A

PROJECT REPORT
ON

HOUSING FINANCE

(SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREE

OF
BACHELOR OF BUSINESS ADMINISTRATION
(SESSION 2013-14)

SUBMITTED TO:

SUBMITTED BY:

KURUKSHETRA UNIVERSITY

JAIDEEP

KURUKSHETRA

B.B.A. III YEAR

CLASS ROLL No. 7457
UNIVERSITY ROLL No.....

I.B.(P.G.) COLLEGE PANIPAT

(AFFILIATED BY KURUKSHETRA UNIVERSITY KURUKSHETRA)

DECLARATION

I JAIDEEP student of B.B.A. III year in I.B.(P.G.) College, Panipat

hereby declare that the project report entitled HOUSING
FINANCE submitted for the degree of B.B.A. III year is my
original work and the project report has not formed the basis for the
award of any diploma, degree, associate ship, fellowship or similar
other titles. It has not been submitted to any other university or
institution for the award of any degree or diploma.

(PRINCIPAL SIGNATURE)

JAIDEEP

ACKNOWLEDGEMENT
Survey is an excellent tool for learning and exploration. No classroom
routine can substitute which is possible while working in real situations.
Application of theoretical knowledge to practical situations is the bonanzas
of this survey.
Without a proper combination of inspection and perspiration, its not easy
to achieve anything. There is always a sense of gratitude, which we express
to others for the help and the needy services they render during the
different phases of our lives. I too would like to do it as I really wish to
express my gratitude toward all those who have been helpful to me directly
or indirectly during the development of this project.
I would like to thank my professor MISS.NISHA GUPTA who was always
there to help and guide me when I needed help. Her perceptive criticism
kept me working to make this project more full proof. I am thankful to her
for his encouraging and valuable support. Working under her was an
extremely knowledgeable and enriching experience for me. I am very
thankful to her for all the value addition and enhancement done to me.
No words can adequately express my overriding debt of gratitude to my
parents whose support helps me in all the way. Above all I shall thank my
friends who constantly encouraged and blessed me so as to enable me to do
this work successfully.

JAIDEEP

INDEX

S.No.

PARTICULARS

1.

COMPANY PROFILE

2.

INTRODUCTION TO TOPIC

3.

OBJECTIVES OF THE STUDY

4.

RESEARCH METHODOLOGY

5.

DATA ANALYSIS AND INTERPRETATION

6.

FINDINGS

7.

CONCLUSION

8.

LIMITATIONS

9.

SUGGESTIONS

10.

BIBLIOGRAPHY

CHAPTER 1

HDFC Ltd.

INTRODUCTION:
HDFC was incorporated in 1977 with the primary objective of meeting a social need - that of
promoting home ownership by providing long-term finance to households for their housing
needs. HDFC was promoted with an initial share capital of Rs. 100 million.
Their objective, from the beginning, has been to enhance residential housing stock and
promote home ownership.
Now, their offerings range from hassle-free home loans and deposit products, to property
related services and a training facility. They also offer specialized financial services to their
customer base through partnerships with some of the best financial institutions worldwide.

Business Objectives:
Helping Indians experience the joy of home ownership.

The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner, and to
promote home ownership.
Another objective is to increase the flow of resources to the housing sector by
integrating the housing finance sector with the overall domestic financial markets.
As they 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 clientele and
the desire to give them your best. Today, nearly three million satisfied customers whose
dream they helped realize, stand testimony to their success.

Housing Finance Sector:

Against the milieu of rapid urbanization and a changing socio-economic scenario, the
demand for housing has grown explosively. The importance of the housing sector in the
economy can be illustrated by a few key statistics. According to the National Building
Organization (NBO), the total demand for housing is estimated at 2 million units per year and
the total housing shortfall is estimated to be 19.4 million units, of which 12.76 million units is
from rural areas and 6.64 million units from urban areas. The housing industry is the second
largest employment generator in the country. It is estimated that the budgeted 2 million units
would lead to the creation of an additional 10 million man-years of direct employment and
another 15 million man-years of indirect employment.
Having identified housing as a priority area in the Ninth Five Year Plan (1997-2002), the
National Housing Policy has envisaged an investment target of Rs. 1,500 billion for this
sector. In order to achieve this investment target, the Government needs to make low cost
funds easily available and enforce legal and regulatory reforms.

Organizational Goals:
HDFC's main goals are to:

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, and
To grow through diversification by leveraging off the existing client base.

HDFC Founder:
MAN WITH A MISSION: Hasmukhbhai Parekh
If ever there was a man with a mission it was Hasmukhbhai Parekh, their Founder and
Chairman-Emeritus, who left this earthly abode on November 18, 1994.

Born in a traditional banking family in Surat, Gujarat, Mr. Parekh started his financial career
at Harkisandass Lukhmidass - a leading stock broking firm. The firm closed down in the late
seventies, but, long before that, he went on to become a towering figure on the Indian
financial scene.
In 1956 he began his lifelong financial affair with the economic world, as General Manager
of the newly-formed Industrial Credit and Investment Corporation of India (ICICI). He rose
to become Chairman and continued so till his retirement in 1972.
At the ripe age of 60, Hasmukhbhai started his second dynamic life, even more
illustrious than his first. His vision for mortgage finance for housing gave birth to the
Housing Development Finance Corporation - it was a trend-setter for housing finance in the
whole Asian continent.
He was a true development banker. His building up HDFC without any government
assistance is itself a brilliant chapter in financial history. His wisdom and warmth drew
people from all walks of life to him, for advice, guidance and inspiration soft spoken man of
few words, Mr. Parekh nevertheless held strong and definite views with a quiet conviction.
He was always concerned with building bridges, improving and encouraging communication
between people.

Organization & Management:

HDFC is a professionally managed organization with a board of directors consisting of
eminent persons, professionals who represent various fields including finance, taxation,
construction and urban policy & development. The board primarily focuses on strategy
formulation, policy and control, designed to deliver increasing value to stakeholders.
HDFC has a staff strength of 1490 (as on 31st March, 2009), which includes professionals
from the fields of finance, law, accountancy, engineering and marketing. Click here for details
of Senior Management.

HDFC HOME LOAN PRODUCTS

1)
2)
3)
4)
5)
6)
7)

Home Loan
Home Improvement Loan
Home Extension Loan
Land purchase loan
Short Term Bridging Loan
Loan to Professionals for Non Residential Premises
Home Equity Loan

HOME LOAN
HDFC offers loans to individuals to purchase (fresh/resale) or construct
houses. Home loan be applied individually or jointly. Proposed owner of the
property will have to be co-applicants. However the co-applicants need not to
be the co-owners.

PURPOSE

Purchase of flat, row house, bungalow from developers.

Existing freehold properties.
Property in an existing or proposed cooperative society or apartment.
Self construction.

MAXIMUM LOAN
85% of the cost of property (including the cost of land) and based on the repayment
capacity of the customers.

MAXIMUM TERM
20 years subject to the retirement age.
ELIGIBILITY
Salaried employees
Self employed professionals
Self employed businessman
Applicants can either be Resident or Non-Resident
Age of the applicant should not be more than 65 years

HOME IMPROVEMENT LOAN

Home improvement loan facilitates internal and external repairs and other structural
improvements like paintings, water proofing, plumbing and electric works, tilling and
flooring, grills and aluminium windows.

PURPOSE
External repairs

Tilling & flooring

Internal & external flooring

Waterproofing and roofing

Plumbing & electric work

Grills & aluminium windows

Construction of underground/ upper water

tank

Paving of compound walls (with stone/tiles

etc)

Bore well

Waterproofing on terrace

MAXIMUM LOANS
For Existing customers : 100% of the cost of improvement
For New customers : 85% of the cost of improvement

MAXIMUM TERM
15 years subject to retirement age.

HOME EXTENSION LOAN

Home extention loan facilitates the extension of an existing dwelling unit. This type of
loan makes it convinient to extend or add space to home.

PURPOSE
This loan is specifically for the extension purpopse. Be it an additional room, a larger
bathroom or even enclosing an open balcony.
MAXIMUM LOAN
85% of the cost of extention.
MAXIMUM TERM
20 years subject to retirement age.
LAND PURCHASE LOAN

PURPOSE
HDFC Land purchase loan is a convenient loan facility to purchase land, whether it be
to build a house or an investment.
MAXIMUM LOAN
85% of cost of land and based upon the repayment capacity of the customer.
MAXIMUM TERM
15 years subject to customer retirement age.
SHORT TERM BRIDGING LOAN

PURPOSE
Short Term Bridging loan makes customer realize their dreams of buying a bigger and
better home and give them time to sell their existing property to pay off the loan. This is
a short term loan to help customers with the interim period between the sale of their old
homes and the purchase of a new home. Customers repay the loan by paying
monthlyinstallment or interest on the loan with the lump sum payments within 2 years.
Hence customers gets 2 years to sell the property repay the loan.
MAXIMUM LOAN

90% of the cost of new property

MAXIMUM TERM : 2 years

LOAN TO PROFESSIONALS FOR NON RESIDENTIAL PREMISES

This loan facilitates professional to purchase and construct their own office premises or even
renovate their existing office premises.
PURPOSE
Purchase
Constuction
Improvement of office
MAXIMUM LOAN
85% of the cost of property
MAXIMUM TERM
15 years subject to customer retirement age.
HOME EQUITY LOANS

HDFC Home equity loans helps to encash the present market value of the property by
taking a loan by mortgaging the property.
PURPOSE

Higher eduation of the children

Marriage expenses
Medical expenses
Business purpose
MAXIMUM LOAN

For Existing customers: 60% of the market value and present loan outstanding.

For new customers: 50% of the market value of the property.

MAXIMUM TERMS
PROPERTY TYPE

REPAYMENT OPTION

NO. OF YEARS

Residential

EMI Based

15

Non Residential

EMI Based

10

Residential & Non Residential

Simple Interest

CHAPTER 3

OBJECTIVES

To know about the HDFC home loan and its products.

To have the first hand information on loan procedure, sanctioning and

disbursement in HDFC ltd.

To compare the performance of HDFC with other market players.

To study about the financial position for the financial year 2009-10 in
comparison with position in financial year 2008-09.

STAGES OF HOME LOAN

Applicati
on

Scanni
ng

Data
Entry

Recommendati
on
Over (ROVR)

Disburseme
nt of the
loan

Sanctioni
ng

Double
Checking
Over

After Sales
Services

The representation shown above is not a perfect copy of the actual process. This is because
these stages are taking place simultaneously and one application is being taken care for by the
experienced employees of both HDFC Ltd service centre. Also the applicant may be asked to
send information or may be asked questions regarding his requirement and/or his documents
for his own convenience
Hence the loan application may or may not shuttle through different stages.

APPLICATION STAGE

This is the stage where the Application Form first reaches the concerned Service Centre/
workstation. Here all the documents in the application are reviewed by the experienced staff
present at the workstation. The HDFC Ltd employee who reviews the file checks to see
whether all documents are present and in their proper place, if the documents are duly filled,
not fake, attested by authority and present in order. In case any document is missing the
applicant is contacted electronically or by mail or by telephone and requested for the
document to be submitted. This exercise is called FOLLOW UP. The credit appraisal of the
loan application starts at this stage. The workstation employees compute the gross salary, IIR,
FOIR, Loan Eligibility ratio etc. The credit worthiness of the applicant is calculated here.
It is also at this stage that the QUICK DATA ENTRY of the loan application is done to create
a serial no. of the application. After that another page appears and more data is entered .It is
now that a special and unique LOAN A/C NO. is created under which all the loan processes
will be carried out. The number that has been generated is communicated to the applicant by
means of a letter and/or electronic communication. The system of electronically recording the

data helps to create ready reference, a proof ,helps in quick and easy processing of the data. It
also helps to very easily and quickly share data with other employees of HDFC.
The next and important processing performed at the workstation is that of filling up a
document known as the INTERVIEW SHEET for processing individual loans. It
contains various simple entries like
1.Name of borrower
2. Name of co-borrower
3. Income details
4. Family background and permanent address etc
5. Gross Salary
6. Rental
7. Other incomes
8. Obligations
9. Remarks: This column contains the various findings that the employee has found out
after thorough review of the applicants documents such as bank statement, salary slip
etc.
Hence the interview sheet contains the important findings which the employee has
Collected after careful review of the various documents .The interview sheet helps
to cut corners and helps save time by not having other employees to go through the
documents again and again .It hence acts as a source of quick reference.

After all this has been performed well enough the loan application will be arranged
in a file and all it will be given its loan a/c no which also acts as its file no..
The file is now ready to be sent to the HUB (Senior Officers) where further processing will
take place. Next step is scanning of the documents.
SCANNING
In this stage the various important documents of the applicant are scanned. This helps to
create their electronic copy which acts as a ready reference, a proof, and can also be shared
and utilized by other employees of HDFC Ltd.
DATA ENTRY
The file has been sent to the bank head office or the HUB .At HUB there are many experts
with their own specializations. These officials review the various parts of the file again and
perform many specialized tasks.

Data entry is also one of these tasks .This entry is much more different and complex
as compared to the earlier performed Quick Data Entry. An exhaustive amount and type of
information has to be entered into the ILPS system ranging from Personal Details,
Employment Details to Property Rate History and Customer Interactions.
RECOMMENDATION OVER (ROVR)
The Recommendation over is also referred to as the First Appraisal. At this stage certain
specially appointed persons have been given the responsibility of recommending a loan
These people have to take special care of reviewing every document, and all the small details
that need to be considered before considering the loan application to be valid.
After this the file is sent to another specially appointed person as explained below. At this
stage if any correction or mistake is present it can be sent back to the workstation.
DOUBLE CHECKING OVER
As the name suggests at this stage a specially appointed person will double check all the past
proceedings. They will examine the Loan file for any discrepancies, any missing and /or
misplaced documents, the Credit Appraisal results, etc.
This is a very important stage and must be handled with exceptional care. This is because a
mistake at this stage can cause a great loss to the company. The Double checker is responsible
for the ultimate sanctioning of the loan .If any mistake is done at this stage there is no going
back and hence no protection. HDFC takes great care while appointing double checkers
.They should have completed a select number of years with the company and should have
shown exemplary performance and must possess experience.

SANCTIONING
An authorized sanctioning authority within HDFC itself will review the remarks of Double
Checker. If it considers the loan suitable to be sanctioned it gives it approval . After it has
given its approval stamp the ILPS system will automatically send a letter to the Applicant that
his loan has been sanctioned. After this approval the Applicant can go to whichever Service
Centre to get his loan disbursed.
SPECIAL CASE
A special case can arise if the applicant has not mentioned the property for which he wants to
take a loan. In that case the applicant can let the case be remain pending . This means that the
Applicants loan request will be considered to be complete even though he has not decided the
property. However the Applicant is expected to finalize the property in a short time
A Property Address is necessary to:
1. Get the loan disbursed

2. Process the Legal and Technical Appraisal of the property and its Papers.
DISBURSEMENT
The last and final stage in the Home Loan process is that of disbursement. After the
sanctioning has taken place the applicant becomes a registered customer of HDFC Ltd
.He/She can now take the disbursement of the loan from any of the various service centre of
HDFC .The loan shall be disbursed in one Lump sum or in suitable installments to be decided
by HDFC with reference to the need and/or progress of construction. The borrower hereby
acknowledges the receipt of the loan disbursed as indicated in the receipt.

CREDIT APPRAISAL
Credit appraisal is one of the most important and significant step in the Home Loan process.
In case of home loans we either create new accounts or maintain pre existing ones. Credit
appraisal is however a part of sanctioning new loans or enhancing the existing one.
Credit Appraisal starts from the moment, the documents for Loan from the customers has
taken, which is then sent to back office for processing which is called HUB.
CATEGORIES
In case of Credit appraisal there are three main categories:
1. SALARIED PERSON
Here the Credit Appraisal is done for a salaried person .HDFC try to compute the credit
worthiness of a salaried person .It means that the person should be employed as an

employee in a recognized organization. The organization may be public or private. The

person must have proof to prove his employment like credit documents etc.
2. SELF EMPLOYED PERSON
The nature of Credit Appraisal done for a self employed applicant is slightly more
complex. This is due to the presence of enormous bank statements as well as transactions
involved in business. As conducting Business in modern times is a capital intensive
process the bank statements of self employed persons are large and much more complex.
The statement runs into a large number of pages due to the multiple numbers of
transactions. Apart from that their income statements are also quite complex due to
presence of many components.
Hence in the case of a self employed person demanding a loan the credit appraisal has to
be done very carefully .For this very purpose HDFC Ltd has appointed Specialized Credit
Appraisers and a specialized Self employed Committee. These consist mainly of Chartered
Accountants. They handle the important job of appraising the credit worthiness of the self
employed applicants.
3.

SELF EMPLOYED PROFESSIONAL

The self employed professionals include people like Doctors, Chartered accountants ,
Engineers etc. Only HDFC recognizes these professionals as a separate category and has
hence developed a comparatively smoother procedure for their Credit Appraisal and
sanctioning of loan.

PRECAUTIONS
The credit appraisal is an important step for both the borrower and HDFC .Hence it necessary
to take all precautions.
All calculations must be done with correct figures. The data entry in the system must
match the actual data. Also care should be taken in places like the decimals and
rounding off. The data entries should not be going outside the space provided to
them.
The source of the data should be mentioned so that another person may easily verify
the facts and figures
Sometimes it may happen that the Applicant has intentionally or by mistake not
mentioned the full status of his obligations. The common situation in this case
are
A.
He has not revealed of any loan that he may be paying off from an
undisclosed bank account in any other bank
B. He is not disclosing information related to any defaults, Revolving accounts
such as Debit card, Credit card etc.
In these conditions it is difficult to correctly compute the credit worthiness of the person. As a
result an unscrupulous element might get a loan .This will lead to loss to both HDFC and its
honest customers.
The precaution taken by HDFC in this case is that it contacts CIBIL (Credit Bureau of India
Ltd) which is the mega Repository of financial data in India .HDFC electronically requests

CIBIL to reveal information it possesses pertaining to the persons financial obligations.

CIBIL passes on the information by means of a fax containing all revolving accounts, loans
and liabilities.
TERMS AND CONDITIONS OF HDFC HOME LOANS
HDFC has always been market oriented and dynamic with respect resource mobilisation as
well as lending programme. It provides loans to meet all requirements of the customers to
make their house a home. However following are the conditions which are to be met by the
customer before applying for a loan.
LOAN AMOUNT CONDITIONS
HDFC finances upto 85% maximum of cost of property (agreement value + stamp
duty + registration charges)
Repayment capacity takrs into consideration factors such as income, assets,
qualifications, number of dependents, spouse income, liabilities, stability and
continuity of occupation and saving history.
The loan amount of the individual is also subject to Instalment to Income Ratio (IIR)
which is 40% and Fixed Obligation Income Ratio (FOIR) which is 45%.
Maximum loan amount to an individual connot exceed Rs 1crore.
SUPPORTING DOCUMENTS
First of all when a customer came all documents are checked by the workstation which are
directly in contact with the customers. Necessary documents required are as follows.
FOR ALL APLICANTS
1.
2.
3.
4.

Allotment letter of the co-operative society /association of apartment owners.

Copy of the approved drawings of proposed construction /purchase /extention.
Agreement of sale /sales deed /detailed cost estimate cost from architect.
If an applicant have been present employment /business or profession for less than a
year, mention on a separate sheet details of occupation for previous five years , giving
position held, reasons for change and period of the same.
5. Applicable proceesing fees.
6. Residence proof and Identity Proof.
RESIDENCE PROOF
IDENTITY PROOF
Ration Card

Driving License

Passport

Passport

Bank Account Statement

Pan Card

Voters Identity Card

Voters Identity Card

Letter from recognized public authority

Identity Card issued by Employer(if

employed in state/central Govt.)

7. Certificate of loan outstanding issued by the lender ( for refinance cases only)

8. Any other information regarding your repayment capacity that is necessary and will
assist HDFC in appraising the loan proposal.
EMPLOYED CASE
1. Verification of Employment Form with only Part I filled in.
2. Latest original salary slip/salary certificate showing all deductions.
3. If a job is transferable, permanent address where correspondence relating to the
applicant can be mailed.
4. A letter from employer agreeing to deduct the EMI towards repayment of the loan
from applicant salary. This will expedite the processing of loan application.
5. Updated original Bank Passbook/ or Bank Statement for the last six months.
6. Photocopy of Form 16 (issued by the employer) for the last assesment year.
SELF EMPLOYED
1.Balance Sheet , Profit & loss and ITR for the last three years.
2. Business Profile.
3. Copies of individual Tax Challans for the last three years.
4. Copy of advance Tax Challan (if any).
5. Updated original Bank Passbook/ or Bank Statement for the last twelve months.

CREDIT APPRAISAL
After the documents are checked by the workstation, documents are rechecked by the Senior
Officer as well as File Credit Investigation Department (FCI) prepares income sheet and
check all documents of the file. After credit appraisal loan is approved an disbursed to the
conditions or requirement.
RATE OF INTEREST TILL 30 JUNE,2010 (DUAL RATE)
Till 30 June, 2010 all applications received will be locked by Dual rate.
SLAB

RATE OF INTEREST

Till March 2011

8.25%

Till March 2012

9%

Next Floating rate

PLR 4.75%

RATE OF INTEREST
SLAB

HOUSING
LOAN

PLOT
LOAN

Upto 30 lakhs

8.75%

9.25%

30-50 lakhs

9%

9.5%

Above 50 lakhs

9.25%

9.75%

EQUITY LOAN

Loan against property -11.25%

FIXED
RATE OF
INTEREST
Fixed rate -14%

PROCESSING FEES AND OTHER CHARGES

A processing fees of 1% of the loan amount is charged from the applicant which includes all
the fees and the charges at the time of sanctioning of the loan application. Service tax is also
applicable and will be charged on the fees collected.
REPAYMENT
Loan is repaid in EMI comprising principal and interest. EMI commences from the first of
the month following the month in which the disbursement of the loan has been completed.
Due date of payment of first EMI is the 5th day of the month following such month.
Interest is paid on the portion of the loan disbursed which is called Pre-EMI. Pre-EMI interest
is payable every month from the date of each disbursement upto the date of the
commencement of EMI. Customer may opt to pay the EMIs by direct deduction from their
monthly salary. They can also issue post dated cheques and can also issue standing instruction
to their bankers or can pay the installment at any of the HDFC collection centers.

FLEXIBILITY IN REPAYMENT
Following are the repayment option features being offered by HDFC to their customers:
Step up Repayment Facility (SURF): This scheme help young executive to take a
bigger loan today based on an increase in their future income, this will help
executives to buy a bigger home today. In this EMIs of the customer increases in
future.
Flexible Loan Installment Plan (FLIP): Often customers, parents and their children
wish to purchase property together. The parents are near to retirement and their
children just started their work. This option help customers to combine their income
and take a long term home loan wherein the installment reduces after the retirement.
Tranching: To help the customers save their interest, HDFC introduced a special
facility known as Tranching. In this customer has the option to start their EMIs even
before the full disbursement of the loan. By this facility customer can repays their
loan faster.
PREPAYMENT FACILITY

Customer can repay the loan ahead of schedule by making part or full prepayment. If the
prepayment is made within three years of the first disbursement, early redetmption charges of
2% of the amount being prepaid is payable, but if prepayment is made after three years then
no charges is charged by HDFC.
DISBURSEMENT OF THE LOAN
HDFC disbursed the loan after the property has been technically appraised, all legal
documentation has been completed. The loan will be disbursed in full or in suitable
instalments (normally not exceeding three in number) taking into account the requirements of
the funds and progress of construction.

Practical example to explain how banks arrive at eligibility of home loan

applicants
Vijay is a maintenance engineer with a private firm. His monthly takehome salary is around
Rs 35,000. With many public sector banks offering singledigit interest rates, Vijay feels this is
the best time to invest in his dream house. A two-bedroom house on the outskirts costs about
Rs 16 lakhs. Will any banker lend him this money? Is he eligible for a home loan of Rs 16
?lakhs
There are numerous factors that banks take into consideration when computing your loan
eligibility. Age of the applicant, his salary, repayment/credit history, savings, profession,
location of property, health condition and other debts have a direct bearing on the loan
amount sanctioned. Some professions are categorised as negative or risky by the lenders.
People in such professions may find it difficult to get a loan sanctioned. On the contrary,
some jobs are considered more stable with lesser probability of default. They are on the
.preferred list of most lenders
It is imperative that the property an applicant wishes to purchase falls within the
geographical limits as defined by the bank. As a thumb rule, banks will lend to applicants
who can set aside 40 percent of their monthly income towards their home loan repayments.
Based on
this, an individual's loan eligibility is calculated. It is assumed that a person who earns more
.can set aside more money towards his EMI repayments

?How does a bank compute your loan eligibility

Most loan eligibility calculators available on the Internet are based on a formula. The home
loan eligibility, in lakhs, is arrived at by dividing the amount available for the loan repayment
.with the borrower by the loan installment per lakh for the given tenure
The simplest way to increase your loan eligibility is by increasing the loan tenure. Consider
Vijay's case. At 9 percent rate of interest and for a tenure of 10 years, banks will sanction him
not more that Rs 12 lakhs. However, for a greater tenure of 20 years his loan amount shoots
up to Rs 18 lakhs. However, the longer the tenure of the loan, greater is the cost of
.borrowing
Applying jointly, with your parent or spouse, increases your loan eligibility. The incomes of
both applicants are combined when computing the loan eligibility. You can almost double
.your loan eligibility with a joint loan

RESEARCH METHODOLOGY

SCOPE OF THE STUDY:

The study focuses on prevailing rate of interest, percentage of funding, tenure of home loan,
fee etc being charged by other banks in comparison to HDFC.
From this study, HDFC can identify the difference between the schemes and charges charged in
comparison to with its competitors. Hence HDFC can change their schemes to perform better than
other banks and can attract more customers. The present study focuses on analyzing the balance sheet
and profit and loss statement of HDFC for the last two years.

METHODS OF COLLECTION OF DATA

For the project number one i.e. The Comparative Study of Home Loans provided by HDFC
LTD. With other financial institutions various banks like SBI, ICICI, AXIS Bank etc. were
surveyed. The whole procedure of the disbursement of loan, various schemes, interests rates
etc. Factors were obtained from various banks. The whole data was the organized in excel
files and later on considering all the factors the whole data was analyzed.
SECONDARY DATA
Secondary data refers to the one which has already been collected by someone else .The
secondary data was collected from the office account records and annual report of the
company. Secondary data sources for this study are:

Websites of HDFC and other financial institutions

Pamphlets/Brochures/Magazines
Annual report
Newspaper/ Articles
Mangers of different banks deal in housing loans.

PRIMARY DATA
Primary data is collected from different banks of Chandigarh (shown above as Major Players)
regarding the comparative analysis of housing loan schemes offered by different financial
institutions.

DATA ANALYSIS AND FINDINGS

A) Comparison of home loans

The comparative study of HDFC home loan products and process was conducted with similar
services offered by other financial institutions. The study was done on the leading market
players like ICICI, SBI, AXIS Bank etc. The study illustrates prevailing rate of interests,
percentage of funding, tenure of home loan and fees , documentation and repayment options
features etc being launched in other banks .
From this study, HDFC can identify the difference between their
schemes and charges charged by other banks. Therefore this can help HDFC to change their
schemes accordingly so as to perform better than other financial institutions.
B) Financial Analysis
The study of Balance Sheet and Profit and loss A/c of HDFC Ltd. for two years i.e. 2008-09
and 2009-10.The financial statements for these two years help me out in preparation of Ratio
Analysis and Cash Flow Statement of HDFC Ltd.
From this study of Ratio Analysis and Cash Flow Statements to
interpret the results that the future of HDFC Ltd. is bright.

CHAPTER 7(A)

BUSINESS PROFILE(for self employed people)

BANKS

STATE BANK
OF INDIA

IDBI BANK

UBI

ICICI BANK

DOCUMENTS

1. SALES DEED
2. MUTATION
3. LEGAL
SEARCH
REPORT(BANK
ADVOCATE)
4. DESIGN &
ESTIMATE
(ARCHITECT) 5.
VALUATION
REPORT
6. ITR (LAST 3
YEARS)
7.BALANCE
SHEET & P/L
(LAST 3
YEARS)
8. BANK
STATEMENT
(CURRENT &
SAVINGS, 6
MONTHS)
9. BUSINESS
PROFILE
10. ID PROOF
11. RESIDENCE
PROOF
12. PHOTOS
13. PROPERTY
PAPERS
UPTO 30 LAC
8.75%
30- 50 LACS
9%
> 50 LACS

9.25%

ITR &
BALANCE
SHEET &P/L
(LAST 2
YEARS)
&
OTHERS SAME

ALL SAME

ALL SAME

UPTO 30 LAC
8.75%
30- 50 LACS
9%
> 50 LACS

9.25%

UPTO 5 YEARS
9%
5 10 YEARS
9.25%
10-15 YEARS
9.5%
15- 25 YEARS
9.5%

UPTO 30
LACS
1st YEAR
8.25%
2nd YEAR
9%
3rd YEAR 9%

RATE OF
INTEREST

MORE THAN
30 LACS
1st YEAR
8.25%
2nd YEAR
9.25%
3rd YEAR
9.25

PROCESSING
FEES

0.5% OF LOAN
TAKEN

1% OF LOAN
TAKEN (.5%
NEGOTIABLE
FOR GOVT
EMPLOYEES)

0.5% OF LOAN
TAKEN + 1500
LAWYERS FEES
(NOT
NEGOTIABLE)

REPAYMENT
TERMS

A. MAX 60% OF
NET INCOME
B.BELOW 55
YEARS -MAX 20
YEARS
REPAYMENT
PERIOD OR 65
YEARS
85% of the cost of
property OR 4
times the amount
of income (Avg of
3 years' income)

BELOW 55
YEARS -MAX
20 YEARS
REPAYMENT
PERIOD OR 65
YEARS OF AGE

FOR FLAT/PLOT
MAX YEARS - 20
YEARS
CONSTRUCTION
MAX YEARS - 10
YEARS

85% of the cost

of property
( below 30 lakhs)
OR 80% of the
cost of property
(above 30 lakhs)

GROSS INCOME
- 4 TIMES MAX
NET INCOME - 5
TIMES &
MAX AMOUNT 50 LACS &
FOR ( 7
METROS)- 100
LACS

OWN SOURCE

NIL

NIL ( AFTER 6
MONTHS)

REFINANCE

2%

2%

INSURANCE OF
THE PROPERTY

YES
(OPTIONAL)

YES
(OPTIONAL)

NO

AREAS OF
FUNDING

Any area inside or

outside tricity the
condition being it
should not have
been given on
GPA or through
Share transfer

Any area inside

or outside tricity
the condition
being it should
not have been
given on GPA or
through Share
transfer

NOT OUTSIDE
THE TRICITY

Any area inside

or outside tricity
the condition
being it should
not have been
given on GPA
or through
Share transfer

GURRANTOR

Guarantor is
required(one who
is an Income Tax
Assessee and
he/she has to have
an account in
State bank of
india)

NOT
REQUIRED

DEPENDS UPON
CASE

NOT
REQUIRED

ELIGIBILITY
OF LOAN
AMOUNT

0.5% OF
LOAN TAKEN
( IF LOAN
ALREADY
EXIST THEN
NEGOTIABLE
.25%)
MAX 20
YEARS OR 60
YEARS OF
AGE

85% of the cost

of property OR
100% of the
amount of
registry.

90%
PREPAYMENT
ANYTIME
STARTING
FROM THE
NEXT MONTH
OF THE
LOAN. 12 EMI
TO RUN
AFTER THAT.
YES
(OPTIONAL)

ADDITIONAL
SECURITY

N/A

DEPENDS
UPON CASE

DEPENDS UPON
CASE

N/A

BUSINESS
PROFILE(for
self employed
people)
BANKS
DOCUMENTS

RATE OF
INTEREST
PROCESSING
FEES
REPAYMENT
TERMS

AXIS BANK
ALL SAME

UPTO 30 LACS 8.75%

ABOVE 30
LACS 9.25%
0.5% OF LOAN
TAKEN
MONTHLY EMI
FOR 25 YEARS 822
FOR 20 YEARS 884
FOR 15 YEARS 999

BANK OF INDIA
1.PHOTOGRAPHS
2.IDENYITY PROOF
3.LOCAL ADDRESS
PROOF 4.BANK
STATEMENT (LAST
6 MONTHS)
5.ITR (LAST 3
YEARS)
6.BALANCE SHEET
& P/L (LAST 3
YEARS)
7.PROOF OF WORTH
8.SALE
AGRREMENT
9.COPY OF
APPROVED MAP.
10ESTIMATION OF
CONSTRUCTION.
11. COPY OF TITLE
DEED & PREVIOUS
TITLE DEED

HDFC Ltd.
1.BALANCE SHEET , P
& L AND ITR (LAST
THREE YEARS)
2. BUSINESS PROFILE
3. COPIES OF
INDIVIDUAL TAX
CHALLANS FOR THE
LAST THREE YEARS.
4. COPY OF ADVANCE
TAX CHALLAN (IF
ANY)
5.BANK STATEMENT
( LAST 12 MONTHS)

.55% OF THE LOAN

1% OF LOAN AMOUNT
AMOUNT
15 YEARS - 1029 PER MAX TO 20 YEARS
LACS 10 YEARS 1267 PER LACS

ELIGIBILITY
OF LOAN
AMOUNT

OWN SOURCE
REFINANCE
INSURANCE OF
THE PROPERTY
AREAS OF
FUNDING

GURRANTOR

ADDITIONAL
SECURITY

FOR 10 YEARS
1253
85% OF THE
COST OF
PROPERTY OR
55% OF THE
NET INCOME

75% OF THE COST

OF PROPERTY OR 4
TIMES LAST THREE
YEARS AVERAGE
ANNUAL INCOME

NIL
NIL

NIL
0.65%

YES
(OPTIONAL)

REQUIRED FOR
BUILDING NOT FOR
LAND

Any area inside

or outside tricity
the condition
being it should
not have been
given on GPA or
through Share
transfer
NOT
REQUIRED

Any area inside or

outside tricity the
condition being it
should not have been
given on GPA

LOCAL
GURRANTOR IN
CAES OF OUTSIDE
TRICITY, MIGHT
REQUIRE KEEPING
THE PROPERTY
INTO
CONSIDERATION

A. IIR (INCOME
INSTALMENT RATIO)
= EMI/GROSS INCOME
MAX 40%, IN CASE
MORE EMI REDUCE
B. FOIR
= ALL
OBLIGATION/GROSS
INCOME
, MAX
TO 35%
YES (OPTIONAL)
APPROVED PROJECTS
ONLY & FLATS
TRANSFERABLE ON
GPA & ALSO FUNDED
WITH ADDITIONAL
SECURITY i.e 1.5
TIMES THE GPA
PROPERTY
DEPENDS UPON CASE

DEPENDS UPON CASE

COMPARATIVE ANALYSIS OF VARIOUS BANKS FOR HOME LOANS (for

employed people)

Maximum loan amount

Rate of interest:
( FLOATING )
below 30 lakhs

30 lakhs - 50 lakhs
more than 50 lakhs

STANDARD
CHART.
75% of the cost of
the property

BANK OF INDIA.

8.5% floating

9.25%(for 10 years n
above)

75% of the cost of

Property or four times
the avg income of last
three years

9% ( for below 10
years)

HDFC
LIMITED
85% of the
cost of
property

till 30th june

all
applications
received can
be locked in
under dual
rate. March
2011 - 8.25%,
Till March
2012 - 9%
3rd year
onwards
Floating
rate( PLR4.75%)
housing loan:
upto 30
lakhs- 8.75%,
30 - 50 lakhs
-9%, above
50 lakhs 9.25%
Plot loan:
Upto 30 lakhs
- 9.25%, 30 50 lakhs 9.5%, above
50 lakhs 9.75%
following
loans are
given when
the person
has home
loan
Equit
loan ( loan
against
property)
11.25%
top up loan 10.25%
education

Processing charges
Pre-payment charges:

0.55%
51,229.20

own source
Refinance
Broken Interest Charges

Nil
0.65%

Additional security

in case of GPA

not required

Insurance of the property

required for
building

required for building

not for land
anywhere except GPA

Area of funding

Guarantor

depends on case to
case

local guarantor in case

of outside tricity.
Might require a
guarantor in tricity
keeping property into

loan - upto 30
lakhs 9.75%, 30 50 lakhs
-10%, above
50 lakhs 10.25%
1% of the
loan amount
fixed: 2% if
the amount
being repaid
is more than
25% of the
opening
balance
adjustable:
2% if the
amount being
repaid is
more than
25% 0f the
opening
balance and is
paid within 3
years of the
date of first
disbursement.
in case of
GPA
optional
any area but
the project
has to be
approved by
the MC. GPA
property is
also financed
but with an
additional
security of
1.5 times the
cost of the
GPA property.
depends on
case to case

consideration.

Resale of the property

Additional documents

DOCUMENTS
REQUIRED:
(1)Income tax return with
computation (years)
(2)Balance sheet and Income
statement (years)
(3) Six months bank
statement
(4) Residence proof
(5) Pan card
(6)Landline bill original
(7) Business Profile
(8) Property paper
(9) Passport size photograph
(10) R C Photocopies

COMPARATIVE
ANALYSIS OF
VARIOUS BANKS

sale agreement, copy

of the title deed and
previous title deeds,
copy of the approved
map duly signed,
estimation of the
construction/
renovation cost, any
other statutory
permission as required
by the local authority.

area to be
approved by
MC

not required

not required

(applicant +
guarantor)
not required

not required

not required

FOR HOME LOANS

(for employed
people)
STATE BANK
OF INDIA
85% of the
cost of
property OR 4
times the
amount of
income (Avg
of 3 years'
income)

AXIS
BANK
85% of the
cost of
property

IDBI BANK

Rate of interest:
( FLOATING )
below 30 lakhs

8.75%

8.75%

8.75%

30 lakhs - 50 lakhs

9%

9%

9%

more than 50 lakhs

9.25%

9.25%

9.25%

Processing charges

0.50%

0.50%

1% (negotiable)
(.50% for govt

Maximum loan
amount

Pre-payment charges:

85% of the cost

of property
( below 30 lakhs)
OR 80% of the
cost of property
(above 30 lakhs)

ICICI
BANK
85% of the
cost of
property
OR 100%
of the
amount of
registry.

8.25% for
first year;
9% for
second
year;
9.25%
onwards
8.25% for
first year;
9% for
second
year;
9.25%
onwards
8.25% for
first year;
9% for
second
year;
9.25%
onwards
0.5% ;
0.25%( if
loan
already
existing)
90%
prepayment
anytime
starting
from the
next month
of the loan.
12 EMIs to

run after
that.
own source

Nil

nil

nil (after 6
months)

Refinance

2%

nil

2%

Broken Interest
Charges

Additional security

not required

not
required

depends upon the

case

not
required

Insurance of the
property

Yes

yes

optional

not
required

Area of funding

Any area
inside or
outside tricity
the condition
being it should
not have been
given on GPA
or through
Share transfer

Guarantor

Guarantor is
required(one
who is an
Income Tax
Assessee and
he/she has to
have an
account in
State bank of
india)

Not
required

yes in case of
business,no in
case of salaried

not
required

Resale of the property

Allowed

allowed

allowed with
security

allowed

Additional documents

Registered
Sale deed,
Mutation
copy, map and
estimate
approved by
the authority

Not
required

depends upon the

case

Map and
Area to be
approved
by the MC

not required

not
required
not
required

not required

DOCUMENTS
REQUIRED:
(1)Income tax return
with computation
(years)
(2)Balance sheet and
Income statement
(years)
(3) Six months bank
statement
(4) Residence proof
(5) Pan card
(6)Local Address
Proof
(7) Business Profile
(8) Property paper
(9) Passport size
photograph

HOUSING DEVELOPMENT FINANCE CORPORATION

RATIO ANALYSIS
for year ending March 31, 2010

1.CURRENT RATIO: CURRENT ASSETS/CURRENT LIABILITIES

For the Year 2009-10

Rs.53,59,17,46,262

= 2.018:1

Rs.26,56,16,40,847
For the year 2008-09
Rs.18,76,16,65,268

= 0.651:1

Rs.28,83,36,87,487
Note: 1.Current Assets Are Taken Except Loans And Advances
2. Current Liabilities Are Taken Except Provisions

2.ABSOLUTE LIQUID RATIO: ABSOLUTE LIQUID ASSESTS/CURRENT

LIABILITIES

For the Year 2009-10

Rs.5,22,41,47,60,065- Rs.5,85,606
Rs.26,56,16,40,847
= Rs.52,24,08,90,459

= 1.97:1

Rs.26,56,16,40,847
For the Year 2008-09
Rs.17,18,48,32,905

= 0.338:1

Rs.28,83,36,87,487
Note: 1.Absolute Liquid Assets =Cash And Bank Balance Except Cash With RBI


2. Current Liabilities Are Taken Except Provisions

3.RATIOS OF LONG TERM DEBT TO SHAREHOLDERS FUND: LONGTERM

DEBT/SHAREHOLDERS FUND

For the Year 2009-10

Rs.8,77,71,97,08,058

= 5.78:1

Rs.1,51,97,65,86,590

For the Year 2008-09

Rs.7,59,54,90,10,918

= 5.78:1

Rs.1,31,37,38,78,513
Note: 1.Long Term Debt Are Taken Except Following:
A) Short Term Foreign Currency Borrowings From Banks
B) Unsecured Foreign Currency Convertible Bonds
C) Loans From Scheduled Banks (Unsecured)-Short Term
D) Commercial Paper(Unsecured)
E) Interest Accrued And Due
2. Shareholders Fund=Share Capital + Reserves And Surplus

4.PROPRIETORY RATIO: SHAREHOLDERS FUND/TOTAL ASSETS

For the Year 2009-10

Rs.1,51,97,65,86,590

Rs.11,17,62,96,74,904+ Rs.48,78,46,89,701
= Rs.1,51,97,65,86,590
Rs.11,66,41,43,64,605

For the Year 2008-09

= 0.130:1


Rs.1,31,37,38,78,513

Rs.9,69,93,46,86,387+ Rs.46,63,44,72,308
= Rs.1,31,37,38,78,513

= 0.129:1

Rs.10,16,56,91,58,695
Note: 1.Shareholders Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2
2. Total Assets= Loans And Advances As Per Schedule4 + Investment As Per
Schedule 5

+ Current Assets, Loans And Advances Schedule 6 +

Fixed Assets As Per Schedule 8

5.FUNDED DEBT TO TOTAL CAPITALIZATION: FUNDED DEBT / TOTAL

CAPITALIZATION * 100

For the Year 2009-10

Rs.9,65,65,30,88,314

= 0.864:1

Rs.11,17,62,96,74,904

For the Year 2008-09

Rs.8,38,56,08,07,874

= 0.865:1

Rs.9,69,93,46,86,387
Note: 1.Funded Debt= Loans As Per Schedule 3
2. Total Capitalization =Share Capital As Per Schedule 1+ Reserve And Surplus As Per
Schedule 2+ Loans As Per Schedule 3

6.DEBT/EQUITY RATIO: OUTSIDERS FUND/SHAREHOLDERS FUND

OR
EXTERNAL EQUITIES/INTERNAL EQUITIES

For the Year 2009-10


Rs.9,65,65,30,88,314

= 6.35:1

Rs.1,51,97,65,86,590

For the Year 2008-09

Rs.8,38,56,08,07,874

= 6.39:1

Rs.1,31,37,38,78,513
Note: 1. Outsiders Fund= Loans As Per Schedule 3
2. Shareholders Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

7.SOLVENCY RATIO: TOTAL LIABILITIES TO OUTSIDERS/TOTAL ASSETS

For the Year 2009-10

Rs.9,92,21,47,29,161

= 0.851:1

Rs.11,66,41,43,64,605

For the Year 2008-09

Rs.8,67,39,44,95,361

= 0.853:1

Rs.10,16,56,91,58,695
Note: 1.Total Liabilities To Outsiders= Loan Funds As Per Schedule 3 +Current Liabilities And
Provisions As Per Schedule 7 (Except Provisions Under Schedule 7)
2. Total Assets= Loans And Advances As Per Schedule 4 + Investment As Per
Schedule 5

+ Current Assets, Loans And Advances Schedule 6 +

Fixed Assets As Per Schedule 8

8.FIXED ASSETS TO NET WORTH RATIO: FIXED ASSTS (AFTER

DEP.)/SHAREHOLDERS FUND

For the Year 2009-10

Rs.2,22,11,41,613

= 0.0146:1


Rs.1,51,97,65,86,590

For the Year 2008-09

Rs 2,03,40,51,342

= 0.0155:1

Rs 1,31,37,38,78,513
Note:1.Fixed Assets= Net Block As Per Schedule 8
2. Shareholders Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

9.FIXED ASSET RATIO:

OR
FIXED ASSET TO LONG TERM FUNDS: FIXED ASSTS (AFTER DEP.)/TOTAL LONG
TERM FUNDS

For the Year 2009-10

Rs.2,22,14,11,613

= 0.0022:1

Rs.10,29,69,62,94,648

For the Year 2008-09

Rs.2,03,40,51,342

= 0.0023:1

Rs.8,90,92,28,89,431
Note: 1.Fixed Assets= Net Block As Per Schedule 8
2.Total Long Term Funds= Share Capital As Per Schedule 1+ Reserves And Surplus As
Per Schedule 2+ Loan Funds As Per Schedule 3
But Loan Funds Are Taken Except Following:
A)Short Term Foreign Currency Borrowings From Banks
B)Unsecured Foreign Currency Convertible Bonds
C)Loans From Scheduled Banks (Unsecured)-Short Term
D)Commercial Paper(Unsecured)
E)Interest Accrued And Due

10.RATIO OF CUURENT ASSETS TO PROPRIETORS FUND: CURRENT

ASSETS/SHAREHOLDERS FUNDS

For the Year 2009-10

Rs.53,59,17,46,262

= 3.354:1

Rs.1,51,97,65,86,590

For the Year 2008-09

Rs.18,76,16,65,268

= 0.143:1

Rs.1,31,37,38,78,513
Note: .1.Current Assets Are Taken Except Loans And Advances
2. Shareholders Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

11.RETURN ON SHAREHOLDERS INVESTMENT OR NET WORTH: NET PROFIT

AFTER INTEREST AND TAX/SHAREHOLDERS FUND*100

For the Year 2009-10

Rs.28,26,48,98,200*100

=18.60%

Rs.1,51,97,65,86,590

For the Year 2008-09

Rs.22,82,54,27,543*100

=17.37%

Rs.1,31,37,38,78,51
Note:1.Net Profit = Net Profit After Interest And Tax Taken As Per Profit And Loss Account.
2. Shareholders Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

12.EARNING PER SHARE (EPS): EARNING AVAILABLE TO EQUITY

SHAREHOLDER/NUMBER OF EQUITY SHARES


For the Year 2009-10
Rs.28,26,48,98,200

=Rs.98.45 Per Share

28,71,10,222 Shares

For the Year 2008-09

Rs.22,82,54,27,543

=Rs.80.24 Per Share

28,44,53,910 Shares
Note:1.Earning Available To Equity Shareholders= Net Profit After Interest And Tax Taken As
Per Profit And Loss Account.
2.Number Of Equity Shares= No. Of. Equity Shares Are Given In Share Capital As Per
Schedule 1

13.DIVIDEND PER SHARE: PROPOSED DIVIDEND/NUMBER OF EQUITY SHARES

For the Year 2009-10

Rs.10,33,59,67,992

= Rs.36 per Share

28,71,10,222 Shares

For the Year 2008-09

Rs.8,53,36,17,300

= Rs.30 per Share

28,44,53,910 Shares
Note:1.Proposed Dividend Is Taken As Per Profit And Loss Account.
2.Number Of Equity Shares= No. Of. Equity Shares Are Given In Share Capital As Per
Schedule 1

14.DIVIDEND YIELD RATIO: DIVIDEND PER SHARE/MARKET PER SHARE

For the Year 2009-10

Rs.36*100
Rs. 2876

= 1.25%

For the Year 2008-09

Rs.30*100

= 1.12%

Rs. 2686
Note: 1. Dividend Per Share Is Taken As Per Above Calculations.
2.Market Price Per Share Is Taken As Per Balance Sheet.

15.DIVIDEND PAYOUT RATIO: DIVIDEND PER SHARE/EARNING PER SHARE

For the Year 2009-10

Rs.36*100

= 36.57%

Rs.98.45

For the Year 2008-09

Rs.30*100

= 37.39%

Rs.80.24
Note: 1. Dividend Per Share Is Taken As Per Above Calculations.
2.Earning Per Share Is Taken As Per Above Calculations.

16.PRICE EARNING RATIO: MARKET PRICE PER SHARE/EARNING PER SHARE

For the Year 2009-10

Rs.2876

= 29.21:1

Rs.98.45

For the Year 2008-09

Rs.2686
Rs.80.24

= 33.47:1


Note: 1.Market Price Per Share Is Taken As Per Balance Sheet.
2.Earning Per Share Is Taken As Per Above Calculations.

17.RATIO OF FIXED ASSET TO FUNDED DEBT: FIXED ASSETS (AFTER

DEP.)/FUNDED DEBT

For the Year 2009-10

Rs.2,22,11,41,613

= 0.0025:1

Rs.8,77,71,97,08,058

For the Year 2008-09

Rs.2,03,40,51,342

= 0.0027:1

Rs.7,59,54,90,10,918
Note: 1.Fixed Assets= Net Block As Per Schedule 8
2.Funded Debt= Loans As Per Schedule 3

18.RATIO OF FIXED ASSET TO FUNDED DEBT: FIXED ASSETS (BEFORE

DEP.)/FUNDED DEBT

For the Year 2009-10

Rs.5,24,45,57,998

= 0.0060:1

Rs.8,77,71,97,08,058

For the Year 2008-09

Rs.4,93,85,23,820

= 0.0065:1

Rs.7,59,54,90,10,918
Note: 1.Fixed Assets= Gross Block As Per Schedule 8
2.Funded Debt= Loans As Per Schedule 3

19.RATIO OF RESERVE TO EQUITY CAPITAL: RESERVES AND SURPLUS/EQUITY

CAPITAL


For the Year 2009-10
Rs.1,49,10,55,23,520*100

= 98.11%

Rs.1,51,97,65,86,590

For the Year 2008-09

Rs.1,28,52,93,78,563*100

= 97.80%

Rs.1,31,37,38,78,513
Note:1.Reserve And Surplus Are Taken Per Schedule 2 Of The Balance Sheet.
2. Equity Capital=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

20.RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUND: CURRENT

LIABILITIES/ PROPRIETORS FUND

For the Year 2009-10

Rs.26,56,16,40,847

= 0.175:1

Rs.1,51,97,65,86,590

For the Year 2008-09

Rs.28,83,36,87,487

= 0.219:1

Rs.1,31,37,38,78,513
Note: 1. Current Liabilities Are Taken Except Provisions
2. Proprietors Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

21.TOTAL INVESTMENT TO LONG TERM LIABILITIES: SHAREHOLDERS FUND

+ LONG TERM LIABILITIES/LONG TERM LIABILITIES

For the Year 2009-10


Rs.1,51,97,65,86,590+ Rs.8,77,71,97,08,058
Rs.8,77,71,97,08,058
= 1.173:1
For the Year 2008-09
Rs.1,31,37,38,78,513+ Rs.7,59,54,90,10,918
Rs.7,59,54,90,10,918
= 1.1729:1
Note: 1. Shareholders Fund=Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2
2.Long Term Liabilities Are Taken Except Following:
A)Short Term Foreign Currency Borrowings From Banks
B)Unsecured Foreign Currency Convertible Bonds
C)Loans From Scheduled Banks (Unsecured)-Short Term
D)Commercial Paper(Unsecured)
E)Interest Accrued And Due

22.FREE RESERVES PER SHARE: ALL FREE RESERVES/ NO. OF EQUITY

SHARES

For the Year 2009-10

Rs.44,15,89,06,746+ Rs.9,52,45,78,000
28,71,10,222

= Rs.53,68,34,84,746

= Rs.186.97 per share

28,71,10,222

For the Year 2008-09

Rs.37,20,87,54,723+ Rs.5,20,45,78,000
28,44,53,910
= Rs.42,41,33,32,723

= Rs.149.10 per share


28,44,53,910
Note:1.Free Reserves= General Reserve As Per Schedule 2+ Balance Of Profit And Loss
Account As Per Schedule 2
2.Number Of Equity Shares= No. Of. Equity Shares Are Given In Share Capital As Per
Schedule 1

23.RETURN ON GROSS CAPITAL EMPLOYED:NET PROFIT AFTER TAX and

PREFERENCE DIVIDEND/GROSS CAPITAL EMPLOYED*100

For the Year 2009-10

Rs. 28,26,48,98,200*100

= 18.60%

Rs. 1,51,97,65,86,590

For the Year 2008-09

Rs. 22,82,52,27,543*100

= 17.37%

Rs. 1,31,37,38,78,513
Note: 1.Net Profit = Net Profit After Tax And Preference Dividend Taken As Per Profit And
Loss Account.
2. Preference Dividend Is Nil Because There Are No Preference Shares
3. Gross Capital Employed= Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2

24.RETURN ON NET CAPITAL EMPLOYED:NET PROFIT AFTER TAX and

PREFERENCE DIVIDEND/NET CAPITAL EMPLOYED*100

For the Year 2009-10

Rs. 28,26,48,98,200*100
Rs. 1,25,41,49,45,743

= 22.54%

For the Year 2008-09

Rs. 22,82,52,27,543*100

= 22.26%

Rs. 1,02,54,01,91,026
Note: 1.Net Profit = Net Profit After Interest And Tax Taken As Per Profit And Loss Account.
2. Preference Dividend Is Nil Because There Are No Preference Shares
3. Net Capital Employed= Share Capital As Per Schedule 1 + Reserves And
Surplus As Per Schedule 2 Current Liabilities As Per Schedule 7 Except Provisions.

Year

Year

Ratios Of HDFC LTD. For The Financial Year

2009-10

2008-09

1.Current Ratio

2.018:1

0.651:1

2. Absolute Liquid Ratio

0.338:1

0.338:1

5.78:1

5.78:1

4. Proprietary Ratio

0.130:1

0.129:1

5. Funded Debt To Total Capitalization

0.864:1

0.865:1

6.35:1

6.39:1

0.851:1

0.853:1

8. Fixed Assets To Net Worth Ratio

0.0146:1

0.0155:1

9. Fixed Asset Ratio

0.0022:1

0.0023:1

3.354:1

0.143:1

18.6

17.37

98.45

80.24

36

30

1.25

1.12

15. Dividend Payout Ratio

36.57

37.39

16. Price Earning Ratio

29.21

33.47

17. Ratio Of Fixed Asset To Funded Debt

0.0025:1

0.0027:1

18. Ratio Of Fixed Asset To Funded Debt

0.0060:1

0.0065:1

98.11

97.8

3.Ratios Of Long Term Debt To Shareholders Fund

6. Debt/Equity Ratio
7. Solvency Ratio

10. Ratio Of Current Assets To Proprietors Fund

11. Return On Shareholders Investment Or Net Worth (In %Age)
12. Earning Per Share (EPS) (In Rs.)
13. Dividend Per Share (In Rs.)
14. Dividend Yield Ratio (In %Age)

19. Ratio Of Reserve To Equity Capital (In %Age)


20. Ratio Of Current Liabilities To Proprietors Fund

0.175:1

0.219:1

21. Total Investment To Long Term Liabilities

1.173:1

1.1729:1

Rs. 186.97

Rs. 149.10

22. Free Reserves Per Share

23.Return On Gross Capital Employed

18.60%

24. Return On Net Capital Employed

22.54%

17.37%
22.26%

HOUSING DEVELOPMENT FINANCE CORPORATION

RATIO ANALYSIS
for year ending March 31, 2010
Investment Valuation Ratios:
1. Dividend per Share
Dividend is the return to shareholders for their investment in the company.
Higher the dividend, higher the satisfaction & thus higher the confidence. In the given case of HDFC,
in year 2010 & 2009, The Company has provided dividend of Rs. 36 & Rs. 30 per share against face
value of Rs. 10 per share. This proves that the company has paid dividend at rate of 360% & 300% in
year 2010 & 2009 resp. this shows company is making huge profits & investors are also satisfied.
2. Free Reserves per Share
It shows the amount of free reserves available per share. In the given case, in
year 2010 & 2009, the free reserves per share are Rs. 186.97 & Rs. 149.10 resp. which shows
company has surplus money to use in case of any contingent & other liabilities.
3. Ratio of Reserves to Equity Capital
This ratio shows how much reserves are available against equity capital.
Higher the percentage, higher the satisfaction of shareholders & thus higher the stability. In the case
of HDFC, in Year 2010 & 2009, the percentage was 98.11% & 97.80%. This shows that the
companys ratio has increased & the stability has also been increased because of higher reserves
available with the company.
Profitability Ratios:
1. Fixed Assets Ratio & Fixed Assets to Net Worth Ratio
These ratios show the relationship of fixed assets with Long Term Funds &
Share Holders Funds. In Year 2010 & 2009 the fixed assets ratio was 0.0022:1 & 0.0023:1 resp while
fixed assets to net worth ratio was 0.0146:1& 0.0155:1. This shows in 2010 both ratios have been
decreased as compared to Year 2009. This is a bad situation for the company.
2. Ratio of Current Assets to Proprietors Funds
This ratio shows that how much current assets are there to cover the proprietors
funds. Higher the ratio higher the solvency. In the case of HDFC, this ratio in Year 2010 & 2009 was
3.354:1 & 0.143:1resp. As we can see that ratio has increased from Year 2009 to 2010 which shows
companys future is bright.
3. Ratio of Current Liabilities to Proprietors Fund


This ratio shows the number of times current liabilities are to the proprietors
funds. Lower the ratio is beneficial for the company. In Year 2010 & 2009, it was 0.175:1 & 0.219:1.
This shows that ratio has decreased from 2009 to 2010 which is good for the company.
4. Total Investment to Long Term Liability Ratio
This ratio shows that how much Long Term Liabilities are covered with our
Investments. Higher the ratio means higher the capacity of company to pay back the Long Term
Liabilities. In the given case of HDFC, the ratio in Year 2010 & 2009 was 1.173:1 & 1.1729:1. In both
years the ratio is almost same, we can say that the company is in good condition because it is able to
cover its long term liabilities with its investments.
5. Return on Gross Capital Employed & Return On Net Capital Employed
These ratios establish the relationship between Profits & Capital Employed. It
is the primary ratio to measure the overall profitability of the company. Higher the ratio means higher
the efficiency of the company. In the given case, in year 2010 & 2009, Return on Gross Capital
Employed was 18.60% & 17.37% resp while Return on Net Capital Employed was 22.54% & 22.26%
resp which show higher efficiency of the company, the company is highly efficient.
6. Return on Net Worth
This ratio establishes the relationship between Profits after interest & taxes &
Net Worth. It is the primary ratio to measure the overall profitability of the company. Higher the ratio
means higher the efficiency of the company. In the given case, in year 2010 & 2009, the ratio is
18.60% & 17.37% which shows high efficiency of the company.
Liquidity & Solvency Ratios:
1. Current Ratio
As per rule of thumb, the best current ratio is 2:1, this means current assets should
be twice of current liabilities but in case of HDFC, the current ratios in year 2010 & 2009 are 2.018:1
& 0.651:1 resp. this shows that company has excess current assets over current liabilities, which
shows high working capital.
2. Absolute Liquid Ratio
As per rule of thumb, the best quick ratio is 1:1, this means absolute liquid assets
should be equal to current liabilities but in case of HDFC, the liquid ratios in year 2010 & 2009 are
0.338:1 & 0.338:1 resp. this shows that company has less liquid assets over current liabilities. This
proves that company has enough assets which can be easily converted into cash.
Debt Coverage Ratios:
1. Ratios of Long Term Debt to Shareholders Fund
This ratio shows the claims of outsiders to the funds. In case of HDFC, Ratios
of Long Term Debt to Shareholders Fund in year 2010 & 2009 are 5.78:1 & 5.78:1 resp. which shows
that the claims are more than the funds; this is a bad situation for the company.
Long Term Solvency Ratios
1. Ratio of Fixed Asset (after dep.) To Funded Debt & Ratio Of Fixed Asset (before dep.) To
Funded Debt
These ratios show the relationship of Fixed Assets with the Funded Debt.
Higher the ratio higher the chances of stability because in case of failure fixed assets will cover the


funded debt. In the given case, in year 2010 & 2009 the Ratio Of Fixed Asset (after dep.) To Funded
Debt is 0.0025:1 & 0.0027:1 resp. while Ratio of Fixed Asset (before dep.) To Funded Debt is
0.0060:1 & 0.0065:1 resp. which shows that company assets are much less than the funded debt.
2. Proprietary Ratio:
This ratio shows the relationship of shareholder funds with hat of total assets. In
the case of HDFC, in year 2010 & 2009 it was 0.130:1 & 0.129:1 resp. which shows no more
difference between both two years.
3 Debt Equity Ratios
This ratio shows the claims of outsiders to the claims of owners i.e. shareholders. In
case of HDFC, the debt equity ratio in 2010 & 2009 are 6.35 & 6.39 resp. which shows that the claims
are more than the equity; this is a bad situation for the company.

4. Funded Debt to Total Capitalization:

This ratio shows the claims of outsiders to the claims of total capital. In case of
HDFC, the funded debt to total capitalization ratio in 2010 & 2009 are 0.864:1 & 0.865:1 resp. which
shows that the claims are less than the total capital; this is a good situation for the company. &
companys future is bright.
5. Solvency Ratio
This ratio shows the solvency of the company by comparing total liability to
outsiders with total assets. In HDFC case, this ratio in 2010 & 2009 was 0.851:1 & 0.853:1. As we
have seen the ratio has increased from year 2009 t6o 2010, this shows companys status is nice.

Cash Flow Indicator Ratios:

1. Dividend Payout Ratio Net Profit
This ratio shows the ratio of dividend paid out of profits. Higher the ratio
higher the investors satisfaction & interest. This is very beneficial for the company because company
cant loose confidence of investors. In the given case, in year 2010 & 2009, the ratios are 36.57 &
37.39 resp., which are very high. This shows company is capable to give higher returns to its
investors.
2. Dividend Yield Ratio
This ratio shows the ratio of Dividend Paid Per Share & Market Price Per Share.
Higher the ratio higher the investors satisfaction. In the case of HDFC, in year 2010 & 2009, the ratio
was 1.25% & 1.12%. As the ratio this year has increased this shows companys higher profitability.
3. Price Earning Ratio
This ratio shows how many times the Market Price of Share is of the Earnings
per Share. In HDFC case in Year 2010 & 2009 the ratio was 29.21 & 33.47 resp. which shows that
this this year there are more earnings as compared to last year.
4. Earnings per Share
It represents the earnings of shareholders from the company in the year.
Higher the earnings per share, higher the confidence of shareholders & higher the companys


reputation. In the given case, in year 2010 & 2009, the earnings per share are 98.45 & 80.24 resp.,
which shows high returns to shareholders. Hence, company is highly stable.

CONCLUSION
I have studied the attached Balance Sheet of HOUSING DEVELOPMENT FINANCE
CORPORATION LIMITED (the Corporation) as at March 31, 2010,
The Profit and Loss Account and the Cash Flow Statement of the Corporation for the year ended on
that date, both annexed thereto & have made an interpretation of the company via ratio analysis.
I have come to the conclusion that the company is on the high level of success. It is growing day by
day. Its long term as well as short term stability is solid. It is capable of generating more & more
returns in coming future. After analyzing, I have no doubt that if in coming future any contingent
liability raises before company, it is able to face the challenge. Moreover the investors & creditors
(short & Long Term) both are satisfied by the company because it is declaring high profits & returns
& repaying creditors in time.
So, the companys future is Bright.

LIMITATIONS:
Every study conducted may have certain shortcomings and unfortunately mine is also a
similar case. A few errors have crept in despite mine best efforts to avoid them but it is
expected that still mine study and findings are very much relevant.

An error may have been due to the samples taken not conforming to the actual
population; this is because the sample was a convenience sample.
Certain questions which are not properly responded by the Respondents.
Personal bias or personal error of the interviewer might also have crept in, some
cases, while interpreting the respondents.
There are several customers who dont show proper interest in filling the questioner as they
feel that they wont get any benefit after filling the questioners and its just a waste of time for
them.

SUGGESTIONS AND RECOMMENDATIONS

All one need is the courage to innovate, the skill to understand clientele and the desire to give
them the best .Likewise following are some of the suggestions which would help HDFC in
improvising their working styles and performance.

Most of the customers face problems regarding the rate of interest. HDFC must inform its
customers about the change in ROI, It automatically changes but there is decrease in rate
of interest , it doesnt change automatically.
Any change in the policies must be intimated to all the customers .HDFC should provide
proper information to its customers.
There is lot of formalities in the loan disbursement process .Too much documentation is
done . Customer is no aware of all the formalities. Therefore paperwork should be more
friendly and clear .
Customers should be given proper information about EMI. They are generally not told
how their EMI are calculated they should know EMI is calculated and of what amount.
After sale service is an issue of concern. Customers facing problems are not attended on
time. Employees are generally cooperative only when the loan is sanctioned and
disbursed. Therefore after sale service should be improved up to the satisfaction level of
the customer.
Website of HDFC should give more options and features to customers so that they get
maximum information sitting at home
Employees of HDFC should be more prompt towards customers grievances and
problems
HDFC should provide personalized services to customers.
Comparative pricing in terms of lower interest rates and front end changes should be
adopted.
Company should enter into tie ups with reputed builders and development authorities.
HDFC should increase their reach by penetrating into rural and semi urban areas .They
should also capitalize on present customer base by generating referrals
Aggressive marketing and great publicity through newspapers, hoarding, websites and
other medias should be done.

BIBLIOGRAPHY

www.wikipedia.org
www.google.com
www.hdfc.com
www.ansalapi.com
www.moneycontrol.com
www.hdfcbank.com
www.hdfcinsurance.com
www.hdfcfund.com
www.hdfcergo.com
www.hdfcrealty.com
www.credila.com