`SUMMER PROJECT REPORT ON

Process management of Mortgages and Analysis of customer who have taken loan against Gold from the Bank.. At Housing development finance corporation bank (HDFC) ,Jaipur.

In the partial fulfillment for the requirement for Award of Post Graduate Diploma in Business Management Submitted By: Kavita jain Sapna sharma Project Guide Prof.Tarjini Goyal Faculty, FMS-IRM JAIPUR Corporate Guide Mr. Vinod Vijay Regional credit Manager (LAP) Mr. Gaurav Gattiwal Asst.Credit Manager (Tw/Gl) HDFC BANK JAIPUR

INSTITUTE OF RURAL MANAGEMENT, JAIPUR

Faculty of Management Studies Institute of Rural Management, Jaipur

CERTIFICATE
This is to certify that the summer training report titled Process management of mortgages and analysis of customer who have taken gold loan from bank is a record of project work done jointly by Ms kavita jain & Ms Sapna sharma under my guidance and supervision and that it has not previously formed the basis for the award of any degree, fellowship or associate ship to her.

Date: Place:

Prof.Tarjini goyal
(Faculty Guide)

DECLARATION
I, do hereby declare that the report entitled Process Management of Mortgages and Analysis of customer who have taken Gold loan from the bank is an original piece of work carried out by me at HDFC Bank Jaipur. The abstract or any form of report has not been published earlier and it presents the original work done by me during the Summer Internship Programme under Post Graduate Diploma in Business Management, Faculty of Management Studies - Institute of Rural Management (FMS-IRM), Jaipur from 16th May, 2010 to 30th June 2010, from Housing development finance corporation Jaipur.

Place: Jaipur Date:

Kavita jain Sapna Sharma

ACKNOWLEDGEMENT

The completion of any project depends upon the co-operation, coordination and combined efforts of several resources of knowledge, inspiration & energy. I always knew that in an organization, the work atmosphere yields enormously on an individuals productivity and quality of work.the competence and expertise of people around me at HDFC bank Jaipur. Was a factor that motivated me to strive and achieve nothing short of perfection. I owe a great many thanks to all those, without whom this project wouldnt have been as much a learning experience and as successful. To those, who helped and supported me during the course of this project. My deepest sense of gratitude for the Faculty-in-Charge, Prof. Tarjini Goyal,FMS-IRM,Jaipur, for constant guidance, professional help and support during the course of the project, for .guiding me and helping me at all times during the project. She was the key inspirer for me and without his guidance this project would have been a distant reality. I express my thanks to the Company Guide, Mr.Vinod Vijay (Regional credit Manager) & Mr Gaurav Gattiwal ( Asst.credit manager) HDFC bank for extending his support and guidance for this project. Thanks and appreciation to the helpful people at bank Branch, for their support. Iam hereby thankful to; Ms yashasvi jain , Mr vipul sogani Mr deepesh mishra, Mr sharad Ahuja, (credit managers mortgages).Mr Ashish sharma Ms deepshika saraswat (credit managers gold loan) . I thank my colleagues and friends for providing constant encouragement and help. I am indebted to them for their timely help & the enthusiasm they expressed in helping me bring this project to the fruitful end. Henceforth I would also like to extend my sincere token to our Director, Brig, S.K. Gaur for his relentless spirit to lend a helping hand to the students. I am highly grateful to FMS-IRM, Jaipur for their benevolent assistance. (Kavita jain (Sapna sharma)

Table Of Contents
Sr. No. Executive summary Chapter 1 1.1 Statement of problem 1.2 objective of study 1.2.1 primary objective 1.2.2 secondary objective 1.3 practical utility of the study 1.4 limitations of the study 1.5 Research methodology 1.5.1 Research design 1.5.2 Area of sampling 1.5.3 Sampling technique 1.5.4 Sample size 1.5.5 Data collection method 1.5.6 Tools of data collection method 1.5.7 Tools of analysis Chapter 2 HDFC Company profile 2.1 Introduction to banking sector 2.2 Introduction of company 2.3 Company history 2.4 Services offered by the company Chapter 3 HDFC bank mortgage service 3.1 objectives of mortgage service 3.2 features of mortgage service 3.3 offerings of mortgage service 3.4 mortgage credit loan product Chapter 4 PHASE 1 HDFC BANK MORTGAGE PRODUCTS 4.1 Loan against property Particulars Page No. 7 8 9 9 9 10 10 10 10 10 10 11 11 11 11 12-19 12-13 14-18 18-19 19 20-21 20 20 21 21 22-39 22-23

4.1.1 Steps in Application process 4.1.2 Documents required while applying Lap 4.1.3 Flow chart for Lap 4.1.4 credit mortgage process-(Lap) 4.1.5 FTR/FTNR guidelines 4.1.6 kyc guidelines 4.2 Loan against Gold 4.2.1 what is gold loan 4.2.2 process of gold loan 4.2.3 kinds of gold loan 4.2.4 features &benefits of gold loan 4.2.5 Eligibility criteria 4.2.6 Documentation required while applying gold loan 4.2.7 processing fee & charges 4.2.8 flow chart for gold loan Chapter 5 CUSTOMER SATISFACTION SURVEY ON GOLD LOAN Chapter 6 SWOT ANALYSIS 6.1 swot analysis on Loan against property 6.2 swot analysis on gold loan Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 FINDING SUGGESTIONS CONCLUSION BIBLIOGRAPHY ABBREVATIONS ANNEXURE

23-25 25-27 28 29-32 32-33 33-35 36 36-37 37 37 37-38 38 38 38 39 40-43

44-45 44 45 46 46 47 48 49 50-51

EXECUTIVE SUMMARY-

The summer training of a management student plays an important role to develop him into a well groomed professional. It gives theoretical concepts a practical shape in the field of applications. The project at HDFC bank dealt with Process Management of Mortgages and Analysis of customer who have taken gold loan from the Bank. The forthcoming project report is divided in phases:

Phase 1: 1. To study about the process of loan against property 2. To study about gold loan provided by the HDFC bank Phase 2: 1. Comparison of HDFC Lap & Gold loan with other banks. 2. Analysis of customer who have taken loan against gold from Bank.

The research methodology was conclusive, tentative and descriptive in nature. Both the secondary and the primary data collection methods were taken into consideration and the conclusions of the report were derived fundamentally on the basis of the primary data collected and thus analyzed accordingly.

Questionnaires were circulated and mailed randomly. A few Statistical Analysis Tools like, mean, pie charts, were used to draw inferences based on the survey .

After doing the thorough analysis it can be concluded that a vibrant and a well-developed market which has been shown to facilitate consumption & investment, by providing loans to different segments has a lot of potential in the coming years. The lenders as well as borrowers in the country are growing at a very fast pace and so is their knowledge about the different products, e.g. loan against property & loan against gold. The awareness among the Indian demographic regarding risk and return of their repaying capacity is increasing. This ensures the long life of the industry and banks retail asset centers. Thus, it was a great experience to work with a company of such a high reputation.

1.1 Statement of the problem .

Banking sector is consider as one of the tentative sector of the economy where the products are being designed according to the market need of the economy, my project report is basically on process management mortgages & analysis of customer who have taken gold loan from the bank. the major problem which were identified before going on for the project is reason behind dissatisfacion & area of improvement of the customers.

1.2 . OBJECTIVE OF THE STUDY:

At HDFC Bank I was working with the Retail credit(mortgages) department, which caters specifically to providing HDFC services to individuals meeting the necessary requirements. 1. As a part of my project I had to study the Process of Loan against Property & Gold loan provided by the HDFC bank and to make analysis of HDFC Lap & Gold loan in comparison to other banks & Analysis of customer who have taken gold loan from the HDFC bank. 2. The report is divided into 2 parts : PRIMARY & SECONDARY OBJECTIVES:

1.

TO STUDY ABOUT THE PROCESS OF LOAN AGAINST PROPERTY TO STUDY ABOUT GOLD LOAN PROVIDED BY HDFC BANK

2.

COMPARISON OF HDFC LAP & GOLD LOAN IN COMPARISON TO OTHER BANKS ANALYSIS OF CUSTOMER WHO HAVE TAKEN GOLD LOAN FROM HDFC BANK

1.3 Practical utility of study:

This study gives an insight that at what level HDFC bank has its reach to the general mass. This study will help to know the current business potential for the bank. Interaction with public helped me to know the products and services they want. Also the analysis made by me will help HDFC to customize the product to cater their need.

1.4 Limitations of the Study Limited access to software of the bank Confidential information of the bank cannot be disclosed. Biased response of customers.

1.5 Research Methodology

The study undertaken by me was regarding a Process Management of mortgages and analysis of customer who have taken loan against gold from the bank. 1.5.1 Research design: The research conducted for Phase I is a library research. It includes: Analysis of historical records. Analysis of documents. The research conducted for Phase II was descriptive research

1.5.2 Area of sampling: The survey was broadly carried out in Rajasthan.

1.5.3 Sampling Technique: The type of sampling taken was census sampling.

1.5.4 Sample size Target population: The universes of the study are existing customers of HDFC bank.. 200 Responses were elicited. 1.5.5 Data collection method: Data is Collected through the questionnaires filled from telephonic interview by customer.

1.5.6 Tools of data collection method: Primary data Secondary data

Primary Data: Collected through the questionnaires filled from telephonic interview by Customer.

Secondary data: Through annual report, internet, magazines, journal and websites.

1.5.7 Tools of analysis: Presentation tools: Pie charts Bar graphs Flow charts

Statistical tools: Percentages

2. COMPANY PROFILE

2.1 INTRODUCTION TO THE BANKING SECTOR

Banking, the business of providing financial services to consumers and businesses. The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. DEFINITION:

Engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc. Transacting business with a bank; depositing or withdrawing funds or requesting a loan etc. A banker or bank is a financial institution that acts as a payment agent for customers, and borrows and lends money. A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money.

Banking Industry in India

The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

2.2 INTRODUCTION TO THE COMPANY

Background The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC Bank's objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People. Capital Structure As on 31st March, 2011 the authorized share capital of the Bank is Rs. 550 crore. The paid-up capital as on the said date is Rs. 465,22,56,840/- (46,52,25,684 equity shares of Rs. 10/- each). The HDFC Group holds 23.35% of the Bank's equity and about 17.44% of the equity is held by the ADS / GDR Depositories (in respect of the bank's American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues). 28.53% of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has 4,11,464 shareholders.

The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts

(GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002.

Distribution Network HDFC Bank is headquartered in Mumbai. As on March 31, 2011, the Bank has a network of 1986 branches in 996 cities across India. All branches are linked on an online real-time basis. Customers in over 800 locations are also serviced through Telephone Banking. The Banks expansion plans take into account the need to have a presence in all major industrial and commercial centres, where its corporate customers are located, as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing / settlement bank to various leading stock exchanges, the Bank has branches in centres where the NSE / BSE have a strong and active member base. The Bank also has a network of 5471 ATMs across India. HDFC Banks ATM network can be accessed by all domestic and international Visa / MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.

Financials The Banks total income for the quarter ended March 31, 2011, was Rs. 6,724.3 crores. Net revenues (net interest income plus other income) at Rs. 4,095.2 crores for the quarter ended March 31, 2011 increased by 24.0% over Rs. 3,302.1 crores for the corresponding quarter ended March 31, 2010. Net interest income (interest earned less interest expended) for the quarter ended March 31, 2011 was Rs. 2,839.5 crores as against Rs. 2,351.4 crores for the quarter ended March 31, 2010. This was driven by loan growth of 27.1% and a core net interest margin for the quarter of 4.2% Credit Rating The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered

to be "of the best quality, carrying negligible investment risk". CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "AAA ( ind )" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high"

The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.

Business Profile Wholesale Banking The Banks target market is primarily large, blue-chip manufacturing companies in the Indian corporate sector and to a lesser extent, small & mid-sized corporates and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime public sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual

funds, stock exchange members and banks.

Treasury Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the banks Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.

Retail Banking The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2010, the bank had a total card base (debit and credit cards) of over 14 million. The Bank is also one of the leading players in the

merchant acquiring business with over 90,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc. 2.3 HDFC Bank history: The merged entity now holds a strong deposit base of around Rs. 1,22,000 crore and net advances of around Rs. 89,000 crore. The balance sheet size of the combined entity would be over Rs. 1,63,000 crore. The amalgamation added significant value to HDFC Bank in terms of increased branch network, geographic reach, and customer base, and a bigger pool of skilled manpower. In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks in the New Generation Private Sector Banks. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: Wholesale Banking Services - The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized corporates and agri-based businesses. Retail Banking Services - The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements.

Treasury - Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio. HDFC Securities (HSL) and HDB Financial Services (HDBFSL) are its subsidiaries. 2.4 Services offered by the company: Personal Banking

Accounts & Deposits Loans Cards Forex Investments & Insurance

NRI Banking

Accounts & Deposits Remittances Investments & Insurance Loans Payment Services

Wholesale Banking

Corporate Small & Medium Enterprises Financial Institutions & Trusts Government Sector

3. HDFC BANK MORTGAGE SERVICE

Housing Development Finance Corporation (HDFC) Bank Mortgage Service is leader in the Indian mortgage market at present with the State Bank of India (SBI) following the lead. The total worth of the India Mortgage Market presently is nearly US $ 18 billion. The gross domestic product to mortgage ratio in India is very low in comparison to other developed countries. The ratio in the foreign countries ranges from 25% to 60% whereas in India the ratio is 2.5%. The India Mortgage Market is showing fast growth in the past few years. The foremost players in this sector are the finance corporation but presently the commercial banks are also started playing an important role in the development and growth of the India Mortgage Market.

3.1 OBJECTIVES OF MORTGAGE SERVICE:

To provide the customer with the best possible services To focus on cost management and management of gains To put emphasize on the quality of the credit and advance in form of mortgage loan

3.2 THE SALIENT FEATURES OF HDFC BANK MORTGAGE SERVICE:

The mortgage based loans provided in order to acquire real estate for commercial purposes, and as working capital

The funding is done upto 3/4 of the cost of the project and the balance is the customers contribution

The customer has to provide collateral securities against the loan

The main purpose of HDFC Bank Mortgage service is to provide easy access to refinancing, renovating or owning commercial real estate through the disbursement of loans against mortgages. The HDFC Bank Mortgage service also provide mortgage based loans as working capital. The HDFC Bank Mortgage service is provided against presentable security such as residential house or apartment, industrial property, urban commercial complex, possessed in the name of the receiver of the loan. The security such as rented house can be accepted if the same

property is on a lease and the person should also have the authority to collect the rent under the power of attorney.

3.3 OFFERINGS OF HDFC BANK MORTGAGE SERVICE:

Debt consolidation service Home equity loans New home loans Latest mortgage quotes Mortgage refinancing Real estate lending

3.4 Mortgage credit loan product

o o o o o LAP (Loan Against Property) LARR (Loan Against Rental Receivables) DOD (Dropline overdraft mortgages) LCP (Loan Against Commercial Property) LAG (Loan Against Gold)

PHASE I: 4 HDFC BANK PRODUCTS

GOLD LOAN

LAP

4.1 LOAN AGAINST PROPERTY(LAP)

A loan against property (LAP) is a loan against your house or even a plot. If all the land titles are in place and you have an income, this is a cheaper loan option if you want some liquidity in double quick time. Though the interest rates on this loan are higher than that of a home loan, it is cheaper than that a personal loan or a loan against security. Loan against Property refers to the secured loan category where the borrower gives a guarantee by using his property as a security. The right of ownership of the property is still with the borrower, and if he/she is unable to repay the loan amount, he/she can sell the property to pay off the debts. In other words it actually means - a loan given or disbursed against the mortgage of property. One can now take a loan against one's self occupied residential or commercial property, to expand his business, plan a dream wedding, or fund one's child's education and much more. However, one needs to give a declaration stating that these funds will not be used to carry out any illegal activities or for any speculative purpose. The loan is given as a certain percentage of the property's market value (usually around 40 per cent- 65 per cent). But the threshold amount is generally defined by most lending institutions. Usually, banks and other lenders extend a loan against property as a security, for up to 50 per cent of the market-value of the property. However, the extent of the loan is also subject to your eligibility as per income norms which also are stricter than home loan norms. A loan against property gets you capital based on the value of your property. It is available

for both salaried and self-employed persons and against commercial as well as residential property. All this and, you don't have to sell your property to raise the capital. It's all yours to keep if you repay the loan taken. 4.1.1 Steps involved in the application process are: 1. Application 2. Processing 3. Documentation 4. Sanctioning of the loan 5. Valuation and legal check 6. Disbursement 1. Application Just as in case of every loan, the loan application begins the whole process. You will need to fill in a loan application with details, personal and professional, loan requirement, details of the property intended for mortgage etc. Make sure the details are filled in accurately. 2. Processing Next comes the loan processing stage, the stage at which the loan process gains actual momentum. This could start with a personal discussion followed by the bank's field investigation. Along with the application form and the credit documents, you may have to pay a processing fee to the bank, which could be 1-2 per cent of the intended loan. An upfront fee could be collected to maintain your loan account records, sending income tax certificates every year, maintaining post-dated cheques, etc. When you go for a personal discussion, carry all the original documents pertaining to the information provided on the application form. Do not submit any forged documents or lie about the financial details requested. The bank's field investigation will follow; the bank might outsource this task to third-party verification agents.

3. Documentation Documentation includes the following; Proof of income: Copies of last three years income tax returns (along with copies of Computation of Income/Annual accounts, if any), Form 16/Form 16A, last three months salary slips, copies of the last 6 months statements of all the active bank accounts that reflect your salary/business income details etc. Age proof: Copy of the school leaving certificate/driver's licence/passport/ration card/PAN card/voter identity card etc. Address proof: Utilities bills, such as phone and electricity bills, need to be provided to prove that you are actually staying at your current address.

Identification proof: Documents with your photograph. Sometimes, one document, if it contains a photograph, the current residential address, and the correct age can be the proof for all three mentioned above. Employment details: If your company is not well-known, a short summary about the nature of the company, its business lines, its main customers, its competitors, number of offices, number of employees, turnover, profit, etc. may be needed. Usually, the company profile that is available on the standard website of the company is enough. Property papers: The bank may require title deeds and other documents relevant to the property. This will be important as the loan can be taken only against free-hold property. Also, it can be only about 40-60 per cent of the cost of property. It is important for the bank to establish the value of the property and its legal status before the offer can be considered. Meanwhile, bank verifies your personal and employment details. The bank also does a valuation of the property.

4. Sanctioning of the loan Loan sanction is the next process in the series. At this stage, the bank has checked your financial credentials based on criteria such as your income, age, qualifications, experience, employer, nature of business (if self employed), etc. They work out the maximum loan eligibility, and an indicative loan amount that the bank is willing to offer. 5. Valuation and legal check Valuation and legal check on property and papers is the next stage where the focus of the bank will shift to the property that you intend to mortgage. Make sure the property papers and the relevant NOCs are in place. The bank's lawyer will check the property papers for their legality. The bank may also send an expert to visit the property. This expert could be a bank employee or an associate with a realty firm. 6. Disbursement Once the bank has ascertained all that it needs to be assured of you as a client, the property as a security, and your repayment capacity, it will disburse the loan. The bank does not enquire about the purpose for which you use the loan. Though, it stipulates that the loan should not be utilized in speculative activities.

4.1.2 DOCUMENTS REQUIRED WHILE APPLYING LOAN AGAINST PROPERTY: Documents required

Completed loan application form with one passport size photograph Passport Photo PAN card Voter's identity card Income proof statement Driving licence

Financial documents (all of the following) Salaried individuals

Latest salary slip showing statutory deductions AND Form 16 (Declaration from the employer giving the details of income and deductions, duly signed by an authorized signatory of the Company) OR

Latest acknowledged IT returns AND Bank statements for the last 3 months

Self-employed individuals / Proprietor

Computation of income for the last 2 years certified by a C.A. OR P&L and balance sheet for the last 2 years certified by a C.A. AND Copies of acknowledged IT returns for the last 2 years AND Bank statements for the last 6 months

Partnerships

Computation of income for the last 2 years certified by a C.A. OR P&L and balance sheet for the last 2 years certified by a C.A. AND Copies of acknowledged IT returns for the last 2 years AND Partnership Deed, Letter of Authority, Bank statements for the last 6 months,

CPA TO BANK
Application form Financials & banking Valuation Report (if loan amt is more than 50 lacs then 2 valuations required) Cibil & Sas Report Kyc Documents Dedupe Report

CREDIT MANAGER TO OPERATION LOGIN

Credit Approval Memo (CAM) Ric Sampled (Red) or Ric screened (Blue) If the Case is greater than 1 Crore then Profile Check is also required. Personal Discussion (pd) sheet Valuation Report (If loan amount is more than 50 lacs then 2 valuations required) Legal Report with a Search Reciept (check legal entry in the system) Roc search report in case of pvt. Ltd companies. Corporate Cibil In case of partnership companies. RBI FI report

The responsibility of the credit manager is to the decisioning of the file within the defined TAT as per the policy.

4.1.3 Flow Chart For LAP START Sales Source the Case file Prepare the case under the various product schemes for Login S.P.E Returned back to Sales

Login Check

FTNR

PSDR

DPE

Process Check Findings (Dedupe,fi,legal,valuation)

Completion of the Case File Moved toCredit

If some documents required then pendency raised

Decisioning of the case file

IF NOT DO ABLE REJECT

Move to C.P.A

COMPLETION OF PENDENCY IN STIPULATED TIME

If complete approve/forward Post approval sent to operations for disbursal

If not completed in time move to CPA

File disbursed

4.1.4 CREDIT MORTGAGE PROCESS -(LAP)

In this entire credit process of mortgage loans has the activities and responsibilities clearly entrusted to the respective roles i.e. CPA,ADFC and CREDIT MANAGER

PROCESS FOR LAP:

1. objective
To ensure the following mortgage credit product loans are decisioned as per policy timeliness and accuracy are adhered

Credit process modelIn our model cpa is an outsourced agency who manage loan processing while Adfc are resources from Adfc ltd. And credit managers are bank officers managing the cpa& Adfc staff wherein the final responsibility of credit process at the location lies with them. For processing the loan applications, HDFC bank use lasersoft system(LS) which is a web based front end system with limited access to the system depending on functional role. The process model briefly described below: 1. Login stage 2. Data entry and process checks initiation 3. Credit appraisal stage

1.login stage
Short proposal entry(SPE)shall be done by sales irrespective of the fact,whether the file is sourced from hub or spoke location.in case of spoke sourced cases,SPE can be done from respective spoke or from nearest processing hub depending on system accessibility. Once SPE is done by sales,file will be submitted at CPA desk for checking compliance to MDCP (minimum document credit parameters).guidelines.cpa will check for the presence of lasersoft

number on the file,check if the file has moved to PSDR stage,application sign date is mentioned on application form or not,completeness of documentation &adherence to mdcp checklist.if mdcp check is ok,file will be logged by selecting FTR in the document field &remarks&psdr will be completed for the respective file.Appropriate entry will be made in the login register .on the other hand if the MDCP check is not OK then the file would be returned to the sales staff post updating FTNR code as per FTNR guidelines. The discrepant file will be returned back to concerned sales representative post entry in the login register. If FTNR file is being loggedin, necessary approval/confirmation needs to be taken from credit manager & PSDR is to be completed by selecting FTNR_CRE.i.e.FTNR with credit sign off in document field. For non CPA locations,above mentioned login process shall be carried out by ADFC or credit manager.

2.Data Entry &Process checks Initiation:

Once a file is logged,first check/data entry at DPE has to be of application date.needs to be necessarily mentioned at DPE by CPA/ADFC/CM manually as per application form.The field should not be skipped or left blank as otherwise system will capture DPE date as application date by default &thus leading to incorrect data capturing in LS. Partial data entry would be done at DPE by creating client profile for all applicant/co applicants & updating minimum required income/banking/obligation information depending on credit program as per DPE guidelines.system will then allow moving stage from DPE .simultaneously the file would be handed over to RIC for screening/sampling. Immediately post completion of partial DPE ,request would be sent for bank statement greater than 6 months for HDFC bank account holders & all process checks need to be initiated(valuation/legal/cpv)on system.if two valuations are required,both should be initiated simultaneously.legal should be initiated upfront for all cases. No document in any form should be handed over to external vendors for completion of process checks till the time process checks are initiated on system. Along with the above checks ,RBI dedupe would be initiated offline,pd would be initiated offline as per the PD grid. ROC &LIP would be initiated offline to the concerned agency if applicable.

DEDUPE(CIBIL & SAS) will be auto triggered from system post move stage from DPE. The CPA should also complete full DPE after initiating all process checks in the system.post partial DPE, proposal will move to under writing bucket &would not be available at DPE stage for completion of data entry.however, DPE can be accessed from u/w stage.CPA/ADFC/CM will access DPE from U/W stage& complete DPE in terms of data entry. All the verifications/checked initiated should be checked if received as specified in the process flow and the same should be printed & attached in the file before sending the same to the credit manager for decisioning.

3.Credit Appraisal Stage

Credit manager needs to ensure all the process checks are received & attached in the file before decisioning.corporate CIBIL needs to be initiated for all cases GREATER THAN RS.1 CRORE. Credit will appraise the file basis credit policy guidelines & process check reports. One of the below four decisions can be assigned to a file ie, Approve, Reject, Forward or pending. Approved file shall be kept with CPA/CREDIT till final approval including legal clearance & closure of credit related subjective approvals.in case any re-look on the approved file is required for loan amount or any other reason by the sales Team,communication regarding any additional mitigant/document required will be made post the clarification /documentation receipt.The application will be accorded a final decision. For reject &pending cases ,the file shall rest with credit for a maximum period of 5 days for relook/query resolution &submission of additional documents, if any,& clearance of pendancies.post the requisite information/documents,a final decision will be taken on the application the file will then be sent to the CPA, if no change in decision & can be sent to operations if its a complete approved case,including legal clearance & closure of credit related subjective approvals. In caseof any change in the credit promo/scheme,the necessary changes need to be made in DPE & the necessary process check need to be initiated. At the time of decisioning ,the credit manager needs to check the need for an additional SPE.in case, if an additional SPE is required ,the same needs to be communicated to sales.An additional file would not be required,but the additional proposal number would be mentioned on the file.

4 REFERENCES:

FTNR guidelines KYC guidelines

4.1.5 FTR / FTNR Guidelines

Process for capture of FTR /FTNR capture in mortgages Process for capture of codes Every case logged in at CPA should have at least any of the codes, FTR, FTNR, or FTNR credit ok captured in PSDR module HUB LOCATION FTNR cases on login of a file in CPA, CPA staff will check for MDCP compliance as per the MDCP checklist. Post checking MDCP compliance, the login status of the file, namely, FTR, FTNR, or FTNR credit OK needs to be captured in the login register &on lasersoft. These discrepancies should be captured on the system in the relevant FTNR codes. Eg: Application form not signed by the applicant, would be FTNR A and in the Remarks / Description field, CPA will capture the Actual discrepancy in detail. In FTNR cases, the file should be returned to sales for curing only post capturing of the FTNR codes and detailed discrepancy. Once the file is cured and retured to CPA again, the CPA staff should check for completeness of the FTNRs raised. If the file is clear, then login register should again have another entry which would marked as FTR for that case. Once all the discrepancies are resolved, CPA will MOVED STAGE and the file would be considered as logged in. FTNR CREDIT OK In cases pf any document or information discrepancies in the file, the sales staff may take credit approval to log in the post which the file would be marked FTNR CREDIT OK in the login register. FTR cases

If the file is complete in the first instances, the CPA should mark FTR on both lasersoft and the login resigter and do PSDR move stage to log-in the file. SPOKE LOCATION If the reaches the CPA from a spoke location, the CPA staff would first check for completeness of the file, and do the SPE of the file and follow the process as for HUB location.

FTNR CODES IN PSDR STAGE For every cases logged in at the CPA, ANY ONE of the below codes must be captured on the system in PSDR stage. This can be view by sales through viewer right. 1 FTR(First time right) 2 FTNR( first time not right) 3 FTNR with credit OK (OK to login) The below FTNR codes are created under the Document list available in PSDR. FTNR will be marked in a file for the below reasons through the mentioned codes: FTNR A Application form realted FTNR B KYC Related FTNR C-Banking related FTNR D Fiancials realted FTNR E Income norms related FTNR F- Loans detailed/ repayment track related FTNR G- Self attestation / OSV/ DSA Stamp related FTNR H- Property plan / sanction plan related FTNR I -Others

4.1.6 Know your Customer (KYC) Guidelines:

The Reserve Bank of India (RBI) has advised banks to follow a 'KYC guidelines', where in certain personal information of the account-opening prospect or the customer is obtained. The

objective of doing so is to enable the Bank to have positive identification of its customers. This is also in the interest of customers to safeguard their hard earned money. The KYC guidelines of RBI mandate banks to collect three proofs from their customers. They are 1. Photograph 2. Proof of identity 3. Proof of address

KYC is the initial and the most critical procedure before any customer is entertained. Therefore to begin with I would like to bring forth some Frequently Asked Questions (FAQ) regarding KYC. What is KYC? Know Your Customer - KYC enables banks to know/ understand their customers and their financial dealings to be able to serve them better and manage its risks prudently.

Why KYC? To establish the identity of the customer : This means identifying the customer and verifying his/ her identity by using reliable, independent source documents, data or information. For individuals, bank will obtain identification data to verify the identity of the customer, his address/ location and also his recent photograph. This will be done for the joint holders and mandate holders as well.

Are KYC requirements new?

No, KYC requirements have always been in place and Banks have been taking KYC documents in accordance with the guidelines issued by RBI from time to time. RBI has revisited the KYC guidelines in the context of recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering standards and on Combating

Financing of Terrorism and enhanced the KYC standards in line with international benchmarks.

Is KYC mandatory? Yes. It is a regulatory and legal requirement. Regulatory: In terms of the guidelines issued by the Reserve Bank of India (RBI) on 29th November 1704 on Know Your Customer [KYC] Standards Anti Money Laundering [AML] Measures, all banks are required to put in place a comprehensive policy framework covering KYC Standards and AML Measures. Legal: The Prevention of Money Laundering Act, 1702 (PMLA) which came into force from 1st July, 1705 (after rules under the Act were formulated and published in the Official Gazette) also requires Banks, Financial Institutions and Intermediaries to ensure that they follow certain minimum standards of KYC and AML as laid down in the Act and the rules framed there under.

When does KYC apply? KYC will be carried out at the following stages: Opening a new account Opening a subsequent account where documents as per current KYC standards not been submitted while opening the initial account Opening a Locker Facility where these documents are not available with the bank for all the Locker facility holders When the bank feels it necessary to obtain additional information from existing customers based on conduct of the account When there are changes to signatories, mandate holders, beneficial owners etc KYC will also be carried out in respect of non-account holders approaching the bank for high value one-off transactions.

4.2 LOAN AGAINST GOLD Gold Loan

For Indians, gold is considered as an essential investment from a cultural, emotional and safety perspective. One bought, is a dead investment. It tends to lie in the locker not earning you any money. Why not make use of it in your time of need? You can 36onetize this idle asset to help you tide over your financial need. So if ever you find yourself in need of money, consider gold loans as an option. Goldloans also know as gold deposits are loans given by banks/ NBFCs by taking gold as a security. Gold loans are not new to the Indian market. It existed but in the unorganized sector where money lenders used gold as a security for providing loans. Now banks have entered this space in a big way because the market is very large considering the fact that most Indians tend to have sufficient investment in gold. More importantly, with more and more women working in the family, people have become broadminded. So the social stigma that was once attached to taking a loan on gold is gradually being eliminated. Off late, this product has become popular because of the substantial rise in gold prices. The quantum of loan that one can get by giving gold as security has increased tremendously making it an attractive loan proposition.

4.2.1 What is Gold Loan?

As the name suggest its loan against Gold. Its the most convenient way to receive cash in no time from any NBFC/Bank by pledging your Gold ornaments/Coins/bars/Exchange traded funds ETFs/ SBI gold certificates etc., this is one loan product which comes with minimal documentation & no processing time in short its over the counter product. Product is designed in a way it ensures hassle free process for the customer & loan availed can be put to any use. Loan amount eligibility is evaluated basis on the Gold value banks usually fund 70-80% of the gold market value & on repayment of the loan gold deposits are returned back to the customer.

This loan comes much cheaper than personal loan as its a secured product & rate of interest ranges between 11.5-24% per annum. Rate of interest is decided on two factors risk criteria ( What % of market value of Gold you are availing loan if its 90% of the Gold market value then interest charged will be higher & vice a versa for lower loan amount as compared to gold value) & customer relationship with the bank.

4.2.2 PROCESS OF GOLD LOAN

You offer your jewellery to the lender who can be a bank or an NBFC. The lender will evaluate the purity of the jewellery. The charge for evaluation is generally borne by the borrower. Once the evaluation is done, the paper work for the mortgage is done. Banks will ask you to produce personal documents such as Pan Card, address proof among other things. The lender will give you a loan which in most cases can be up to a maximum of 80% of the value of the jewellery. After having repaid the loan, you get your gold back from the lender.

4.2.3 HDFC bank has two kinds of gold loan:

a) Loan Against Gold b) Overdraft Against Loan

A- LOAN AGAINST GOLD

The HDFC Bank has offers quick and easy loan amount against gold. You can get instant loan against your gold jewellery and ornament. You may use the loan amount for your personal uses like gift your love one, house renewal, celebration, purchase home appliance, purchase vehicle or repairing etc. The Loan features and benefits are as below

4.2.4 Features and Benefits of gold loan

Bank has provided loan up to Rs.10 lacs on 90% value.

Your Gold Jewelery & ornament will safe and secure at bank. Available Any Time Liquidity (ATL) facility. No EMI, you can enjoy loan facility with lower interest rate. If you are HDFC bank customer, so you have special interest rate.

4.2.5 Eligibility Criteria

Applicant age should not be more than 65 years. The Gold jewelery or ornament should be owned or any of the family member.

4.2.6 Documentation Requirement

Applicants have compulsory Proof of Identity (Voter ID Card/ Passport/ Driving License) Address Proof (Ration Card/ Telephone or Electric Bill/ Shop & Establishment copy) Signature Proof (Passport copy/ Driving License/ Bankers verification/ Cheque0 Two Passport size photographs. Latest three months Salary slips for salaried person.

4.2.7 Processing fee & Charges

Processing Charges 1.50% or Rs. 750/-, whichever is higher. Valuation fee charges Nil N.O.C. Charges Nil Charges for late payment of loan amount Nil Non standard Repayment Charges Nil Outstation clearing charges Nil Cheque swapping charges Nil Loan cancellation/ Re-book Charges N/A Cheque bounce charges Nil Statement Charges Nil Renewal Processing fee charges Rs. 500/-. Duplicate Repayment schedule charges N/A

4.2.8 Flow Chart for GOLD LOAN

Approach bank/nbfc for loan against gold.

Evaluation of purity of gold.

Paperwork for mortgage.

Disbursal of loan.

On repayment of the loan,you get your gold back from the lender.

5.1 . Customer satisfaction survey on gold loan

1. customer satisfaction towards rightly guidance by the bank executive at the time of loan application-

Customer Satisfaction
Dissatisfied 20%

Satisfied
Satisfied 80%

Dissatisfied

Findings : Maximum no of customers said that they are guided rightly by the bank executive at the time of loan application.

2. Time taken by valuer in valuation:

valuation done
10% 25% 25% 40%
5-15min 15-30min 30min- 1hr more than 1 hr

Findings: out of 200 customers 65% customers get their valuation done in 5 min to 30 min. this shows that maximum customers are satisfied by the time taken by the bank in valuation done.

3 Satisfaction of customer on amount calculated by gold valuer on gold? Customer satisfaction

Dissatisfied 18%
satisfied Netural 10% satisfied 72% netural dissatisfied

Findings: out ot 200 customers 72% customers are satisfied by the amount calculated by the gold valuer on the gold loan.

4 Time taken in telephone verification? Time taken

33%

42%

5-15min 15-30min

more than 1hr

25%
Findings: maximum customer tvr was done in 5-15 min

5 Customer satisfaction towards different banks: (a) ease of documentation

EASE OF DOCUMENTATION

HDFC 86% OTHER 14%

HDFC OTHER

Findings: most of the customers said that HDFC bank take less documents in comparision to OTHER banks. (b) speed of approval:

SPEED
OTHER 35% HDFC 65%

HDFC OTHER

Findings: out of 200 customers 65% customers are satisfied by speed of approval of gold loan provided by HDFC bank.

6 Satisfaction of customer towards gold loan provided by HDFC bank?

Customer satisfaction

Dissatisfied 35%

Satisfied 65%

satisfied dissatisfied

Findings: maximum no. of customers are satisfied by the gold loan provided by the HDFC bank.

6. SWOT ANALYSIS

6.1 SWOT ANALYSIS ON LOAN AGAINST PROPERTY:

STRENGHTS Laser software (LS) has helped in making the credit appraisal procedure easier and less time consuming. More services to privileged/ priority customers. Easy sanctioning for the account holders.

WEAKNESS Too many formalities. Customers get depressed due to prolonged legal and technical formalities.

OPPORTUNITY

THREATS .

Great potential in smaller town and cities Branch expansion will help acquire more customers and thereby help multiply retail banking business. Can increase customer base through marketing of the products. Campaigns about the products and services offered can be boon for bank. Ever growing competition is a motivator for bank to always keep marching ahead.

Changing market conditions. Constant renewal of policies by other banks.

6.2 SWOT ANALYSIS ON LOAN AGAINST GOLD: STRENGHTS Right strategy for Right products. Superior customer service vs.competitors. Strong capital raising ability Dedicated workforce aiming at making a long-term career in the field. High degree of customer satisfaction. WEAKNESS Gold loan business constituted 98.5% of revenues. So any major decline in gold prices in future can adversely impact the companys revenue. Customer service staff need training.

OPPORTUNITY

THREATS

Profit margins will be good. The gold loans market is significantly under-penetrated and is expected to continue growing at the rate of 35-40% in the future. an unfulfilled customer need. Changing customer attitude and life style.

Great risk involved. Very high competition prevailing in the industry.

7. FINDINGS
Eligibility criteria for banks is almost same, not entirely Maximum number of borrowers were satisfied due to the lower rate of interest. HDFC bank takes lesser documentation in gold loan and maximum number of documentation in lap. Valuer was not available at the time of valuation. Customers have to wait for more than 2hrs to receive money after valuation. Valuation was not according to customer requirement.(expectations) Slow disbursement process of loan money.

8. SUGGESTION:

Improves disbursement process in gold loan. Bank should appoint two or more valuers at a time so the valuation process takes less time in gold loan. Charge low processing fees in LAP.

9. CONCLUSION

There is a great scope for further improvements in loan division. Overall the schemes are pretty good. No competitive marketing strategy has developed to gain the business. Tough competition. Good coordination between organization and customers, which reveals the importance the importance of fair and clear business. Reasons behind unsatisfaction /area of improvement in gold loan: Customer have to wait for more than 2hr to receive money after valuation. Fast process requirement. Valuation was not according to customer requirement or expectation. Delay in valuation. Valuer was not available on time.

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10. BIBLIOGRAPHY

WEBSTIES:
www.hdfcbank.com www.icicibank.com www.wikipedia.com www.Sbibank.com www.bseindia.com www.google.com www.manappuram.com

OTHER SOURCES:
HDFC annual reports 2010-2011.

MAGAZINES:1 2 Business world. Business Today

NEWSPAPERS:1. 2. Times of India. Economic Times.

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11. ABBREVIATION

CPA- central processing agency CM- credit managers SPE-short proposal entry DPE-detail process entry MDCP-minimum document credit parameters PSDR-pre sanction document receipt entry RIC-risk intelligence & control unit

12. ANNEXURE

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11.1 QUESTIONAIRE Customer satisfaction survey on gold loan

1 Do you feel you were guided rightly by the bank exec.at the time of loan application? Strongly agree Agree netural strongly disagree disagree

How much time was taken in getting valuation done from the time of walk in the branch? 5-25min 25-50min 50-75min 75-100min How was the behaviour of the valuer? Polite Average Rude

Were you satisfied with the amount calculated by the valuer of the jewelery? Satisfied Netural Dissatisfied

After how much time the tvr was done? 5-15min 15-30min More than 1hr

How was the conduct of the person doing the CPV? Polite 5|Page

Average Rude

Do you feel any questions were asked that you were uncomfortable answering? Yes No

How much time you have to wait in the branch after getting the valuation done? 1hr 1-2hr More than 2hr

How was your overall experience while taking loan from HDFC bank? Good Average Poor

10 Which one would you prefer basis the following parameters? Ease of documentation Speed of approval Timely disbursement of money Verification process Responsiveness of bank employees to your needs

11

Customer satisfaction? Satisfied Unsatisfied

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