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“A Study of Credit Appraisal Policy in HDB Financial Services &
Analysis on Customer Perception towards HDB Funding”
1Source HDB portal
SUMMER INTERNSHIP PRESENTATION
Presented by- Harpreet Singh (PGFA1521)
Source Self 2
FLOW OF
PRESENTATION
1• About the Industry
2.• About the Company
3. • Objectives
4.• About credit appraisal
5. • Research Study
6.• Findings
7.• SUGGESTIONS & RECOMMENDATIONS
8.• Conclusion
NBFC
A Non Banking Financial Company
(NBFC) is a company registered
under the Companies Act, 1956
of India, engaged in the business of
loans and advances, acquisition of
shares, stock, bonds, insurance
business or chit business but does not
include any institution whose
principal business is that includes
agriculture or industrial activity or the
sale, purchase or construction of
immovable property.
Regulated by the Reserve Bank of
India (RBI)
3Source google
NBFC Universe
NBFCs
Regulated by RBI
1. AFCs
2. LCs
3. ICs
4. IDF-NBFCs
5. RNBCs
6. GL-NBFCs
7. IFC-NBFCs
8. NBFC-Factors
Regulated by NHB
Housing finance
Companies
Regulated By SEBI
1. Merchant Banking Companies
2. Stock Broking
3. Collective Investment Schemes
4.Venture Capital Fund Companies
Regulated by MCA
1. Nidhi Companies
2. Mutual Benefits Companies
Regulated By State
Govt.
Chit Fund Companies
Regulated by IRDA
Insurance Companies
Source: Google 4
Company Profile
Industry Non Banking Financial
Institution (NBFC)
Founded In2007 , HDFC
16508, Employees
Headquarters Mumbai, India
Area served India
Key people Ramesh G, chairman & MD
Products Personal loan, Businessloan, Loan against shares,Loan against property,Loan against gold
5Source HDB portal
Products offered by HDBHDB
LOANS
Secured
loans
1. Loan against securities
2. Loan against Shares
3. Loan against Property
4. Loan against Gold
5. Car Loans
6. Enterprise Business Loan
7. Equipment Loans
Unsecured loans
1.Personal loans
2.Business Loans
INSURANCE
1.Life Insurance
2.GeneraInsurance
6Source HDB portal
7
JOB DESCRIPTION
Title of the Job: InternDepartment: Credit DepartmentKey Result Areas (KRAs):
Checking all the documents which are required before login
Login the loan file and generate the LOS ID (unique ID)
Generating all the other documents i.e. the CIBIL
Report, e-tax payment slip, tracker in HDFC Or HDB in
any branch ,if any
•Meeting the customer personally as PD
(Personal Discussion)
•Preparing the CAM (Credit Approval Memo)
Making the Cases in the given format by the company
which is to be send above level for the approval.
OBJECTIVE OF THE
STUDY
“statements describing what
the project is trying to
achieve & the effect or
change that the project is
supposed to cause”
To study the meaning and importance of Credit appraisal
To study the credit appraisal process
To understand the financial tools required for credit appraisal
To understand the basic fundamentals of credit department
To study and understand the terms and conditions of sanctions and advances
To study the entire loan system
8
Character
(integrity/willingness)
Capacity
(ability/financial
soundness)
Collateral
(security)
Capital
(funds availability)
Conditions
(Reference check)
5C’s
CREDIT
APPRAISAL
“An investigation/assessment
done by the company before
providing any loans & advances
also checks the commercial,
financial & technical viability of
the project proposed its findings
pattern and further checks the
collateral security cover for the
recovery of such funds”.
Source: Google9
CREDIT
APPRAISAL
PROCESS
Post sanction activities such as bank account review
Disbursement of loan
Final assessment of documentations, mortgages, agreements
Sanction/Approval of proposal by concerned authority
Assessment of the proposal (ABB bank balance, gross income)
Preparing the financial data
Preparation of CAM (credit approval memo)
Check for the RBI defaulter list, CIBIL check, POSIDEX, ITR
Pre sanction visit by the credit officer (Personal Discussion)
Receipt of documents (Balance sheet, KYC, Gas receipt, Bank balances, Stability proof)
Receipt of application from the applicant
10Source google
SURVEY
“procedure for collecting
data to be analyzed”
•To study
consumer
perception
towards HDB
financial
services
funding
•The Research
Design used
is descriptive
research
design
•Primarydata•Survey•Interview
•Samplesize-50
•RandomlyLoanApplicant
OBJECTIVERESEARCH
DESIGNDATA
COLLECTION
SAMPLINGSIZE &
METHOD
11
TOOLS ON WHICH DATA ANALYZED IS CONDUCTED
“excel is used to interpret the results”
1. Sole banking with the parent bank HDFC
36%
64%
Sole Banking with HDFC
Yes No
2. Already financed by HDB Financial services
28%
72%
Finance from HDB
Yes No
12Source Self
3. Services provided by HDB financial services
Excellent
Good
Satisfactory
Bad
Very Bad
1
19
22
7
1
Services provided by HDB
Excellent Good Satisfactory Bad Very Bad
4. Aware of loan charges
56%
44%
Aware of loan charges
Yes No
13Source HDB portal
FINDINGS
5. ROI provide by HDB
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
1
11
26
11
1
ROI by HDB is High
Strongly Agree Agree Neutral Disagree Strongly Disagree
Credit and risk go hand in hand
For each type of loan, there are different types of parameters
After studying few cases, I found that in some cases, loan is
sanctioned due to strong financial statements
Credit appraisal mainly depends on the one most important
factor which is the rate of interest as due to the competition.
14
Source self
SUGGESTIONS &
RECOMMENDATIONS Branch credit limit should be exceeded as it helps to reduce the
work load of all the related people
Moderate rate of interest
Policies and norms should be strictly followed for any cases
by everyone
Credit and other departments should work
independently; no other departments should interfere in
each other work
Login of cases to be done with complete documents,
incomplete documents will stretch the work and time of credit
team
Data Authentication
15Source Self
CONCLUSIONS
Credit appraisal should be
based upon
Financial performance
Business performance
Industry outlook
Quality of management
Usually, it is seen that the credit appraisal isbasically done on the basis of fundamentalsoundness. But after seeing different types ofcases , it can be concluded that credit appraisalsystem is not looking on the financial parameters,there are other factors also.
In all, the viability of the project from everyaspects analyzed, as well as type of thebusiness, promoters past records, experience,long term plans plays a crucial role inincreasing chances of getting project approvedfor loan.
16Source Self
Questions & Comments?
Contact Details:
Harpreet Singh
PGFA 1521
MOB. No: +91 9675297500
Email Id: [email protected]