per cent of the country's automotive Gurgaon and Manesar in Haryana are
hubs where all of the Maruti Suzuki cars in India are manufactured. The Chakan corridor
near Pune, Maharashtra is another vehicular production hub with companies like Motors,
Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land
Rover, Fiat and Force Motors having assembly plants in the area. Ahmedabad with the Tata
Nano plant, Aurangabad with Audi, Kolkatta with HindustanMotors,Noida with Honda and
Bangalore with Toyota are some of the other automotive manufacturing regions around the
country.
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The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting
about 1.5 million every year. The dominant products of the industry are two wheelers with a
market share of over 75% and passenger cars with a market share of about 16%. Commercial
vehicles and three wheelers share about 9% of the market between them. About 91% of the
vehicles sold are used by households and only about 9% for commercial purposes. The
industry has attained a turnover of more than USD 35 billion and provides direct and indirect
employment to over 13 million people. The supply chain of this industry in India is very
similar to the supply chain of the automotive industry in Europe and America. This may
present its own set of opportunities and threats. The orders of the industry arise from the
bottom of the supply chain i.e., from the consumers and go through the automakers and
climbs up until the third tier suppliers. However the products, as channelled in every
traditional automotive industry, flow from the top of the supply chain to reach the consumers.
Interestingly, the level of trade exports in this sector in India has been medium and imports
have been low. However, this is rapidly changing and both exports and imports are
increasing. The demand determinants of the industry are factors like affordability, product
innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high
and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the
advantages of this sector in India are yet to be leveraged.
Note that, with a high cost of developing production facilities, limited accessibility to new
technology and soaring competition, the barriers to enter the Indian Automotive sector are
high. On the other hand, India has a well-developed tax structure. The power to levy taxes
and duties is distributed among the three tiers of Government. The cost structure of the
industry is fairly traditional, but the profitability of motor vehicle manufacturers has been
rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have
material cost of about 80% but are recording profits after tax of about 6% to 11%.
The level of technology change in the Motor vehicle Industry has been high but, the rate of
change in technology has been medium. Investment in the technology by the producers has
been high. System-suppliers of integrated components and sub-systems have become the
order of the day. However, further investment in new technologies will help the industry be
more competitive. Over the past few years, the industry has been volatile. Currently, India’s
increasing per capita disposable income which is expected to rise by 106% by 2015 and
growth in exports is playing a major role in the rise and competitiveness of the industry.
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Tata Motors is leading the commercial vehicle segment with a market share of about 64%.
Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai
Motor India and Mahindra and Mahindra are focusing expanding their footprint in the
overseas market. Hero Honda Motors is occupying over 41% and sharing 26% of the two
wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the
three wheeler market. Consumers are very important of the survival of the Motor Vehicle
manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the
augmentation in demand of cars. Steel is the major input used by manufacturers and the rise
in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to
the end consumer. The price of oil and petrol affect the driving habits of consumers and the
type of car they buy.
The key to success in the industry is to improve labour productivity, labour flexibility, and
capital efficiency. Having quality manpower, infrastructure improvements, and raw material
availability also play a major role. Access to latest and most efficient technology and
techniques will bring competitive advantage to the major players. Utilising manufacturing
plants to optimum level and understanding implications from the government policies are the
essentials in the Automotive Industry of India.
Both, Industry and Indian Government are obligated to intervene the Indian Automotive
industry. The Indian government should facilitate infrastructure creation, create favourable
and predictable business environment, attract investment and promote research and
development. The role of Industry will primarily be in designing and manufacturing products
of world-class quality establishing cost competitiveness and improving productivity in labour
and in capital. With a combined effort, the Indian Automotive industry will emerge as the
destination of choice in the world for design and manufacturing of automobiles.
3.3 Growth Potential of the Indian Auto Industry:-
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There are several factors, which are expected to contribute to the growth in the automotive
industry. These are as follows:-
Increasing Demand for vehicles:
This has been a result of the growth in income levels and easy availability of financing
options. Greater consumer awareness and closer linkages with the global auto trends, for
example, shorter life cycles of vehicles due to faster replacement, have led companies to
introduce contemporary products in the Indian market. The CAGR of 14.1 per cent achieved
by the domestic automotive industry between 2001-02 and 2006-07 makes India one of the
fastest growing markets in the world.
Stable Economic Policies Adopted by Successive Governments:
The Indian Government has ensured continuity in reforms and policies in the country, which
has contributed to the overall economic growth, including the growth of the automotive
sector. In addition, the government has taken specific policy initiatives, such as lower excise
duties on smaller cars, etc to boost local demand. Implementation of VAT has positioned
India globally, as one of the leading low cost manufacturing sources. India is expected to
emerge as the manufacturing hub for small cars. It has already been recognised as a low cost
source for components. Vehicles are also expected to gain much from the global trend in
outsourcing to low cost countries.
Availability of Low Cost Skilled Manpower:
The cost of quality manpower in India is one of the lowest in the world. In terms of
availability, India produces 400,000 Engineering graduates every year and it is estimated that
on an average roughly 7 million skilled workers enter the workforce every year.
High Quality Standards:
The ‘Made in India’ brand is rapidly getting associated with quality. Already, nine Indian
component manufacturers have won the Deming Award for quality and most of the leading
component manufacturers are QS and ISO certified.
Proximity to Key Markets :
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Proximity to other growing Asian economies and emerging markets like Africa gives India a
strong advantage over other competing nations. Besides the freight cost of shipments from
India to Europe is cheaper as compared to freight costs of other competing countries like
Thailand.
Growth forecasts as per Automotive Mission Plan:
The size of the Indian automotive industry is expected to grow at a rate of 13 per cent per
annum over the next decade to reach around US$ 120-159 billion by 2016. In volume terms,
the market is expected to reach 31.96 million units by 2015. The total investments required to
support the growth are estimated at around US$ 35-40 billion. Two wheelers are expected to
lead the growth, with estimated sales of 27.8 million units by 2016. Sales of passenger
vehicles are expected to grow from the current 1.58 million vehicles to 2.65 million vehicles
by 2015.
3.4 Michael Porter’s Five Forces Analysis:-
Michael Porter identified five forces that influence an industry. These forces are: (1) degree
of rivalry; (2) threat of substitutes; (3) barriers to entry; (4) buyer power; and (5) supplier
power. For more on this framework proposed by Porter, like other industries operating under
free market, capitalistic systems, viewing the automotive industry through the lens of Porter’s
Five Forces can be helpful in understanding the forces at play.
1) Degree of Rivalry
Despite the high concentration ratios seen in the U.S. market which typically signify that a
lesser degree of competition is seen in the industry, rivalry in the U.S. and the global
automotive industry is intense. Clearly, the concentration ratios do not tell the whole story.
The automotive industry in the U.S. is no longer the playground of the Big 3 (GM, Ford, and
Daimler Chrysler); global companies compete in the U.S. market, while U.S. companies have
globalized themselves. In the 1980s, the Japanese car makers Honda and Toyota entered a
fairly disciplined U.S. market and have been very focused in growing their shares of the
market. The great diversity of rivals in terms of cultures and associated philosophies has
intensified rivalry in the industry. Market growth is slow in the established markets of the
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U.S. and Western Europe, and companies must fight fiercely to take out gains or prevent
losses in market share. However, growth is potentially huge in the rapidly industrializing
nations of China and India; in these booming markets, companies could take advantage of the
opportunities to reap handsome rewards. The degree of rivalry in the automotive industry is
further heightened by high fixed costs associated with manufacturing cars and trucks and the
low switching costs for consumers when buying different makes and models.
2) Threat of Substitutes
The threat of substitutes to the automotive industry is fairly mild. Numerous other forms of
transportation are available, but none offer the utility, convenience, independence, and value
afforded by automobiles. The switching costs associated with using a different mode of
transportation, such as train, may be high in terms of personal time (i.e., independence),
convenience, and utility (e.g., luggage capacity), but not necessarily monetarily (e.g., round
trip train fare on MARTA would most likely be less expensive than the cost of fuel consumed
on a similar round trip, daily parking, car insurance, and maintenance).
The exception to this statement occurs in the global urban areas with high population
densities. In these areas, the substitutes available (e.g., walking, mass transit, bicycles, etc.)
can be less costly than automobiles and thus alternative modes of transportation are often
preferred. Also, there are inherent underlying social and cultural attitudes that keep people
from owning automobiles in some parts of the world. Many nations are not as spread out or
as mobile as the U.S.; they are constrained either by geography, race, class, or religion and
the need for personal transportation is not as great, yet. The American dream of “a car [or
two] in every garage” is not what the rest of the world currently wants or needs. However,
the marketing arms of the global automotive manufacturers are certainly working very hard
to change this paradigm, and with unprecedented production volumes worldwide, all signs
indicate that they are succeeding. Most with the ability and means to own a vehicle, who live
in a society with the necessary infrastructure (e.g., roads and fuelling stations), will do so.
3) Barriers to Entry
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The barriers to enter the automotive industry are substantial. For a new company, the start up
capital required to establish manufacturing capacity to achieve minimum efficient scale is
prohibitive. An automotive manufacturing facility is quite specialized and in the event of
failure could not be easily retooled. Although the barriers to new companies are substantial,
established companies are entering new markets through strategic partnerships or through
buying out or merging with other companies. In fact, the barriers to entry for new (or
different) markets may be quite low; in the 1980s, U.S. companies practically invited
Japanese makers into the U.S. by failing to offer quality vehicles in the lower price markets.
All of the large automotive companies have globalized and entered foreign markets with
varying degrees of success.
In the newer, undeveloped markets of Asia, Africa, and South America, the barriers to entry
similarly exist. However, a domestic start up, with local knowledge and expertise, has the
potential to compete in its home market against the global firms who are not yet well
established there. Such an operation, if successful, would surely be snatched up by one of the
global giants and incorporated into its fold.
4) Buyer and Supplier Power
In the relationship between the automotive industry and its suppliers, the power axis is
substantially tipped in the industry’s favour. The automotive industry is comprised of
powerful buyers who are generally able to dictate their terms to their suppliers. There are
specific characteristics that make members of the automotive industry powerful buyers:
(1) there is not a grand proliferation of companies manufacturing automotives, and the four
largest automotive companies in the U.S. have roughly 90% of the value of shipments and
value added in the U.S. (2) automotive parts (e.g., oil filters, mufflers, belts, etc.) are
standardized commodities and these parts are only used on automobiles; and (3) backward
integration can and does occur, as seen in summer 2005 when Ford purchased struggling
parts maker Visteon.
In the relationship between the automotive industry and its ultimate consumers, purchasers of
finished vehicles, the power axis is tipped in the consumers’ favour. Consumers wield the
greatest power in this relationship due to the fairly standardized nature of the automotive
commodity (a vehicle) and the low switching costs associated with selecting from among
competing brands. However, the automotive industry remains marginally powerful due to the
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large customer to producer ratio. The automotive industry is a dynamic place. With the
forces above at play, and with history as a guide, it is safe to say that the automotive industry
will continue to change, evolve, and adapt.
3.5 Major Manufacturers in the Indian Auto Market:-
3.5.1 Tata Motors:-
Market Share: Commercial Vehicles 63.94%, Passenger Vehicles 16.45%
Tata Motors Limited is India’s largest automobile company. It is the leader in commercial
vehicles and among the top three in passenger vehicles. Tata Motors has winning products in
the compact, midsize car and utility vehicle segments. The company is the world's fourth
largest truck manufacturer, and the world's second largest bus manufacturer with over 24,000
employees. Since first rolled out in 1954, Tata Motors as has produced and sold over 4
million vehicles in India.
Tata Motors is the first company from India's engineering sector to be listed in the New York
Stock Exchange (September 2004), has also emerged as an international automobile
company. Through subsidiaries and associate companies, Tata Motors has operations in the
United Kingdom, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a
business comprising the two British brands which was acquired in 2008. In 2004, it acquired
the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. The
rechristened Tata Daewoo Commercial Vehicles Company has launched several new
products in the Korean market, while also exporting these products to several international
markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from
Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed
Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009.
Hispano's presence is being expanded in other markets.
In 2006, Tata Motors formed a joint venture with the Brazil-based Marcopolo, a global leader
in body-building for buses and coaches to manufacture fully-built buses and coaches for India
and select international markets. In 2006, Tata Motors entered into joint venture with
Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the
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company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun
production of the Xenon pickup truck, with the Xenon having been launched in Thailand in
2008. Tata Motors is also expanding its international footprint by franchises and joint
ventures assembly operations in Kenya, Bangladesh, Ukraine, Russia, Senegal and South
Africa.
With over 3,000 engineers and scientists, the company's Engineering Research Centre,
established in 1966, has enabled pioneering technologies and products. The company today
has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea,
Spain, and the UK. It was Tata Motors, which developed the first indigenously developed
Light Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica,
India's first fully indigenous passenger car. Within two years of launch, Tata Indica became
India's largest selling car in its segment. In 2005, Tata Motors created a new segment by
launching the Tata Ace, India's first indigenously developed mini-truck.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, a development which
signifies a first for the global automobile industry. Nano brings the comfort and safety of a
car within the reach of thousands of families. The standard version has been priced at USD
2,200 or Rs.100, 000 (excluding VAT and transportation cost). The Tata Nano has been
subsequently launched as planned, in India in March 2009.
3.5.2 Maruti Suzuki:-
Market Share: Passenger Vehicles 46.07%
A license and Joint Venture agreement was signed between the government of India and
Suzuki Motor Company (SMC) in Oct. 1982 to launch Maruti Udyog Limited (MUL).
Today, MUL offers 11 models, including the Maruti 800, Omni, premium small car Zen,
international brands Alto and WagonR, off roader Gypsy, mid size Esteem, luxury car
Baleno, MPV, Versa, Swift, and Luxury SUV the Grand Vitara XL7.
MUL’s dominant position in the Indian car market and its ability to satisfy its customers has
made it the success it is today. MUL has been the leader in the Indian car market for two
decades. Today, MUL holds about 50% of the total Indian market. For a record sixth year in
a row, MUL was ranked highest in customer satisfaction, according to the J.D. Power Asia
Pacific 2005 India Customer Satisfaction Index Study. In 2004, Business World ranked
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MUL among the country’s five most respected companies and the country’s most respected
automobile company.
As the dominant player in the Indian automobile market, MUL is focusing on entering new
markets in India to increase market share. MUL recently added service businesses including
sale and purchase of pre-owned cars, lease and fleet management service for corporate
clients, Maruti Insurance and Maruti Finance. In April, MUL made large investments in a
new plant that will produce diesel engines. Once this plant is operational, MUL plans to
increase its role in the diesel segment of the market, which now accounts for about one-fifth
of the total passenger car market in India.
Competition has become fierce in some Indian market segments, especially entry level
compact cars. MUL’s major competitor in this market, Hyundai Motor Company, is
aggressively expanding its sales and network across India. MUL has reduced the price of the
Maruti 800 three times this year to keep this model cheaper than those offered by Hyundai.
Even with the planned expansion to new Indian markets, MUL’s future success will depend
greatly on how well it can compete with its new international competitors.
Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of
Japan, is India's largest passenger car company, accounting for over 45% of the domestic car
market. The company offers a complete range of cars from entry level Maruti-800 and Alto,
to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans Dzire, SX4 and Sports
Utility vehicle Grand Vitara.
Since inception in 1983, Maruti Suzuki India has produced and sold over 10 million vehicles
in India and exported over 500,000 units to Europe and other countries. The company’s
revenue for the fiscal 2010-2011 stood over Rs 375,224 million and Profits after Tax at over
Rs. 22,886 million.
3.5.3 Hyundai:-
Market Share: Passenger Vehicles 14.15%
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Hyundai Motor India Limited is a wholly owned subsidiary of world’s fifth largest
automobile company, Hyundai Motor Company, South Korea, and is the largest passenger
car exporter. Hyundai Motor presently markets 49 variants of passenger cars across segments.
These includes the Santro in the B segment, the i10, the premium hatchback i20 in the B+
segment, the Accent and the Verna in the C segment, the Sonata Transform in the E segment.
Hyundai Motor currently exports cars to more than 110 countries across European Union,
Africa, Middle East, Latin America and Asia. It has been the number one exporter of
passenger car of the country for the sixth year in a row.
In a little over a decade since Hyundai has been present in India, it has become the leading
exporter of passenger cars with a market share of 66% of the total exports of passenger cars
from India, making it a significant contributor to the Indian automobile industry. In 2009, in
spite of a global slowdown, Hyundai Motor India’s exports grew by 10.7%. In 2010 Hyundai
plans to add 10 new markets with Australia being the latest entrant to the list. The first
shipment to Australia is of 500 units of the i20 and the total i20 exports to Australia are
expected to be in the region of 15,000 per annum
3.5.4 Mahindra & Mahindra:-
Market Share: Commercial Vehicles 10.01%, Passenger Vehicles 6.50%, Three Wheelers
1.31%
Mahindra & Mahindra is mainly engaged in the Multi Utility Vehicle and Three Wheeler
segments directly. The company competes in the Light Commercial Vehicle segment through
its joint venture subsidiary Mahindra Navistar Automotives Limited and in the passenger car
segment through another joint venture subsidiary Mahindra Renault. In the year 2009, on the
domestic sales front, the Company along with its subsidiaries sold a total of 220,213 vehicles
(including 44,533 three wheelers, 8,603 Light Commercial Vehicles through Mahindra
Navistar Automotives and 13,423 cars through Mahindra Renault), recording a growth of
0.6% over the previous year.
The company’s domestic Multi Utility Vehicle sales volumes increased by 3.3%, as against a
decline of 7.4% for industry Multi Utility Vehicle sales. A record number of 153,653 Multi
Utility Vehicles were sold in the domestic market in 2009 compared to 148,761 MUVs in the
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previous year. Hence, Mahindra & Mahindra further strengthened its domination of the
domestic Multi Utility Vehicle sub-segment during the year, increasing its market share to
57.2% over the previous year’s market share of 51.3%.
Mahindra & Mahindra is expanding its footprint in the overseas market. In 2009 the Xylo
was launched in South Africa. The company formed a new joint venture Mahindra
Automotive Australia Pvt. Limited, to focus on the Australian Market.
3.5.5 Ford Motor Company:-
Ford motor company (F) was founded in 1903 by automotive and industrial pioneer Henry
Ford in Dearborn, Michigan. Being first to implement a moving assembly line for
automotive manufacturing, Ford was able to more efficiently mass produce their products
than their competitors. In 1908 the Model T was introduced and went on to sell over 15
million vehicles, firmly establishing Ford as the major player in the early automotive industry
with 50% market share by the 1920s. The company went public in 1956 and since then has
grown to be a significant presence in the global automotive market.
The Ford Motor Company product portfolio includes cars, trucks, and SUVs from the
following brands: Ford, Lincoln, Mercury, Mazda, Aston-Martin, Jaguar, Volvo, and Land
Rover. In addition to its core automotive business, Ford has a finance division, a parts and
service division, and they also currently own Hertz Corporation, the largest car rental
business in the world. Relative to other massive automotive manufacturers in 2003, Ford was
number two domestically and globally (behind GM), in terms of number of vehicles sold.
Ford’s outlook is challenging. In the 3rd quarter of 2005, Ford posted a pre-tax profit loss of
over $1.3 billion in their automotive operations, with a $1.1 billion loss in North America.
The current losses for 2005 are due to a number of reasons: (1) rising costs of commodities,
namely steel and energy, have increased manufacturing costs considerably; (2) ongoing and
rising health care costs, particularly ‘legacy’ benefits paid to retirees and their families;
(3) bailing out major parts supplier Visteon from bankruptcy; and (4) vehicle sales lagging by
81,000 units compared to the same point in 2004, in spite of unprecedented “Employee
Pricing” sales offered during summer 2005. Sales are especially lagging in the profitable
SUV and truck markets where demand is dropping due to escalating gasoline prices. This
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loss is disappointing given the positive trend seen in net income for the past two years. The
negative net income seen in 2002 was due to the costly safety recall of defective Firestone
tires used on numerous Ford and Mercury trucks and SUVs.
The volatility of Ford’s stock, in terms of its Beta rating, is in the neighbourhood of 1.6
which indicates that investing in their stock has fairly high risk. In the face of poor
performance and negative trends, significant steps must be taken in the near future to ensure
the long term viability of Ford Motor Company.
Elements of company-wide restructuring have been announced and implementation begun.
Part of the restructuring involves reducing personnel, mostly from white-collar positions. In
more long term restructuring, the company needs to shed over-capacity in manufacturing.
Shedding over-capacity involves closing down and consolidating manufacturing facilities.
These closures are prevented by agreements made with the United Auto Workers (UAW)
through 2007. A key element in Ford’s success is its relationship with the UAW and ability
to get concessions from the union. Concessions over healthcare costs, which cost upwards of
$2000 per new vehicle sold, and plant consolidations are required for Ford to be leaner, more
efficient, and more cost-effective in its business.
In addition to organizational restructuring being vital to the future success of Ford, the
company realizes the need to re-establish their market share, particularly in the U.S. domestic
market. They have begun attempts to do this with the introduction of many new vehicles to
freshen and invigorate their product line. Ford has announced plans to increase its hybrid
vehicle production tenfold to 250,000 per year by 2010. This could be viewed as an attempt
to position itself as the domestic leader in the rapidly growing hybrid market in the U.S. If the
organizational restructuring comes off well and new product offerings are a hit with
consumers Ford stands a good chance to see another 100 years as an industry leader.
3.5.6 Honda:-
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Honda Motor Co. (HMC) was established by Soichiro Honda in 1946. It originally began
producing motorcycles in the mid 20th century and began manufacturing automobiles (the
Honda Civic) in 1972.
After the original Civics’ inception, Honda produced many variants of this highly successful
vehicle, such as the four-door sedan, wagons, hatchback, coupe, and more recently the
hybrid. Honda currently has two automotive brands (Honda and Acura) and it produces over
20 other vehicle models, such as the Accord, Element, Insight, Odyssey Minivan, Pilot SUV,
and Ridgeline Truck, in addition to producing motorcycles and power products.
Since Honda began producing automobiles it has been a leader in producing fuel efficient and
low emissions vehicles. In 1977 and 1983, Civic models ranked first in U.S. fuel-economy
tests. Honda has also introduced hybrid vehicles such as the Insight, Civic, and Accord, in
1999, 2002, and 2004, respectively, with the 2006 Insight being the most fuel efficient car of
2006. Currently, Honda ranks sixth in sales within the automotive industry. They have
overseas plants in over 12 countries including the U.K., Italy, Brazil, Taiwan, Indonesia,
Malaysia, Thailand, Nigeria, U.S., and Canada. Honda has been increasing their production
capacity worldwide in response to their steady growth in total sales over the last few years.
From 2002 to 2003, Honda increased sales by 95,000 units, and from 2003 to 2004, sales
increased by 259,000 units. With this growth in sales Honda has seen a commensurate
increase in its revenues. In China, they saw approximately a 50% increase in sales from the
fiscal years of 2003 to 2004, and they expect sales to keep increasing.
In the future, Honda has stated that they will keep improving the fuel efficiency of all their
vehicles. They will continue to expand their production capacity in Asia, due to the expected
increases in demand in those regions. In the U.S., they plan on launching new models
targeted to younger people to create a new base of loyal customers. Given Honda’s past
record on delivering high quality and fuel efficient vehicles, their strong position in the
current market, their strategic direction for the next few years, and the rising costs of fuel
worldwide, it is evident that Honda will have a strong presence in the automotive market in
the future.
3.5.7 Nissan:-
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Nissan Motor Co., Ltd. (NSANY) was established in 1933 in Japan, but its roots go back to
1914 when the first Datsun automobile was produced. Nissan first appeared on American
shores in 1958 when a Datsun sedan was released on the U.S. market. Nissan furthered its
influence on the American market in 1960 when Nissan Motor Corporation, U.S.A. was
established in Gardena, California. In 1989, Nissan founded Infiniti, the luxury division of
Nissan North America, Inc. The most recent major corporate event, however, came in 1999
with the formation of the Renault-Nissan alliance. While Renault, a French corporation, and
Nissan remain independent corporations, “both companies share a single joint strategy of
profitable growth and a community of interests.” More specifically, as a result of the
alliance, Renault holds a 44% stake in Nissan, while Nissan owns a 15% stake in Renault.
Excluding Renault, Nissan supports two major brands – Nissan and Infiniti, and produces a
total of 18 different vehicle models. Nissan’s stated mission is “investment in the future.”
Nissan has experienced a substantial recovery over the past six years. Carlos Ghosn became
CEO of Nissan in 1999 after leading both Renault and Michelin U.S. through economic
turnarounds. Before Ghosn’s arrival, Nissan had experienced seven years of losses. After
posting a -$6.456 billion net income in 2000, Nissan has steadily recovered under Ghosn’s
leadership such that in 2004 they earned $4.882 billion in net income. Since 2002, revenue
has increased approximately 50% Sales have risen 22% over that same period. In 2004,
Nissan was able to sell 3,388,000 automobiles.
Nissan, including all consolidated subsidiaries, currently employs 123,748 workers in 18
countries on 4 continents. Nissan’s market share in the U.S. stands at around 6% as of 2004
while, in Japan, Nissan holds 19.3% of the market as of 2005. Along with Toyota, Nissan
has recently become one of the most successful Japanese automobile companies in the U.S.
The Infiniti brand has regularly been the recipient of industry awards Two . Nissan is not
optimistic about the sales outlook in the U.S. or Chinese markets. Ghosn recently predicted
that growth in the U.S. market is at the beginning of the end, and that the sales “bonanza” in
China is a thing of the past. In the face of an industry-wide decrease in growth, Nissan’s
outlook is not outstanding. However, good management and a strong global presence will
serve Nissan well as the competition moves to emerging markets.
3.5.8 Toyota:-
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Toyota was established as a public company in Japan in 1937. It entered the U.S. market in
1957, but only became successful with the introductions of the Corona in 1965 and the
Corolla in 1968. By 1970, Toyota was the world’s fourth-largest carmaker and by 1975 had
displaced Volkswagen as the U.S.’s #1 auto importer. Toyota began auto production in the
U.S. in 1984 through a joint venture with GM, and launched the successful Lexus line in the
U.S. in 1989. Since then, Toyota has continued to grow steadily, becoming the third largest
global automotive manufacturer as of 2003, with sales last year of 7.4 million vehicles.
Unlike many other large auto manufacturers, Toyota carries only 4 brands: Toyota, Hino,
Scion, and Lexus; it also has a majority interest in Daihatsu. Known for their quality and
reliability, Toyota cars and light trucks such as the Camry (Best-selling passenger car in
America, 2004), Corolla, Lexus LS330, Prius (Motor Trend’s Car of the Year, 2004), Tundra
(Motor Trend’s Truck of Year, 2000), Tacoma (Motor Trend’s Truck of the Year, 2005),
4Runner, and Lexus RX300 (Motor Trend’s SUV of the Year, 1999) have been extremely
successful both in the U.S. and abroad.
In the last few years, Toyota has been able to ride out the automotive storm, continuing to
post impressive results despite the troubles that other companies have seen. In 2003, net
income jumped almost 55%, reaching US$10.8B. And in 2004, both revenue and net profit
increased slightly. Currently, Toyota holds a 6% profit margin. Toyota’s success is based
largely on its forward-thinking, innovative management style and its rigorous standards of
quality. The Toyota Production System is a much-studied strategy of design and
manufacturing which emphasizes streamlining and elimination of waste – giving rise to the
“just-in-time” and “lean” manufacturing movements – and continuous error-checking and
improvement. In addition, Toyota has repeatedly been ahead of the trend in investing in new
technologies. Instead of focusing on reducing labour costs, Toyota has increasingly
automated their production facilities. And with the release of the Prius in 1997, Toyota
introduced the first mainstream hybrid vehicle, cashing in on the demand for fuel economy
and reduced environmental impact. Like the Prius, the Scion line successfully identified and
addressed a new consumer sector, a plan that Toyota will continue to follow. These strategies
combine to give Toyota a significant sustainable competitive advantage.
The results of all this are clear: in 2005, Toyota won a record-breaking 10 segment awards in
J.D. Power and Associates Initial Quality Study, with Lexus carrying top honours for five
years straight. And while 75% of Toyota’s current market is in Japan and North America, it
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aims to reach markets in 140 countries and regions in the future. With new assembly
facilities in Thailand, Indonesia, South Africa and Argentina, Toyota has more than 60
manufacturing facilities in 26 countries. This allows production in geographic proximity to
Toyota’s future target markets like Asia and South America. With expansion underway, an
operation going well, innovative infrastructure and mindset, and well-targeted high quality
products, Toyota is excellently positioned for future growth and success.
3.5.9 Volkswagen:-
The Volkswagen Automotive Group was formed in Germany in 1937 based on Ferdinand
Porsche’s concept for a “Volkswagen,” which literally means a “people’s car.” Today,
Volkswagen AG is the largest European car manufacturer. The company is divided into three
main groups: the Volkswagen Group, which includes the brands Volkswagen, Skoda,
Bentley and Bugatti; the Audi Group, which includes Audi, SEAT, and Lamborghini; and the
Commercial Vehicles Group. Together, these groups comprised 11.5% of the 2004 global
automobile market.
While Volkswagen’s revenues have remained relatively constant, by 2004 its net profit after
taxes had fallen to less than one-third of the 2002 level due to increasing costs. For
Volkswagen’s recent net profit history. Although sales in its largest markets of Western
Europe and South America have remained constant or strengthened over the past year, sales
outside of those markets have dropped. The majority of the losses stem from poor
performance within the Volkswagen group and within the North American market. This has
resulted in Volkswagen’s global market share falling 0.6% to 11.5%.
As profits and market share are currently at their lowest values in the past five years,
Volkswagen has reason to be concerned about the future of the company. Its returns on sales
and equity have fallen to 0.8% and 3.0%, respectively. Both rates are worst among the ten
companies considered in this report and are approximately half of the next worst ratios.
While Volkswagen has blamed an “unfavourable exchange rate” and “weakness in the most
important markets” for the latest downturn, the larger problem stems from Volkswagen being
unable to provide the best “people’s car” since its competitors are providing similar quality at
a reduced price. With this in mind, Volkswagen has begun a restructuring process aimed at
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making the company and its manufacturing capabilities more conducive to change. It also
engaged in a cost-cutting campaign in 2005 including lay-offs and reworking of union deals.
While these cuts will provide immediate relief, Volkswagen must find a way to provide a
more cost-efficient car to become competitive in the long term.
Volkswagen is also attempting to regain its prominence in the Chinese market. After being
the first company to pursue that market, Volkswagen held a large share of the government
and taxi sectors, which provided a consistent source of income. Due to weakening political
ties and loss of market share to newer competition, Volkswagen has made an effort to
strengthen joint ventures with Chinese manufacturers Shanghai Automotive Industry Corp.
and First Automotive Works. If Volkswagen AG is to reverse its recent decline, the current
restructuring must be successful in cutting costs and winning back some of the market share
lost. If the North American sector can regain profitability and the rapidly growing Chinese
market turns back to Volkswagen, the company will grow in the future.
The above manufactures are the major players in the Indian auto industry and are divided into
in different segments. As per the different segments of cars the cars are classified and as per
the bank policy and the funding is done as per that only. People take up loan according to
their requirement and their choice of manufactures and model of the car.
3.6 HDFC banks flow chart:-
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3.7 MEANING OF LOAN & PROCEDURE FOLLOWED AT HDFC BANK:-
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HDFC BANK
Liability Department (Branch banking)
Assets department
Loans & advances
Secured loans Unsecured loans
Movable securities
Immovable securities
Auto car loan
Gold loan
Loan against securities
Two wheeler loan
Commercial vehicle loan
Commercial equipments loan
Loan against properties
Home loan
Personal loan
Business loan
Education loan
Loan is a method of lending under which bank gives credit to a borrower for a
specific purpose. Loan are promises for future payment, they have to be repaid in periods
beyond a year and are therefore long-term liabilities. In other words “when a banker makes a
advance in a lump-sum which cannot be paid wholly or partly and which the customer has
permission to withdraw subsequently, it is called a loan.”
Many times a borrower needs fund for fixed assets or non repetitive type of activities
and thus, seeks money from the bank which is withdrawn in one lump sum. The loan amount
is normally repaid in installments. Loan may be short-term, medium-term or long-term.
Loans and advances are classified in to secured and unsecured.
Secured Loan or Advance: -
Secured loan or advance means a “Loan or Advance made on the security of assets.
The market value of which is not at any time less than the amount of such loan or advance.”
Unsecured Loan or Advance: -
An unsecured loan or advances means a “Loan or advance not so secured. A partly
covered loan or advance is partly covered by the security of assets, the market value of such
securities being less than the amount that has been lend or outstanding at any time.”
In HDFC Bank, Loans and Advances department is divided in three parts as follows:-
The loan procedure of the new car loans at the HDFC bank:-
1. Loan application department.
Procedure for any loan starts from this department. All the applicants have to submit
their application form supported by the required document in this department. After
that sales executive will check the form and document and will make the proposal.
The sales executives of the banks will collect all the required documents and then the
application will be moved forward to the RIC department (risk intelligence control)
department of the bank for the verification of the documents. All the legal formalities
like making legal mortgage deed, loan agreement, hypothecation agreement, share
linking, lien & set-off, etc. documents are being made by this dept. After the RIC
department then comes the credit department. The credit department will see that
whether the person is eligible for the loan or not and upto what amount the loan
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should be sanctioned for the applicant. Than after the file of the applicant is moved to
operations department means the disbursement department for the disbursement of the
loan. All the legal formalities like making legal mortgage deed, loan agreement,
hypothecation agreement, share linking, lien & set-off, etc. documents are being made
by this dept.
2. Loan disbursement department.
Once the loan is sanctioned the file is moved from RIC to operations
department means the disbursement department, in this department the disbursement
activity takes place. Officer in this department will take care of all the security of the
loan given by bank and will keep the entire original document in their record room.
After completion of all the procedure, the loan will disburse to the borrower. And
after that the branch will take care of the collection of installment and interest on loan.
3. Recovery Department.
The Recovery Department of the bank is indulged in the work of managing the
overdue advances of the bank. Such advances of the bank are also sometimes called as
the Non Performing Assets (NPAs). This department is very important from the point
of view of bank.
3.8 Auto Car Loan Policy at HDFC Bank:-
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Eligible Borrower Segments for Loan:-
1) Salaried Individuals
2) Self Employed Individuals
3) Sole Proprietorships
4) Partnership Firms
5) Hindu Undivided Families (HUFs)
6) Private & Public Ltd Co.
7) Joint ventures
Conditions & Credit Criteria for Loan:-
Common Criteria:-
Conditions Credit Criteria
1) Minimum age Salaried – 21 years
Self employed – 30 years
2) Maximum age Salaried – 60 years
Self employed – 65 years
3) Customer personal verification To be done at the office and residence also.
4) PAN no. Mandatory or Latest 2 years of income tax return.
Mandatory Documents:-
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Documents Borrower Segment
1) Application form Required for all the segments of borrower.
2) Know your customer (KYC) Required for salaried & self employed. If partner, director, Karta or the trustee is co – applicant.
3) Sign verification proof Required for all segments of borrower.
4) Others MOA for Pvt. Ltd and Ltd Co. Partnership deed for partnership. Trust deed for trust.
1) Loan to Vehicle (LTV):-
o LTV is based on Ex- showroom price.
o Maximum LTV for Tier 3 model under any program will be upto 90% or upto 95% including
suraksha kavach premium account.
o For any other model maximum LTV can be upto 100% including suraksha kavach.
2) LTV Downsizing:-
o For loan amount below 5 lacs, there should not be any downsizing.
o Definition of downsizing = approved loan amount < eligibility.
o Eligibility = Lower of (income based LTV, product cap, model based LTV + template LTV
deviation allowed)
3) Average Quarterly Balance (AQB):-
This is to find out whether the customer will be able to pay the EMI or not by looking at
balance maintained in the first 15 dates of the month in the customers’ bank account. The
AQB is to be maintained 1.5 times of EMI.
4) Customer personal verification (CPV):-
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Customer personal verification is compulsory for every customer who comes for loan in the
bank. Customers’ identity proof, address proof and age proof are must for getting the loan.
Residence verification
Office verification
Tele verification – Residence and office
Directory check
Features and benefits of new car loan:-
o Covers the widest range of cars sand multi- utility vehicles in India.
o Avail 100% finance on your favourite car.
o Flexible repayment options ranging from 12 to 84 months.
o Borrow upto 3 times your annual salary (For salaried professionals) and 6 times your annual
income (For self employed professionals).
o Speedy processing within 48 hours.
o Repayment with easy EMI’s
o Attractive interest rates
o Hassle free documentation
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Customer Privileges
o If you are an HDFC Bank account holder, we have special rates for you.
o If you have had a Preferred Account or a Corporate Salary Account with HDFC Bank for
more than six months, you can get fast approvals on your loans with minimum
documentation.
o If you are an existing HDFC Bank Car Loan customer with a clear repayment of 12 months
or more we can Top-Up your car loan to the extent of the original loan value.
1) Attractive car loan plans:-
Auto Loan Takeover Plan:-
If you are a salaried individual holding any of the credit cards mentioned below, your loan
gets processed faster.
Requirements:
Facility is available to only HDFC bank account holders (CASA).
All terms and conditions applicable for the used car product are applicable for the Loan take
over product.
Minimum 9 month old loan with any approved Financier with clear repayment track record.
2) Advantage platinum Credit Card Plan:-
If you are a salaried individual holding any of the credit cards mentioned below, your loan
gets processed faster
HDFC Bank International Credit Card
Citibank Gold
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Citibank Diners
HSBC Gold
ANZ Grindlays Gold
American Express Gold Card
American Express Charge Card
Standard Chartered Gold
Requirements:
Your card has to be atleast one year old.
You need to submit the last two billing statements.
Small cars, normal funding up to three years.
Funding on premium cars restricted to 70% under this plan.
The plan does not include multi-utility vehicles.
Contract copy and salary slip of NRI.
Endorsement on passport for last 3 years.
Proof of ownership of property.
Post-dated cheques must be from the resident account of the borrower.
No Income-Document Loan Plan:-
Now, you can get a car loan without proof of income.
Under this scheme, you get the loan amount up to 60% of the car invoice value.
The tenure of loan can be a maximum of 3 years
100% Loan Plan with Fixed Deposit Lien:
This allows you to take a loan against your deposit at HDFC Bank.
You can get a loan for 100% of the invoice value amount with the required margin
Placed as a fixed deposit in HDFC bank.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 62
Lien is marked on the specified deposit. Installments can be paid separately or out of
The deposit (if deposit is large enough).
NRI Loans:-
NRIs can avail of new car loans from HDFC Bank for the use of the vehicles by their relatives in India.
Additional documents required are as follows :
Contract copy and salary slip of NRI.
Endorsement on passport for last 3 years.
Proof of ownership of property.
Post-dated cheques must be from the resident account of the borrower.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 63
3.8 THE RATE CHART:
Open Mkt + HBL
Tenor ( TOP 20 CITIES )
Segment 12-23 24-35 36-60 >60
A Segment / MUVS / Indica Dle / nano
16.25% 15.25% 14.25% 16.25%
B Segment 16.25% 14.75% 13.50% 16.25%
C Segment 16.25% 14.75% 13.00% 16.25%
C+ Segment 16.25% 14.75% 12.50% 16.25%
D Segment 16.25% 14.50% 12.25% 16.25%
D+ Segment 16.25% 14.25% 12.00% 16.25%
Payout 0.00% 1.00% Normal Normal
BEFORE 20TH JUNE LOGIN AFTER 20TH JUNE LOGIN
Volume (INR) PF(INR) PF(INR) PF(INR) PF(INR)
Upto 2.5 Lacs 2325 1163 2625 1313
2.51 – 4.00 Lacs 3350 1675 3650 1825
4.01 to 5 Lacs 3800 1900 4100 2050
5.01 – 10 Lacs 3950 1975 4450 2225
Over 10 Lacs 4275 2138 4950 2475
A/MUV B C C+ D D+
Maruti 800 Maruti Alto Maruti Swift TOYOTA COROLLA ALTIS
Maruti Vitara AUDI
Maruti Omni Maruti A-Star Maruti Swift Dzire VW JETTA CHEVROLET CAPTIVA BENTLEYMaruti Versa Maruti EECO Maruti SX4 HONDA CIVIC FIAT 500 BMW
Chevrolet Tavera Maruti Estilo FIAT LINEA MITSUBISHI LANCER
FORD ENDEAVOUR JAGUAR
Mahindra Bolero Maruti Ritz FORD FIESTA MITSUBISHI CEDIA
HONDA ACCORD LAND ROVER DISCOVERY
Mahindra Scorpio Maruti Wagaon R FORD FIGO CHEVROLET CRUZE
HYUNDAI TUSCON LAND ROVER FREELANDER
Tata Sumo Chevrolet Aveo U-va FORD FUSION SKODA LAURA MITSUBISHI OUTLANDER
LAND ROVER RANGE ROVER
Tata Safari Chevrolet Beat HODAN CITY SKODA OCTAVIA
MITSUBISHI PAJERO MERCEDEZ BENZ
Indica DLE Chevrolet Spark HONDA JAZZ TATA ARIA NISSAN TEANA MITSUBISHI MONTERO
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 64
Indica Xeta Fiat Palio HYUNDAI ACCENT NISSAN X TRAIL PORSCHE
Fiat Punto HYUNDAI I20 TOYOTA CAMRY TOYOTA FORTUNER
Ford Ikon HYUNDAI VERNA VOLVO TOYOTA PRADO
Hyundai I-10 MAHINDRA XYLO HONDA CR V VW BEETLE
Hyundai Getz TATA MANZA SKODA SUPERB VW PASSAT
Hyundai Santro TOYOTA INNOVA SKODA YETI VW TOUAREG
Mahindra Logan VW POLO
Indica Vista CHEVROLET AVEO
Tata Indigo CHEVROLET OPTRA
SKODA FABIA
VW VENTO
The above rate chart is for the top 20 cities and it for the month of June. The rates vary from
month to month and even the terms and conditions of it. The rates shown in this chart has two
parts i.e. the file which comes for login before 20th June, the processing fees (PF) is lower as
compared to after 20th June.
Tenor:-
It is the time period for which the loan is taken on the vehicle. Mostly people
prefer 36 months i.e. three years or 60 months i.e. five years time period. The
rate is also lower in all the segments in this period.
Segment:-
In auto industry the classification of cars is done segment wise. Because of
different segments the classification of the cars becomes easy and so the
funding. Segment “A” is MUVs (multi utility vehicles) these kinds of vehicles
are normally used for taxi purposes and so these car falls under TIER 3
category which means it is most risky to fund these cars and so the interest
rate is also for this kind of cars. The maximum amount of funding done in this
segment is upto 75% of the EX- showroom price. E.g. Indica, Scorpio, Tata
sumo etc.
The cars which fall under segment “B” are those car whose price range is from
4 lacs to 7 lacs and these kind of cars are known as compact cars. Middle class
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 65
people prefer this segment most. Segment “B” cars fall under the category of
TIER 2 so they are less risky than that of MUVs and so the percentage of
funding also increases The “C” segment cars are those cars which fall in the
range of 7 lacs to 10 lacs and the higher middle class mostly prefer this cars.
These segment car are called mid size cars. These cars also falls under TIER 2
category and maximum funding can be done in these category is upto 90%.
Segment “C+” is called the executive car segment. These cars fall above the
range of 10 lacs. These cars fall under the TIER 1 category and the funding of
the car is done upto 90% of the EX- showroom price of the vehicle.
The “D” segment cars are premium cars and SUVs (sport utility vehicles). The
maximum funding in this segment can be done upto 90%. The “D+” segment
cars are the luxury cars. All these cars are the imported cars. This segment
falls under the TIER 1.
Processing fees:-
This amount is collected from the customers for the processing of the loan file.
This amount can be waivered.
Stamp charges:-
This amount is also collected from the customers and it is 0.25% of the
amount funded to the customer on the vehicle. This amount is also
compulsorily paid by the customers to the bank. This amount goes to the
government.
Franking charges:-
This amount is also collected from the customers and this amount is
compulsory to be paid by the customer to the bank and the amount paid by
them is Rs. 200. This amount also goes to the charges are government.
Payout ratio:-
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 66
It is the amount given to the channel from whom the sourcing is done. The
minimum ratio given to the channel is 1% and the maximum ratio is 2% but in
festive season some special amount is also given.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 67
CHAPTER-4
ACTIVITES CARRIED OUT AT HDFC BANK
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 68
During the period of two months the activities learned at HDFC bank in Auto car loan
department are as under:-
1) Learned about the system used for banking. The system used for branch banking is
FINWARE. From FINWARE system one can know any details of the account in the
HDFC bank.
2) Learned how the branch banking works and what the different departments of the branch
banking are. For learning the branch banking, visited Alkapuri branch, Old padra branch,
Karelibaug branch and Raopura branch.
3) Learned what work is done at the welcome desk, what the Personal Banker (PB), the
Relationship Manager (RM), the Authorised Personal Banker and the branch manager
does and how do they co- ordinate with each other.
4) Visited Axis bank, Kotak bank, ICICI bank and SBI to know the auto car loans schemes
of different banks and to know the difference between the schemes of other banks and
HDFC bank.
5) Learned how to make the login and disbursement report on daily basis of auto car loans.
6) Learned how to make the login and disbursement report channel wise on daily basis of
auto car loans.
7) Learned how to make the login and disbursement report location wise on daily basis of
auto car loans.
8) Learned how to make the manufacturer wise sales report on the monthly basis of auto car
loans.
9) Learned how to make the dealer sales report on the monthly basis of auto car loans.
10) Learned how to make the branch target report versus achievements of auto car loans.
11) Learned how to make the PB and RM target report versus achievements of the auto car
loans.
12) Learned how to make the lead generated report and the lead achievement report of the
auto car loans.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 69
13) Learned how to make branch direct reporting (BDR) login and disbursement report of the
auto car loans.
14) Learned the LOS (Loan originating system). In this LOS system one can know any status
of the file. In this system one can know whether the file is in underwriting or is it
approved or whether it is rejected. One can know any status of the file of the applicant or
the customer from login of the file to the disbursement of the file.
15) Learned the FINNONE system. This system is for the internal repayment of the loan.
From this system one can know whether the applicant or the customer has bounced any of
the EMIs and any past records of any kind of loan.
16) Learned how to do collection of RC book and insurance policy of the vehicle by calling
the customers as these documents are needed by the bank for their records.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 70
CHAPTER-5
RESEARCH METHODOLOGY
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 71
5.1 Problem Statement:
This research has been conducted to study the “THE DELINQUENCY DATA OF NEW
CAR LOANS, STUDY DONE AT HDFC BANK, BARODA”.
5.2 Research Objectives:
There is an objective behind any research. Without objective there is no meaning of research.
The purpose of research is to discover answers to questions through the application of
scientific procedures. The main aim of research is to find out the truth which is hidden and
which has not been discovered yet. As each research has some or the other objectives the
following are the objectives of this research:
Primary Objectives:-
To know the reasons of delinquency at HDFC BANK.
Secondary Objectives:-
To understand what is delinquency and what are the underlying reasons for the
emergence of its.
To understand the impacts of delinquency on the operation bank.
To know what steps are taken by the bank to reduce the delinquency percentage.
To suggest some measures to lower the level of delinquency at the bank.
5.3 Research Design:
A research design specifies the methods and procedures for conducting a particular study. In
this research I have use following research methods.
Exploratory research:-
An exploratory research focuses on the discovery of ideas and is generally
based on secondary data.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 72
5.4 Data Collection:
Data collection is the curious elements of research study the research in depend on what data
you are going to collect on your research.
1) Primary Data:
The data, which are collected for the first time, directly from the respondents to the base of
knowledge & belief of the research, are called primary data. The normal procedure is to
interview some people individually or in a group to get a sense of how people feel about the
topic
2) Secondary Data:
When data are collected & compiled in a published nature, it is called secondary data. So far
as this research is concerned, Internet & many magazines and the brochures have been
referred as secondary data and the data given by the bank for the study purpose is the main
sources of secondary data. The project is completed by undertaking the secondary data.
Bank journals, internal records of the bank and bank website were the major sources for
collecting the secondary data as this research is based on secondary data.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 73
5.5 Limitation of Research:
Personal Bias:
Some respondents may have had personal bias due to which they may not have given the
correct information and due to which the right conclusion may not be have been derived at.
Area:
The result may have varied, if it was conducted somewhere else and Since the Indian
banking sector is so wide so it was not possible for me to cover all the
private banks of the Indian banking sector. The findings may not be
applicable to all the banks.
Time Limit:
The time limit taken for conducting the research was very less it could also be one of the
limitations of the study.
Bases of study:
Since my study is based on the secondary data, the practical operations
as related to the delinquency, which are adopted by the bank might not
be learnt thoroughly
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 74
CHAPTER-6ANALYSIS OF THE DATA
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 75
6.1 RESEARCH ON DELIQUENCY OF AUTO CAR LOANS
CUSTOMERS AT HDFC BANK:-
In auto car loan the delinquency means the percentage of defaulters against the total
customers in a month. The delinquency data is calculated in percentage. Delinquency is
calculated on the basis of 30+ days and 90+ days. If the customers bounce their first EMI
they fall into 30+ days defaulters list and if they are unable to pay their EMI for more than
three months then they fall under 90+ days defaulters list. It is the responsibility of the sales
department to bring the first EMI of the customer where as if the customer falls in 90+ days
defaulters list then it is the responsibility of the collection department to get the recovery
done. The sales department and the collection department keeps the follow up of the
customer so that the customer pay their EMI.
The collection department tries and contact the 30+ defaulters list anyhow and after
contacting the customer the collection department people compel them to pay their EMI so
that it is not a loss to the bank and if the customer is still stiff not pay their EMI than the
collection department people don’t have any option but to take back their vehicle as it is
under the hypothecation of the bank as it is the property of the bank and this is the last option
left for the bank, so that they can recover their losses.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 76
Analysis and interpretation of the delinquency data of last 5 months in India
INTERPRETATION:-
The above bar chart explains the delinquency of the defaulters in various regions in the
month of January. As it is seen in the chart the north region is having the highest delinquency
percentage i.e 3.66% and 1.46% in 30+ and 90+ days respectively , the reason for this is it
that the region is big as compared to the others regions and the quality of people matters in
that. Most of people who take loan they are unaware of post loan procedure and so they fall
in defaulters list. And as compared to the other regions south region is having the lowest
delinquency i.e 1.85% and 0.56% in 30 + and 90+ days, the reason behind that is the people
over there are educated and they are aware of their EMI and the collection department in
south region is more effective as compared to the other regions. In east region the percentage
of delinquency is also high i.e 3.12% and 1.21% in 30+ and 90+ days respectively because of
unawareness of people. In west region the collection department is also effective and the
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 77
JANUARY
people are less likely to default so the percentage of delinquency is also low i.e 1.96% and
0.63% in 30+ and 90+ days respectively.
INTERPRETATION:-
The above bar chart explains the delinquency of the defaulters in various regions in the
month of February. As it is seen in the chart the north region is having the highest
delinquency percentage i.e 3.64% and 1.55% in 30+ and 90+ days respectively , the reason
for this is it that the region is big as compared to the others regions and the quality of people
matters in that. Most of people who take loan they are unaware of post loan procedure and so
they fall in defaulters list. And as compared to the other regions south region is having the
lowest delinquency i.e 1.91% and 0.67% in 30 + and 90+ days, the reason behind that is the
people over there are educated and they are aware of their EMI and the collection department
in south region is more effective as compared to the other regions. In east region the
percentage of delinquency is also high i.e 2.83% and 1.24% in 30+ and 90+ days respectively
because of unawareness of people. In west region the collection department is also effective
and the people are less likely to default so the percentage of delinquency is also low i.e
1.87% and 0.68% in 30+ and 90+ days respectively.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 78
FEBRUARY
INTERPRETATION:-
The above bar chart explains the delinquency of the defaulters in various regions in the
month of March. As it is seen in the chart the north region is having the highest delinquency
percentage i.e 3.15% and 1.23% in 30+ and 90+ days respectively , the reason for this is it
that the region is big as compared to the others regions and the quality of people matters in
that. Most of people who take loan they are unaware of post loan procedure and so they fall
in defaulters list. And as compared to the other regions south region is having the lowest
delinquency i.e 1.65% and 0.55% in 30 + and 90+ days, the reason behind that is the people
over there are educated and they are aware of their EMI and the collection department in
south region is more effective as compared to the other regions. In east region the percentage
of delinquency is also high i.e 2.30% and 0.99% in 30+ and 90+ days respectively because of
unawareness of people. In west region the collection department is also effective and the
people are less likely to default so the percentage of delinquency is also low i.e 1.51% and
0.63% in 30+ and 90+ days respectively.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 79
MARCH
INTERPRETATION:-
The above bar chart explains the delinquency of the defaulters in various regions in the
month of April. As it is seen in the chart the north region is having the highest delinquency
percentage i.e 3.31% and 1.41% in 30+ and 90+ days respectively , the reason for this is it
that the region is big as compared to the others regions and the quality of people matters in
that. Most of people who take loan they are unaware of post loan procedure and so they fall
in defaulters list. And as compared to the other regions south region is having the lowest
delinquency i.e 1.96% and 0.56% in 30 + and 90+ days, the reason behind that is the people
over there are educated and they are aware of their EMI and the collection department in
south region is more effective as compared to the other regions. In east region the percentage
of delinquency is also high i.e 2.81% and 1.02% in 30+ and 90+ days respectively because of
unawareness of people. In west region the collection department is also effective and the
people are less likely to default so the percentage of delinquency is also low i.e 1.68% and
0.66% in 30+ and 90+ days respectively.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 80
APRIL
INTERPRETATION:-
The above bar chart explains the delinquency of the defaulters in various regions in the
month of May. As it is seen in the chart the north region is having the highest delinquency
percentage i.e 3.12% and 1.22% in 30+ and 90+ days respectively , the reason for this is it
that the region is big as compared to the others regions and the quality of people matters in
that. Most of people who take loan they are unaware of post loan procedure and so they fall
in defaulters list. And as compared to the other regions south region is having the lowest
delinquency i.e 1.91% and 0.58% in 30 + and 90+ days, the reason behind that is the people
over there are educated and they are aware of their EMI and the collection department in
south region is more effective as compared to the other regions. In east region the percentage
of delinquency is also high i.e 2.32% and 0.89% in 30+ and 90+ days respectively because of
unawareness of people. In west region the collection department is also effective and the
people are less likely to default so the percentage of delinquency is also low i.e 1.70% and
0.59% in 30+ and 90+ days respectively.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 81
MAY
CONCLUSION AND SUGGESTIONS
It can be concluded that delinquency is not confined to alone auto car loans but also to the
other kinds of loans and advances.
The following are the findings of the study and the reasons for the delinquency in the bank.
1) In 30+ days the delinquency is more because the customers take loans and there is
possibility that they are unable to pay their first EMI because of unavailability of
the money.
2) And it is also possible that the customer might not be willing to pay the money so it
is one of the reasons of default in the bank.
3) There is also a possibility that the customers’ cheques are not swapped on time and
because of these reason they fall into the defaulters list
4) Proper follow up by the bank people is also one of the reasons of delinquency.
5) At times the customers forget to maintain balance in the bank account in which loan
is going on because the customer might have several accounts in other banks.
6) It is possible that the customer is not aware of the EMI cycle.
7) Market crisis is also one of the reasons of the delinquency.
8) Family issues are also one of the reasons of delinquency because of unavailability
of the money.
Following suggestions can be given to reduce the level of delinquency in the bank:
1) Professional people should be recruited and associated at all levels of credit
department. They can be CAs, lawyers, MBAs, banking experts etc.
2) The credit people should properly check and verify all the documents of the
customers before giving the loan to the customers and without documents, the loan
should not be given.
3) Proper survey of difficulties of customers should be made and adequate assistance
should be accordingly provided.
4) Banks and financial Institutions together with Central Government should establish
more courts for quicker remedies.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 82
5) Recovery agents should be appointed to collect on daily basis from transport
operators, retail traders etc.
6) Bank branches in various sectors should be given more autonomy so that they can
take quick and timely decisions regarding NPA accounts.
7) Collection of interest from creditors should be on monthly basis instead of quarterly
basis.
8) Banking staff should be well trained to properly monitor creditworthiness of the
borrowers.
9) Political interference should be eliminated in disbursement of loans and advances.
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 83
Bibliography
http://finance.indiamart.com/investmentin_india/hdfc_bank.html
www.hdfcbank.com/personal/prd_glance.htm
www.hdfcbank.com/personal/loans/new_car_loans/new_car.htm
www.ibef.org/download/automotive-25068 .pdf
www.wikipedia.org/wiki/automotive_industry_in_india
www.wikipedia.org/wiki/history_oftheautomotive
www.wsj.com/mde/public/page/2_3022-autosales.html
http://www.hdfcbank.com/aboutus/awards/default.htm#%23
http://www.rbi.org.in/scripts/NotificationUser.aspx
s
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT Page 84