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Summer Project Report

‘End to End Impr ovement in T ur n

ar ound T ime in T wo-W heeler s Loan ’

Project guide- Dr. Anupam varma Submitted

Industry guide- Mr. O.P Ojhaa


I would like to acknowledge with gratitude the sincere and dedicated

service of the officers and staff appointed at the HDFC bank. It is not
possible to single out any one in particular and so I am refraining from
doing so. The collective effort enabled me to work as a team in a
harmonious environment, which contributed in no small measure to
the fulfillment of the task entrusted to me without any serious

I would like to record my appreciation to Mr. O.P Ojhaa, state head

two wheeler loans, HDFC bank, Rajasthan, for having submitted an
erudite analysis on the state of Loan processing. I would like to
express my gratitude to Mr. Rohit Sharma, S.M, HDFC bank finance
who was instrumental in drafting the report. His services are gratefully
acknowledged and his help has really put an insight into the report.
My heartfelt thanks to Mr. Hari Om Singh, TSM, HDFC BANK, two
wheelers loans, Rajasthan who has shown me the right directions for
conducting the workings in the CPA and coordinating in all the
activities of the bank.

I would once again like to express my gratitude to Dr. Anupam Varma,

Dy. Director, BIMTECH for guiding me and putting his great
suggestions into the report.

S. No. Topic Page No.
1 Executive Summary 4
2 Project objective and problem identifications 6
3 Data collections and methodology 7
4 Introduction-evolution of two wheeler industry 8
5 Two wheeler industry-major players 10
6 Indian banking history 14
7 Company profile-HDFC bank 15
8 Finance market overview 22
Pamac international-processing house for HDFC
9 bank 26
10 Commercial loan processing 28
11 Turn around time- various stages 29
12 Flow-chart depicting the loan processing 30
13 Analysis and Results 35
14 Suggestions and recommendations 60
15 Appendix 63
16 Bibliography 67
Table of contents

Executive Summary
The financial services sector and capital markets have a significant influence on
how Economies develop, principally through their role in allocating financial
capital between different economic activities, as well as through their own
operations, not only do banks Manage their own financial and sustainability
performance, they are in a position to influence Socio-economic and
environmental performance in client organizations and through their Lending
strategies. In this report, we examine whether and how leading banks manage
the corporate economic impacts of their core lending activities.
The aim of this research is to explore whether banks account for the types of
economic Impacts arising from their lending activities. It asks who the real
beneficiaries of bank are lending activity and whether banks take this into
account in their core business decisions. Specifically, it questions how some
banks understand their economic impacts and whether and how this informed the
development and delivery of lending products and services. Accountability and
BSR have developed a methodology through which companies can begin to
articulate and account for the economic impacts of their business activities –
siting, employment, Procurement, product and service development and delivery,
contribution to taxes, investment And philanthropy.

This report focuses on the bank lending sector’s product Development and
delivery business function, and through this explores corporate understanding
And accountability of banks. As for all sectors, there is less data on product-
related impacts than other for other aspects of business activity, which is a critical
impact area for banks.

This study explores whether and how banks understand and manage the
economic impacts of their products – through product development, use and
delivery of loan products – on the communities that use them. This relates to
both production-side economic impacts and consumption side product-related
economic impacts. Production-side impacts might include the operations of bank
branches, and might include employment, sourcing from local suppliers and
environmental impacts. While the impact of these activities is important, the most
significant economic impacts are likely to accrue to customers and the wider
economy. Consumption-side economic impacts relate directly to the access to
finance debate, as well as questions that have arisen over who banks lend to and
for what type of economic activity. Most attention on banks in this area has
focused on project finance for large and environmentally sensitive projects.
Access to finance refers to the lack of availability of finance to specific
communities. These issues have largely defined the corporate responsibility of
banks in the eyes of some major stakeholders.

This report explores how some banks understand and account for their economic
contribution to society. For some, economic impact management is already an
important internal management tool and stakeholder engagement platform. For
others, the value of managing economic impact is clear, but the challenge is
finding ways to do it. Ideally, corporate management of economic impact allows
company to better inform and engage stakeholders on the broader debate on the
role of the sector in society.

The report examines what sustainability principles and standards mainstream

banks have adopted around the world, and the extent to which those standards
capture the most significant potential economic impacts of bank lending. The
report sets out some of the key framework issues and players driving banks to
consider sustainability issues

Project Objective

“Study to reduce the end-to-end Turn around Time in the two-

wheeler loan processing“

Problem Identification

• Customers

Time becomes the most important aspect looked over by the customer with the
changing life style, especially if we talk about service industry, its importance
increases by many folds and same applies to TW Loans also. As soon as
customer walks down at the dealer points he doesn’t wish to even waste a single
minute to get the vehicle financed and with the Multi National NBFC’s entering in
Indian Markets, importance of TAT increases even more.

• Dealer

They employ huge capital, mainly raised from Banks and interest cost is involved
so there have to be faster payments of loan amounts so that there money is
rotated in the best and cost-effective direction and he is able to fund his vehicles
and get the payouts received from banks according to the no. of vehicle sold.

• Banks

Service industry requires a lot of customer focus as customer is also involved in

the whole process and needs a special attention as well as fast and quality
services if they want to remain in the market. So the same applies to the banking
industry as the customer is very choosy in selecting a finance company and
which can give him fast and better services as well as good customer
interactions is preferred. So the improvement of TAT will ensure that the
customer gets fast approvals of loan and get his loans as simple as it can be
possible, so a compressed turn around time will lead to better retention of
customer and will increase the goodwill of the bank.

Data Collection

Sample size

For canvassers

Sample size: 100

Types of Sampling: Random sampling.
Research area: jaipur and jaipur rural

For customers

Sample size: 200

Types of Sampling: Random sampling.
Research area: jaipur and jaipur rural

Primary Data: Collected through the questionnaires filled from canvasser,

customer and interviews conducted from CPA and HDFC bank staff.

Secondary data: Collected from HDFC bank annual reports, auto and finance
magazines, internet and annual reports of other banks and finance companies.



Methodology is the most important step, which should be considered while

working on any project. The methodology used by us in completing the project
report is as follows:

Particulars Stage 1 Stage 2 Stage 3 Stage 4

Stage Data Data collection Data collection Analysis
description Collection from from customers stage
from canvassers
Methodology Internet and Questionnaire Questionnaire Manual
and tools used journals method and method for method

Interview for primary data (MS- Excel)
primary data collection
‘Evolution of the Indian two-wheeler industry
The two-wheeler industry (henceforth TWI) in India has been in existence since
1955. It consists of three segments viz., scooters, motorcycles, and mopeds. The
increase in sales Volume of this industry is proof of its high growth. In 1971, sales
were around 0.1 million units per annum. But by 1998, this figure had risen to 3
million units per annum. Similarly, capacities of production have also increased
from about 0.2 million units of annual capacity in the seventies to more than 4
million units in the late nineties4.

The TWI in India began operations within the framework of the national industrial
Policy as espoused by the Industrial Policy Resolution of 1956.This resolution
divided the entire industrial sector into three groups, of which one contained
industries whose development was the exclusive responsibility of the State,
another included those industries in which both the State and the private sector
could participate and the last set of industries that could be developed
exclusively under private initiative within the guidelines and objectives laid out by
the Five Year Plans (CMIE, 1990).Private investment was canalized and
regulated through the extensive use of licensing giving the State comprehensive
control over the direction and pattern of investment. Entry of firms, capacity
expansion, choice of product and capacity mix and technology, were all
effectively controlled by the State in a bid to prevent the concentration of
economic power.

However due to lapses in the system, fresh policies were brought in at the end of
the sixties. These consisted of MRTP of 1969 and FERA of 1973, which were
aimed at regulating monopoly and foreign investment respectively. Firms that
came under the purview of these Acts were allowed to invest only in a select set
of industries.
This net of controls on the economy in the seventies caused several firms to
a) Operate below the minimum scale of efficiency (henceforth MES),
b) Under-utilize capacity and
c) Use outdated technology.
While operation below MES resulted from the fact that several incentives were
given to smaller firms, the capacity under-utilization was the result of

i) the capacity mix being determined independent of the market demand,

ii) the policy of distributing imports based on capacity, causing firms to
expand beyond levels determined by demand so as to be eligible for
more imports. Use of outdated technology resulted from the restrictions
placed on import of technology through the provisions of FERA.

Recognition of the deleterious effects of these policies led to the initiation of

reforms in 1975 which took on a more pronounced shape and acquired wider

scope under the New Economic Policy (NEP) in 1985. As part of these reforms,
several groups of industries were deli censed and ‘broadbanding’5 was permitted
in select industries. Controls over capacity expansion were relaxed through the
specification of the MES6 of production for several industries. Foreign investment
was allowed in select industries and norms under the MRTP Act were relaxed.
These reforms led to a rise in the trend rate of growth of real GDP from 3.7% in
the seventies to 5.4% in the eighties. However the major set of reforms came in
1991 in response to a series of macroeconomic crises that hit the Indian
economy in 1990-917. Several industries were deregulated, the Indian rupee was
devalued and made convertible on the current account and tariffs replaced
quantitative restrictions in the area of trade. The initiation of reforms led to a drop
in the growth of real GDP between 1990 – 1992, but this averaged at about 5.5%
per annum after 1992. The decline in GDP in the years after reforms was the
outcome of devaluation and the contractionary fiscal and monetary policies taken
in 1991 to address the foreign exchange crisis. Thus the Industrial Policy in India
moved from a position of regulation and tight control in the sixties and seventies,
to a more liberalized one in the eighties and nineties. The two-wheeler industry in
India has to a great extent been shaped by the evolution of the industrial policy of
the country.

Regulatory policies like FERA and MRTP caused the growth of some segments
in the industry like motorcycles to stagnate. These were later able to grow (both
in terms of overall sales volumes and number of players) once foreign
investments were allowed in 1981. The reforms in the eighties like ‘broad
banding’ caused the entry of several new firms and products which caused the
existing technologically outdated products to lose sales volume and/or exit the
market. Finally, with liberalization in the nineties, the industry witnessed a
proliferation in brands.

A description of the evolution of the two wheeler industry in India is usefully split
up into four ten year periods. This division traces significant changes in economic
policy making. The first time-period, 1960-1969, was one during which the growth
of the two-wheeler industry was fostered through means like permitting foreign
collaborations and phasing out of non-manufacturing firms in the industry. The
period 1970-1980 saw state controls, through the use of the licensing system and
certain regulatory acts over the economy, at their peak. During 1981-1990
significant reforms were initiated in the country. The final time-period covers the
period 1991-1999 during which the reform process was deepened these reforms
encompassed several areas like finance, trade, tax, industrial policy etc. We now
discuss in somewhat greater detail the principal characteristics of each sub

Two wheeler industry

‘Riding on Top Gear’ is what the two-wheeler industry is celebrating in the first
half of FY05, wherein the industry volumes had grown over 12% on back of good
monsoons. Also, the second half of FY05 has given the industry reasons to
celebrate, with strong volume rise of nearly 16% (Apr-Feb) in motorcycles,
largely aided by faster growth in the entry level 100 cc segments. Though
competition has been on the rise in the past year, with new models and variants
being launched every alternate day, the overall market has been growing fast
enough to accommodate all of these models.
The most striking feature of the year gone by was the growing volumes in favor
of the entry-level segment. Industry leaders Hero Honda and Bajaj Auto have
once again kept the other players at bay, and increased their market share during
the year. In fact, Bajaj Auto has been outperforming the industry by a good
margin for the last few months, courtesy its new launches CT100 and the
Discover. TVS Motor on the other hand has been reeling under pressure since
the time its Max 100 sales started dipping at the end of FY04 while the new
models are yet to taste success in the market. Apart from the big three, the talk of
the town in the past year was the entry of Honda Motors into the Indian
motorcycle segment through its ‘Unicorn’. Launched in the premium 150 cc
category, the bike received spectacular response initially with a waiting period of
almost 6 weeks.
Despite the strong volume growth witnessed by the industry, profits have grown
at a slower rate or even de-grown in some cases due to the cost pressures and
higher sales of economy bikes. Due to growing competition, manufacturers
resisted passing on price hikes and instead took a hit on their profits. However,
recently the companies have raised prices on most of their models by around 1-

Hero Honda, the leader has created another landmark by crossing 2.5 million
bikes for the year and in the process improving its market share in motorcycles to
50% from 48% in last year. For FY05, Hero Honda’s sales stood at 2.6 million, a
rise of over 27% over the last year’s 2.1 million. Domestic sales were up 26%,
while export sales, which form a miniscule part of the overall sales, were up 63%.
Sales continued to be heavily stacked in favor of the “Splendor Plus” and
“Passion Plus” models, accounting for over 70% of total volumes.
Vehicle Sales Q4FY05 Q4FY04 % Chg FY05 FY04 % Chg
Total Motorcycles 685419 592718 15.6% 2626070 2070154 26.9%
256200 203089
Domestic 664845 578477 14.9% 3 9 26.2%

Exports 20574 11492 79.0% 64067 39255 63.2%

For the second half of FY05, the company’s sales hovered around 2.3 lakh a
month with no spare capacity to cater to the additional demand.
Towards the end of the fiscal, Hero Honda unveiled its new offering ‘Super
Splendor” in the growing 125 cc class, and costing around Rs 2000-3000 more
than the Splendor plus model. The model has nothing new to offer as far as
external features are concerned; however considering the strong growth
opportunities of 125 cc segments and Hero Honda’s strong brand equity, the
model is expected to clock decent numbers. Going forward, for the year FY06,
Hero Honda is expected to continue performing well and improve sales through
de-bottlenecking of its plants, which will increase the capacity by over two-lakh
units. The new Super splendor is hopeful of clocking sales of nearly 30,000 units,
largely cannibalizing the sales of previous splendor and passion models, due to
its powerful engine and good fuel economy. The company is hopeful of ending
the year with a modest growth of 12-15%.

Strong growth in the motorcycle segment saved the day for Bajaj Auto, while the
other segments de-grew during the year. The company sold a total of 1.8 million
vehicles (incl. 3-wheelers), higher by 20% as compared to last year. Motorcycles
sales grew 42% to 1.45 million, outperforming the industry hands down and in
the process increasing its market share to 28.8% as against last year’s 24.5%.
FY05 FY04 % Chg FY05 FY04 % Chg
Scooters(G) 20418 49523 -58.8% 102762 178070 -42.3%
Scooters (UG) 4818 12039 -60.0% 30931 54709 -43.5%
Step thru's 4391 8487 -48.3% 19195 32502 -40.9%
Motorcycles 396107 262992 50.6% 1449677 1023650 41.6%
Total 2 wheelers 425734 333070 27.8% 1602565 1288960 24.3%
3 Wheelers 53725 60409 -11.1% 221987 229154 -3.1%
Grand Total 479459 393479 21.9% 1824552 1518114 20.2%

Motorcycle growth was led by the new CT100 model in the entry segment, which
clocked sales of almost lakh units a month in just a few months from its launch.
Launched in May last year, the bike was an instant hit with the commuters due to
its low price, high fuel efficiency and smart looks for an entry level bike. The bike
succeeded in acquiring the leadership position in the entry segment from Hero
Honda’s CD Dawn and even posed a challenge to the might of Splendor.
Later in the year, Bajaj launched the much-awaited Discover in the 125 cc
executive segment. The bike received great reviews due to its superior

technology and suave looks and is contemplated to be the biggest contender to
Splendor’s title in coming years. The Discover model is clocking around 25,000
units per month currently and commands nearly 40% of the 125 cc segment
sales. Apart from these new launches, Bajaj continued its dominance in the
premium segment, courtesy the Pulsar twins, and firmly stood it’s ground against
the Honda’s new entrant ‘Unicorn’, which was expected to affect Pulsar sales.
The unexpectedly strong sales performance has forced the company to increase
capacities of motorcycles from 1.8 million to 2.4 million for the year.
In the coming year, Bajaj is contemplating launching of two new bike models by
June, one each in entry and premium segments. In the premium segment, the
market is anticipating Pulsar 200 cc model while the entry-level bike is likely to be
a stripped down version of CT100, with a price tag of less than Rs 30,000.
Meanwhile, Discover, due to its superior features should attract greater number
of buyers. Also, the newly launched scooter Bajaj Wave is banking on niche
segments and the company has great expectations from this model. The
company will continue to follow an aggressive pricing policy in search of market

TVS Motors has been a laggard as regards FY05 was concerned and has
disappointed a great deal of its supporters. Overall sales for the year grew just
under 2% to 1.16 million, while the motorcycle sales ended the year 4% lower to
6.8 lakh bikes.
Vehicle Sales Q4FY05 Q4FY04 % Chg FY05 FY04 % Chg
Motorcycles 176921 181420 -2.5% 679536 706558 -3.8%
Scooters 48759 44471 9.6% 224621 189238 18.7%
Mopeds 71025 69358 2.4% 263393 251065 4.9%
Total Sales 296705 295249 0.5% 1167550 1146861 1.8%

Second half of FY05 was however much better, assisted by the launch of “Star”
100 cc. Scooter sales were up 19% for the year, aided by strong growth in sales
of Scooty model and managed to control some on the damage done by faltering
bike sales. For the year, the company’s market share in the two wheelers has
fallen by nearly 270 bps to 18.7%.
In the motorcycle division, TVS has lost significant market share due to sharp fall
in sales of entry-level bike Max 100, with no other model from the TVS stable
filling in the gap until the launch of Star in mid November. The company launched
the 125 cc Victor GLX in Sept to capitalize on the immense growth prospects of
this segment. The bike has met with moderate success due to heightened
competition in the segment and sells close to 15,000 units.

TVS has lined up big-ticket expansion of over Rs 400 crore in the next few years
which includes a two wheeler plant in Indonesia to strengthen its international
presence. The Indonesian plant will have an initial annual capacity of 1.2 lakh

units, while another two wheeler plant will be set up in India to enhance the local
In the coming year, TVS plans to introduce three new models to provide the
much-needed spurt to the volumes, apart from relying on consistently performing
Victor and Star models. Scooty Pep 100 cc version will be launched in second or
third quarter of FY06, while the new Fiero premium model is also expected
sometime in the early 2006 to replace the current Fiero model.

Though the growth rates may taper off after growing at a fast pace for the past
two years, the market now is nearly 6 billion units and accounts for 20 percent of
the global market. Apart from the top three, even the likes of LML and Kinetic
have been aggressive in their growth plans, while international players Honda
and Suzuki too have evinced strong interest in Indian two wheeler markets.
The dream run seen by two wheelers is expected to continue over the next few
years even though monsoons continue to remain the biggest driver, and creates
an air of uncertainty. Apart from monsoons, low interest rates, increasing
purchasing power, low operating cost of a two wheeler and greater choices to
customers at varying price points induce confidence for long term growth in the
Hero Honda, through its widespread dealer network and fuel-efficient models,
continues to remain attractively poised to reap rewards of the growth in industry.
Bajaj, the challenger, has clearly demonstrated its ability to out grow the industry
and has priced products competitively in an effort to improve market share. TVS
despite the promises has failed to deliver and still is an underdog in the race to

Honda motorcycles and scooters India Ltd.

Honda is the world's largest manufacturer of 2-wheelers. Its symbol, the Wings,
represents the company's unwavering dedication in achieving goals that are
unique and above all, conforming to international norms. These wings are now in
India as Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI), a wholly owned
subsidiary of Honda Motor Company Ltd., Japan. These wings are here to initiate
a change and make a difference in the Indian 2-wheeler industry. Honda's dream
for India is to not only manufacture 2-wheelers of global quality, but also meet
and exceed the expectations of Indian customers with outstanding after sales
The HMSI factory is spread over 52 acres, with a covered area of about 85,815
square meters at Manesar, Gurgaon district of Haryana. The foundation stone for
the factory was laid on 14th December 1999 and the factory was completed in
January 2001. The initial installed capacity was 100,000 scooters per year, which
has reached 6,00,000 scooters by the year by 2007 and motorcycle capacity

shall be 4,00,000 per annum. The total investment outlay for the initial capacity
was Rs. 215 crores and now the accumulated investment is 800 crores

Honda Motor Company, Japan with its headquarters in Tokyo, has manufacturing
operations in 32 countries with 109 production bases. It has 3 business divisions
namely 2-wheelers, 4-wheelers and Power Products. Apart from HMSI that
manufactures 2-wheelers, the other business divisions in India include Honda
Siel Cars India Limited (HSCI) and Honda Siel Power Limited .The company
principal of Honda Worldwide is dedication to supplying products of the
highest quality yet at a reasonable price for worldwide customer
satisfaction. The Honda Activa and the Honda Dio have been extremely
successful in the auto geared scooter market. The Honda Unicorn
150cc motorcycle features unmatched finishing and offers a mono-
shock suspension. The Honda Shine 125cc motorcycle offers great
value for money and offers optional disc brakes and self start. The
Honda Eterno with its 4 Stroke, fuel efficient engine has been
instrumental in reviving the geared scooter market in India.

Indian Banking History

In the 1960’s the Indian government set out on a policy of nationalizing all of the
major banks, and effectively putting them under the control of the Indian
government. The first wave in the late 1960’s consisted of the leading fourteen
banks, and the second wave of nationalization occurred in 1980’s which
consisted of six additional banks.2 The nationalization of banks significantly
alters the priorities of those institutions from profit maximization to doing the will
of the Indian government. In 1990’s, the Indian government embarked on a policy
of liberalization of banks within the Indian economy. This liberalization finally
allowed once again for private banks to operate with little interference from the
government. These banks were given the nick name “the New Generation tech
savvy banks.”3 The first private bank to begin operation under the new flag of
liberalization was HDFC Bank, which began operations in 1995.

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 liberalization of the

Indian Banking Industry in 1994. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995.

Company Profile:

HDFC Bank Limited, a private sector bank, provides financial services to

corporations, and middle and upper-income individuals in India. It has three
divisions: Wholesale Banking, Retail Banking, and Treasury Operations. In
addition, the bank provides telephone, Internet, and mobile telephone banking
services. As of March 31, 2005, it operated 467 branches and 1,147 ATMs in 211

HDFC Unique Positioning

HDFC incorporated without any government ownership, allowing it to have a very

unique position within the Indian economy. Even though HDFC did not suffer
from government ownership, its major competitors did. Up to this day, nineteen
different Indian banks are considered nationalized. Private Banks without any
government ownership generally are held liable by their shareholders and
generally strive to maximize profits. In addition, without any government
ownership these organizations face a real potential for going bankrupt without
any help from the government. These realities encompass a hard budget
Constraint, which means the organization, faces a real chance of death. The
management will have more of an incentive to grow and expand the business.

The government ownership of these banks conceivable changes the priorities of

these banks from profit maximization to abiding by what priorities the Indian
government lays down. If the Indian government decides that the additional
growth is necessary within small business loans; the Indian banks will feel
pressured to issue all loans that are in relation to small business’s even if they
may result in a lose. In addition, government controlled banks will fear
bankruptcy less because of the fact their organization is owned by the Indian
government. This mentality will result in these organizations being run less
efficiently as well as less emphasis placed on profit maximization.

Therefore, HDFC, one of the few private banks in India with profit maximization
as its sole priority competing against government controlled banks with possibly
multiple priorities in one of the premier growth markets.

Further Company Information

The Wholesale Banking division provides loans, deposit products, documentary

credits, guarantees, bullion trading, and foreign exchange and derivative
products. It also offers cash management services, clearing and settlement
services for stock exchanges, tax and other collections for the government,

custody services for mutual funds, and correspondent banking services. The
Retail Banking division provides various deposit products, as well as loans, bill
payment services, gold and silver credit cards, debit cards, third party
distribution, investment advisory services, card and automated teller machine
(ATM) acquiring transactions, and depositary services. The Treasury Operations
division offers foreign exchange and derivative products for its clients. The
company was incorporated in 1994 and is headquartered in Mumbai, India.

HDFC is India's premier housing finance company and enjoys an impeccable

track record in India as well as in international markets. Since its inception in
1977, the Corporation has maintained a consistent and healthy growth in its
operations to remain a market leader in mortgages. Its outstanding loan portfolio
covers well over a million dwelling units. HDFC has developed significant
expertise in retail mortgage loans to different market segments and also has a
large corporate client base for its housing related credit facilities

Critical elements:

• ·Acquired Times Bank in merger from Times Of India Group (5 – 6%

present holding) in 2000.
• HDFC owns only 24.4%, rest owned by public and private equity
investors JP Morgan Chase (5-6%).
• ·Large Foreign Institutional Investors (in India) including Putnam,
etc. (big vote in Indian equity markets) – 10-11%
• ·Warburg Pincus has a significant holding in HDFC (its promoter)

On mortgages: HDFC Bank has entered into an Memorandum of

Understanding with HDFC Ltd. wherein HDFC Bank will source housing
loans for HDFC Ltd. (possible future merger – ICICI and ICICI Bank; didn’t bring
in due to very broad-based and industry focus and felt more comfortable with

The Growing Indian Middle Class

The central customer base for HDFC is India’s middle class and upper class. In
the last ten years the percentage of the population that makes up the middle
class has doubled from 7% to nearly 15%. the current economic growth of seven
percent will probably be maintained for the foreseeable future allowing for
additional growth in the middle class. By all accounts, if the growth rate is
maintained then half of India will turn middle class between 2020 and 2040,
these potential growth prospects for HDFC are enormous especially with their
key client base will experience so much growth over the next two decades
assuming that current growth rates are maintained.

HDFC Present Strategy

Mortgages in India

HDFC present strategy concentrates greatly around the growth of the Indian
mortgage market. At present mortgage payments only contribute approximately 3
percent of India’s GDP as compared to other countries with significantly bigger
mortgage markets. HDFC believes it can break the cultural barrier and expand
into the Indian mortgage market, which has the potential for tremendous growth.
Factors working for a good market scenario:
- Rising Disposable Income
- Low Interest Rates
- Generally Stable Property Prices
- Increased Urbanization
- Housing Shortages

Percentage GDP Paid to Mortgages vs. Individual Countries HDFC has the
ability to expand the present Indian mortgage market because of the ideally
strong market climate, but also because HDFC has the home court advantage in
respect to culture in India. Like most culture, Indians would like to borrow from a
“local” bank rather than a foreign controlled bank such as Citigroup or HSBC.

Within the hunters, what’s HDFC’s strategy for increasing market share:

HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. The entire bank's branches have
connectivity which enables the bank to offer speedy funds transfer facilities to its
Customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs). The Bank has made
substantial efforts and investments in acquiring the best technology available
internationally to build the infrastructure for a world-class bank. In terms of
software, the Corporate Banking business is supported by Flexcube, while the
Retail Banking business by Finware, both from i-flex Solutions Ltd (no.1 banking
software in the world). The systems are open, scaleable and web-enabled.

Among the first and only to offer net banking, mobile banking, universal
access, extended hours, large ATM network, electronic collection &
payment gateways (bills, payrolls), etc.

Key differentiators in India.

Lowest Funding Costs: The technology driven customer service attracts a lot of
Deposits due to the services HDFC can offer being leaner and technology driven.

Focus on auto loans: 2-wheeler and car loans are among the fastest growing
segment, likely to be the bank’s largest retail loan segment in the near future.

Expanding portfolio – home loans, possible merger with HDFC:

It is has recently signed a MoU with HDFC for home loans. HDFC also has very
well respected insurance, securities business (insurance with Standard Life).Will
definitely leverage its distribution network.

Geographic Expansion: has gone from 60 cities 2 years ago to over 150 today.
Critical as a lot of the untapped market is in the “heartland” of the emerging
middle class, i.e., Tier II and Tier III cities.

Market Growth:
Scheduled commercial banks touched, on the deposit front, a growth of 14% as
Against 18% registered in the previous year (2002-2003). And on advances, the
Growth was 14.5% against 17.3 % of the earlier year. Retail finance business is
likely to grow at a CAGR of 34% in FY2003-07. ICICI and HDFC best positioned
to take advantage. The retail loan portfolios of both the banks are expected by
analysts to grow at an annualized 45-60% over FY2003-07. This would increase
the share of retail loans in their asset books, contributing to a rise in the margins
and RoEs of both.

Wholesale Banking
The Company's principal commercial banking products include a range of
financing products, documentary credits (primarily letters of credit) and bank
guarantees, foreign exchange and derivative products and corporate deposit
products. Its financing products include loans and credit substitutes such as
bills discounting, commercial paper and other funded products. Its foreign
exchange and derivatives products assist corporations in managing their
currency and interest rate exposures. HDFC Bank's principal transactional
services include cash management services, capital markets transactional

services and correspondent banking services. The Company provides
physical and electronic payment and collection mechanisms to a range of
corporations, financial institutions and government entities. It was also
appointed by the government of India to collect direct taxes.

The Company's capital markets transactional services include custodial

services and stock exchange clearing bank services. HDFC Bank provides
custodial services primarily to Indian mutual funds. The Company is a clearing
bank for seven major Indian stock exchanges, including the National Stock
Exchange and The Stock Exchange, Mumbai. In addition, it provides
correspondent banking services, including cash management services and funds
transfers, to approximately 20 foreign banks and more than 900
cooperative banks.

HDFC bank Retail banking assets

The Company offers an array of retail loans, including loans against securities,
auto loans, personal loans and two-wheeler loans. It offers loans against equity
securities, mutual fund units and against bonds issued by the Reserve Bank of
India (RBI) that are on its approved list. It offers auto loans at fixed interest rates
for financing new automobile and used car purchases. HDFC Bank offers
unsecured personal loans at fixed rates, repayable in equal monthly installments
over a period of 12 to 60 months. It offers loans at fixed rates, repayable in
monthly installments typically over a period up to 36 months for financing the
purchase of new scooters or motor cycles.

The retail business is the key driver of HDFC Bank’s growth strategy, with the
objective of diversifying the asset portfolio and building a low-cost stable
resource base. With a complete product suite across both asset and liability
products as well as a wide range of banking services, HDFC Bank is today a
retail financial supermarket with the ability to cross-sell the entire range of credit
and investment products and other banking services to our customers. The key
dimensions of HDFC Bank retail strategy are products, channels and processes,
underpinned by a strong customer focus.

Changing demographics and the trend towards upward migration in income

levels coupled with existing low retail credit penetration levels have created a
major growth opportunity in retail finance. HDFC Bank’s retail assets business is
capitalizing on this opportunity with a competitive positioning and strategy
comprising innovative products, wide distribution, strong credit controls and high
customer service standards and rapidly growing volumes in each segment to
achieve economies of scale.

In the mortgages business, HDFC Bank expanded its reach to more than 140
locations across the country. HDFC Bank was the first to introduce adjustable
rate home loans, with interest rates linked to a floating prime lending rate. This
product received excellent response from customers across the country and was
a key driver of growth in the mortgages segment. It also enabled HDFC Bank to
price loans competitively and achieves better asset-liability management. Other
products and product variants introduced this year included loans against
existing property as well as several value-added features – retail property
services and home insurance policies bundled with the loan. During fiscal 2002
HDFC Bank emerged as one of the leading player in the mortgages business.
During fiscal 2002 HDFC BANK consolidated its position as clear market leaders
in automobile loans. HDFC has expanded its distribution network to 145 cities
and towns across the country. The key drivers of growth were the strength of its
corporate relationships with leading automobile Manufacturers, strong distribution
capability and customer service focus. HDFC has been rapidly increased its
presence in other segments as well. HDFC Bank expanded our two-wheeler
business to over 140 locations. HDFC Bank partners manufacturers in
distributing their products and therefore enjoys preferred status with them. HDFC
Bank were able to offer competitive products to its customers by leveraging
economies of scale resulting from the rapid growth in operations.

HDFC Bank now has over one million retail Internet banking accounts. Retail
Internet banking customers can view their bank accounts, transfer funds between
their own accounts and to any other HDFC Bank account. HDFC Bank also
offers the facility of transferring funds to accounts in any branch of any bank, in
eight cities through eCheques, India’s first Internet based inter-bank fund transfer
facility. Customers can also open a fixed or recurring deposit, make a stop-
cheque request and inquire into the status of a cheque online. Customers can
write to the account manager through the secure channel and subscribe to
account statement by e-mail. HDFC Bank offers its customers the facility of
paying utility bills online in over 120 cities in India. All major online shopping
services are linked to HDFC Bank’s online payments facility. HDFC Bank has
also focused on the call centre as a key channel. HDFC Bank’s call centre can
now be accessed by customers in 100 cities, and is India’s largest domestic call
centre. The call centre is a single point of contact for customers across all
products. It provides various self-service options and also personalized
communication with customer service officers for a full range of transactions and
account and product related queries. The call centre is now evolving into a
complete relationship management channel not only for complaint resolution but
also for cross-selling on inbound calls. The call centre uses state-of-the-art voice-
over Internet-protocol technology and cutting-edge desktop applications to
provide a single view of the customer’s relationship. HDFC Bank’s mobile
banking services provide the latest information on account balances, previous
transactions, credit card outstanding and payment status and allow customers to
request a checkbook or account statement.

Additional Key Strategies

HDFC management during late 2005 and early 2006 redefined its business
strategy to focusing on high yield loans. The type of loans these consist of are:

- Personal Loans
- Credit Cards
- Two Wheeler Loans

This emphases has lead to a margin expansion of between 20-30 basis points,
but it must be added that this refocusing carries additional risk with defaults on
credit cards potentially are higher. In addition to loan growth, non interest income
has also seen a tremendous growth pattern and is sure to see similar growth in
the future because of Technology. HDFC invests heavily in technology whenever
possible to develop an environment of information technology and
communications systems. One way HDFC uses technology to increase revenue
is through ATM fees. From 2004 to 2005, fee incomes have grown by nearly 83
percent. The fees income growth should maintain a positive growth pattern as
HDFC continues to expand and grow in the Indian market. HDFC will continue to
look for additional ways to use technology to maximize profits whenever possible.

HDFC Bank offers business loans to address the borrowing needs of the
trading community typically around the bank branches by offering them various
facilities like credit lines, term loans for expansion/addition of facilities,
discounting of credit card receivables, letters of credit, guarantees and other
basic trade finance products and cash management services. The Company also
offers silver and gold credit cards and loans for commercial vehicles, construction
equipment and housing.

The Company's individual retail account holders receive the benefit of a wide
range of direct banking services, including a free automated teller machine
(ATM) card, access to its growing branch and ATM network, access to its
other distribution channels and eligibility for utility bill payment and other
services. Its retail deposit products include current accounts, which are non-
interest-bearing checking accounts designed primarily for small businesses;
savings accounts, which are demand deposits in checking accounts designed
primarily for individuals and trusts; fixed or time value added accounts, which
offer its customers added value and convenience, and ebroking accounts that

are offered as checking accounts to customers of stock brokers where all
transactions are routed electronically between the broker and beneficiaries.

It also provides international debit cards, bill payment services, individual

Depositary accounts, mutual funds sales, investment advice, Internet
brokerage, credit cards, electronic data capture terminals and insurance.

ICICI was established by the Government of India in the 1960s as a Financial

Institution (FI, other such institutions were IDBI and SIDBI) with the objective to
finance large industrial projects. ICICI was not a bank - it could not take retail
deposits; and nor was it required to comply with Indian banking requirements for
liquid reserves. ICICI borrowed funds from many multilateral agencies (such as
the World Bank), often at concessional rates. These funds were deployed in large
corporate loans.
All this changed in 1990s. ICICI founded a separate legal entity - ICICI Bank
which undertook normal banking operations - taking deposits, credit cards, car
loans etc. The experiment was so successful that ICICI merged into ICICI Bank
("reverse merger") in 2002.
At the time of the reverse merger, there were rumors that ICICI had large
proportions of Non Performing Loans ("NPA", as they are known in India) on its
books - in particular to the steel industry. Since 2002, there has been a general
revival in Indian industry (and metal based industry in particular). It is widely
believed that the proportion of NPAs has come down to prudent levels (even if it
were high earlier).
ICICI Bank now has the largest market share among all banks in retail or
consumer financing. ICICI Bank is the largest issuer of credit cards in India It was
the first bank to offer a wide network of ATM's and had the largest network of
ATM's till 2005, before SBI caught up with it.
ICICI bank now has the largest market value of all banks in India, and is widely
seen as a sophisticated bank able to take on many global banks in the Indian
The bank is expanding in overseas markets. It has operations in the UK, Hong
Kong, Singapore and Canada. It acquired a small bank in Russia recently. It has
tie-ups with major banks in the US and China. The bank is aggressively targeting
the NRI (Non Resident Indian) population for expanding its business.


Two Wheeler Loans

Leading banks in the public and private sector are providing two wheeler loans,
right form mopeds to motorbikes. These loans are available at attractive rates
and best prices to attract new customers. Quite a few banks are offering online
loan application for the ease of prospective clients. Private sector banks are
ahead of their public sector counterparts in terms of efficiency of application and
processing of loans. On the spot loan offers are given by various banks and other
flexible schemes to suit the needs and pockets of customers.

Maximum Loan offered by ICICI Banks for Two Wheeler Loans

Loans are provided by banks from as low as Rs. 5000 to Rs. 150000. These
loans can be paid in easy installments. The installment period can range
anywhere from six months to three years, depending on the finance option
chosen by the customer. In case of new vehicles, banks generally finance up to a
maximum of 90% of the cost of the vehicle.
In case of old/second hand vehicles, banks finance up to a maximum of 85% of
the value of the vehicle. Repayment is done by Equated Monthly Installments or

Interest Charged by ICICI Bank on Two Wheeler Loans

Although Public sector banks are offering lower interest rate than their private
counterparts but they are lagging behind due to poor quality of service. Interest
rates depend on the two wheeler model, loan tenure. Interest is generally
calculated on a monthly reducing balance.

Process of Two Wheeler Loans Application in ICICI bank

Customers can contact the bank representative and apply for an auto loans.
They can also fill online forms. There is no processing fee for new cars in most
banks/finance companies. However, some companies do charge a minimal
processing fee for used two wheelers.

The Centurion Bank of Punjab (formerly Centurion Bank) is an Indian private
sector bank providing both retail and corporate banking services. The company
was incorporated on 30th June, 1994 and the certificate of Commencement of
Business on July 20th. It is promoted as a joint venture between 20th Century
Finance Corporation Ltd, and its associates and Keppel Group of Singapore. It
has got a network of ten branches. The main equity of the Bank was provided by
the promoters, 20th Century Finance Corporation Ltd. & its associates and
Keppel Bank of Singapore (now Keppel Tat Lee Bank Ltd.) through Kephinance
Investment (Mauritius) Pte. Ltd.

20th Century Finance Corporation Limited has been amalgamated with

Centurion Bank Limited. The Bank, set up in a fully computerized environment
with ATM facility at every branch and Computer networking between branches
can indeed claim to be a `Bank with a difference'. The Bank has introduced, for
the first time in the country, the concept of `anywhere banking' which enables to
operate the account from any other branch of the Bank. Boards of Directors of
Centurion Bank and Bank of Punjab Ltd on June 29, 2005 approves merger of
two banks. The combined bank will be called Centurion Bank of Punjab

Centurion Bank of Punjab is a new generation private sector bank that was
formed by the merger of Centurion Bank and Bank of Punjab, both of which had
strong retail franchises in their respective markets. Centurion Bank had a well-
managed and growing retail assets business, including leadership positions in
two-wheeler loans and commercial vehicle loans, and a strong capital base.
Bank of Punjab had a strong retail deposit customer base in North India in
addition to a sizable SME and agricultural portfolio.

Centurion Bank of Punjab Ltd has a nationwide network of 240 branches and
extension counters and 388 ATMs. The bank offers a wide spectrum of retail,
SME and corporate banking products and services. It has been among the
earliest banks to offer a technology-enabled customer interface that provides
easy access and superior customer service.

BAFL is one of India’s leading retail finance companies. It is primarily engaged in
providing finance for BAL’s two and three wheeler vehicles, consumer durables,
personal computers and consumer loans. For fiscal 2005 the disbursements for
two and three wheeler vehicles, consumer durables, personal computers and
consumer loans comprised 56%, 28%, 11% and 5% of the total disbursements
respectively. For fiscal 2006 the disbursements for two and three wheeler
vehicles, consumer durables, personal computers and consumer loans
comprised 60%, 24%, 13% and 3% of its total disbursements respectively. For
the six months period ended September 30, 2006 our disbursements for two and
three wheeler vehicles, consumer durables, personal computers and consumer
loans comprised 59%, 22%, 17% and 2% of its total disbursements respectively.
As of March 31, 2006 and September 30, 2006 it was approximately 3.44 million
and 3.93 million individuals respectively as customers across India.

Bajaj Auto Limited (“BAL”), which is the single largest shareholder, is one of
India’s leading two wheeler manufacturers. In fiscal 2005 BAFL funded 17.72% of
BAL’s two wheeler sales in India other than exports. For fiscal 2006 it funded
16.79% of BAL’s two wheeler sales in India other than exports. BAFL currently
operate in 82% of BAL’s dealerships. As part of there strategy for two wheelers,
they have focused on financing BAL’s two wheelers. BAFL will continue to derive
significant fiscal and operational benefits by leveraging our relationship with BAL.

BAFL was originally incorporated as a private limited company on March 25,

1987 after which it had became a deemed public company by virtue of section 43
A of the Companies Act, 1956 with effect from October 20, 1987. It is currently
registered as a non banking finance company (“NBFC”) in terms of Section 45 IA
of the Reserve Bank of India Act, 1934. It commenced its operations by providing
finance mainly for two wheelers through its first branch in Hyderabad. As of
September 30, 2006 it has a presence in 20 states across the country with a
network of 108 branch offices, 270 satellite locations, 47 direct marketing / selling

Pamac international-The Credit processing house (CPA)

Pamac international eliminates the paper headaches from the 2 wheeler loan
process and streamlines the business process to generate cost and time savings
for HDFC bank.

2 wheeler loan files, in HDFC bank flow in a linear fashion where the file moves
from point A to B to C. By incorporating a Pamac imaging solution at the
beginning of the process, HDFC bank will improve loan processing times by
turning the linear process into a virtual process. The flexibility of a virtual process
allows employees to work on any part of the loan process at any time, increasing
productivity and reducing costs.

By integrating the data capture solution at the beginning of the loan process,
Pamac can assure data integrity in the 2 wheeler loan servicing system as well
as reduce bottlenecks in areas like post closing. By combining imaging services
and data capture services, you can increase throughput, reduce the costs to
process a loan and even reduce the time to sell loans to the secondary market.

The Pamac Business Process

Document, Scanning, Indexing and Audit

Pamac business process outsourcing model involves the following steps:

• Preparing the loan files for scanning by uniquely identifying each

document type and each loan file.
• Scanning the loan files automatically reading the file separator barcode
and storing each loan file and all corresponding documents.
• Matching a loan database to the scanned inventory to ensure that all files
were accounted for in the capture process.
• Providing data capture services used to input the key information of a loan
file into an origination or servicing system or act as an audit against
existing data.

Clerical Processing
Clients may elect to outsource even more of their non-core business by allowing
Pamac to provide incoming mail services for their mortgage loans. Pamac can
receive inbound loan files, prepare, scan, index and return the digital and paper

images with efficient turnaround times and detailed methods that ensure
accountability and accuracy.

Data Capture

Data is keyed domestically or off-shore from the imaged document and returned
within 24 hours. Data capture services allow audits against existing data or input
of new data into existing systems. By using Pamac for this function, banks can
achieve significant savings over existing data entry costs as well as improved
processing times.

The Pamac Advantage:

• Government Insuring (meet timelines and reduce penalties)

• End-of-Month peaks (accelerate processing backlogs)
• Indexing the loan after scanning.
• Use off-shore data entry services.
• Shorten window of time to insure and sell a loan or pool of loans.
• Reduce Processing Complexity
• Better process for error identification and recovery
• Off-shore document identification and indexing
• Eliminate bottlenecks in post closing and servicing.
• Compress Process Cycle Time

Credit risk evaluation and processing

• Document validations and parametric evaluation of 'credit worthiness'

of the applicants of retail consumer 2 wheeler loans.
• Customer and Corporate profile validations. "CPV" as per industry
• Front end credit checks of 2 wheeler consumer loans.
• Data entry of Retail Loans.
• Post Disbursal Documents follow-up.
• Due-diligence and Securitization Audits.
• Cheque Processing, Encoding and Banking

How is a Loan processed?
When you submit your business loan application, it may seem like it disappears
into a black hole. But understanding how the commercial loan processing system
works can help reduce your anxiety while you wait for approval.

Some lenders like to prequalify potential borrowers to determine how much they
can afford. This will also give you and your lender an opportunity to see which
loan program would be most appropriate for your needs. The lender will gather
basic information, such as your income and existing debts. To initiate the loan
process, you must then complete and submit a loan application.

Once your application is received, a loan officer or processor will review your
credit reports, the amount of available collateral, and your income. Your loan
officer will determine if any additional documentation is required, such as
personal financial statements. If you are purchasing real estate, you may also
need to submit preliminary environmental reports, area maps, title reports,
property appraisals, and lease summaries. If you are going through a broker, he
or she will package your loan request and submit it to several lenders for

After your commercial loan package is submitted to the decision makers — either
a loan committee or underwriter — the processor will present you with a letter of
intent or term sheet. This is a formal document intended to ensure that all parties
involved (the lender and your company) are on the same page. The letter of
intent may include the names of involved parties, amount of financing, type of
security (collateral), and other key terms. During the underwriting process, you
may need to furnish additional documentation.

If you are using a broker, he or she should be helping you negotiate the best
terms, fees, and conditions from various lenders. The next step is choosing the
most attractive offer, and signing and returning the final letter of intent along with
a check, if required, for a deposit, and to pay for third-party reports, such as

After all third-party reports are successfully completed and underwriting
conditions are satisfied, the final loan package is resubmitted to the loan
committee for final approval

At this point the lender will issue a final full loan commitment. If your loan is
approved, your closing agent, who may be an attorney, a title company, or
escrow company representative, will receive closing documents. Your closing
agent will record or file deed transfers and mortgages, order title insurance,
coordinate the exchange of funds, and arrange for you to sign the loan
documents. Closing can take place within days of approval or underwriting. At the
closing, the lender funds the loan with a cashier’s check, draft, or electronic wire

Turn around time ----various stages for loan

processing in HDFC bank
a) customer walk-in stage
b) Files goes to CPA---- for QDE/DDE
c) physical LOG-in and RIC check of pre-documents
d) underwriting forwarded
e) credit manager call for approval or decline

1. IF declined then:
2. Sales department either provides with the documents proof or reduce
the LTV or make a co-applicant from the customers.
3. Decision taken by credit manager
4. Files moves back again to the CPA
5. FI status to be physically attached(CAM approval card)
6. IF approved then file straight away moves to CPA
7. In worst situations the case may also be rejected.

f) Handover the files to OPERATIONS

1. RIC check of post documents.
2. Discrepancy in files to be found
• IF Ok then PDOC and File is disbursed
• Then payment is made
• IF not OK then the sales department to complete post

Flow chart ---depicting the whole process

File straight Sales people provide

with the additional
away goes to the documents or reduce
CPA the LTV amount or
make to be
a co-applicant 30
taken by the
credit manager
File moves back
again to the

FI to be physically
attached (CAM


Again RIC check

to be done of
post documents

Discrepancy to be

ies doesn’t
cies exists

Sales team to complete PDOC is done and the file
the remaining required is disbursed

Pre-qualification/customer walk- in stage

"Prequalification" occurs before the loan process actually begins, and is usually
the first step after initial contact is made. In a prequalification, the lender gathers
information about the income and debts of the borrower and makes a financial
determination about how much the borrower may be able to afford. Different loan
programs may lead to different values, depending on whether you are qualified
for them, so to get a prequalification for each type of program you are suited for
Becomes an important task for the canvasser who educates the customer about
the finance scheme according to his ability to pay now and the rest EMI’S


The "application" is actually the beginning of the loan process and usually occurs
at the place where the customer walks into the dealership. The buyer, now
referred to as a "borrower", completes a mortgage application with the loan
officer and supplies all of the required documentation for processing. In most of
the cases borrower is not able to provide all the required documentations which
becomes one of the basic reasons for the delays. Various fees and down
payments are discussed at this time and the borrower will receive a Good Faith
Estimate (GFE) and a Truth-In-Lending statement (TIL) which itemizes the rates
and associated costs for obtaining the loan. As the information is being noted
down to the canvasser, the same is being referred to the CPA for the QDE/DDE
which is basically recording all the necessary information into the system so that
any improvements can be seen anytime, anywhere and by anybody (bank

Pre-Approval/physical file and RIC check

Once you have made application, your lender will submit your file for automated
underwriting. The automated underwriting systems will review your income,
assets, liabilities, credit scores, loan-to-value ratios, and your proposed loan
details. This system will then give an approval or denial within a stipulated period
of time and then RIC department which helps in checking the authenticities of
documentation and other information regarding the prospective customer


The underwriter is responsible for determining whether the combined package

passed over by the processor is deemed as an acceptable loan. If more
information is needed, the loan is put into "suspense" and the borrower is
contacted to supply more documentation. If the underwriter needs clarification,
we will phone call the sales department and if sales department in any case need
help in answering the underwriter's question, he will call back the customer for
his queries.

"Mortgage insurance underwriting" occurs when the borrower has less than 25%
of the loan amount to put towards a down payment. At this time, the sale
department either has to increase the down payment or take more
documentations or in worst cases make a co-applicant which insure the
guarantee for any default made by the borrower and then the credit manager has
to give his decision again, if in case he is satisfied with the case then he may
approve the case or in the either case may also reject it.

The file then once again moves to the CPA and FI is done once again and CAM
card to be attached physically and RIC check is being done once again for
further inspections.


At this time the lender orders a property appraisal, orders title insurance mails
out requests for verifications, if necessary, for employment (VOE) and bank
deposits (VOD) and any other documents needed for processing of the loan. All
information supplied by the borrower is reviewed at this time and a list of items
not yet received is compiled. The "processor" reviews the credit reports and
verifies the borrower's debts and payment histories as the VODs and VOEs are
returned. If there are unacceptable late payments, collections for judgment, etc.,
a written explanation is required from the borrower. The processor also reviews
the appraisal and survey and checks for property issues that may require further

discernment. The processor's job is to put together an entire package that may
be underwritten by the lender.

Closing a loan

At the closing, the lender "funds" the loan with a cashier's check, draft or wire to
the selling party in exchange for the title to the property. This is the point at which
closing documents are being filled properly and actually title is being transferred
to the borrower. The borrower finishes the loan process and actually buys the

The survey was conducted on 200 customers from the dealership
points, DSA’s and DST’s.

Demographic Profile of Customers Based on Age Group

age group no. of persons
18-25yrs 84
25-45yrs 72
45yrs and above 44

age group

45yrs and above

The survey conducted was comprised more of 18-25 yrs age group which means
young generations

Based on Income Level

no. of persons
under Rs.5000 p.m 35
Rs.5000-10000 p.m 86
Rs.10000-15000 p.m 43
above Rs.15000 p.m 36

income group

50 no. of persons
under Rs.5000 p.m Rs.5000-10000 p.m Rs.10000-15000 p.m above Rs.15000 p.m

The survey conducted constituted more of Rs.5000-10000 p.m income group.

Based on Occupation

occupation no. of persons

salaried 78
business class 67
agri based business 55


business class
agri based business

The survey conducted constituted more of salaried class people out of 200

Factor affecting finance decisions by different age
group people

For 18-25yrs age group

priority Rank
Faster Delivery 58
Low Rate of Interest 16
Executive Behavior 6
Dealer Reference 4


Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 84 people falling under 18-25yrs categories

and they mostly preferred fast delivery as there priority which affect there
finance decision.

For 25-45yrs age group

priority Rank
Faster Delivery 21
Low Rate of Interest 42
Executive Behavior 7
Dealer Reference 2


Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 72 people falling under 25-45yrs

categories who preferred Low Rate of Interest as there priority which affects
there finance decision

For 45yrs and above age group

priority Rank
Faster Delivery 11
Low Rate of Interest 14
Executive Behavior 8
Dealer Reference 11


Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 44 people falling under 45yrs and

above age group categories who preferred Low Rate of Interest ,
Dealer Reference as well as faster deliveries there priority which affects there
finance decision.

Factor affecting finance decisions by all the age group
people clubbed together

priority Rank
Faster Delivery 90
Low Rate of Interest 72
Executive Behavior 21
Dealer Reference 17

priority of the customers age wise

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The graph clearly directs the main motivation of the customers for buying a loan
is the low interest rates, though it may not be true for all of the age

Factor affecting finance decisions by different income

Under Rs.5000 p.m group

priority Rank
Faster Delivery 8
Low Rate of Interest 17
Executive Behavior 7
Dealer Reference 3


Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 36 people falling under Rs.5000 p.m

group categories out of which preferred Low Rate of Interest , there
priority which affects there finance decision.

For Rs.5000-10000 p.m income group

priority Rank
Faster Delivery 24
Low Rate of Interest 40
Executive Behavior 18
Dealer Reference 4

Rs.5000-10000 p.m

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 86 people falling under Rs.5000-10000

p.m income group categories out of which preferred Low Rate of
Interest as well as faster deliveries there priority which affects there finance

For Rs.10000-15000 p.m income group

priority Rank
Faster Delivery 11
Low Rate of Interest 12
Executive Behavior 12
Dealer Reference 8

Rs.10000-15000 p.m

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 86 people falling under Rs.10000-15000
p.m income group categories were very biased and different sets of
people had different preferences which affects there finance decision.

For above Rs.15000 p.m income group

priority Rank
Faster Delivery 11
Low Rate of Interest 7
Executive Behavior 6
Dealer Reference 12

above Rs.15000 p.m

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 86 people falling above Rs.15000 p.m

income group categories preferred dealer references and faster
deliveries which affects there finance decision

Factors affecting all the income groups clubbed

priority Rank
Faster Delivery 54
Low Rate of Interest 76
Executive Behavior 43
Dealer Reference 27

priority of the customers income wise

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The graph shows that most of the customers are more affected by the rate of
interests and there decision for buying the finance scheme is majorly
motivated by it.

Factor affecting finance decisions by different
occupation classes group

For salaried group

priority Rank
Faster Delivery 32
Low Rate of Interest 26
Executive Behavior 12
Dealer Reference 8


Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 78 people falling under salaried group

categories preferred faster deliveries which affects there finance decision.

For business class

priority Rank
Faster Delivery 18
Low Rate of Interest 31
Executive Behavior 11
Dealer Reference 7

business class

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The survey conducted constituted 67 people falling under business categories

preferred Low Rate of Interest which affects there finance decision.

For agri based business

priority Rank
Faster Delivery 2
Low Rate of Interest 17
Executive Behavior 7
Dealer Reference 29

agri based business


Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

Agri-based occupational people preferred Dealer Reference which

mostly affects there finance decision

Factor affecting finance decisions by all the occupation
classes group clubbed together

priority Rank
Faster Delivery 52
Low Rate of Interest 74
Executive Behavior 30
Dealer Reference 44

priority of the customers occupation wise

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

The graph shows that most of the customers are more affected by the rate of
interests and there decision for buying the finance scheme is majorly
motivated by it.

Documents brought by the customers when they walk in a
dealership to avail two-wheeler finance and time taken to
obtain them

Document day 1 day 2 day 3 day 4 day5 day6 day7 more than 7 days
Address Proof 91 34 30 15 12 10 8 0
Id Proof 78 54 23 18 14 11 2 0
Ownership Proof 35 36 55 32 23 11 6 2
Photo 79 42 31 19 11 7 5 6
Income Proof / Agri Proof 19 21 34 47 56 13 9 1
PDC’s 13 24 31 44 34 32 12 10

documents customers bring when they walk in a dealership to avail two-wheeler finance

90% PDC’s
Income Proof / Agri Proof
60% Photo
50% Ownership Proof
40% Id Proof
30% Address Proof
day 1 day 2 day 3 day 4 day5 day6 day7 more than
7 days

In the survey conducted for the different documents brought and time taken,
customers are easily able to bring address proof and ID proof for the two
wheeler finance on the very first day and income proof and agri-proof and
PDC’s i.e. POST DATED CHEQUE are those documents which takes a lot of
time and are very difficult to obtain.

Time taken by sales executive to explain a customer about TW
finance scheme

time taken 5 mins 10 mins 15 mins 20 mins More then 20 mins

no. of customers 34 27 48 54 37

time sales executive has taken to explain you about TW finance scheme



30 no. of customers
5 mins 10 mins 15 mins 20 mins More then 20

Most of the sales executives take around 15-20 mins and some of the sales
executives are even taking more than 20 mins which is bringing more

Time taken by canvasser to collect/fill the following

Document 15 mins 30 mins 45 mins 60 mins More then 60 mins

Application Form 23 45 67 37 28
Agreement 45 56 47 31 21
Address Proof 17 23 25 10 125
Id Proof 32 13 7 18 130
Ownership Proof 4 15 17 23 141
Photo 24 9 14 25 128
Income Proof / Agri Proof 15 13 21 3 148
PDC’s 14 9 11 13 153

time canvasser takes to collect/fill following documents


80% PDC’s
Income Proof / Agri Proof
60% Photo
Ownership Proof
Id Proof
Address Proof
0% Application Form
15 mins 30 mins 45 mins 60 mins More then 60

The survey shows that address proof and ID proof doesn’t takes
much time and are obtained almost within 45mins whereas all the other
formalities like ownership proofs, photos, income proof and PDC’s
take a lot of time and are observed to be procured in more than an hour.

Time different activities has taken

activities 30 mins 60 mins 90 mins 120 mins More then 120 mins
TVR 86 45 35 26 8
FI 21 34 38 45 62

time following activities has taken

30 mins 60 mins 90 mins 120 mins More then
120 mins

The survey showed that TVR’s take not more than 30mins and the rest are also
procured mostly 60mins whereas FI takes a lot of time and the status is mostly
procured after 120mins.

Time dealer takes to deliver the vehicle after getting DO
from HDFC Bank

time taken 30 mins 60 mins 90 mins 120 mins More then 120 mins
no. of customers 25 28 34 54 59

time dealer takes to deliver the vehicle after getting DO from HDFC Bank




no. of customers


30 mins 60 mins 90 mins 120 mins More then
120 mins

The survey conducted showed that most of the dealers take more than 120
mins and sometimes due to some pendencies the dealer is not been able to
deliver the vehicle even within the same day.

No. of times canvasser calls for the pending documents

day 1 day2 day3 day4 day5 day6 day7

2 3 4 5 3 0 0

does the canvasser calls the customer for the pending



According to the survey 69% of the customers calls the customers for the
pending documents and canvasser calls twice a day in first day and increases
the frequency as the day pasts for the pending documents and on the 6th and on
the 7th day the calls are being completed.

Canvasser survey analysis

The survey was conducted on 100 canvassers from the dealerships

and canopy people.

No. of cases served on daily basis by the canvasser

more than 20
no. of cases 5 cases 10 cases 15 cases 20 cases cases
no. of canvasser 59 26 11 2 2

no. of cases

no. of canvaser
5 cases 10 cases 15 cases 20 cases more than 20 cases

According to the survey most of the canvassers are able to serve only 5 cases
And some of them are being able to entertain 10 cases on the busy days.

Time taken to serve a customer

time taken 5 Min 10 Min 15 Min 20 Min More then 20 Min
no. of canvasser 17 23 21 32 7

time taken

no. of canvasser
5 Min 10 Min 15 Min 20 Min More then 20 Min

The graph shows that canvassers take 15-20 mins to serve a customer for
telling him about the scheme and all the formalities needed to be furnished.

No. of customer able to provide with all the documents
at the time of there first visit to the canvasser

yes no
12 88

no. of customer able to provide with all the documents at the time of there first
visit to the canvasser

yes, 12


no, 88

88% of the customers are not being able to bring the necessary formalities for
taking the finance and this increase the turn around time.

Time taken to convey the queries to the CPA for login
the files into the system by different modes of

Mode of communication no. of canvasser

Phone 12
Fax 57
Physically 16
Direct login into the system 5

Mode of communication used by canvassers

30 no. of canvasser

login into



Fax is the most common mode of communication used by the canvasser to

convey the queries to the CPA for login the files into the system.

Most basic deficiency found in a case ready to be


no. of
Document canvasser
Address Proof 5
Id Proof 6
Ownership Proof 18
Photo 12
Income Proof / AgrI Proof 22
PDC’s 37

most basic deficiency found in a case ready to be approved

20 no. of canvasser
Address Id Proof Ownership Photo Income PDC’s
Proof Proof Proof / AgrI

The most basic deficiency which creates delay mostly are the PDC’s (POST
DATED CHEQUES) which are very difficult to obtain from the bank as well as
income proof for high LTV cases and agri proof for agriculture based people are
also some of the documents which are not easily available with the customers.

Time taken by CPA to process different activities

Document 15 MINS 30 MINS 2 HRS 4 HRS 1 Day 2 Days 3 Days 4 Days or more than 4 days
TVR STATUS 49 38 9 3 1 0 0 0
FI AGENCY 14 19 21 37 6 3 0 0
LOS NO. GENERATION 3 9 36 35 15 2 0 0
PHYSICAL FILE LOGIN 3 4 4 8 17 23 28 13
APPROVALS 0 0 0 5 13 24 31 27
DISBURSEMENTS 0 0 0 0 9 12 29 50

60% 4 Days or more than 4 days
50% 3 Days
30% 2 Days
20% 1 Day
0% 4 HRS








• TVR status is available with the CPA within 30 mins in most of the cases.
• FI status takes a bit time since sometimes the cases belong to rural areas
where it is very difficult to find the address and takes 2-4 hrs in most of the
• LOS no. is generated after the file is logged in into the system and takes
2-3 days on an average,
• physical files takes minimum 1 0r 2 days and sometimes the time can also
exceed to 3-4 days,
• approvals also shows the same trend
• files take a lot of time for disbursements and time can exceed to even
more than 4 days in most of the cases

Recommendations and Suggestions

• Since most of the people are falling under 18-25 yrs age group the bank
should launch different schemes for different age group like for e.g. 15
mins loan approval scheme for youngsters.

• Banks should give training to there canvassers to entertain different

customers in a different way so that they are satisfied with there services.

• For people having strong financial or personal record should be given the
loan on a fast and priority basis so that time is not wasted in getting the FI
done and TVR.

• A good friendly and cordial relationship with dealer should be maintained

so that the vehicle is delivered to the customers as fast as possible.

• Bank should look for new and innovative ideas for reducing the time
required for fulfilling the formalities like agri proof required by the farmers
in case of high LTV cases.

• Bank must mention some of the common documents required by the bank
to be furnished by the customers in the advertisements so that customers
are aware of the documents to be submitted and time is reduced in
fulfilling such requirements.

• Since PDC’s are big problems for the banks and increases the time lag for
loan processing, bank should open there customers account in there own
bank and try to get the cheque book available for them.

• Bank should have there own photographers who can take the customers
photo then and there which will reduce a lot of time and authenticity of the
photo is also maintained.

• Banks should have there PC’s at the dealership points so that files are
logged in then and there and time is not wasted in noting down the

• If a case is sourced through a DSA or DST then a PC should be installed

at office which is located between 2-3 DSA’s and DST’s.

• Since FI agency takes a lot of time in giving the status of the rural cases
so there should be a proper team of special FI people who will take care of
the major villages from where cases are in quantity.

• Canvassers mostly take 20 mins to explain the customer about the
scheme, so there should be proper training for the canvassers in which
they can explain the customers in not more than 10 mins

• Special calling teams should be there for intimating the customers about
there pendencies so that cases are being disbursed as soon as possible.

• Banks should tie-up with the dealers to open there inventory funding
accounts so that money is being transferred through wire and the process
is being made more fast.

• The system of DELIVERY ORDER (DO) should be closed and it should be

changed to a better and fast system which will reduce the time in giving
the vehicle to the customers.

New process developed for loan

1. Fax based approval system should be done.

2. As soon as the query is generated the filled form
would be faxed and CPV data is punched
automatically on LOS.
3. The same data generated would be made available
to the TVR and FI agency online and as soon as the
status is made available, the same will be
forwarded to the credit manager for the decision to
be made.
4. CPV agency completes the CPV within the
stipulated period of time and it is forwarded to
credit team who will give the decision.
5. If the credit approves the case then the file is
disbursed and credited to the dealer online to his
inventory funding account.
6. If the file is pending then the sales department to
complete the documents required.

TAT for various activities.

• Fax based query generation—7 mins

• TVR status—7 mins
• CPV done—90 mins
• Credit manager decision time required –7 mins

By applying this new process the TAT is reduced to 2hrs.

Canvasser questionnaire

1. How many cases you serve on a daily basis?

cases cases cases cases cases

5 10 15 20 More then 20

2. How much time you take to serve a customer?

Min Min Min Min Min

5 10 15 20 More then 20

3. Is the customer able to provide you with all the documents at the time of
there first visit?


4. How do you convey the queries to the CPA for login the files into the
system and how much time does it takes?

mins mins mins mins mins

Mode of communication 5 15 25 30 More than 30



Direct login into the system

5. Which is the most basic deficiency do you find in a case ready to be
Address Proof
Id Proof
Ownership Proof
Income Proof / AgrI Proof

6. How much time does the CPA takes to process the file for the following

MINS MINS HRS HRS Days Days Days Days

Document 15 30 2 4 1 2 3 4


Customer Questionnaire

1. Which factors affect your finance decision?

Faster Delivery
Low Rate of Interest
Executive Behavior
Dealer Reference

2. What all documents do you bring when you walk in a dealership to avail two-
wheeler finance?

Day Days Days Days Days Days Days Days

Document 1 2 3 4 5 6 7 More then 7
Address Proof
Id Proof
Ownership Proof
Income Proof / Agri Proof

3. How much time sales executive has taken to explain you about TW finance
Min Min Min Min Min
5 10 15 20 More then 20

4. How much time canvasser takes to collect/fill following documents?

Min Min Min Min Min

Document 15 30 45 60 More then 60
Application Form
Address Proof
Id Proof
Ownership Proof
Income Proof / Agri Proof

5. How much time following activities has taken?

Min Min Min Min Min
activities More then
30 60 90 120 120

6. How much time does the dealer takes to deliver the vehicle after getting DO
from HDFC Bank?

Min Min Min Min Min

More then
Document 30 60 90 120 120

7. Does the canvasser call you for the pending documents?


8. How much time canvasser calls you for pending documents?

Day Days Days Days Days Days Days

1 2 3 4 5 6 7

Name : Age :
Occupation : Income :
Address : Phone :




Certificate of the company

Synopsis of the project

 ICICI Bank – no. 1 financer of car loans in India
 New car Loans

 Used car loans
 Loan amount
 Repayment
 Application process
 Documentation
 Factors affecting car loan finance

Research Methodology
 Research Objective
 Research instruments
 Sample size
 Statistical tools used
 Managerial usefulness of the study


 1st stage
 2nd stage


Results of the project


Limitations of the study



I, Nidhi Chowdhary, a student MBA (Marketing) in Bharati Vidyapeeth’s

Institute of Management & Research (BVIMR), New Delhi, a constituent
Unit of Bharati Vidyapeeth Deemed University , Pune, hereby declare that
the work done on this research project report entitled “Market testing of
Refinance Loan for existing Auto customers in Delhi” has been done by
me under my project guide. No part of this work has been submitted for any

other degree of any other university. The data collected is authentic and
sources have been acknowledged.

Nidhi Chowdhary
MBA (Marketing)



“Blessed is he who expects no gratitude, for he shall not be disappointed.”

- W.C. Bennet

One of the most pleasant part of writing a report is that, it gives the opportunity to thank
all those, with whose guidance, cooperation and sincere advice I have able to draw and
complete my research report entitled “Market testing of Refinance Loan for existing
Auto customers in Delhi”

Today when I am submitting my project report, I would be failing in my duties if I do not

thank various persons without whom this project would never be completed.

I thank Mr. Sanjay, Relationship Manager, Auto loans, ICICI Bank for providing me
an opportunity to be a part of this project. I thank him for making me feel comfortable
and providing me with all the information and tools to make my project successful. This
work would have been impossible, without the valuable help, immense motivation and
true guidance of Mr. Sanjay.

First of all I would like to pay my sincere thanks to Dr. S.S.Vernekar, Director
(BVIMR) for not only giving me the opportunity to work on this project, but also for
providing an excellent infrastructure in the college.

My sincere and special thanks to Mrs. Preety Wadhwa for her insightful guidance and
for being a constant source of inspiration for me throughout the project.

Nidhi Chowdhary


The project undertaken is a research project under the guidance of Mrs Preety Wadhwa
ICICI Bank started its Car Loans business in 1999 which consists of New car Financing
only. In year 2003, Bank started to give loans on Use Cars also. This consists of:

• Financing Sale-Purchase deals

• Loan against existing vehicles

This project deals in evaluating the scope of re-finance on already existing ICICI
Bank car loans.

Questionnaires were used as a mode of primary data and magazines and internet as secondary
data for the collection of information. It aims at finding the customer behaviour and buyer’s
market for refinance loan. In all 200 existing customers were surveyed for this project in Delhi.
The findings and analysis have been made using the data collection through these modes only.


The No. 1 Financier for Car Loans in India

ICICI bank is the No. 1 financier for car loans in the country. They have a network of more than 1800
channel partners in over 1000 locations. Through their strong tie-ups with all leading automobile
manufacturers, the ICIC bank ensures best possible deals to their customers. Well equipped infrastructure
enables hassle-free quick processing of loans with minimal documentation.

The # 1 financier for car loans in the country.

Network of more than 1800 channel partners in over 1000 locations.
Tie-ups with all leading automobile manufacturers to ensure the best deals.
Flexible schemes & quick processing.
Hassle-free application process on the click of a mouse.

All loans at the sole discretion of ICICI Bank Ltd.

ICICI Bank, the market leader in Car Loans, offers you flexible schemes to suit your
needs, hassle free documentation & extremely quick processing, so that you can own and

drive your car in the quickest possible time. Also, with their relations with 12 car
manufacturers, we get the benefit of the most attractive deals in the market.

Turn your dreams into reality. Get that new car you always wanted with our new car
loans. With loans up to 95% of the ex-showroom price and repayment tenors up to 7

Make the experience of owning a used car a simple, easy & reliable experience with
ICICI bank used car loans. ICICI Bank offer up to 85% funding of the car value for
upto 5 year tenor. You may also avail finance against your existing car.

Get immediate cash up to 90% of the car’s value. Flexible repayment – minimum of 5%
of total outstanding every month. Interest is charged only on the amount and time period
utilized for. Roaming current account with privileges like personalized multi-city cheque
book and international HPCL Visa debit card.


Loan Amount
To enhance your loan amount, the certified income of the co-applicant
is considered, if requested by the applicant.

The co-borrower can be the spouse or son/daughter living in the same

city. Since the co-borrower is the joint applicant for the loan, he/she
has the obligation to repay the loan along with the main applicant.

Similarly, a guarantor can be any relative or director (in case of a

private limited company). The guarantor provides the guarantee that

the customer will repay the loan as per the terms & conditions of the

However, in both cases, the asset has to be registered in the name of a

single owner, not joint ownership.

New car
ICICI Bank finance up to 90 per cent of the ex-showroom cost of the

The amount financed will depend on the Loan to Value (LTV) ratio. The
LTV ratios are applicable on the invoice value of the cars The customer
has to bear the registration and the insurance costs.

The LTV also depends on the car model. Higher LTV ratios are available
under specific enhanced income eligibility criteria. Please contact our
representative for further details.

Used car
For a used car, finance up to a maximum of 80 per cent of the
valuation amount is provided. You can also avail of a refinance against
an existing car. In this case, the funding will be 70 per cent of the
valuation amount.

Rates & Fees

Interest rates depend on the tenure and the car model selected.
Interest is calculated on a monthly reducing balance and the rate
remains unchanged till the maturity of the loan.

The interest rate for new cars varies between 14.5 per cent to 16 per

The interest rate for used cars 18.5 per cent for loans greater than Rs 1
lakh and 20 per cent for loans less than Rs 1 lakh.ICICI Bank charge a
processing fee of Rs 1000 only in the case of loan amounts for used
cars that are less than Rs 1 lakh

The repayment tenure extends from 1 to 7 years The maximum loan
tenure for a used car or is determined by the age of the car. In the case
of a used car, the tenure cannot be more than 5 years and the used
car cannot be more than 8 years old at time of maturity of the loan.

ICICI Bank charge a "swap" charge of Rs 500 for exchange of cheques.

Once the loan is sanctioned, you can change the tenure. If you do so,
the interest rate and the EMI will change accordingly. If a new car has
been selected, then the loan amount will change accordingly.

Repayment due dates are the 1st or 7th of every month. Payments
have to be made through post-dated cheques (PDCs) only, neither cash
nor cards are accepted.

Payment due dates cannot be changed.

Once you submit the PDCs, the dates of the cheque cannot be

You can change the PDCs only in the case of a change in bank
accounts. However, ICICI Bank would require a signature verification by
the new banker and ICICI Bank would be charging a nominal fee to
replace your set of cheques.

ICICI Bank charge Rs 500 per bounced cheque.

The repayment schedule and amortisation chart will be given to you

after the loan has been disbursed.

Full pre-payment is accepted, part pre-payment is not allowed.

The prepayment fee is 2 per cent on the outstanding principal amount.

Should you change your residence during the tenure of the loan,
please intimate us through a letter of the same.

In addition, you are required to fund the nominated local account. If

you have shifted to a city where ICICI Bank have a branch, you can do

a PDC swap (issue a new set of PDCs from the new bank account) for
the remaining instalments.

Repayment Terms of your Car Loan

ICICI Bank Car Loans offers flexible schemes, attractive interest rates, and quick &
hassle-free application process at the click of a mouse. At the same time, ICICI Bank
ensure that the repayment terms are equally convenient for you.

ICICI Bank Car Loans offers multiple schemes and repayment options for your car loan.
Repayment tenure ranges from 1 year to 7 years for new car loans. Six year and seven
year loans are available for specific models. Maximum loan tenure for used car
would depend on the age of the car. The car should not be more than 8 years old at the
time of maturity of the loan.

Car Loans

Repayment tenure ranges from 1 year to 7 years for New Car Loans. Six Year and
Seven year loans are available for specific models.
Maximum loan tenure for used car would depend on the age of the car. The car
should not be more than 8 years old at the time of maturity of the loan.
You may change the tenure of the loan before the loan is disbursed. The interest
rate & EMI would change accordingly.
The repayment due dates are 1st and 7th of every month and would depend on the date of
disbursement. Payment due dates cannot be changed.
You can make the Payments through post-dated cheques (PDCs)
Repayment option through Direct Debit Mandates is also available for all ICICI
Bank account holders.
Option of repaying through ECS is also available in select cities.
Payments through cash or credit cards are not accepted.

You may change the PDC's in case your Bank Account is changed . However,
ICICI Bank would require verification of signatures by new banker. A nominal fee of
Rs.750/- (Swap Charges) would be charged for exchange of cheques.
A full pre-payment of the loan is accepted. Part pre-payment is not allowed.
Service Tax will be charged as applicable.
ICICI Bank charge pre-payment fee of 5% on the outstanding principal
amount,Service Tax will be charged as applicable.
ICICI Bank charge Rs.250/-per bounced cheque.

Note: All charges are subject to Service Tax as applicable.

Application Process of your Car Loan

Car Loans from ICICI Bank are extremely convenient, flexible and quick. With more
than 1800 channel partners in over 1000 locations, ICICI Bank reach out to millions
of customers and help them realise their dream of possessing a car.

Keep It Simple and Swift. That's the idea behind the easy and quick application
process of ICICI Bank Car Loans. ICICI Bank have multiple channels for you to
access our car loan services. You can call us on the contact numbers given below,
apply online, send us an email, call for our representative to visit you, visit our
bank centre or SMS us your interest.

Documents required for your Car Loan

At ICICI Bank Car Loans, ICICI Bank offer the most convenient, flexible & quick car
loan at the click of a mouse. Keeping your convenience in mind, ICICI Bank ask you
for minimal mandatory documents for the sanctioning of your car loan.

Car Loans

Car Loans

Salaried Self- Partnershi Private / Public

Individual Employed p Firm Ltd Co


Application Application Application Application

form form form form
Photograph Photograph Photograph of Guarantor's
signing partner photograph
(for private
company only)
Proof of bank One proof of Last two years' Last two years
account income (ITR income proof audited
continuity for the last two (audited financials
years ) account or
One income One proof of Partnership Certified true
proof for the residence deed copy of the
last two years (driving MOA & AOA
(ITR, Form 16, license /
salary slip) voters' identity
card / ration
card / passport
/ utility bills
for the last 3
One proof of One proof of Partners Board
identity residence authority letter resolution
(driving (driving (format
license / voters' license / available on
identity card / voters' identity request)
passport / PAN card / ration

card / photo card / passport
credit card / / utility bills
photo ration for the last 3
card) months)
One proof of One proof of
residence office address
(laminated (utility bill /
driving license lease deed /
/ voters' excise or sales
identity card / tax receipt /
photo ration Shops and
card / passport Establishment
/utility bills for Act
the last 3 Registration)
months /
company ID -
company or
government /
PAN card)
Service Charges for Car Loans

If you are looking for flexible schemes, quick processing of your loans, attractive interest rates at the

click of a mouse, then your search ends here. ICICI Bank Car Loans is the No. 1 financier for
car loans in the country.

Our car loan interest charges differ according to the car model, the tenure of the loan, the customer and

his location. For the Car Overdraft Loan scheme, interest is charged only on the amount drawn
and for the period that it is utilized. The rate of interest would depend on the scheme selected by the

Service Charges

Description of Charges Car Loans

Loan Processing Fees Charges Rs 650/-

/ Renewal Charges
Stamp Duty Actuals
5% on the principal
Prepayment Charges
Charges for late payment
2% per month
Cheque Swap Charges Rs. 500/-
Cheque bounce charges Rs. 200/-
Note : Service Tax and other govt. taxes, levies, etc. applicable as per
prevailing rate will be charged over and above these charges at the
discretion of ICICI Bank.

Factors affecting your Car Loan Amount

Car Loans from ICICI Bank are extremely convenient, flexible and quick. With more than 1800
channel partners in over 1000 locations, ICICI Bank reach out to millions of customers and help
them realise their dream of possessing a car.

ICICI Bank offer Car Loans for new as well as used cars as per your need. ICICI Bank offer a
minimum of Rs. 75,000 for a used car and Rs. 1,00,000 for a new car. Higher car loan amounts are also
disbursed according to the model of the car.

Car Loans
New car

ICICI Bank finance upto 95% of the ex-showroom cost of the car.
The Loan amount also depends on the car model. Higher loan amounts are
available under specific enhanced income eligibility criteria.
Minimum loan amount for new car Loan is Rs.1 lac.

Used car

For a used car, ICICI Bank finance up to a maximum of 90% of the valuation of
the car
Minimum loan amount for a used car loan is Rs. 75000/-

Loan Enhancement

To enhance your loan amount, the certified income of the co-applicant can be
considered, if requested by the applicant.
The co-applicant can be the spouse or son/daughter living in the same city.
Similarly, in case of a partnership firm or a limited company one of the partners or
a director can be taken a co-applicant / guarantor for increasing the loan amount
However, in both cases, the asset has to be registered in the name of a single
owner, not joint ownership.


To know the percentage of customers willing in taking a re-finance option
on their existing loan in the given sample of 200.



This study was very much useful for me. During this research i interacted with different
customers personally and observe lot of things and must say learnt a lot of practical thing
from them. But as we are talking about managerial usefulness of this study so, as we
conduct survey with the help of well-formatted questionnaire, all feedbacks are kept by
the me for future studies as secondary data.

So, finally overall research was really enjoyed by me.

The usefulness of this study for manager is as follow: -

• This study would help manager to find out the market response of Refinance
loans before its launch.

• It provides a feedback to the company about their product, which is refinance


• It provides the information about the company’s stand in the market.

• It helps the manager to apply the various activities, which is useful to increase the
market share of its product.

• It helps the manager to know about the preference and choice of the customers so
that they can plan out their future analysis and strategies on that basis.


Every project work is based on certain methodology, which is a way to systematically
solve the problem or attain its objectives. It is a very important guideline and lead to
completion of any project work through observation, data collection and data analysis.

According to Clifford Woody,

“Research Methodology comprises of defining &
redefining problems, collecting, organizing & evaluating data, making deductions &
researching to conclusions.”

Research Instruments
Primary data
Primary data are those, which were collected afresh & for the first time and thus happen
to be original in character. However, there are many methods of collecting the primary
data; all have not been used for the purpose of this project. The ones that have been used

• Structured questionnaire

Secondary data
When an investigator uses the data that has been already collected by others is called
secondary data. The secondary data could be collected from Journals, Reports and
Various Publications. The advantages of secondary data can be economical, both in the
term of money and time spent. In this report the secondary data was collected through:

• Textbooks
• Magazines
• Articles
• Websites

It is understood that a thorough descriptive research design lays the foundation of
good research. For research we have stressed upon conclusive research and have been
carried out by personal survey.

For this research work more stressed is given on primary data. Primary data will
not only be relevant for research project but it is also reliable, accurate and dependable.

A questionnaire is a set of questions printed or typed in definite order on a form or set of
form. There are two type of questionnaire, the first one is standard questionnaire and the
second one is un-standard questionnaire. The authority or expert sets the standard
questionnaire. In the other hand un-structured questionnaire is set according to objective
of the study by researcher. In this research work we used un-structured questionnaire with
my best ability and under the guidance of the company guide.

The questionnaire was formulated by keeping in mind the following points.

• Giving the respondents clear comprehension of the question.

• Including the respondents to co-operate.

• Giving instructions as to what is wanted.

• Identifying the needs to be known.

• After floor acing the questionnaire, the respondents were personally contacted.
Each respondent was requested to answers the question with appropriate answer
genuinely. All the questions were made very clear to them. The questionnaires
were duly filled with the responses of all the respondents in the current project


There was a fact to face interaction with most of the samples. They were directly
questioned and accordingly personal and professional information were collected from
them. In this project work I have made interview with almost respondent to know some
extra data or fact, which was used in this project work.

In the observation method, the researcher himself collects necessary information by
observing the phenomena under this method. Observation may be conducted on in the
natural field or in the form of experiment.
After the observation, the data is carefully noted in the questionnaire format. We
used uncontrolled observation in this observation which takes place in the natural setting.
Consumers were free to express their feeling about their choice of fuel . The observation
method give us an idea about the Consumer market and buyer’s behaviour on Petrol
and Diesel.

Sample size
Sample size refers to the number of items to be selected from the universe to constitute
the sample. The sample size neither be too small nor be too large, but it must be sufficient
enough to properly analyze and to achieve the objectives of the study. Hence, here the
sample size is of 200 customers through questionnaire, which is sufficient to analyze and
also to achieve the objectives of the study.


The main statistical tools used for the collection and analyses of data in this project are:
• Questionnaire
• Pie Charts
• Tables


Q.1. Do you require any additional loan on your existing vehicle?
1. Yes
2. No

If answer to Q.1. is Yes, then following questions are asked:

Q.2. What is the model of the vehicle (in terms of year)?

Q.3. What is your loan requirement (approx)?
Q.4. For how much duration do you want the loan?

If answer to Q.1. is No, then again try and pitch the customer


A sample size of 200 has been given by the two Direct Selling Agents (DSA), DSA1 and
DSA2, with sample size 100 each. These sample have been chosen in accordance to their
ladel number as per the records of ICICI Bank.

1st Stage

Findings of the first stage show that initially out of 200, almost 75 were ready to give
refinance loan a thought. 40 were ready from DSA1’ sample and 35 were ready from that
of DSA2.

60 Total
30 Accepted



100 Total
50 Accepted

DSA1 +

2nd Stage

Then the final i.e. 2nd stage findings show that out of 75 customers, 35 are wiling to take
the refinance loan.



100 Total
Early acceptance
50 Final acceptance

DSA1 +

ICICI earns a business of Rs. 300 Crores/month on car loans.

So, if 35 customers are ready to take the refinance loan, then it means out of a sample
size of 200, 17.5% people are interested.

This means that:

17.5% * Rs. 300 crores/month = Rs. 52.5 crores/month will be the income earned per
month on refinance loans, if they are taken out in the market.

Secondly, following are the reasons which came out during the refusal of final offer:
 Higher EMI of the Re-finance loan.
 Higher cost of interest
 Personal loans are available at 12-13-14% interest, then why to go for 15-16%
interest of Re-finance loans.
 Maturity of the loans


With a sample size of 200 existing Auto customers, 35 agreed to take the
loan. This means if the product is introduced in the market it will be a good
source of income for the organization and will add to the portfolio of the
organization Thus the product should be introduced in the market as soon as

Results of this research study are given as follows:

 Introduction of the Re-finance loan is a good way to increase the

 When 12% of the people are wiling to take new car loans, then 15%
are willing to take Re-finance loans. The balance 3% will be the
company’s extra revenue
 A difference point is there between personal loans and Re-finance

Thus the product should be introduced in the market as soon as possible for
earning the portfolios and hence the market share. This will help maintaining
the position of ICICI in the market and it will remail a leader as such.


Based on the data collected through the questionnaire and interactions

with the students the following recommendations are made for

 EMI on Re-finance loan should be reduced a bit so that a customer

doesn’t leave it for the personal loans.

 The Re-finance loans should carry certain other advantages so that
a customer is motivated to take it.

 It will be a good portfolio earner so it should be introduced as early

as possible.


No study is an ultimate effort. It always leaves room for improvement and it

is the limitation of one study, which serves as the bases for further research
ventures. Even though, sincere efforts are taken to ensure that an exact
picture can be arrived at, still there may be some limitations related to the
study. These are listed as below:

• The work has been carried out in a limited time, which acts as a
constraint while doing a thorough research work

• The sample size was small and hence the results can have a degree of

• Questionnaire is subjected to errors

• Consumer may have manipulated their responses