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Housing Finance Industry

AN OVERVIEW:
1 Significantly, there has been no dearth of demand for housing & consequently for finances for the same have been abundant. 2 Market dynamics play a pivotal role in determining the lending rates. Considering the same, the housing finance industry has been in a slump in recent times. 3 The entry of banks into the housing finance sector has posed a serious threat to already existent players in the field. 4 Tax sops provided by the Government of India is a significant step towards upholding the future prospects of this industry.

SECTOR COMMENTS:
Nearly 25 lakh houses are built every year in India. However, the nations requirement is around 65 lakh houses per annum. The housing sector in India is facing an estimated shortage of 4.1 crore houses & according to the Ninth Plan, the demand-

supply gap in urban housing is 3.3 crore houses. In case, all these urban housing dwellings were to be built, it would require an investment of Rs. 150.370 crore. Traditionally, the housing finance business has been yielding a margin of around 2%. The skill of the players is in converting their advances that have a maturity period of 15-30 years with the deposits that mature within three years. Though, the National Housing Bank (NHB) refinances loan up to Rs. 2 lakh disbursed to Rs. 2 lakh disbursed to the lower income group, this is just a negligible proportion of advances to the major players. The primary sources of funds are fixed deposits, debentures, private placement of bonds & borrowings from banks & financial institutions. Thus, efficient financial management has a key role to play in this industry.

MARKET PROFILE:
The Indian housing finance sector is crowded with players of all sizes & nature: government organizations HUDCO & NHB. Major players in the industry are HDFC, LIC Housing Finance, Dewan Housing, Can Fin Homes, SBI Home Finance & Gujarat Rural Housing. The youngest entrant into the industry, which is penetrating rapidly, is ICICI. It is the same with quite a few banks, for example, SBI & SBI Home Finance Limited, Bank of Baroda &BOB Finance, Vysa Bank & Vysyabank Housing. Though HDFC & ICICI also have their banking arms, they compete with each other in personal loans, but not housing loans.

These Housing Finances Companies (HFCs) constitute nearly 95% of the total disbursement by the industry. The commercial banks are showing tremendous increase year by year because of their aggressive methodology

MARKET TRENDS:
The housing sector is witnessing a clash between major players. HDFC had ruled this sector with a lions stranglehold. It was smooth sailing for HDFC all these years & it seemed that its monopoly was there to stay forever. However, out of blue emerged ICICI Home Loans, when this financial institution decided to clash arms

with HDFC on its home front. Within a year of its launch, ICICI Home Loans is giving the industry leader, HDFC, sleepless nights. Undercutting in the interest rates is all in the game and so is every other trick in the book. HDFC is gathering its wits to beat its competitor at its own game

MANDATORY CONDITIONS FOR ADEQUATE HOUSING:

These are: 1. Legal security of tenure, 2. Availability of services, materials, facilities & infrastructure, 3. Affordability, 4. Habitability, 5. Accessibility, location.

CHARACTERISTICS OF HOUSING FINANCE:

1 Long term finance with repayments spread over 15-20 years. 2 Most of the people prefer loan at fixed interest rate. The concept of variable interest rate is slowly picking up with the expectation of further southward movement of interest rate. 3 Market is becoming very competitive after the entry of banks in financial institutions in retail lending. 4 The spreads are declining due to competition & unless long term funds are made available at reasonable interest rate, it would be very difficult to maintain the bottom-line.

LIST OF HOUSING OF HOUSING FINANCE COMPANIES IN INDIA

Housing Development Finance Corporation Limited LIC Housing Finance Limited GIC Housing Finance Limited Can Fin Homes Limited Dewan Housing Finance Corporation Limited Ganesh Housing Corporation Limited Gruh Finance Limited Happy Home Profin Limited International Housing Finance Corporation Limited MFL Housing Finance Limited Mahareshi Housing Finance Limited Manoj Housing Finance Company Limited Manraj Housing Finance Limited Mehta Housing Finance Limited Modern Shares & Stockbrokers Limited Parshwanath Housing Finance Corporation Limited Residency Housing Finance Limited Sahara Housing Finance Corporation Limited

NATIONALIZED BANKS
State Bank of India PNB Home Loans Bank of India Union Bank of India

Syndicate Bank Canara Bank Allahabad Bank Central Bank of India

PRIVATE BANKS
ICICI Bank Home Loans IDBI Bank Home Loans

HDFC INTRODUCTION

Bank home loan offered by HDFC bank encompasses a wide range of loan options which are subject to various parameters like term of loan, financial status of the individual seeking loan and the purpose of loan. Owing to these diversifications, HDFC home loan have grown in popularity over the years.

HDFC bank, India announced the arrival of the new generation, technology driven commercial banks in India. HDFC bank in India was set up in august 1994 with the approval of reserve bank of housing finance company of India (set up in 1977).

The house of customer dream and loans for it at customized repayment periods which suits customers capabilities, that is exactly what the HDFC bank has in store for the customers. With HDFC home loan you can buy an exiting apartment, bungalows, or even row houses anywhere in the country.

The convenience HDFC offer is the nature of repayment which can be customized to suit your priorities. Customer can either apply for HDFC home loan

individually or jointly. The people who are to own the property should be co-applicant need no be co-owners, as per stipulations.

The loan amount that can be availed has been capped at 85% of the cost of the property, which include the land cost. The loan amount would be decided by thee bank taking into account the applicants capability like their income , age, spouses income, assets, number of dependent etc.

With HDFC, the applicants can opt for fixed rate loans and adjustable or floating rates. Before the final disbursement is done by bank, the applicant pays a pre-equated monthly installment for amount if loan disbursed. The monthly installment amount depends on interest rate, amount if loan availed and the tenure of the loan opted for.

The security required is first mortgage of the to be financed property. If any additional income is accrued during the loan tenure, the applications are free to repay the loan amount earlier that the scheduled tenure. The charge for this is currently 2% of the prepaid amount. Normal tax benefits apply.

The HDFC insist that property is insured against fire and other hazards during the loan term, with bank as beneficiary HDFC also assists its customers on property dealings.

Person of the Indian origin (PIO) holding foreign passports are also eligible to avail the housing loan. If a customers status as an applicant changes during the loan tenure from non resident Indian to resident Indian, the bank works out the revised payment schedule as per the customers new finance status. The new rate of interest would be the rate for resident Indians, which means the outstanding balance would be charged with revised rate.

HDFC also offers loan for refurbishing you home, which would add value to our residence. You get loans for external repair, roofing and water proofing, painting,

plumbing and electrical works, tiling, flooring paving of compound wall and even for construction of a bore well.

HDFC bank also provides loans for self employed to build or renovate office/ residential premises. Doctors, CAs and lawyers are eligible. The fee charges are 1% of loan amount. HDFC lends 85% of the cost of the property subject to a ceiling of RS 1 CRORE. Maximum repayment period is RS 15 year. For HDFC home loan equity loans, the maximum amount is RS 1 lakh. The market value of the dwelling unit should be a minimum RS 10 lakh. Maximum period of loan is 15 years

PRESENT STATUS
Presently the company is doing excellent job in all the fields. They continue their good job in increasing the customer base to become a strong brand. Their customer satisfaction is their strong point in their overall progress. HDFC is a unique example of a housing finance company which has demonstrated the viability of market- oriented housing finance today. It is viewed as an innovative institution and a market leader in the housing finance sector in India. The World Bank considers HDFC a model private sector housing company in developing countries and a provider of technical assistance for new and existing institutions, in India and abroad. HDFCs executives have undertaken consultancy assignments related to housing finance and urban development on behalf of multilateral agencies all over the world.

HDFC, having pioneered and helped develop market- oriented housing finance in India has continued to expand its services to a broader spectrum of client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client base for future growth. Internal systems have been developed to be robust and agile, to take into account changes in the volatile external environment.

HDFC has recorded a profit after tax of 1257.7 crore this year as compared to Rs. 1,036.59 crores for the next year, an increase of 21%. This is after providing Rs.300 crores for tax (previous year Rs.220.20 crores). The loan portfolio (including loans outstanding, deposits and investments in preferences shares and debentures for financial real estate related projects) as at March 31, 2006 amounted to Rs.46, 492 crores as against Rs. 37,216 crores in the previous year- an increase of 25%. Loan approvals during the year were Rs.25,634 crores as compared to Rs. 19,715 crores in the previous year, representing a growth of 30%. Loan disbursements during the year were Rs.20, 679 crores as against Rs.16, 207 crores in the previous year, representing a growth of 28%.

If we talk `of Hardwar branch of HDFC the situation is similar to the above one. HDFC in Hardwar is doing excellent job in the market as compare to others. The major competitors in the city are ICICI, SBI and LIC housing finance. Majority gives the proof that HDFC is facing the stiff competition with SBI because both the companies have tied up with BHEL in which they are providing loans to the employees. Both the institutions are giving them the loan at cheaper rate than each other. Most of the customers of the HDFC are of BHEL. On the other hand ICICI and LIC are also doing very well. So as a whole we can say that stiff competition was going in the city and home loan market is increasing day by day. During the period of 28 years from 1977-2006 HDFC has given over Rs.104,55 crore cumulative loan approvals and over Rs. 86,250 crore cumulative disbursements.

Deposit Base : - over 7,500 crore

Asset Base: -

over 47,750 crore

SOURCES OF LOAN: Walk in customers Outreach Programmes Direct Selling Agents Service Associates in the middle east Arrangement with HDFC Bank Internet Captive Distribution company.

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BRIEF FINANCIAL RESULTS ( IN CRORES )

PARTICULARS Income from Operation Other Income Total Expenditure Interest Charges Other Expenses GP PBT PAT EPS Loan: Individual Corporate Bodies Others Loan Approvals Loan Disbursement Loan Outstanding DPS Book Value

(Y)2007-08 3097 8.99 1878 1873 61.82 897 1026 851.7 34 19158 8489 326 15216 12667 27974 13.5 138

(Y)2008-09 34000 9.48 2134 1959 110.28 1275 1256 1036.59 42 24259 11168 590 19715 16207 36011 17 156

(Y)2009-10 4265.54 12.85 2702 2491 130.96 1575 1557 1257.6 50 30261 13975 752 25634 20679 44990 20 179

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SERVICES PROVIDED BY HDFC.

Home loan counseling

Sharing of over 28 years of home loan experience HDFC has been a part of a 28 year journey with their 26 lakh customer. Home loan counselors offer the customer the time testing advice .project approved facility provides the customer the comfort of purchasing properties from builders who complied with all basic documentation.

1. Door step services: HDFC offer door step services.

2. Wider product range: They provide loan to met all the requirements for you to make that house a home loan are given on adjust rate, fixed rate with money rate without money market condition and fixed rate without money market conditions. 3. Two-in One Home Loan: Two-in One Home Loan provides customer with a choice of breaking up the loan required into adjustable and fixed rate loans. Customer will find benefits in both the ways as it helps them to hedge their interest rate, risk against rising interest rate to extend to the fixed portion of the loan and take the advantage of falling interest rate, with adjust rate portion.

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VALUE

ADDITIONS

TO

HDFC

HOME

LOAN

CUSTOMERS
LOAN COVER TERM ASSURANCE:
HDFC standard life insurance company limited offers an insurance plan to ensure that lives uncertainties do not affect the home that you are providing to your family with your housing investment. LCTAP provides a lump sum on fortunate device of the life assured. This pure risk plan is designed in a cover that decrease as you repays, your home loan making it a low cost in insurance plan.

AUTOMATIC REPAYMENT OF HOME LOAN EMIs:

You can give us standing instruction to repay your home loans EMI directly from your HDFC banking saving account. Thus saving you from the trouble of procuring signing and tracking post dated cheque.

FEATURES & BENEFITS OF HDFC

Home Loan:
Home loans for individuals to purchase (fresh / resale) or construct houses. Application can be made individually or jointly. HDFC finances up to 85% maximum

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of the cost of the property (Agreement value + Stamp duty + Registration charges) based on the repayment capacity of the customer

Home Improvement Loan :

HIL facilitates internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminium windows. HDFC finances up to 85% of the cost of renovation (100% for existing customers) subject to market value of the property..

Home Extension Loan:

HEL facilitates the extension of an existing dwelling unit. All the terms are the same as applicable to Home Loan.

Land Purchase Loan:

Be it land for a dream house, or just an investment for the future, HDFC Land Purchase Loan is a convenient loan facility to purchase land. HDFC finances up to 85% of the cost of the land (Conditions Apply). Repayment of the loan can be done over a maximum period of 15 years.

Choose from Fixed Rate or Floating Rate with options to structure

customers loan as Partly Fixed or Partly Floating

Flexible repayment options to suit your individual needs

Loan cover Term Assurance Plan - HDFC Standard Life Insurance Company
Ltd. offers an insurance plan*, which is designed to ensure that life's uncertainties do not affect your family's interests and your precious home. LCTAP provides a lump-

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sum payment on the unfortunate demise of the life assured.

This pure risk plan is designed in a way that the cover decreases as you repay your home loan making it a low cost premium insurance plan.

Automated Repayment of Home loan EMI :

Customers can give HDFC LTD standing instructions to repay their Home Loan EMIs directly from your HDFC Bank Savings Account, thus, saving you the trouble of procuring, signing and tracking post-dated cheques

HDFC GOALS:HDFCs main goals are as follows:

Develop close relationships with individual households. Maintain its position as the premier housing finance institution in the country. Transform ideas into viable and creative solutions. Provide consistently high returns to shareholders. To grow through diversification by leveraging off the existing client base.

HDFC: The Business model

Banking of visionaries. Adopted the philosophy of learning by doing Strong corporate values and culture mainly emphasis on transparency, integrity, training, technology and commitment. High service standards. Low administrative costs. Empower line managers

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AIM OF HDFC
Helping Indians experience the joy of home ownership.

The road to success is a tough and challenging journey in the dark where only obstacles light the path. However, success on a terrain like this is not without a solution.

As we found out nearly three decades ago, in 1977, the solution for success is customer satisfaction. All you need is the courage to innovate, the skill to understand your customers and the desire to give them your best.

Today, nearly three million satisfied customers whose dream we helped realize, stand testimony to our success.

Our objective, from the beginning, has been to enhance residential housing stock and promote home ownership.

Now, our offering range from hassle-free home loan and deposit products, to property related services and a training facility.

We also offer specialized financial services to our customer base through partnerships with some of the best financial institutions worldwide.

HDFC KEYS STRENGTHS

FINANCIAL EXPERTISE As a joint venture of leading financial services groups, HDFC standard life has the financial expertise required to manage your long-term investments safely and efficiently.

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RANGE OF SOLUTIONS We have a range of individual and group solution, which can be easily customized to specific needs. Our group solution have been designed to offer you complete flexibility combined with a low charging structure.

TRACK RECORD SO FAR

Our group premium income, for the year ending March 31, 2008 stood at RS 4,859 crores and new business premium income stood at RS 2,685 crore.

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OBJECTIVES OF THE STUDY

This research is done on the basis of following objectives1. To study the different services provided by the HDFC LTD.

Home loan. Insurance policy Fixed deposits

2. To study the perception of existing customers of HDFC Ltd about its housing finance scheme. 3. To know the awareness of different products of HDFC family besides the home loan products among its customers. To determine reason behind opting for an insurance. To determine the feedback on services provided by insurance agents. To study the benefits provided by the HDFC to their insurance s customers. To know the reason behind for opting the fixed deposits by the HDFC customers. 4. To study the grounds that makes HDFC the leading home loan provider in India.

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RESEARCH METHODOLOGY

This report contains an exploratory and descriptive study. Sample size: Home loan-60 Insurance-50 Fixed deposits- 50 Total population of HDFC customers Data collection tools: Primary Data: Questionnaire was used for primary data collection. Primary data was collected through structured close ended questionnaire as well as open ended questionnaire. Questionnaire was well tested before it was put into final implementation. Data was collected from the customer of the HDFC LTD. Close ended questionnaire: In close ended questionnaire method the employee cant express his view or idea , he has to give answer to this questions by replying in yes or no or by tick mark option. 450

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Open ended questionnaire: In open-ended questionnaire the trainee is free to express his view and ideas regarding a particular topic.

Secondary data: The collection of data from journals, books,

quarterly publications & website of the organization is called secondary data. In this study Books, booklets/magazine about HDFC services and websites has been used for collection of data.

STATISTICAL TOOLS the analysis was done with the help of following tools: 1. Bar charts 2. Pie charts

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THE STUDY

Taking into consideration the time & cost element the sample of the study restricted to 60. Sample size may not be sufficient to depict the clear picture of the population. The answers given by the respondents may be biased. Ignorance of the respondents about the home loans, insurance and fixed deposits & offers of other banks & financial institutions was a big hindrance in getting the genuine answer. Unwillingness of the people to respond to the questions asked due to short span of time available with them.

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HOME LOANS
Home loan offered by HDFC encompasses a wide range of loan options which are subject to various parameters like term loan, financial status of the of the individual seeking loan and the purpose of the loan. Owing to these diversifications, HDFC Home Loans have grown in popularity over the years.

The primary subdivision of HDFC home loan is loan for

resident Indians non resident Indians

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Loan for resident Indians:

With an HDFC home loan, one can buy a self-contained flat in an contained flat in an existing or proposed co-operative society, in an apartment owners association or even an independent single-family bungalow anywhere in India.

HDFC home loan are easy to arrange and can be customized according to the individuals needs and repayment capabilities.

This category can be further into subdivided into:

Home loan Home improvement loan Home extension loans Short term bridging loans Land purchase loans Professional loan or loan for non-residential premises Home equity loan.

LOANS FOR NON RESIDENT INDIANS

Like resident Indians, HDFC home loans feature similar categories of loans for non resident Indians as well. They include:

Home loan Home improvement loan Home extension loan Land purchase loan

Loan for Existing Customers

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Home Improvement Loans

Home Extension Loans

Home Conversion Loans

Top - Up Loans

Home Loan
A new home brings with it new hopes, joys and emotions. At HDFC, we have shared new hopes, joys and emotions with over 3.2 million customers. Every customer has a specific and unique concern. Having earned an experience of 30 years in home loans, our home loan product is customized to provide you solutions for your unique concern.

Features
Maximum loan: 85% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer.

Maximum Term 20 years subject to your retirement age.

Applicant and Co- Applicant to the loan: Home Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co owners.

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Adjustable Rate Home Loan: Loan under Adjustable Rate is linked to HDFC Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the home loan disbursed will not change*. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases.

Purpose

Purchase of Flat, row house, bungalow from developers Existing freehold properties Properties in an existing or proposed co-operative housing society or apartment owner's association First Power of Attorney purchases in Delhi for DDA flats allotted before 1992

Home Improvement Loan

Feature

Purpose
External repairs Tiling and flooring Internal and external painting Plumbing and electrical work Waterproofing and roofing Grills and aluminum windows Waterproofing on terrace Construction of underground/overhead water tank Paving of compound wall (with stone/tile/etc.) Bore well Maximum loan

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85% of the cost of improvement Maximum Term 15 years subject to your retirement age Applicant and Co- Applicant to the loan Home Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co- owners. Adjustable Rate Home Loan Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the home loan disbursed will not change. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases

Home Extension Loan Feature Purpose

HDFC Home Extension Loan makes it convenient for you to extend or add space to your home. Be it an additional room, a larger bathroom, or even enclosing an open balcony. Maximum loan 85% of the cost of extension Maximum Term 20 years subject to your retirement age Applicant and Co- Applicant to the loan Home Loans can be applied for either individually or jointly. Proposed owners

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of the property will have to be co-applicants. However, the co-applicants need not be co- owners.

Short Term Bridging Loan

Short-Term Bridging loan makes you realize your dream of buying a bigger and better home and gives you time to sell your existing property to pay off the loan. This is a short term loan to help customers with the interim period between the sale of your old home and the purchase of a new home. You can take the loan even if you are an existing customer of HDFC

Features
Maximum loan 90% of cost of new property Maximum Term 2 years Applicant and Co - Applicant to the loan Home Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co-owners.

Land Purchase Loan

Features
Maximum loan 85% of cost of the land and based on the repayment capacity of the customer. Maximum Term 15 years subject to your retirement age. Applicant and Co- Applicant to the loan Home Loans can be applied for either individually or jointly. Proposed owners

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of the property will have to be co-applicants. However, the co-applicants need not be co-owners.

Adjustable Rate Home Loan

Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the home loan disbursed will not change. If the interest rate increases, the interest component in an EMI will increase and the principal component will, reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases

Loans to Professionals for Non Residential Premises Loan Feature Purpose

Purchase, Construction, Improvement of Office, Clinic

Eligible Doctors Chartered Accountants Lawyers Other self-employed professional Maximum loan 85% of cost of the property Maximum Term 10 years Improvement 5 years Non residential premises maximum term is 15 years, NRP improvement remains 5 years.

Applicant and Co - Applicant to the loan

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Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co-owners.

Home Equity Loans

HDFC Home Equity Loans helps you encash the present market value of the property by taking a loan by mortgaging the property.

Features

Purpose
Loan can be for any purpose. However, the funds should not be used for speculation or any illegal purposes. Customers have benefited by taking loans to meet the following funding requirements

Education Marriage Expenses Medical Expenses Property Residential Non Residential - Should be Fully Constructed - Should be a Freehold property having a clear and marketable title.

Adjustable Rate Home Loan

Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from

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the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the home equity loan disbursed will not change*. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases

Maximum Loan Existing Customers - Balance of 60% of the market value and present loan outstanding -Minimum Market Value of the property being Rs.5,00,000 for Residential property and Rs.7.50 Lacs for Non Residential Property - Repayment Capacity of the customer

Loan for existing customer Home Improvement Loans

This loan facilitates internal and external repairs and other structural improvements like Painting, Waterproofing and Roofing, Plumbing and Electrical Works, Tiling and Flooring, Grills and Aluminum Windows compound walls and almost all improvements. etc. One can borrow a maximum of Rs. 100 lacs or 100% of the cost of renovation, whichever is lower against a new customer who can borrow only Up to 85 % or Rs 100 lacs whichever is lower.

Home Extension Loans

HDFC provides Home Extension Loans specifically to facilitate the extension of an existing dwelling unit. The maximum amount of such a loan is Rs. 100 lacs or

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100% of the cost of extension, whichever is lower. This loan can be taken for a maximum of 20 years and is to be repaid in equated monthly installments.

Home Conversion Loans

Existing HDFC borrowers can avail of a Home Conversion Loan to acquire another dwelling unit, through sale of the existing dwelling unit. The existing loan can be transferred to the new property with an increase in loan amount based on the current eligibility. This saves the customer from the hassle of prepaying the first loan and availing of new loan thus saving them prepayment charges and processing charges to the extent of loan conversion.

Top - Up Loans this product offers an existing resident Indian customer a loan against the mortgage of the existing property. It helps in encashing the investment in a house without having to dispose it off to fund various needs related to Higher Education, Purchase of Furniture, Business Requirements, etc. The maximum loan amount under this product is 60 % of the market value of the property less the outstanding loan and is subject to the current loan eligibility.

The maximum term of the loan is 10 years. Top up loans can given after 1 to 2 years [based on our discretion], of the final disbursement of the existing loan or upon possession/completion of the existing financed property. Eg: Existing outstanding Loan Current market value of property Maximum loan eligibility Rs 3 lacs. Rs 10 lacs 60% of market value i.e. Rs 6 lacs Rs 6 lacs less Rs 3 lacs = Rs 3 lacs

Actual Loan Eligibility

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KYC (know your customer)

KYC is an acronym for know your customer, a term commonly used for customer identification process. SEBI has prescribed certain requirement related to KYC norms for financial institution and financial intermediaries including mutual fund to know their customer. This could be in a form of verification of identity, address and financial status, occupation and such other personal information.

It includes--Passport Pan Card Driving license Voter I.D Card Ration Card Bank A/C Statement Telephone Bill Electricity Bill

LIST OF BASIC DOCUMENTS REQUIRED

IN CONSTRUCTION /EXTENSION/ IMPROVEMENT CASES

copy of sales deed/title deed / free hold deed Searching certificate from sub-registrar for past 12 years. Xerox copy of approved map with permit to build highlighting the area to be constructed.

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Detailed estimate of construction from any approved architect/civil engineer for only the area highlighted on the map. Mortgage permission from appropriate authority if land is on lease.

IN CASE OF PURCHASE FROM DEVELOPMENT AUTHORITY / UP HOUSING BOARD

copy of allotment letter Receipts of payment already made. NOC for mortgaging the house /plot in favor of HDFC if the property is on allotment or lease. possession letter / certificate/ inventory/ hire purchase agreement(in case property is on hire purchase) final costing letter(if property has been converted to cash down basis )

IN CASE OF PURCHASE ON RESALE FROM INDIVIDUALS

Copy Of Allotment Letter sales agreement ,if already executed receipts of payments already made to builder NOC from builder as HDFC draft tripartite agreement with the builder as per HDFC draft if applicable

IN CASE OF PURCHASE ON RESALE FROM INDIVIDUALS

Copy of sale agreement, if already executed. Copies of earlier title deed/ sale/ lease deed. Certificate of search of past 12 year from sub-registrars office. detail of interim security which can be provided by the customer tell property is mortgaged to HDFC in the form of shares, NSC,FIXED deposits, INDIRA/

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KISAN VIKAS PATRAS or any property documents. These securities can also be in the name of your spouse/ family members.

FINANCIAL DOCUMENTS
Latest salary certificate giving detail of allowances and deduction. Bank statement for last six month.

LEGAL DOCUMENTS
(Original and photo copies are required while applying before disbursement)

Sale deed/ leased deed in the name of the seller. Original receipt of payment made to the government authority. 12 year non encumbrance certificate from the sub registrar office in the name of the seller Earlier sale deed if any.

DOCUMENTS REQUIRED IN CASE OF EMPLOYED.

Verification of employment Latest original salary slip/ salary certificate showing all deductions. if the job is transferable, permanent address where correspondence relating to the application can be mailed Updated original bank passbook / or original bank statements showing salary and saving entries for the last 6 months. a photocopy of form 16(issued by employers) for the last assessment year

DOCUMENTS REQUIRED IN CASE OF SELF-EMPLOYED

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Balance sheet and profit and loss accounts of the business/ profession along with copies of individual income tax return for the last 3 year certified by chartered accountant. A note giving information on the nature of your business/ profession, form of organization, client, suppliers, etc. Copies of individual tax challans for the last 3 years. copy of advance tax challan(if any) Updated original bank pass book or original bank statement showing savings entries for the last 12 months.

DOCUMENTS REQUIRED IN CASE OF NRI IN CASE OF PROFESSIONALS

Last 6 month salary slip employment contract/ employment letter overseas bank account statement for last 1 year(minimum 6 months) w2 form+ income tax return(last 2 years) visa stamp + passport copy of his professional degree credit report (financial history, personal details , credit source) NRE/NRO account for last 1 year power of attorney + address proof HR E-Mail ID

INCASE OF MERCHANT NAVY

CDC(continuous discharge certificate) salary slip + employment contract passport with visa stamped NRE/NRO account for last 1 year copy of degree /professional diploma certificate HR E-MAIL ID

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Boarding details ship/vessel duration of sale

DOCUMENTS REQUIRED IN CASE OF CORPORATE FIRM/ COMPANY

Profile of the company List of board of directors Copy of registration certificate Attested copies of last three year audited balance sheet and profit and loss account Bank statement for the last one year Cash flow for the next three year Details of loan availed during the last three years by the company with detail of security offered against the loan Copy of memorandum of article and association Sale deed Earlier sale deed Mutation order Income tax clearance Allotment letter and possession letter by the development authority Lay out map Approved building plan from competent authority along with the sectional plan Detailed to built from the competent authority Detailed project report

Certain statuary requirement are to be complied with as per the complied with as per the companies act, office of registrar of companies and the income tax act depending upon the nature of the company. For loan processing, photocopies of all the above documents are required. And after sanction all the documents would be required in original.

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REPAYMENT TYPES
The following type of repayment is available for the customer depending upon their level of comfort and above all their eligibility.

straight term flexible loan installment plan.(flip) balloon payment(BP) step up repayment

STRAIGHT TERM REPAYMENT

This payment facility is for young employees or self employed individuals. In this repayment facility the EMI is made constant. Only the term varies according to the variable rate of interest. The maximum term is given on the customers requirements. Maximum term is either 20 year or the retirement age whichever is earlier.

INSTALLMENT PLAN FLEXIBLE LOAN

This repayment facility is for senior government employees whose jobs are with pension. Also there are less than 10 years of service left. On the basis of this feature additional loan can be worked out on pension income. The loan actually is broken down in two parts on the basis of present income and the other part is pension income.

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BALLOON PAYMENT
This type is payment is only for senior government employees whose has less than 10 years of service left. It is for those people who want to pay in bulk amount from their retirement benefits. To the extent addition loan can be given based on the present value of this money. No EMI is worked out in this additional loan.

STEP UP REPAYMENT FACILITY

This facility is for young professional who are willing to make payment of enhanced EMI as their income rises periodically. In the initial year only the interest is repaid as simple interest. This scheme is good for income tax planning. With the help of this scheme around 15% higher loan can be worked out.

EMI (EQUATED MONTHLY INSTALLMENT)

Customer plays the loan in equated monthly installments (EMI) comprising principal and interest. Repayment by way of EMI commences from month in which you take full disbursement.

PRE-EMI INTEREST
Pending final disbursement, the customer pays interest on the portion of the loan disbursed. This interest is called pre- EMI interest. PRE-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI.

TRANCHE BASED EMI

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To help customer to save PRE-EMI interest, HDFC has introduced a special facility of tranche based EMI. For under construction properties customers can choose the installments they wish to pay, till the time the property is ready for possession. Anything paid over and above the interest by the customer goes towards principal repayment.

HOME LOAN GLOSSARY

Acceptance Letter:
It is the letter that a borrower eagerly waits to fill up. Once the loan is issued by the way of sanction letter, the applicant communicates his willingness to accept the loan by way of an acceptance letter. He has to send this within a time frame of 1-3 months from the date of the sanction letter.

Advance EMI:
Pay back time! Number of equated installments in the form of post dated cheques, paid out in advance at the time of disbursement of loan.

Administrative Fee:
It is the unavoidable pay out by which bank/HDFC can make money of you. A one time fee; generally non-refundable; payable before the loan is disbursed. Rates may vary from 1-2% of the loan amount.

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Commitment Fee:
Much like other commitments, this if one screws up one gets the short end of the straw. It is an interest, which is charged if you do not draw the sanctioned loan amount within a period of 6-7 months.

Credit Appraisal:
The IMPORTANT PEOPLE! Every Housing Finance Company (HDFC) has its own panel of credit appraisal officers who process applications. They take into account various factors like income of the applicants, number of dependents, monthly expenditure, repayment capacity, employment history, number of years service left over & other factors, which affect the credit rating of the borrower. Proof of income will also be verified for the purpose of approval of loan. The time taken for receipt of such information is crucial since it affects the length of the time required for a loan approval.

Down Payment:
Wonder why it is called down payment when it has to be paid up-front? HDFC LTD normally gives loan up to 80-85% of the value of the property. The balance would have to be paid by the buyer, as a payment before he draws on the loan amount.

Encumbrance:
It is the document to avoid the nightmare of the property litigation. It records details of transfer of ownership of a property in succession right to the current owner. It shows the date, the names of the parties involving the amount of consideration, the extent & schedule of the property. This certificate can be obtained from the subregistrars office for the payment of fee. This certificate is also useful in establishing the events as to how & when the present owner came into possession of the property.

Floating Rate:
Here the interest rate on the loan depending on the Prime Lending Rate (PLR) is fixed by the Reserve Bank. This change can happen as frequently as one in six

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months. If the PLR falls, you benefit & if it rises the vice-versa takes place. However, in case of a fall your payments remain the same for every month. The finance company will refund some of your EMI cheques & effectively compensate you by reducing the tenure of the loan. The reverse happens if the PLR raises much to your disadvantage. Whoever said that this is a floating must be joking. Its best called the sink or ride the crest rate, wouldnt you agree?

Flat rate:
It is the percentage representation of the amount of annual interest on the total loan amount.

Interest tax:
Housing Finance Companies have to pay a tax on the interest income they receive. One should check whether the interest rates quoted include interest tax or not. This tax is normally about 2% of the interest rates charged. Interest tax has been abolished from April 2000.

Legal Scrutiny Report:

The documents which are pertaining to your property needs to be scrutinized by the legal personnel of the HDFC to ensure that you are buying a property that is clear & marketable.

Margin Amount:
It is the difference between the total cost of the project & the loan amount sanctioned. This money has to be invested by the borrower prior to the release of the loan amount.

Prepayment Charges:
Most HDFCs charge some fee for pre-payment of loan before the tenure is over. Your earning capacity normally increases with your age & a pre-payment fee can be a big cost. The fee is normally in the range of 1-2% of the pre-paid amount.

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Refinance charge:
Some housing Finance Companies do not charge you for prepayments from your own savings. However, if you retire a loan using money borrowed from another Finance Company, you will have to pay a refinance charge of 1-2% of the loan outstanding.

Stamp Duty:
It is the duty/ fee payable on the different instruments/documents as per the prescribed rate. The adequacy of the stamp duty should be ensured to make a document valid & enforceable.

Statement of Account:
This is the statement indicating the outstanding loan amount, the amount paid by the borrower, the appropriations made towards the interest & principal etc. at the end of the financial year.

LOAN APPRAISAL OF THE INDIVIDUAL

METHODOLOGY OF LOAN APPRAISAL:

Credit appraisal of the individual. technical appraisal of the property legal appraisal

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CREDIT APPRAISAL OF THE INDIVIDUAL

The credit appraisal is done on two parameters

The credit profile of the individual The family background of the individual.

The credit appraisal of the individual decides that what loan amount can be given for the asked loan amount i.e. for much loan is the present customer eligible based on his or her credit profile and family background.

STEPS IN CREDIT APPRAISAL

Making of the customer file This step involves the collection of various documents into 1 complete file. the documentation involves the various documents i.e. customer information, legal technical etc. once the file is made and arranged in order, its time to study the file.

Study the files all the documents are matched and cross-checked and the estimation for the credit profile of the customer is made.

calculate IFA This step required a lot of cross checking. According to the IFA the loan eligibility is calculated.

interviewing the customer This activity helps in getting the idea of the customers finance details. When a customer asks that how much loan can be getting, then he is giving a rough idea by multiplying his monthly salary by multiplying his monthly salary by 30. This is a rough estimate given to him.

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Calculation of IIR, FOIR etc The last step is the calculation of how much loan can be given to the customer. Further all the ratios are calculated.

Calculation of EMI Further the EMI is calculated which is based on the tenure for which the customer is eligible. as mentioned earlier the EMI remains constant. Only the tenure changes in variable rate of interest.

INCOME APPRAISAL OF AN INDIVIDUAL EMPLOYED:

Appraised income is calculated by considering all the regular incomes. The documents should be in order. For employed people, all the regular income is considered like.

Basic allowance Daily allowance Housing rent allowance CA CCA

SELF EMPLOYED:
Categories self employed non professionals and Self employed professionals like doctors etc.

possible forms of business organization in bothProprietorship firm Partnership firm Private ltd company.

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LEGAL APPRAISAL
Legal appraisal makes sure that the title is clear.

SECURITY FOR THE LA

Main security Interim security

TITLE DOCUMENTS IN CASE OF:Sale By builder

Allotment letter OCR NOC (no objection certificate) as per HDFC draft Cash down Tripartite agreement on RS 100 duly signed by the purchaser and builder

Allotment by government body

allotment letter OCR Mortgage permission

Construction on freehold plot

sale deed title report map+ estimate map submission

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Construction on lease hold plot

lease document allotment letter possession certificate mortgage permission

Resale cases
KYC (Address, ID. , AGE PROOF, bank statement) sale deed sale agreement Copy of registry.

TECHNICAL APPRAISAL
It involves valuation of the house or plot. it should be kept in mind that the valuation amount should match the loan asked + own contribution by the customer. This is the technical appraisal. Maximum 85% of the cost of valuation can be the loan component. Rest 15 % has to be the own contribution.

The basic purpose of technical department is security. to verify the property location quantity of property stability of property infrastructure FSI(Floor surface index) FAR(Floor area ratio)

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CASE
MR. X wants to take loan for the purpose conduction of a house. The details are as follows:

Age: 30 Dependents: 1 Loan asked for: 10 lacs Time duration for repayment: 20 year Current rate of interest: 13.755 Plot area: 2000 sq feet Gross salary: RS 25000 per month Deductions: PF = RS 2500 GIS = RS 500 Agriculture income per annum= RS 100000 Rental income: RS 5500per month Deposits of: RS 75000

CALCULATIONS:
As the age of the customer is not much, he can easily repay the loan in 20 years. Further the net salary will be: 25000-(2500 +500) = RS 22000 per month

IFA = 25000 As the customers finance condition is good enough, we take IRR of 40 %

It comes out to be 8800 This becomes the monthly installment i.e. the EMI. Now we take the factor at 9% for 15 years. It comes to RS 900

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We now divided the possible EMI by the factor Thus 8800/ 900= 9.7

Thus the loan can be given of 1000000

TECHNICAL APPRAISAL
The plot area is 1380 sq feet Taking the average cost of RS 700/ sq feet. The cost comes out to be RS 966000 This is the valuation done by the valuers. Thus the loan amount and the cost match almost. Loan can now be sanctioned. But the document should have been checked for legal part. 85% loan can be given i.e. RS 850000 Rest 15% has to be the own contribution i.e. 150000 The 1st distribution is given of RS 255000 after the utilization of the own contribution. The 2nd disbursement is given of RS 425000 after the lying of the slab The 3rd disbursement is given of RS 170000 after the flooring and plastering have been done. Now onwards the EMI starts of RS 8.5 * 900 = RS 7650

RESULTS:
The customer gets a loan of RS 850000 His own contribution is RS 150000

And he pays the EMI of RS 7650

FREQUENTLY USED TOOLS IRR (INSTALLMENT TO INCOME RATIO)

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It is the ratio between the monthly installment to be given by the customer and his/her monthly income. This ratio basically tells that out of the ones monthly income, how much percentage does the monthly loan installment makes. This gives the idea of the customers financial strength. Normally the IIR range between 25% to 35% based on the customers credit profile. It can also extend up to maximum 50% if the case is really good. Lets take an example

EMI = RS 4500 gross income = RS 25000 IIR = (EMI / gross income) % = 4500 / 25000% = 18 % Thus in this case the IIR is 30%. it means that out of the customers income, he is eligible for giving installments which is 30% of his income.

PARAMETER THAT DECIDED IIR

AGE QUALIFICATION Employers Designation Assets Liability Saving history Property location Residential address Family background Dependents

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LCR (LOAN TO COST RATIO)

This ratio is the ratio between the loan amount and the cost of the property. This ratio given the idea that the loan amount forms what percentage of the property cost. Lets take an example Loan = RS 2000000 Total construction cost = RS 3000000 LCR = (loan / construction cost)% 2000000/ 3000000 66.66%

Thus the LCR here shows that the loan amount comprise 67% of the actual cost of the property. It also shows that 33% should come from the persons own contribution.

It should also be brought to the notice that maximum 85 % can be considered as LCR. It also means that maximum loan that can be granted can not exceed 85% of the cost of the property. That means that rest 15% should come from ones own contribution In existing customers case limit can be raised up to 100% if the loan is for the same property address.

FOIR (FIXED OBLIGATION INCOME RATIO)

FOIR stands for the ratio between the fixed obligations stand for the sum of HDFCS EMI and any other loan installments. for example, if a person has some vehicle loan running ,life insurance along with the housing loan of HDFC , then the fixed obligation would include the EMI of HDFC + EMI of vehicle loan+ the life insurance premium. Lets take an example.. Gross income =RS 2000 Car loan =2500 pm fore 2 year Festival advance =RS 500

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Loan amount =300000 EMI =982 * 3 2945 IRR = EMI / income = 2946*2000% = 15% FOIR =2946+2500/20000)% = 5446+20000% = 27.23%

FIXED

DEPOSIT

HDFC has instituted well-defined service standards for both depositors and deposit agents. HDFC has been able to mobilize deposits from over 10 lac depositors. Outstanding deposits grew from Rs. 1,458 crores in March 1994 to 11,278 crores in March 2008. Much of this success can be attributed to its strong brand image, superior services, security and above all, the significant contribution made by HDFC's deposit agents. HDFC has over 50,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel

INDIVIDUAL

Benefits of an HDFC Individual Deposit

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Tax Benefits:
TDS: No tax deduction at source on interest from deposits up to RS. 5,000/per branch in a Financial Year.

Attractive Returns:
HDFC deposits are Available throughout the year and offer Attractive, Assured returns to investors. Interest rates offered are higher than that offered by most of the commercial banks.

Quick Loan Facility:

Loan against deposit is available after 3 months from the date of deposit up to 75% of the deposit amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be 2% above the deposit rate. *This facility is not available for Easy way Savings and deposits from minors.

Nomination Facility:
Individual depositors, singly or jointly, can nominate under this facility. In case the deposit is placed in the name of a minor the nomination can be made only by a person lawfully entitled to act on behalf of the minor. Power of attorney holder or any person acting in representative capacity as holder of an office or otherwise cannot nominate. The nominee shall have the right to receive the amount due in respect of deposit on death of all the depositors and payment by HDFC to the nominee shall constitute full discharge to HDFC of its liability in respect of the deposit.

Demand Draft Facility:

Outstation depositors can send demand drafts after deducting demand draft charges. This facility is not available to investors under Easy way Savings. This facility is applicable for places where HDFC does not have an office.

High Service Standards:

Depositors are offered across the counter services for new deposits, renewals,

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repayments and loan against deposit facility. Further, all enquiries through email, post, telephone and in person are attended to immediately.

Electronic Clearing Service:

This facility is provided to depositors in select centers whereby the interest will be credited directly to the depositors' bank account. The depositor would receive a credit entry "ECS HDFC" in his passbook/bank statement. Intimation of interest credited would be sent on an annual basis. Your bank will not levy any charge for this facility as per present RBI guidelines. FIXED HDFC has instituted well-defined service standards for both depositors and deposit agents. HDFC has been able to mobilize deposits from over 10 lac depositors. Outstanding deposits grew from Rs. 1,458 crores in March 1994 to Rs 8,741 crores in March 2006. Much of this success can be attributed to its strong brand image, superior services, security and above all, the significant contribution made by HDFC's deposit agents. HDFC has over 50,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel VARIABLEHDFC has instituted well-defined service standards for both depositors and deposit agents. HDFC has been able to mobilize deposits from over 10 lac depositors. Outstanding deposits grew from Rs. 1,458 crores in March 1994 to Rs 8,741 crores in March 2006. Much of this success can be attributed to its strong brand image, superior services, Security and above all, the significant contribution made by HDFC's deposit agents. HDFC has over 50,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel.

Deposits: Trust
HDFC offers a wide range of deposit products, a secure investment option, with attractive returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational Institutions, Employees' Welfare Trusts and others as decided by the management.

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Trusts can choose from any of the following products depending on their need. Trust Deposits:

1) Fixed Rate Deposits

Following options are available under Fixed Rate Deposit monthly income plan non cumulative deposit annual income plane cumulative deposit

2) Variable Rate Deposits

Variable Rate Deposit is a new addition to the wide range of deposit products offered by HDFC to enable the depositors to take advantage of movements in interest rates.

Following options are available under variable rate deposit: monthly income plane non-cumulative deposit annual income plan cumulative deposit

Benefits of an HDFC Trust Deposit:

Highest Safety: 'FAAA' and 'MAAA' rating affirmed for the fourteenth consecutive year by CRISIL and ICRA respectively.

Attractive Returns: HDFC deposits are Available throughout the year and offer Attractive, Assured returns to investors.

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Tax benefits:

HDFC Trust Deposits is a specified investment under Section 11(5) (ix) of the Income Tax Act, 1961. No tax deduction at source from Interest on deposits upto Rs. 5,000/- per branch in a financial year.

Quick Loan Facility: Loan against deposit is available after 3 months from the date of deposit upto 75% of the deposit amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be 2% above the deposit rate.

High Service Standards: Depositors are offered across the counter services for new deposits, renewals, repayments and loan against deposit facility. Further, all enquiries through email, post, telephone and in person are attended to immediately.

Demand Draft Facility: Outstation depositors can send demand drafts after deducting demand draft charges. This facility is applicable for places where HDFC does not have an office.

Electronic Clearing Service: This facility is provided to depositors in select centers whereby the interest will be credited directly to the depositors' bank account. The depositor would receive a credit entry "ECS HDFC" in his passbook/bank statement. Intimation of interest credited would be sent on an annual basis. Your bank will not levy any charge for this facility as per present RBI guidelines.

HDFC has instituted well-defined service standards for both depositors and deposit agents. HDFC has been able to mobilise deposits from over 10 lac depositors. Outstanding deposits grew from Rs. 1,458 crores in March 1994 to Rs 8,741 crores in

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March 2006. Much of this success can be attributed to its strong brand image, superior services, security and above all, the significant contribution made by HDFC's deposit agents. HDFC has over 50,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel

Monthly Income Plan The HDFC Monthly Income Plan provides you with regular monthly interest income. It is best suited for retired people, housewives and senior citizens who look forward to a regular source of income.

Non-cumulative Deposits The HDFC Non-Cumulative Deposits is a regular income scheme where the interest will be paid to you quarterly or half-yearly, as opted by you, from the date of deposit. Annual Income Plan HDFC presents the high return and high safety Annual Income Plan for individuals. This option provides for the interest to be paid to you annually. What's more, apart from a host of across the counter services, HDFC also offers you instant deposit receipt for your amount. Cumulative Deposits HDFC offers the Cumulative Deposit scheme, a secure investment option that provides good value for your money. This scheme is suitable for parents investing on behalf of their children and the younger generation looking forward to save for the future. Senior Citizen's Deposits HDFC offers the Cumulative Deposit scheme, a secure investment option that provides good value for your money. This scheme is suitable for parents investing on behalf of their children and the younger generation looking forward to save for the future.

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Interest Rates fixed rate deposit are accepted for any period between 12 and 60 months. The current applicable interest rates are: Interest rates applicable for deposits below Rs. 1 crore from March 17, 2009

REGULAR - ANNUAL INCOME PLAN Period (Months) 24 - 35 36-60 Rate of Interest Maximum without TDS (Rs.)* 57000 56000 Deposit

payable (% p.a.) 8.70 8.80

Minimum Deposit Amount - Rs. 20,000

PREMIUM - ANNUAL INCOME PLAN Period (Months) 30 45 Rate of Interest Maximum without TDS (Rs.)* 55000 56000 Deposit

payable (% p.a.) 9.05 8.90

Minimum Deposit Amount - Rs. 10,000

REGULAR - CUMULATIVE DEPOSITS Period (Months) 12 24 36 48 60 Rate of Interest * payable p.a.) 8.70 8.70 8.80 8.80 8.80 (% for Maturity a Deposit Amount Maximum of Rs. without (Rs.)** 55000 49000 47000 43000 39000 Deposit TDS

10000/10870.00 11815.69 12879.13 14012.50 15245.60

Minimum Deposit Amount - Rs. 20,000 Interest Compounded annually

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PREMIUM - CUMULATIVE OPTION Rate of Interest * for Maturity a Amount of

Period (Months)

payable (% p.a.) 8.80 9.05 8.90

Deposit

Rs. 10000/11119.36 12430.01 13776.73

15 30 45

Minimum Deposit Amount - Rs. 20,000. Interest Compounded annually

REGULAR - MONTHLY INCOME PLAN Period (Months) 12-35 36-60 Rate (% p.a.) 8.35 8.45 of Interest Maximum without TDS (Rs.)* 59000 58000 Deposit

Minimum Deposit Amount - Rs. 40,000

PREMIUM DEPOSIT- MONTHLY INCOME PLAN Period (Months) 15 30 45 Rate of Interest Maximum without TDS (Rs.)** 59000 57000 58000 Deposit

payable (% p.a.)* 8.45 8.70 8.55

Minimum Deposit Amount - Rs. 40,000

NON-CUMULATIVE - QUARTERLY OPTION Period (Months) Rate (% p.a.)* of Interest Maximum without TDS (Rs.)* Deposit

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12-35 36-60

8.40 8.50

59000 58000

Minimum Deposit Amount - Rs. 20,000

PREMIUM NON-CUMULATIVE - QUARTERLY OPTION Period (Months) 15 30 45 Rate (% p.a.)* 8.50 8.75 8.60 of Interest Maximum without TDS (Rs.)* 58000 57000 58000 Deposit

Minimum Deposit Amount - Rs. 20,000

NON-CUMULATIVE - HALF YEARLY OPTION Period (Months) 12-35 36-60 Rate (% p.a.)* 8.50 8.60 of Interest Maximum without TDS (Rs.)* 58000 58000 Deposit

Minimum Deposit Amount - Rs. 20,000 PREMIUM NON-CUMULATIVE - HALF YEARLY OPTION Period (Months) 15 30 45 Rate (% p.a.)* 8.60 8.85 8.70 of Interest Maximum without TDS (Rs.)* 58000 56000 57000 Deposit

Minimum Deposit Amount - Rs. 20,000

VARIABLE RATE DEPOSIT

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The rate of interest on variable rate deposit is linked to the Benchmark Rate and will vary from time to time with the Benchmark Rate. Benchmark Rate is the rate of interest applicable on HDFC Fixed Rate deposit product for the corresponding period. Rate of Interest (ROI) will be reset at the beginning of each interest period. ROI prevailing on the first day of the interest period will be applicable for the entire interest period. For e.g. If a 3-year quarterly deposit is placed on 01/10/04, interest rate for the period from 01/10/04 to 31/12/04 will be the ROI prevalent on 01/10/04 for a 3-year Fixed Rate quarterly deposit product. Similarly, interest rate applicable for the next quarter from 01/01/05 to 31/03/05 will be the ROI prevalent on 01/01/05 for a 3-year Fixed Rate quarterly deposit product.

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HDFC STANDARD LIFE INSURANCE

At HDFC Standard Life, they offer a bouquet of insurance solutions to meet every need. HDFC cater to both, individuals as well as to companies looking to provide benefits to their employees. For individuals, HDFC LTD has a range of protection, investment, pension and savings plans that assist and nurture dreams apart from providing protection. Customer can choose from a range of products to suit their life-stage and needs.

For organizations HDFC ltd have a host of customized solutions that range from Group Term Insurance, Gratuity, Leave Encashment and Superannuation Products. These affordable plans apart from providing long term value to the employees help in enhancing goodwill of the company.

MAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIA LIFE INSURANCE CORPORATION OF INDIA
Life insurance Corporation of India (LIC) was established on 1 September 1956 to spread the message of life insurance in the country and mobilize peoples saving for nation-building activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal,

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operates through 100 divisional offices in important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the country. In 1995-96, LIC had a total income fro premium and investments of $5 billion while GIC recorded a net premium of $ 1.3 billion. during the last 15 years, LICs income grew at a healthy average of 10 percent as against the industrys 6.7 per cent growth in the rest of asia (3.4 per cent in Europe, 1.4 per cent in the US). LIC has even provided insurance cover to five million people living below the poverty line, with 50 per cent subsidy in the premium rates. LICs claims settlement ratio at 95 per cent and GICs at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth rate for life insurance business has been 19.22 per cent per annum..

GENERAL INSURANCE CORPORATION OF INDIA (GIC)

The general insurance industry in INDIA was nationalized and a government company known as general Insurance Corporation of India (GIC) was formed by the central government in November 1972. with effect from 1 January 1973 the erstwhile 107 Indian and foreign insurers which were operated in the country prior to nationalization, were grouped into four operating companies, namely, (i) national insurance company limited, (ii) new India assurance company limited, (iii) oriental insurance company limited and (iv) united India insurance company limited. all the above four subsidiaries of GIC operate all over the country competing with one other.

HDFC STANDARD LIFE INSURANCE COMPANY LTD. :

HDFC standard life insurance company LTD is one of the INDIAS leading private life insurance companies, which offers a range of individual and group insurance solutions. Its a joint venture between housing development financial institution and the standard life assurance company, a leading provider of financial services from the united kingdom. their cumulative premium income , including the first year premiums and renewal premium is RS 672.3 for the financial year,

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apr-nov 2005. they have managed to cover over 11,00,000 individuals out of which over 3,40,000 lives have been covered through our group business tie-ups.

MAX NEW YORK LIFE INSURANCE CO. LTD:

Max New York life insurance company limited is a joint venture that brings together two large forces- max India limited, a multi-business corporate, together with new York life international, a global expert in life insurance. With their various products and riders, their are more than 400 product combinations to choose from. They have a national presence with a network of 57 offices in 37 cities across INDIA.

ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD.:

ICICI prudential life insurance company is a joint venture between ICICI bank, a premier financial powerhouse and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI prudential was amongst the first private sector insurance companies to begin in December 2000after receiving approval from insurance regulatory development authority (IRDA).

OM KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD:

It is a joint venture between KOTAK MAHINDRA bank LTD (KMBL), and old mutual plc.

BIRLA SUN LIFE INSURANCE COMPANY LTD:

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This insurance is a joint venture between ADITYA BIRLA group and sun life financial services of Canada.

SOME ATTRACTIVE INSURANCE PLANS OFFER BY THE HDFC

UNIT LINKED ENDOWMENT SUVIDHA

A customer always wants to give their family the best. And there is no reason why they should not get the very best in the future too. With HDFC unit linked endowment suvidha, customer can ensure that their family remains financially independent, even if customer is not around. Customer can ensure that they live a lie o respect and dignity. HDFC unit linked endowment suvidha gives customer: An outstanding investment opportunity by providing a choice of thoroughly researched and selected investment. Valuable protection to customer family in case they are not around. Flexible premium payment options. Access to customer accumulated fund before maturity. No need to go for medicals. just signing a declaration of health statement will do!

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Thats suvidha for customer!! Customer can choose their premium and the investment fund or funds. HDFC will then invest their premium, net of premium allocation charges in customer chosen funds in the proportion they specify. At the end of the policy term, customer will receive the accumulation value to their funds. In case of customer unfortunate demise during the policy term, HDFC will pay the greater of customer sum assured (less any withdrawals customer have made in the two years before customer claim) and customer total fund value to customers family Use HDFC standard lifes excellent investment options to maximize customer saving & secure customer and customer familys future. We will provide financial security for customers family in customer absence

4 easy steps to customer own plan Step 1. Choose the premium customer wish to invest:
This is the premium customer will continue to pay each year of the policy. The minimum regular premium is Rs10, 000 /- per year. Customer can pay monthly, quarterly, half yearly or annually. Customer may also choose to pay adhoc single premium top-up or additional regular premiums depending on customers convenience

Step 2.choose the period for which customer want to remain invested.
This will be the term of customers policy. Customer can opt for any term between 10 and 30 years. Based on this chosen term customer policy will have a fixed sum assured of (term of customer policy/ 2) times customer chosen annualized premium. The sum assured amount, under any circumstances, can not exceed RS 5, 00,000.

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For example, customer want to pay RS 50000 annually and want the policy will have a sum assured of RS.500000 [calculated as (20/2)*50000].

Step 3.choose the investment fund or funds customer desire:

In this plan the investment portfolio is borne by customer, this mean that the premiums customer pay in this plan are subject to investment risks associated with the capital markets. The unit prices of the funds may go up or down, reflecting changes in the capital market. So, to balance customer level of risk and return, making the right investment choice is very important and customer are responsible for the choices customer make.

Step 4 sign the declaration of health statement:

Customer need to sign the declaration of health statement in the proposal form. Flexible option for customer and customer familys needs HDFC designed the plan to meet customer and customer familys needs. So they can use these facilities to improve the investment returns customer will receive.

UNIT LINKED ENDOWMENT PLUS II

With HDFC unit linked endowment plus II, customer can ensure that their family remains financially independent even if customer are not around. Customer can ensure that they live a life of respect and dignity.

HDFC unit linked endowment plus II gives: Valuable protection to your family in case customer is not around.

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An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments Regular loyalty units to boost your fund value every year Flexible benefit combinations and premium payment options. Flexible additional benefit option such as critical illness cover.

4 easy steps to customer own plan step1. Choose the premium customer wish to invest:
This is the premium customer will continue to pay each year of the policy. Customer can pay monthly, half yearly or annually. The minimum regular premium is RS 12000 per year for annual and half yearly policies. For monthly mode, the minimum regular premium is RS. 1500 per month.

Step 2. Choose the amount of protection (sum assured) customer desire:

In this plan customer can choose any amount of sum assures with. A minimum of (term of your policy /2) times customer chosen annual regular. A maximum of 40 times customer chosen annual regular premium.

Step 3.choose the additional plan benefits customer desire.

life option extra life option death benefit death benefit+ accidental death benefit

life & health option death benefit+ critical illness benefit Extra life & health option death benefit + critical illness benefit + accidental death benefit.

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Step 4. Choose the investment fund or funds customer desire:

In this plan the investment risk in your chosen investment portfolio is borne by customer. This means that the premiums customer pays in this plan are subject to investment risks associated with the capital markets. This unit price of the funds may go up or down, reflected changes in the capital markets. So, to balance customer level of risk and return, making the right investment choice is very important and customers are responsible for the choices

UNIT LINKED PENSION

Today every one is busy climbing the ladder of success and realizing your dreams. today, time are with customers. So HDFC ltd provides HDFC UNIT LINKED PENSION PLAN that is designed to provide a retirement income for life with the freedom to maximize your investment returns by providing a choice of thoroughly researched and selected investments Customer can choose your premium and the investment fund or Funds. We will then invest your premium, net of charges in your chosen funds in the proportion customer specify. At the end of the policy term, customer will receive the accumulated value of your funds, which will be used to provide your pension income. In the event of any unfortunate demise during the policy term, your spouse will receive a cash lump sum to help him or her manage their retirement years. The HDFC unit linker pension plan is an insurance policy, which benefits customer in the following ways. Provides a post retirement income. Gives customer the flexibility to plan your retirement date. Gives customer freedom to invest premiums as per your preference. Offer customer potentially higher market linked returns.

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Gives customer tax benefits on your premiums and on receiving the lump sum.

3 easy steps to your own plan Step1. Choose your retirement age:
Customer can select any age customer wish to retire between 50 years and 75 years.

Step2. Choose the premium customer wish to invest based on your retirement needs:
For a regular premium policy, customer will continue to pay a minimum annual premium of RS 10000 for each year of the policy. Customer can pay the premium quarterly, half-yearly or annually. The minimum premium amount for single premium is RS 25000. Customer can also have range of convenient auto premium payment options.

Step 3. Choose the investment fund or funds customer desire:

Choosing your investment options is important. We have 6 funds that gives customer: The potential for higher but more variable returns over the term of your policy. More stable returns with lower long-term potential. :

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Tax benefits
Income section SEC.80 tax Gross salary Across income slabs annual How much tax HDFC standard life plans can you save? all Up to RS 33,990 All the life insurance plans. saved on

investment of RS 1,00,000 Sec. 80 CCC Across income slabs all Up to RS 33,990 All the pension plans saved on

investment of RS 1,00,000 Sec 80 D* Across income slabs all Up to RS 3399 All the health insurance riders saved on available with the conventional

investment of RS plans. 10,000 Total savings Possible** RS 37,389 RS 33,990 under sec. 80c and under sec. 80 CCC, RS 3,399 under sec 80 d, calculated for a male with gross annual income exceeding RS 10,00,000 Sec.10(10)D UNDER SEC. 10(10D), the benefits you receive are completely tax free subject to the conditions laid down their in .

74

75

Analysis & interpretation FOR HOME LOAN CUSTOMER

1. Popularity of HDFC over the Year.

0-1 YEAR 33.3 MORE THAN 5 YEAR 63.3

1-5 YEAR 40

Figure-1 OPTIONS NO OF RESPONDENTS 0-1 1-5 MORE THAN 5 YEAR 2 48 50 (2%) (48%) (50%) %

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Interpretation:
50% of the respondent knew the HDFC LTD from more than 5 year. 48% of the respondents knew the HDFC LTD more than 1 year but less than 5 year. And 2% of the respondent knew HDFC LTD only from one year.

2. MEDIUM OF POPULARITY

50 40 30 20 10 0

45% 28% 17% 12%

Figure-2 OPTIONS NO OF RESPONDENTS Friends & relatives 28 28% %

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Advertisement Customers firm Others

17 45 12

17% 45% 12%

Interpretation:
45% of the respondents come to know about the HDFC LTD from their own firms 28% of the respondents come to know about the HDFC LTD from their friend and relatives Whereas 17% and 12% of the respondents know about the HDFC LTD from the advertisement and through other sources.

(3) Familiarity with Home Loan Products

all products 10%

3-5 products 22%

1 product only 33%

2-3 products 35%

Figure-3 OPTIONS NO OF RESPONDENTS ONLY 1 PRODUCT 33 33% (%)

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2 -3 PRODUCTS 3-5 PRODUCTS ALL PRODUCTS

35 22 10

35% 22% 10%

INTERPRETATION:
This percentage shows that most of the people are aware only about 2-3 products of HDFC Ltd.

4. Commonly Sold Product

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1% 4% 14%

l%

Home extention loan Improveme nt loan extention loan Land purchase loan home equity loan

51%

Figure-4 OPTIONS Home Loan Improvement Loan Extension Loan Short Term Bridging Loan Land Purchase Loan Loan To Professionals For Nonresidential Premises Loan Home Equity Loan 1 SHARES 51 14 4 0 1 0

Interpretation:
51% of the respondents are using the home loan product of HDFC LTD. Whereas 14 % and 4% of the respondents are using improvement and extension loan.

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5. How long you associated with HDFC LTD?

17%

13%

less than 1 year

27%

2-3 year
43%

4-6 year more than 6 year

figure-5

OPTIONS Less than 1 year 2-3 years 4-6 year More than 6 year

NO OF RESPONDENTS 13 43 26 16

(%) (13.3%) (43.3%) (26.7%) (16.7)

INTERPRETATION:
This percentage shows that most of the people (43.3%) are associated with HDFC LTD only about 2-3 year.

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6. Satisfaction Level of Customers

100 100 50 0 0 YES NO

Figure-6

OPTIONS (i) (ii)

NO .OF RESPONDENTS Yes No

SHARES 100% 0

Interpretation:
Out of the sample size of 60 respondents, the entire respondents (100%) are satisfied with the HDFC services.

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7. Motive behind Opting for HDFC

25 20 15 10 5 0 21
better than other financial institution guided/suggested by others unique offers or opportunity all the above

7 0 2

Figure-7

OPTIONS

RESPONSE (In Points)

Better than other financial institutions Guided/Suggested by others Unique offers or opportunities All the above

21% 7% 0% 2%

Interpretation:

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21% of the respondents opted HDFC LTD as it is better than other financial institution. 7% and 2 % opted HDFC LTD because of guided/suggested by the other and for all the reasons

8. FORMALITY DONE BY HDFC

100 80 60 40 20 0 yes no

Figure-8 OPTIONS NO. OF RESPONDENT RESPONSE

YES NO

100 0

(100%) (0% )

Interpretation:
100% respondents are satisfied with the formality which is done by the HDFC LTD.

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9. Comparison of the Same Product from Other Financial Institutions

(i)

83%
90% 80% 70% 60% Responses 50% 40% 30% 20% 10% 0%

Yes

No

20%

(a)

(b) Options Figure-9

OPTIONS YES NO

RESPONDENT 20 80

RESPONSE (In %) 20% 80%

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(ii)

In response to this question all those customers who have/had taken loan from other institutions also found HDFC better.

Interpretation:
80% of the respondents do not have any loan liability from other institute. Whereas 20% the respondent have taken loan from other institutions.

10. Type of Interest Rate Preferred

90 80 70 60 50 40 30 20 10 0

86.7

fixed floating

13.3

86

Figure-10 RESPONSES ANSWER RESPONSE (in %) Fixed Floating/Variable 13 87 (13.3%) (86.7)

Interpretation:
1.86.7 % of the respondent prefers floating rate for their monthly interest rate. While only 13% of the respondent prefer fixed rate for their monthly interest rate.

11. Attitude towards HDFC

90 80 70 60 50 40 30

20
10 0 positive nagative Figure-11

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RESPONSES

ANSWER

RESPONSE (In %)

Positive Negative

80 20

(80%) (20%)

Interpretation:
80% of the respondents having the positive attitude toward the HDFC. Whereas 20% of the respondents having the negative attitude toward the HDFC.

12. Suggestions Given by the Customers

CATEGORIES

ANSWERS

RESPONSES (In no.)

None Suggestions given

20 80

10% 20%

Following are the SUGGESTIONS given-

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 Interest rate should be controlled Processing time of the loan should be reduced Interest type adjusted of their own by HDFC should be done only with the prior intimation to the customer When interest rate is reduced by RBI then EMI amount should be reduced instead of the term of repayment Processing time of the loan should be reduced. Charges are excessively high for change in rate plan that should be controlled. Hidden charges are very high they must be checked At the time of repayment of loan ahead schedule less formalities should be done which are very time consuming Online document information should be given to the customers. If the customer has opted for Fixed Rate of Interest once, it should be forever & should need not to be revised every year.

Words of APPRECIATION by the Customers Makes the dream of having a dream house comes true. Very helpful & polite with the customers. Well awareness of customers needs Easily approachable because it is situated near the working place (B.H.E.L). Insurance cover plan offered on the loan is an admirable option.

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Fewer formalities required in comparison to banks & other home loan institutions

DATA ANALYSIS AND INTERPRETATION FOR INSURANCE CUSTOMERS

TOTAL RESPONDENT=100

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1. DATA GIVES BENEFITS OF INSURANCE PERCEIVED BY RESPONDENTS.

future investment 25% cover future uncertain 55%

tax deduction 20%

Figure-12 RESPONSE ( In % ) 55% 20% 25%

OPTIONS cover future uncertain tax deduction future investment

RESPONDENTS 55 20 25

Interpretation:
55% of the respondents believe that covering future uncertainty is the biggest benefits of an insurance policy. Whereas, 20% and 25% of them believe that the other benefits are tax deduction and future investments respectively.

2. Data providing features of insurance policy that attracted respondents?

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company reputation 11%

money back gurantee15%

low premium 30%

largte risk coverage37 %

easy access to agent 7%

Figure-13 Options Large risk coverage Low premium Money back guaranty Company reputation Easy access to agents respondents 37 30 15 11 7 Responses In (%) 37% 30% 15% 11% 7%

Interpretation:
Majority of the respondent (37%) found larger risk coverage as the most attractive feature of the all.

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3. Data gives people perception about insurance.

20%

20%

60%

Figure-14 Options A saving tool A tax saving device A tool for protect your family respondents 60 20 20 respondents in(%) 60% 20% 20%

Interpretation:
60% of the respondents have perception of insurance being a saving tool.
And 20% of the respondents have perception of insurance being a

tax saving device as well as a tool for protecting the family.

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4. Data shows buying process of the people.

45%

55%

Figure-15 Options Company approaches customer Customer approaches insurance company respondents 55 45 No. Of Respondent In (%) 55% 45%

Interpretation:
55% of the respondents approached the insurance company/ agents. Whereas, 45% of the respondents were approached by the company/agent.

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5 .Data shows satisfaction of respondents with respect to policy?

0% 0% 0%
NOT SATISFIED
20%

0%

0%

SATISFIED
80%

Figure-16 Options respondents No. of responses in (%) 80% 20%

satisfied Not satisfied

80 20

Interpretation:
80% of the respondents are satisfied with their existing insurance policy. But 20% of the respondents are not satisfied with their existing policy.

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6. Data shows satisfaction of +respondents with respect to service agents.

0%
NOT SATISFIED 10%

SATISFIED 90%

Figure-17 options satisfied Not satisfied respondents 10 90 No. of responses in (%) 10% 90%

Interpretation:
90% of the respondents are satisfied with their existing service agents. But 10% of the respondents are not satisfied with their existing deposits agents

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7. Data shows respondents investment for tax saving

00 00 0
EPF 3%

PF 6% PPF 7%
bonds 9.5%

LIC 15%

NSC 9.5%

Figure-18 options RESPONDENTS No. of responses in (%) 30% 19% 19% 14% 12% 6%

L IC NSC Bonds PPF PF EPF

30 19 19 14 12 6

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Interpretation
39% of the respondents save their tax by investing in LIC, which is the highest among all investment. This shows that most people for getting taxes benefits invest in LIC. 19% of the respondents do their tax saving by investing in NSC and BONDS. 14%and 12% of the respondents save their tax by investing in PPF and PF. 7. Data shows respondents perception about best form of investment for securing their future.

insurance

30%

fixed deposit 33%

shares 4%

bank deposits 5%

securties1 7% Figure-19 options

jewellary 11%

RESPONDENTS

No. of responses in (%) 33% 5%

Fixed assets Bank deposits

33 5

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Jewellery Securities i.e. bonds, MFs Shares insurance

11 17 4 30

11% 17% 4% 30%

Interpretation:
33% of the respondents as with the view that fixed assets is the best form of investment for securing their future. 30% of the respondents as with the view that fixed assets is the best form of investment for securing their future, which is one of the highest and this shows that insurance is an important key for securing your future. 8. Data gives peoples perception on appropriate age for buying insurance.

after 25 year 29%

anytime 61%

after 35 year 10%

Figure-20

99

options After 25 year After 35 year After 45 year Anytime

RESPONDENTS 29 10 0 60

No. of responses in (%) 29% 10% 0% 60%

Interpretation:
29% of the respondents are with the view that insurance should be bought after the age of 25 year. 10.5% of the respondents are with the view that insurance should be buying after the age of 35 year. Whereas, 60% of the respondents are with the view that buying of insurance does not have any thing to do with age i.e., there is no age limitations. It can be purchase any time according to the need. 9. Data shows what people would look for in an insurance company.

accessibility 17%

friendly service 25%

good plans 29%

a trust name 29%

Figure-21

100

options

answers

A trust name Friendly service and responsiveness Good plans Accessibility

29 25 29 17

No. of responses in (%) 29% 25% 29% 17%

Interpretation:
29% of the respondents looking for a trust name and good plan in a company for insurance. 25% of the respondents looking for a friendly service and responsiveness in a company for insurance. Accessibility is also a important factor looked by customer in a company.

DATA ANALYSIS AND INTERPRETATION FOR FIXED DEPOSITS CUSTOMERS TOTAL RESPONDENTS=50 1. Data shows the respondents who are having Fixed Deposits?

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No 20%

Yes 80%

Figure-22 options Yes No RESPONDENTS 80 20 No. of responses in (%) (80%) (20%)

Interpretation:
80% of the respondents are having the fixed deposits.
Whereas 20% of them do not having any fixed deposits.

2. Data shows commonly used product in Fixed Deposits.

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senior citizon 6% noncumulative 7%

monthly income plan 30%

cumulative deposits 25%

annual income plan 16%

Figure-23 options RESPONDENTS No. of responses in (%) 30% 5% 11 17 4 11% 17% 4%

Monthly income plan Annual income plan Cumulative deposit Non cumulative Senior citizenship 5

30

Interpretation:
30% of the respondents used monthly income plan for the fixed deposits. 17% of the respondents used non-cumulative plans for their fixed deposits. 11% of the respondents used cumulative plan. Whereas only 4% and 5% customer used annual income and senior citizen plan for their investment in fixed deposits

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3. Data shows reason behind the fixed deposits.

tax saving 31%

family protection 38%

saving/ investmen t 31%

Figure- 24 options Tax deduction Future investment Family protection RESPONDENTS 31 31 38 No. of responses in (%) 31% 31% 38%

Interpretation:
38% of the respondents choose fixed deposit for family protection. 31% of the respondents opted for fixed deposits just for tax deduction and for future investment both.

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4. Data shows satisfaction of respondents with respect to policy.

not satisfied 15%

satisfied 85%

Figure-25 Options satisfied Not satisfied RESPONDENTS 85 15 No. of responses in (%) 85% 15%

Interpretation:
85% of the respondents are more or less satisfied with their existing policy. 15% of the respondents are not satisfied with their existing policy.

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5. Data shows satisfaction of +respondents with respect to service agents.

not satisfied 10%

satisfied

90%

0%

Figure-26 options RESPONDENTS No. of responses in (%) 10% 90%

satisfied Not satisfied

10 90

Interpretation:
90% of the respondents are satisfied with their existing service agents. But 10% of the respondents are not satisfied with their existing deposits agents

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6. Data shows what people would look for in a fixed deposits company.

accessibility 17%

friendly service 25%

good plans 29%

a trust name 29%

Figure-27 options RESPONDENTS No. of responses in (%) 29% 25% 29% 17%

A trust name Friendly service and responsiveness Good plans Accessibility

29 25 29 17

Interpretation:

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 29% customer looks for a trust name and good plans in a company for fixed deposits. 25% customer looks for a friendly service and responsiveness in a company for fixed deposits. Accessibility are also important factor looked by the customer in a company

108

FINDINGS

109

HDFC Ltd. (Haridwar) has a tie-up with B.H.E.L (Haridwar) & BEL (Kotdwar) so most of its customers are the employees of these organizations & for this reason they have somewhat common attitude towards it. The source of awareness among them in most of the cases is Employer Firm & social groups. This implies that advertisement does not play any significant role in it. The most popular products of HDFC Ltd. are home loans & improvement loan just because of less awareness about the other products of HDFC LTD like home extension loan, short term bridging loan etc. Though most of the customers of HDFC have never approached to other financial institutions for their home loan needs because they consider HDFC LTD as a reliable institution than others. In regard to other financial products of HDFC family people are aware about HDFC- Bank, Life Insurance, and Mutual Funds & Deposits. Over all, all customers hold a positive attitude for the organization as the HDFC provide better services and attractive policies than other institute. Maximum customer of insurance are satisfied with the service agents as according to the study the agents provide customers timely n better services. The customers look a trust name and good planning for their investment this implies that HDFC gives them both advantages for their investment purposes. In fixed deposits in HDFC LTD customer prefer monthly income plan because this plan give them a better return and full family protection.

110

111

Conclusion
HDFC, being the pioneer in home loans & today the leading bank of India, has become a reliable institution for the people of our nation. Dealing with customers at HDFC is one of its strategies which are consistently followed by its people. Customer having a positive attitude towards the HDFC LTD. Though most of the customers of HDFC have never approached to other financial institutions for their home loan needs as they consider HDFC as the reliable institution & second, the aggressive policies adopted by other financial institutions. HDFC housing is a known brand among customer. People generally want loan, they only need awareness. It was observed that, during the survey that most of the people do not know about the details of the taking housing loan. The most popular products of HDFC Ltd. are home loans & improvement loan, insurance, fixed deposits. People are approaching to HDFC for they find it better than other financial institutions. Quality of service is the unique feature which HDFC is leveraging very well. Another heartening trend was in terms of people viewing insurance as a tax saving and investment instrument as much as a protective one. A very high number of respondent have opted for insurance for such purpose and its shows how HDFC LTD Company have been successful to attract public money in recent time. The general satisfaction level among public with regarding to fixed deposits policy, insurance policy and agents still requires improvement.

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At last the working culture of the organization was satisfactory and the loyalty pattern of the customer is very supportive.

Bibliography

BOOKS Himalaya publication, Nagpur (2003) Mc Gill life insurance

New age international publication, Jaipur Rajasthan (2009) C.R Kothari Research Methodology

Magazines referred HDFC Quarterly Internal Database

Employee Hand Book

Websites www.hdfc.com www.google.com www.hdfcinsurance.com

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QUESTIONNAIRE
Home loan

A. Name:_______________________________________________Age: _______________ B. Gender: male (__) /female (__) C. Annual Income : (a) Below Rs 2 lakh (b) Rs.2 lakh to Rs.4 lakh (c) Rs.4 lakh to Rs.6 lakh (d) Rs.6 lakh and above E. No. of family members (__) (__) (__) (__) (__)

F. Communication address: __________________________ __________________________ G. Occupation __________________________

H. Contact No.___________________.

1. Since when do you know about HDFC Limited?

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(a) 0-1 year (b) 1-5 year (c) More than 5 year

(__) (__) (__)

2. How did you come to know about HDFC Limited? (a) Friend and relative (b) Advertisement (c) HDFC ltd employees (d) Others (__) (__) (__) (__)

3. About how many products of HDFC Limited are you aware with? (__)

4. Are you satisfied with the services provided by HDFC Limited? (a) Yes (__) (b) No (__)

5. Are you comfortable with the formalities required by the HDFC Limited? (a) Yes (__) (b) NO (__)

6. Amongst the following which products of HDFC Limited are you using? (a) Home Loan (c) Extension Loan (__) (__) (b) Improvement Loan (d) Short Term Bridging Loan (f) Loan to Professionals for N R P (__) (__) (__)

(e) Land Purchase Loan (__) (g) Home Equity Loan (__)

7. How long you associated with HDFC Limited? (a) 1 Year (b) 2 to 3Year (c) 4 to 6 year (d) More than 6 year (__) (__) (__) (__)

8. Why you opted for HDFC Limited? (a) Better than other financial institutions (b) Guided/Suggested by others (c) Unique offers or opportunities (d) All the above (__) (__) (__) (__)

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9.1. Are you using the same product of some other financial institution also? a) Yes (__) (b) no (__)

9.2. If yes, which one is find better? _____________________________ _____________________________

10. Which financial institution do you think the best in home loan facilities? (a) HDFC LTD (b) ICICI (c) SBI (d) LIC (__) (__) (__) (__)

11. Which interest rate you prefer? (a) Fixed (b) Floating (__) (__)

12. Did HDFC ltd provide you all the details of housing loan before the loan approval/ disbursement? (a) Yes (__) (b) No (__)

13. How many loan you have availed from HDFC Limited? No. of loan:___________.

15. After having an experience with HDFC Limited what attitude do you hold about it? (a) Positive (__) (b) Negative (__)

16 What are the aspects/suggestions which can help HDFC in providing better services to the customers? _____________________________________________________________________ _____________________________________________________________________

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_____________________________________________________________________ _____________________________________________________________

Questionnaire
A. Name: _______________________________________________ _______________ B. Gender: male (__) /female (__) C. Annual Income: (a) Below Rs 2 lakh (__) (b) Rs.2 lakh to Rs.4 lakh (__) (c) Rs.4 lakh to Rs.6 lakh (__) (d) Rs.6 lakh and above (__) D. No. of family members (__) E. Communication address: __________________________ _____________________________________________ F. Occupation __________________________ G. Contact No.___________________.

Insurance:

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1. Do you have any insurance policy? (a) Yes ( ) (b) no ( ) 2. For how many years do you have insurance policy? (a) < 5 year () (b) 5 to 10 year () (c) 10 to 15 year () (d) More than 15 year ()

3. What do you think about the benefits of insurance cover? (a) Cover future uncertainty () (b) Tax deduction () (c) Future investment () (d) Any other () 4. How you bought insurance? (a) You approached insurance company (b) Insurance company approached you 1. Are you satisfied with the policy? (a) Satisfied (b) Not satisfied

() ()

() ()

If not satisfied, please offer your comment: __________________________________________________________________ ________________________________

2. Which is the best form of investment? (a) fixed deposit () (b) bank deposits () (c) jewelry () (d) securities () (e) shares () (f) insurance () 7.What is the right age to buy insurance? (a) After 25 year (b) After 35 year (c) After 45 year (d) Any time

() () () ()

8. Which feature of your policy attracted you to buy it? (a) Low premium () (b) Large risk coverage ()

118

(c) (d) (e) (f)

Money back guarantee Reputation of company Easy access to agents Any other

() () () ()

QUESTIONNAIRE

Fixed deposits: A. Name: _______________________________________________Age:

_______________ B .Gender: male (__) /female (__) C Annual Income: (a) Below Rs2 lakh (b) Rs.2 lakh to Rs.4 lakh (c) Rs.4 Lakh to Rs.6lakh (d) Rs.6 lakh and above D. No. of family members (__) (__) (__) (__) (__)

E. Communication address: __________________________

119

__________________________ F. Occupation __________________________

H. Contact No.___________________.

1.Do you have any fixed deposit(s)? (a) Yes ( ) (b) No ( )

2. What type of fixed deposits do you have? a) Monthly income plan b) Annual income plan c) Cumulative deposit d) Non cumulative e) Senior citizenship 3 .How many fixed deposits do you have? a) One b) Two c) Three d) More than three ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )

4. Are you satisfied with the fixed deposits? a) Satisfied b) Not satisfied ( ) ( )

5. What are the benefits of fixed deposits? a) Tax deduction b) Future investment c) Cant say ( ) ( ) ( )

6. Are you satisfied with the services of service agents? a) Satisfied b) Not satisfied c) Can not say ( ) ( ) ( )

7. What would you see in accompany for a fixed deposit?

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a) A trust name b) Friendly service c) Good plans d) Accessibility

( ) ( ) ( ) ( )

GUIDELINES WHILE TAKING A HOME LOAN

If a customer recently tried to get a home loan? He must go through a lot of confusion before he could finally get a fix on which one to take. A customer has faced several problems From where he takes a loan? , Which bank provides the cheapest loan? , Will he get required the amount of the loan? , Is it wise to take loans on the variable or fixed interest rates because of speculation on bottoming out of interest rates? Unless he is a financial genius, choosing the home loan lender will be tough. First, a customer must realize that the lender cannot be decided on interest rates alone.

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Here are a few guidelines to help you take a better decision: Housing finance companies (HDFCs) & banks calculate eligibility differently. For instance, some lenders are very comfortable with self employed people & their loan eligibility calculations reflect that. On the other hand, some lenders have special schemes for people drawing salaries above a certain value. In many cases, the amount the lender is willing to give will override interest & other considerations.

Choose a lender who has pre-approved the property you are planning to buy. This ensures relatively easier disbursement formalities.

In case of property that is being resold, it is advisable to show the draft documentation of the property to the potential lender before confirming your choice. Some lenders may have some specific requirements which your seller may not be in a position to fulfill.

Some lenders do not fund property under construction. Some banks are uncomfortable making part payments on self-constructed property.

Always check whether the lender is familiar with home loan procedures. Many banks which advertise for home loans are often not conversant with the procedures involved. This problem is especially glaring in case of some nationalized banks. For these banks, home loans are one of the many activities that they undertake. While the bank itself will have a lot of experts who know this product inside out, this expertise is rarely available at the local branch level. This leads to avoidable delays, especially at the disbursement stage. Now let us turn to the cost factors:

Never take a loan where the interest rate is stated on annual rate basis. All lending home lenders now calculate interest on a monthly/ daily-reducing basis. There is no difference monthly rest basis & daily rest basis of interest calculation.

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You should know how to calculate the equated monthly installment (EMI) for a given interest rate to ensure that the stated interest rate is being applied. EMI refers to the money you pay to your lender every month by way of repayment of the loan. A part of this EMI goes towards repaying your outstanding principal while the remaining amount goes towards payment of interest on that amount. An easy way to calculate the EMI is to use the function (Fx) formula in Microsoft Excel (see easy EMI in Excel).

Also, always take into account the upfront fee. This fee would be called administration fee, sanction fee, legal fee, technical fee, file fee or commitment fee. Some banks may levy documentation or consultation charges as well. This adds to your total effective cost of the loan.

Most lenders provide loan up to 90% of the cost of the property but the definition of the cost of property varies from lender to lender. While agreement value, stamp duty & the registration charges are standard inclusions in the cost of the property, some lenders also include the society charges & deposits with statutory authorities in the cost. Please note that all large lenders work their EMIs on a monthly/daily reducing basis. It is advisable not to take any loan where the interest rate is calculated on annual rest basis. In any case, currently, only a very small number of lenders offer rates on an annual rest basis. This means that the interest rate applicable to your loan will go up or down depending upon the changes in a reference rate, which is usually the retail rate of that bank.

Another you have to keep in mind is the prepayment charges charged by the lender. Most borrowers end up partially or fully prepaying the home loan & hence, a prepayment charge adds to your total cost. Other things remaining the same, you must choose the lender who does not charge a prepayment charge. In an environment of intense competition, lots of lenders offer incentives to attract the consumer.

Having understood the nitty-gritty of home finance, let us now take a look at the variable & fixed rate debate. Most home loan consumers taking new loans today

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are signing a variable rate loan. In theory; the operation of a variable interest rate loan seems simple. If the interest rate goes up, your interest rate goes up proportionately & vice-versa. However, in actual practice, the operation of the variable rate loan is not all that easy to understand. Let us now take a look at some of the complexities involved in it:

Tracking the movement of the reference rate: The interest rate paid by the consumer during the tenure of the loan is based on the movement of the reference rate, which may be equal to or lower than the PLR (prime lending rate) of banks. For example, a banks declared reference rate for a 15-year home loan may be 9.25% & the PLR may be 10.75% (reference rate is 1.50% below the PLR of the bank). Today, it is common for consumers to obtain better rates than the declared reference rates of the banks. It is important for the consumer to know that such lower negotiated rates can be linked appropriately to the reference rate so that there is no confusion when the reference rate changes. In the example given above if the consumer negotiates a rate of 9% from the bank, he must ensure that the reference rate mentioned in the document is 1.75% below the PLR. So before you sign the documents for your home loan always make sure that reference rate is explicitly mentioned in the agreement.

Reset dates:

Another complication is the date on which the variation in the

reference rate is to be taken into account for passing it on to the consumer; you must remember that the reference rate could move in your favour or even against you. While, by & large, the home loan industry has high transparency levels, some banks have fallen short of the standards outlined above.. So what can home loan consumers do to safeguard their interest? First, they should read the sanction letter/ loan agreement before they sign it. As discussed above, they must also read the variation mechanism & ensure that it is transparent. In view of the soft interest rate expectations, it would be recommended that the consumers should sign up a variable rate loan so that they can benefit from any future reduction in interest rates. So you must always keep track of what is

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happening in the home loan market so that you can switch to fixed rate loans if it seems as though the interest rates are bond to increase.

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