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I, Vipin Upreti student of MBA 4thSemester, of IIMT management college Meerut hereby declare that the Research Project Report title as " LOAN SCHEMES AND CAR RECOVERY PROCEDURE OF H.D.F.C. BANK" is the outcome of my own work & I also declare that this report is my original work and no part of this has been published or submitted to anybody or any university by any one for the award of any other degree/ diploma.

Vipin Upreti

It is a matter of great explanation and ecstasy for me to present my research project report the topic " LOAN SCHEMES AND CAR RECOVERY PROCEDURE OF H.D.F.C. BANK" I offer my sincere gratitude to every one involves directly and indirectly for his help and guidelines through out the project I am especially thankful to my project guide MR. Sandeep Kumar Lecturer, who had given me opportunity to complete project. My project has been influenced by number of standards and popular text books. I express my gratitude to the respective author.

Vipin Upreti

The opening of the economy has brought car buyers a plethora of models choose from. The decision to buy the car means the buyers have covered half the distance they need to travel to own their dream car. The second half, which is probably the more difficult path begins with the question "How are you going to pay for it?" i.e. whether the buyers wants to buy the car by their own funds or they want to finance it. The current sluggish market conditions coupled with the lowering of the inter rates; have made the car finance market extremely competitive. Final companies, dealers and manufacturers are wooing buyers with special offers/ such as low interest rates. To select the best cat loan scheme that suits the customer, it is necessary for the customer to first make himself familiarize with the mechanics of this market after

But even they are facing the problem of non-recovery of loan. Non recovery of installments as well as interest on the loan portfolio negates the effectiveness of the process of the credit cycle. Therefore. . With the popularity of financing the problem of recovery has also borrowing for houses and appliances. it is not infrequent that a person with multiple liabilities for funding his assets can sometime find it difficult to meet all his obligations in time. come the question how to recover the loan? In eve finance company. Now. there is a specified loan recovery procedure. Non recovery also affects the profitability of lenders besides required to maintain additional owned funds by way of capital and provisions recovery. It also contains collection strategy to be adopted for delinquency management.which the customers will be in a better position to make up their mind. the various terms and some insights into how the car loan schemes work. This report will elaborate the basics of car finance.

The bank does not let this money sit idle but instead provides loans to borrowers who might then buy a house / car or expand a business. credit unions. which restates the circulation of money and provide financial'" assistance of money and provide financial assistance to all economic activities.INTRODUCTION Finance plays an important role in economy. every country has its own monetary and financial institutions. spurring economic growth. Thus the modem economic activities of any country cannot be imagined without money capital. For example. As banks. The savings of millions of people percolate through many financial institutions. a bank acquires large amounts of money from the deposits of individual savers. A wide variety of financial institutions have . and other financial institutions provide credit. they help expand the economy by directing funds from savers to borrowers.

In India. The institutions of classified into two categories: 1) Banks and 2) Non . Here. generates billions of dollars in worldwide revenues. trucks. changing forever the way people live.Bank financial institutions Automobile industry produces automobiles and other gasoline-powered vehicles. and provides the basis for a multitude of related service and support industries. and motorcycles etc. Automobile industry is one of the most important industries in the world. Day by day the car industry is growing with a very fast speed. automobile industry. the competition in the car industry has been increasing a lot .different roles in finance and the economy. It provides jobs for millions of people. buses. travel and do business. affecting not only the economy but also the cultures of the world. such as cars. Automobiles revolutionized transportation in the 20th century. we are mainly concerned with the car industry that is a part of the.

Today.over a few years. The days have gone when people were known only with few cars like Ambassador. Maruti 800. both in the petrol as well as diesel there is a lot of competition in our country. Premier Padmini etc. Below is given the different segments in which different cars fall. mid segment or multi utility etc. a lot of cars have come into being in our country in every segment: be it compact segment. . With the automation computerization increased competition and changed customer perception and consciousness.

Ranging from 4 Lac to 6 Lac   Maroti Esteem Ford Ikon . SMALL SEGMENT: Lac         Maruti 800 Maruti Wagon R Maruti Alto Maruti Zen Daewoo Matiz Fiat Uno Tata Indica Hyundai Santro -Ranging from 2 Lac to 6 2.e. MID SEGMENT . on the basis of price) can be Classified under following segments: 1.VARIOUS SEGMENTS OF CAR Cars according to certain parameter (i.

PREMIUM SEGMENT    Ranging from 10 Lac to 15 Lac Mercedes Benz E-Class Mercedes Benz C-Class Hyundai Sonata .Ranging from 6 lac to 10 Lac 4. LARGE SEGMENT       Maruti Baleno HM's Contessa HM's Lancer OM's Opel Astra Honda City Honda Accord .    Fiat Siena Hyundai Accent HM's Ambassador GM's Opel Corsa 3.

SPORTS AND MULTI UTIUTY SEGMENT               M & M's Classic M & M's Marshal M & M's Voyager M & M's Bolero M & M's Armada Tata Sierra Tata Sumo Tata Safari Bajaj Challenger Bajaj Gama Bajaj Judo Bajaj Trax Bajaj Traveller HM's RTV The focus of the project is to make a comparative study of car loan schemes of S. In fact the scope of car finance . Investments Limited with some other financial institutions.5.E.

And no doubt. Earlier the restrictive policies of the GOI didn't allow the foreign players to set up shop in India. the Combined Annual Growth Rate (CAGR) stands at 17. This has adversely affected the technological upgradation of the domestic car manufacturers. the car sales have gone up by 19%. Since then. But with the opening up of the economy. such a rise in the sale of the car industry has given a positive sign for the financial institutions. the economy slumped into recession and the auto industry too slowed down. But during the year 2005-06. several global automobile companies did set up their plants and started production. The growth of passenger car industry is closely related to the market dynamics as the economic liberalization has paved the way for increased activities in this vital industry.has been increased with the growth in the car industry. Estimates show that between 200203 is considered as the peak year of industrial growth in the current decade. .6%.

The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited'. as part of the RBI's liberalization of the Indian Banking Industry in 1994. with its registered office in Mumbai.HDFC BANK LIMITED PROFILE The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive in 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. India. Business Focus: HDFC Bank's mission is to be a World-Class .Indian Bank. consistent . HDFC Bank commenced operations as a Scheduled Commercial Bank inJanuatyl995. The Bank's aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability.

Customers in 90 locations are also serviced through Phone Banking. professional integrity and regulatory compliance. HDFC Bank's A1M network can . The Bank at present has an enviable network of over branches spread over cities across the country. the Bank has branches in the centres where the NSEIBSE have a strong and active member base. Distribution Network:HDFC Bank is headquartered in Mumbai. Moreover. Being a clearing/settlement bank to various leading stock exchanges. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Customer Focus. The Bank also has a network of over networked A TMs across these cities. Product Leadership and People. All branches are linked on an online real-time basis. HDFC Bank's business philosophy is based on four core values: Operational Excellence. The bank is committed to maintain the highest level of ethical standards.with the bank's risk appetite.

2% of the bank's equity while about 13.28.450 crore (Rs. Electron/Maestro. NRls/OCBs while the balance is widely held by about. 10 of the equity is held by FIls. Mauritius (IFHL) (both funds advised by J P Morgan Partners.5% of the bank's equity.282 crore (Rs.000 shareholders. Roughly 27.2 billion). .. Mumbai and the National Stock Exchange. Plus/Cirrus American Express Credit/Charge cardholders. The shares are listed on The Stock Exchange. Capital Structure:The authorized capital of HDFC Bank is accessed by Visa all domestic and international and Visa/MasterCard. formerly Chase Capital Partners) together hold about 5. The Indian Private Equity Fund. The HDFC Group holds 24.5°. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB". 214. Mauritius (IPEF) and Indocean Financial Holdings Ltd.1 % of the equity is held by the depository in respect of the bank's issue of American Depository Shares (ADS/ADR Issue). The paid-up capital is Rs.45 billion).

the Bank has succeeded in leveraging its market position. The Bank has prioritized its engagement in technology and the internet as one of its key goals and bas already made significant progress in web--enabling its core businesses. In each of its businesses. .Technology: HDFC environment Bank in operates terms of in a highly automated and information technology 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). expertise and technology to create a competitive advantage and buildmarket share.

etc. including working capital finance. trade services. For these corporate. transactional services. blue-chip manufacturing companies in the Indian corporate sector and to a lesser extent. emerging mid-sized corporate. the Bank provides a wide range of commercial and transactional banking services. The bank has three key business areas A) Whole sale Banking Services The Bank's target market is primarily large. cash management.Business-Profile:HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side. The bank is also a leading provider of structured solutions which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate .

their investments in electronic form. Net Banking and Mobile Banking. Loans against marketable securities. Phone Banking. as well as through alternative delivery channels like A This. Personal Loans and Loans for Twowheelers. The products are backed by world class service and delivered to the customers through the growing branch network. The Bank also has a wide array of retail loan products including Auto Loans. stock exchange members and banks.customers. offering customers the facility to hold. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA . solutions to customers. giving the customer a one-stop window for all his/her banking requirements. It is recognized as a leading provider of cash management corporate and transactional mutual banking funds. It is also a leading provider of Depository Services to retail customers. B) Retail Banking Services The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services.

The Treasury business is responsible for managing the returns and market risk on this investment portfolio. the bank has three main product areas .Credit Analysis & Research Limited (CARE) and Fitch Ratings India Pvt. C) Treasury Operations Within this business.Foreign Exchange and Derivatives. Ltd. With the liberalization of the financial markets in India. Local Currency Money Market & Debt Securities. advice and product structures. The Credit Rating Information Services of India . To comply with statutory reserve requirements. and Equities. Rating: HDFC Bank has its deposit programmes rated by two rating agencies . the bank is required to hold 25% of its deposits in government securities. The bank was one of the first four companies which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency.Electron) and issues the MasterCard Maestro debit card as well.. corporate need more sophisticated risk management information.

The bank has been assigned a 'CRISIL GVC Level rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest. .Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future.



. a person can acquire a house as well as a car once he gainfully employed and -at the same time he can fund his children to schools and colleges by financing their.? Before the availability of car financing scheme a person have to wait for the acquisition of car until he had saved money sufficient to buy car. Housing Finance and last but not the least the Car Financing Schemes. In other words even an officer of a car or government would not be able to buy a car until he was in his late 40's. through educational loans. His priority would have been to save money for the education of his children and then to buy a house or an apartment.CAR FINANCING WHY.. The car would have been the last priority. . However with attractive loan financing schemes for Children Education.

the government has.It is therefore evident that the financing schemes have created whole new industries and have been advancing the cause of Industrialization of the country. small trade opportunities and new lifestyles are some of the benefits of these financing schemes. This would have not been possible without the car financing schemes. The creation of jobs. In order to support these industries. also provided various tax breaks such as allowing interest paid on these loans as tax .deductible payments MAJOR CAR FINANCERS IN Meerut BANKS    Bank  SB of Hyderabad  SBI PNB Canara  m Bajaj Auto Finance  Finance Sundara NBFCs Tata . One can see various models of new car and motorbikes in almost every Indian cities road.

According to RBI "Default means non-payment of any principal debt or interest thereon on any other amount payable by a borrower to any secured creditor consequent upon which the account of such borrower is classified as non-performing asset in the books of accounts of the secured creditor in accordance with the dictions or guidelines issued by the Reserve Bank" . SB of Allahabad  S. Investments Limited  Bank  Baroda  Central  Bank of  HDFC Mahindr a Manjula DEFAULT IN CAR FINANCE MEANING OF DEFAULT Repeated prolonged delays and dishonored cheques deem to be default.E.

Unaware of the cheque being presented if awareness calling has not happened. Deliberate default. Customer has issued PDC's from multiple bank accounts and has funded a wrong account. and siphoning of funds is called willful default. Unable to fund the account on the cycle date of the month. Unwillful default:. . D. REASONS FOR DEFAULT A. such borrower may be termed as unwillful defaulter.TYPES OF DEFAULT: A.Means borrower who is willing to pay the dues but due to certain reasons which are/were beyond his control could not receive the funds receipts for payment of dues. B. skip and fraud. C. B. Willful default:-If the borrower does not pay though he has to pay. wrong use of funds.

a financer conduct a Field Investigation to verify the following:  CHARACTER: .. e. Pre Sanction Measure 2. Post Sanction Measure PRE SANCTIN MEASURES A.g. regularity and promptness in fulfilling his promises and repaying the . Before sanctioning a loan.MEASURES TO GET RID OF DEFAULT Measures are divided into two phases: 1. integrity.The word character implies a number of personal characteristics of a person. honesty.

The banker therefore does not lend money to an entrepreneur without adequate funds of his own. If the borrower possesses necessary technical skill.dues. managerial ability and experience to run a particular industry or trade. sense of responsibility.  CAPITAL: Banks are the repositories of the public money and the borrowed money. success of such unit may be taken for granted and the banker will consider him a deserving case for granting an advance.  enterprise CAPACITY: largely The success the of an depends upon ability. In case of failure of the business enterprise the banker will be to realize his money if the borrower own capital is sufficient. competence and experience of the entrepreneur. good habits and the reputation and goodwill which he enjoys in the eyes of others. .

Bank takes the necessary follow up action to ensure that the loans are actually utilized for the purpose for which they are sanctioned. POST SANCTION MEASURES:A. The banker obtains the necessary documents. Issuance of notices to the borrower as well as to the guarantors C. Personal contact D. a life insurance policy or other collateral security or the guarantee of the third party. Telephone persuasion E. a bank obtains any security which may be available such as goods or other asset. Normally. C. Monitoring of the account B. Registration notice F.B. Legal notice . D.

Address Verification Correct /Incorrect II. I.G. Office / Business Correct / Incorrect Premises address III. Family details furnished Correct / Incorrect Correct' Incorrect Could not verify Guarantor Correct/Incorrect Correct / Incorrect Correct / Incorrect Correct / Incorrect Could not verify . Taking over of possession CAR FINANCE FIELD INVESTIGATION REPORT Borrower 1. Tel No. Name 2. (s) IV. Filling of suit H.

Period of stay 3.years Name Yes/ No Yes/ No . Area Checked with any Existing customer (state name and 5. Approx.V. contact number) Was there any Corroboration done with any neighbor . House Rented/ owned / Ownership / Could not be verified Rented / owned / Ownership / Could not be verified VI. Type of house 4.

CAR LOANS LOANS Meaning of Loan:- .

a fresh request is made to the bank. If the borrower needs funds again or wants renewal of an existing loan. credit is given for a given purpose and for a predetermined period. ADVANTAGES OF LOAN SYSTEM . these loans are repayable in installments. usually along with interest at some future point (s) in time. Funds are required for single non .An arrangement in which a lender gives money or property to a borrower and the borrower agrees to return the property or repay the money. Thus a borrower is required to negotiate every time he is taking a new loan or renewing an existing loan. LOAN SYSTEM Under the loan system.repetitive transactions and are withdrawn only once. Banker is at liberty to grant or refuse such a request depending upon his own cash resources and the credit policy of the central bank. Normally.

the banker gets an opportunity of automatically reviewing the loan account. Unsatisfactory loan account may be discontinued at the discretion of the banker. 3) Profitability: . DISADVANTAGES OF LOAN SYSTEM .1) Financial Discipline on the Borrower:. Interest accrues to the bank on the entire amount lent to a customer.The system is comparatively simple. this system ensures a greater degree of self discipline on the borrower as compared to the cash credit system.As the time of repayment of the loan or its installments is fixed in advance. 2) Periodic Review of Loan Account:.Whenever any loan is granted or its renewal is sanctioned.

they are renewed frequently. 2) Banks have no control over the use of funds borrowed by the customer. To avoid it. but in practice they roll over. 3) Though the loans are for fixed periods. banks insist on hypothecation of the asset /vehicle purchased with loan amount.. TYPES OF LOAN . However. i. 4) Loan documentations are more comprehensive as compared to cash credit system. borrowers may borrow in excess of their exact requirement to provide for any contingency.1) Inflexibility every time a loan is required. it is to be negotiated with the banker.e.

Medium terms loans repayable over a period. LONG .The various types of loans are as follows: 1. are extended by banks. and other tenn lending institutions for meeting the requirements of capital investment in industry or agriculture. etc. COMPOSITE . Usually one year or less.LOAN: . equipments for professionals and other tools and machinery. 3. MEDIUM . are generally called "term loans". . are granted for the purchase of durable goods like tractors ai1d vehicles. 2.Long terms loans.TERM LOANS :. ranging from one year to seven years. often used to refer to bonds or shorterm loans. SHORT . 4.When a loan is granted both for buying equipments and for working capital purposes specially in case of small borrowers it is called composite loan.TERM LOANS:.Short terms loans are usually granted to meet the working capital needs of the borrowers.TERM LOANS: .

These are the principles of   Safety Liquidity .e. UNSECURED WANS: - Unsecured loans or advance means a loan or advance not so secured. SECURED WANS:.A loan which is repayable on demand (i.A loan. rather than on a specific date. 6. Unsecured. which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender.5. The assets may be forfeited to the lender if the borrower fails to make necessary payments. loans are also known as clean advances and are obviously granted to parties enjoying high reputations and sound financial position. without prior notice). 7. DEMAND LOAN: . PRINCIPLES OF SOUND LENDING There are 5 cardinal principles of bank lending that has been followed by the commercial banks since long.

the social purpose. and (2) willingness to pay. he earns profit and can repay the loan promptly. The repayment of the loan depends upon the borrower's (1) capacity to pay. The banker should. the loan is recovered out of the sale proceeds of his tangible assets. the first and foremost principle of lending is to ensure safety of the funds lent.As the bank lends the funds entrusted to it by the depositors. according to the contract. highlighting. Otherwise. take utmost care in ensuring that the . which they have to subserve 1) SAFETY: .   Profitability Purpose of the Loan Principle of Diversification of Risks Central government & Reserve Bank have issued number of directions in this regard. By safety is meant that the borrower position to repay the loan. therefore. along with interest. The former depends upon his tangible assets and the success of his business. if he is successful in his efforts. The willingness to pay depends upon the honesty and character of the borrower.

the banker regards liquidity as important as safety of the funds and grants loans on the security of the assets. He should be a person of integrity. For example. which are easily marketable without much loss. Therefore. Thus. goods and commodities are easily marketable while fixed assets like land buildings and specialize types of plants and equipments can be liquidated after a time interval. 2) LIQUIDITY:Banks are essentially intermediates for short-term funds. This depends upon the nature of assets owned by the borrower and pledged to the banker. . good character and reputation. therefore largely payable on demand.enterprise or business for which a loan is sought is a sound one and the borrower is capable of carrying it out successfully. they lends funds for short periods and mainly for working capital purposes. The banker must ensure that the borrower is able to repay the loan on demand or within a short period. The loans are.

That is to say that the banks should not grant advances to unsound parties with doubtful repaying capacities. banker requires of the purposes for which he seeks the loan. Banks do not grant loan for each and every purpose . pay a very high rate of interest. Such advances ultimately prove to be irrecoverable to the detriment of the interest f the bank and its depositors. Loans are not advanced for speculative and unproductive purposes 'like social functions and . even if they are ready to.while lending his funds. 4) PURPOSE OF THE LOAN:. They must employ their funds profitably so as to earn sufficient income.they ensure the safety and liquidity of their funds by granting loans for productive purposes only.3) PROFITABILITY:-commercial profit earning institutions. The sound principle of lending is not to sacrifice safety or liquidity for the sake of higher profitability. the banks are nationalized banks are no exception to this.

The advances. overall position of the bank will not be in jeopardy. on the other hand. distributed amongst a good number of customers belonging to different trades and industries. The banker thus diversifies the risk involved in lending. The banker should not grant advances to a few big firms only or to concentrate them in a few industries or in a few cities or regions of the country only. If a big customer meets misfortune.This is also a cardinal principal of sound lending. or certain trades or industries are affected adversely. 5) PRINCIPLE OF DIVERSIFICATION OF RISKS: .ceremonies or for pleasure trips or for the repayments of a prior loan. . should be over a reasonably wide area.

There after you should bargain with the selected set for the best deal. the sale person initiates the approval process. the sales person from the selected financier will give you the final quote and request for the documents of. your eligibility is .  Once you have finalized your financier and the scheme details. Based on your documents.CAR LOAN PROCEDURE  Based on the initial quotes from a number of financiers you need to shortlist a set you think that suit your requirement the best. On that he has already appraised you collecting the necessary documents.

A copy of the RC Book has to be submitted with the financier. . tenure and IRR).determined (mainly the principal amount.  Once the Field Investigation gives the green signal. if applicable. the financier conducts a Field Investigation to verify your address and a few other basic details. The financier will give you a Amortization table to indicate the repayment dates.  Thereafter the financiers make payment of the necessary amount to the dealer toward the purchase of your car. your credit history is also cross-checked with other financiers.  On delivery of the car it is registered and insured. the scheme is processed Down Payment and Post Dated Cheques (PDC) towards the installment payment are collected from you by the financier and the appropriate agreement (depending on the nature of financing) is signed. On being found eligible. and an entry is made in the RC book to indicate the claim of the financier on the car. Sometimes.

I.I. Loan Sanctioned Completion of File Loan not If not satisfied with .FLOW CHART FOR OBTAINING CAR LOAN Proposal Field Investigation Valuation (Only for property based) If satisfied with F. F.

e.. the credit worthiness of the borrower or a person.the word character implies and includes a number of personal characteristics of a .Deposit of initial Amount Issue of draft In Favour of Supplier Issue of Insurance Cover note Delivery of Car Noting of Company Hypothecation Charge in the Books of RTO PRECAUTIONS WHILE GRANTING LOANS A banker must take the following precautions: PRECAUTIONS BEFORE SANCTIONING A LOAN 2) The applicant for a loan must be properly introduced to the banker the banker must try to know the background of the applicant. i. Such credit worthiness is judged by the banker on the basis of (1) character (2) capacity. and (3) capital  Character :.

sense of responsibility.person. competence and experience of the entrepreneur.the success of an enterprise largely depends upon the ability. In case of failure of the business enterprise the banker will be able to realize his money if the borrower's own capital is sufficient.g. experience to run a particular industry or trade. success of such unit may be taken for granted and the banker will consider him a deserving case for granting an advance.Banks are the repositories of the public money and the borrowed money. good habits and the reputation and goodwill which he enjoys in the eyes of others. therefore does not lend money to an entrepreneur without adequate funds of his own. managerial ability and.  Capital: . The banker. If the borrower possesses necessary technical skill. integrity. his honesty.. . regularity and promptness in fulfilling his promises and repaying the dues. e.  Capacity: .

3) The bank should take the necessary follow up action to ensure that the loans are actually utilized for the purposes for which they are sanctioned. 4) Normally, a bank is expected to obtain any security which may be available such. as goods or other assets, a life insurance policy or other collateral security or the guarantee of the third party

1) The banker must directly make payment to the dealer m vehicles on the basis of Performa invoice, to ensure that the loan is properly utilized. 2) The vehicles to be purchased must be hypothecated to the bank and the interest of the bank in vehicle must be noted in the registration book and a certificate to this effect must be issued by the Regional Transport Office (R.T.O.). 3) The banker must insist that the borrower takes a comprehensive insurance policy on the vehicle in the joint names of the borrower and a banker for its full

value. The policy must continue till the entire amount of the loan is repaid. 4) The loan must be repaid in Five I Seven years in monthly I quarterly installments. The banker must ensure that the borrower pays the installments

regularly. 5) The banker must obtain the necessary documents. 6) The rate of interest should be mentioned.

Car Loan- New Car Loan
Advantages of New Car Loans Services.   Speedy processing - within 48 hours. Covers the widest range of cars and multi-utility vehicles in India. (. Whatever the car you choose, we finance you, for up to 90000of its invoice value.  Flexible repayment options - 12 to 60 month period.  Attractive car loan plans.

  

Among the lowest interest rates. Hassle-free documentation. Prepayment - prepay the loan anytime after 6 months at a small

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Charge. Special rates for HDFC Bank account holders.

Auto Loan Takeover Plan Requirements:  Facility is available to only HDFC bank account holders (CASA).  All terms and conditions applicable for the used car product are applicable for the Loan take over product.  Minimum 9 month old loan with any approved Financier with dear repayment track record

You can get a loan for a car without proof of income. your loan gets processed faster. the loan amount would be as much as 600/0 of the car invoice value.  Under this plan. . American Express Charge Card  Standard Chartered Gold No Income-Document Loan Plan This Loan Plan removes all income document requirements.Advantage platinum Credit Card Plan If you are a salaried individual holding any of the credit cards mentioned below.  HDFC Bank International Credit Card. Citibank Gold     Citibank Diners HSBC Gold ANZ Grind lays Gold American Express Gold Card.

.  Lien is marked on the specified deposit.  You can get a loan for 1000/0 of the invoice value amount with the required margin placed as a fixed deposit in HDFC Bank. 100% Loan Plan with Fixed Deposit Lien This allows you to take a loan against your deposit at HDFC Bank. Endorsement on passport for last 3 years. NRI Loans NRIs can avail of new car loans from HDFC Bank for the use of the vehicles by their relatives in India. Installments can be paid separately or out of the deposit (if deposit is large enough). Additional documents required are as follows:   Contract copy and salary slip of NRI. The tenure of loan can be a maximum of three years.

  Proof of ownership of property.Used Car Loans Advantages of our Used Car Loans Services  You can choose any car manufactured in India within a certain age*. Get up to 80% finance of the value of the car.   Choose flexible loan repayment schedules. * 6 years for premium vehicles. . 7 years for standard vehicles and up to 8 years (only for salaried individuals) on select vehicles. Post-dated cheques must be from the resident account of the borrower. you can get fast approvals on your loans with minimal documentation Car Loan . Approval Plan If you have an HDFC Bank Preferred Account or a Corporate Salary Account with HDFC Bank for more than six months.

Avail of the lowest interest rates. your loan request gets processed faster than normal. If you are an HDFC Bank account holder. we have got special benefits for you. SCHEMES FOR USED CAR LOANS Credit Card Plan For a salaried individual and hold any of the cards mentioned below.   Repay in easy installments of 12 to 48 months.      Citibank Gold Citibank Diners HSBC Gelid ANZ Grind lays Gold American Express Gold Card .

Post-dated cheques must be from the resident account of the borrower . Endorsement on passport for last 3 years. Proof of ownership of property. Additional documents required are as follows:     Contract copy and salary slip of NRI.  American Express Charge Card Standard Chartered Gold 60-Miute approval products If a person has a HDFC Bank Preferred Account or a Corporate Salary Account with us for more than 6 months. NRI Loans NRls can avail of Used Car Loans from HDFC Bank. you can get fast approvals on your loans with minimum documentation. for use of the vehicles by their relatives in India.

100% Loan Plan with Fixed Deposit Lien This allows one to take a loan against your deposit at HDFC Bank. . it's OK.  Lien is marked on the specified deposit. you get the loan amount up to 60% of the car invoice value.No Income-Document Loan Plan If one do not wish to submit income documents.  Under this scheme. Installments can be paid separately or out of the deposit (if deposit is large enough).  The tenure of loan can be a maximum of 3 years.  You can get a loan for 100% of the invoice value amount with the required margin placed as a fixed deposit in HDFC Bank. You can get a car loan without proof of income.

For salaried individuals:   Minimum age of Applicant 21 years Maximum age of Applicant at loan maturity: 58 years  Minimum employment: and 1 year 2 in current of employment employment  minimum years Minimum Annual Income: Rs 100000 net annual income. Telephone: Must at residence For self employed:   Minimum age of Applicant 21 years Maximum age of Applicant at loan maturity: 65 years  Minimum business employment: At least 3 years in .Eligibility For New And Used Car Loans.

100000 P a for mid-sized and premium cars   Minimum turnover: Turnover Rs 4. 60000 p.a for standard cars and Rs.5 lacs Telephone: One phone at least at business and at residence of the loan executing partner For private limited company:  Minimum Income: Net profit Rs.a for standard cars and RS. 60000 p.100000 P a for mid-sized and premium cars  Minimum turnover: Turnover Rs 4. 60000 p.a for standard cars and RS.100000 p a for mid-sized and premium cars  Telephone: Must at residence For partnership firms:  Minimum Income: Net profit Rs. Minimum Annual Income: Net profit Rs.5 lacs .

100000 p a for mid-sized and premium cars   Minimum turnover: Turnover Rs 4. 60000 p.5 lacs Telephone: One phone at least at business premises Documentation for New and Used Car Loans .a for standard cars and Rs. Telephone: One phone at least at business premises For public limited company:  Minimum Income: Net profit Rs.

Recent.Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card.For salaried individuals:  Proof of Identity:. Address Proof:. driving licence ( Laminated.Passport copy.Passport copy.Latest ITR. PAN Card. Legible.   Income Proof:. PAN Card.  Bank Statement.Latest salary slip with form 16. for mid sized and premium cars if income is greater than . Legible)  Income Proof:. driving licence (Laminated.  Bank Statement.Waived for small cars.Not mandatory For self employed:  Proof of Identity:. Recent.Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card. Address Proof:. Voters Id car. Voters Id car.

Rs 1.5 lacs then bank statement requirement can be waived. Profit & loss Account for latest two years and the latest 2 years IT returns of the company .NA Income Proof:.Audited balance sheet. For private limited company:   Proof of Identity:. Profit & loss Account for latest two years and the latest 2 years IT returns of the company  Address Proof:.NA Income Proof:. for mid sized and premium cars if income is greater than Rs 1.Audited balance sheet.5 lacs then bank statement requirement can be waived.Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate  Bank 5tatement.Waived for small cars. For partnership firms:   Proof of Identity:.

NA .Audited balance sheet.Telephone Bill/Electricity BiII/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate  Bank Statement. Address Proof:.NA Income Proof:.NA For public limited company:   Proof of Identity: .Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate  Bank Statement. Profit & loss Account for latest two years  Address Proof:.

companies Which cars can be financed? HDFC Bank finances most passenger cars and multi-utility vehicles manufactured by India's leading automobile companies. How much finance can I avail of? You can borrow up to 90% of the invoice value.1 lakh. But if you so desire. the minimum loan amount is RS.Frequently Asked Questions About New Car Loans Who can avail of HDFC Bank New Car Loans? To avail of a New Car Loan you need to be in one of the following categories:  Salaried individuals in the age group of 21 to 60 years (at the end of the tenure)  Self-employed individuals in the age group of 21 to 65 years (at the end of the tenure)   Partnership Firms Public & Private Ltd. .

One merely has to pay a small prepayment fee on the outstanding loan amount. Does one have the option of pre-paying the entire loan amount? Yes. You need not necessarily have an account with us. one can get an HDFC Bank Car Loan. One can pre-pay the loan any time after 6 months of availing of the loan. . How long will it take to process the loan? Within 48 hours of completing documentation.What are the tenure options? The choice is yours. You can choose any repayment option from 12 to 60 months all specially designed to suit your requirements. can one still avail of loans? Of course. If one doesn't have an account with HDFC Bank.

you've come to the right place. then you may be required to have a guarantor for this loan. Frequently Asked Questions About Used Car Loans Who can avail of HDFC Bank Used Car Loans? If you are looking for your dream car. and loan to buy it. But if your income does not meet our credit criteria. You have to fall into any of the following categories  Salaried individuals in the age group of 21 to 60 years (at the end of the tenure)  Self-employed individuals in the age group of 21 to 65 years (at the end of the tenure)   Partnership Firms Public & Private Ltd. companies .Does one need a guarantor? Generally no.

Fiat Siena & Uno and Mitsubishi Lancer. Ford Escort & Ikon. Baleno. So choose the car from the extensive list and apply right away. You can choose from any of the 4 well-paced repayment options of 12. Daewoo Matiz & Cielo. Esteem. Opel Astra & Corsa. 24. Safari.36 or 48 months all specially designed to suit your requirements. Honda City.Which cars can be financed? HDFC Bank finances most passenger cars and multi-utility vehicles manufactured by India's leading automobile companies. you can borrow up to 800/0 of the invoice value. Sumo. Tata Indica. . Wagon R. How much finance can one avail of? If you so desire. What are the tenure options? The choice is with you. Hyundai Accent & Santro. Omni. Maruti 800. Zen.

But if your income does not meet our credit criteria. Do one have the option of pre-paying the entire loan amount? Yes. You can pre-pay the loan any time after six months of availing of the loan. You merely have to pay a small prepayment fee on the outstanding loan amount If one doesn’t have an account with HDFC Bank. Do one need a guarantor? Generally no. You need not necessarily have an account with us.How long will it take to process the loan? Within 48 hours of completing documentation. So how does one get HDFC Bank Car Loans? It's quite simple. then you may be required to have a guarantor to stand surety for your loan. you can get HDFC Bank Car Loans. Or visit any of the HDFC Bank . can I still avail of loans? Of course. You can either meet us at an HDFC Bank Branch convenient to you.

Loan Required City Occupation Company# Designation# (# Required for Salaried) Income per annum Ext.-0ffice Mobile No. No. . Residence Tel. All fields are mandatory First Name Last Name Email Id Tel. FORM FOR CAR LOAN Kindly share with us a few details about yourself and our representative shall get in touch with you.preferred dealerships or you could also call us and we will promptly send an HDFC Bank associate over to you. No.

(Net Income for salaried employees / Business Income as per ITR for non-salari RECOVERY PROCESS .

HDFC BANK: RECOVERY PROCES ROLE OF A COLLECTION MANAGER Collection manager plays an important role in HDFC bank. He/She is expected to perform his duty as a team leader. operations and legal. credit. guide and as a facilitator for the staff and vendor at his disposal. For effective discharge of his duties. . it is important for collectors to maintain continuous contact and good relations with the customer throughout the tenure of the loan. a collection manager need to interact with other departments / functions like business. In order to achieve the goal of controlling delinquency. He/She is responsible for delinquency management in a particular location on the portfolio assigned to him. The relation of the customer with the company with the disbursement of the loan and continues till the end of his loan tenure.

PERSONS INVOLVED IN COLLECTION PROCESS Daily Recovery executives Senior Recovery Head Sales executive Recovery Advisor .

Broadly. efforts will be made to focus on early buckets and to minimize the forward flows to higher buckets. sale of possessed assets and legal action. . Collection is done using all the tools like in house telecalling. Dunning letters will also be used for specific purpose / special cases.  Collection follow up will be done through telecalling and or field visit.COLLECTION STRATEGY The Collection Strategy at HDFC Bank is attuned to the nature of product and is in line with the kind of risks involved in the same. possessions of assets.  To organize collection follow -up coverage for delinquent accounts in a cost-effective manner. the Collection Strategy will be as follows :  Awareness calling is initiated with the purpose of ensuring minimum cheque returns and also to identify non-starters. field collections through agencies. frauds and skips at an early stage. dunning letters.

Legal action should be initiated. A. As a last report possession of assets to be initiated and the asset is to be as prescribed in this policy. or a broken promise 3.  In house collectors can recommend accoW1ts to held agencies through the collection manager for reasons like. To establish contact with a no-contract case or To follow up on a ~Promise to pay'. External collection agencies may be used for field collections. In-house telecallers (or outsourced telecallers operating inhouse) and pickup boys will be used for all Tele collections. 2.  To accelerate / intensify follow up. AWARENESS CALLING The details of fresh cases booked during the previous month (awareness data) and whose EMI PDC's are being deposited for the first time is sent to the collection manager on a . 1.

on account of loan obtained from S.E. Awareness calling holds a very special importance to collection as during awareness calling important information can be gathered.monthly basis. The awareness data contains the demographic details. This enables the customer to make arrangements for honouring the cheque. loan/assets & PDC start / cycle date. this process is known as awareness calling. viz a) Customer contractibility b) Correctness or otherwise of address c) Correctness numbers d) Additional landmarks to the address or otherwise of phone . Also the cycle date for future presentation of PDC in every month is informed to him. Telecalling is done to all these customers informing them of their EMI cheque being presented and the cycle date for future EMI's. Through awareness calling the customer is informed of the date of presentation of his first EMI Cheque. in case it is not provided for. Investment.

COLLECTION CALLING Start collection calling to all customers through in-house /outsource telecallers. it is to be collected making an appointment with the customer through pickup collectors. B. h) Disputes-services issue of any.  The customer must be briefed about the penal charges  after In case the payment is ready.  Basic courtesies have to be observed and the tone and manner must be pleasant and professionals.  In case the customer asks for time then a follow up is done on the day the customer promises to pay .e) Confirming asset delivery f) Obtaining vehicle registration numbers' g) Early warning about customer being a skip if no contact established.

 Cheque returned must be intimated only to the customer or in his absence to his wife or secretary (in case a call is made to the office)  In case both the telephone numbers (residence and office) is out of order. confirm the number by checking with the Directory information Services  In case no contact is made through telephone even after four attempts the case is then handed over to the field agency  Record of telecal1ing done. should be maintained as per format below: Attempt Date calling Time calling Outcome 1st of of 2nd 3rd 4th 5th .

1 .2 3 4 5 6 7 8 ACTION CODE NC LM PP BP OS PY SK OT DESCRIPTION No contact Left message Promise to pay Broken promise Outstation Payment received Skip Others FIELD REFERRALS .No.The outcome of the telecalling will be recorded as per the action codes S.

. Apart from the above.a) Field Visits .     Skips cases Fraud cases Non-starter Where customer refuses! dispute the payment. due) will be routed to the collection agency by the collection manager.  Any other account where the Loan/ Asset is considered to be at risk.all cases that are still outstanding after telecalling. b) All cases. allocation to field will happen. Also where telecalling units are not in place. If required the collection manager should meet the customer personally and close the Issue. the following cases will also be referred to the field collection agency. will be allocated to the' field agency.e. This will consists of cases with remarks LM (Left Message) and NC (No Contact). more than 1 EMI. which are in Bucket 2 and above (i.

Dunning is used as a mode of collection as it has . it is useful in all legal matters where the dunning letters serve as valid proof or evidence.NON-STARTER & SKIPS 1) Non-Starter: Anon-starter is a customer who defaults during the first month after the commencement of the loan. Non-Starters have to be given 1 st priority in collection. Apart from serving the purpose of having sent written correspondence. as they are likely to become chronic defaulters. DUNNING OF LETTERS Dunning is a very effective collection follows up tool. C. 2) Skips: The customer is classified as SKIP if he is not available at the given residential office I property financed addresses and the forwarding address is either not available or the same is incorrect and cases where the customer's residence and office telephone number is incorrect/ unlisted /untraceable.

This letter is sent to all customer of Bucket 3. After sending this notice following situations may arise:  The customer makes a part payment of the over due amount only. LOAN RECALL NOTICE This is a notice sent to the customer stating the loan extended to the customer has been withdrawn or terminated. D. In such cases legal steps taken should be pursued with. This letter also states the total amount payable by the customer for settlement of the account in full. . It is also used as a back up mode for other collection activities. Also the regular PDC's will be banked.extensive coverage in a short period with minimum cost. and the impact of any written communication is always more than verbal communication.

Normally legal recourse is taken if the normal collection actions fail to recover the money from the delinquent customer. it is generally used as a strategy to force the customer to honor his dues. However. the collection manager should look at the option of continuing the loan. civil litigation should be pursued for summary suit. though it is the last option available with the collection unit. The customer regularize the account by clearing the dues as of date and request for continuation of loan  In cases where the asset is there . the option of possession of assets if available should be carried out and legal action viz. if the collection manager feels that upon possession and sale of asset should result in a shortfall. LEGAL ACTION Legal action. . If the customer remains delinquent. E.we should exercise the option of possession.

court of law.SECTION 138 (B)  In case cheque is dishonored by the banker of hirer the company can  Invoke the provisions U/S 138 (B) of Negotiable Instrument Act as amended.  On receipt of dishonored cheque hirer is contacted to apprise with the payment status so that hirer may make sincere efforts to discharge liabilities.  On failing the company issues a notice to the Hirer U/S 138 (B) within 30 days from the date of dishonoring the cheque and allows Hirer to deposit the default amount with the company within 15 days of the receipt of such notice. .  On expiry of 15 days lead time to the hirer company submits a complaint in writing in the appropriate.

 In case of amount received from the selling of the article falls short the hirer is bound to make the good of the laws. . Apart from above provision the hirer has the option to return the hired article to the company for settling the issue in such cases the company with due concern of the hirer sales the article and realizes amount from the hirer and process of set on and set off carried on.

  Valuation of asset.COLLECTION FOLLOW UP MATRIX Bucket No.  2 3 above 2 and 3 above  Routed to collection agency if Non.Starter. of EMI'S DUE 1 1    Telecalling starts 1st bounce calling Collection calling / 2nd bounce letter /cheque pick up. Sale of possessed asset. Handling over the collection agency and  Notice u/s 138 for criminal action It should happen the 3rd cheque bounce happens   Legal recall notice Handling over to possession agency for to over possession of asset. if not settled by Hirer  Post sale notice for recovery of ACTIVITY .

we need to ascertain the current business address of the customer and a letter can be written to the employer stating the default committed by the employee of his organization.  Legal action if shortfall not paid by customer.shortfall. This result in lowering his status. because no individual should like the organization to know that he has availed a loan and that he is a defaulter in it. However in such cases . This is more effective way of inducing the customer to pay. This is done by sharing the defaulter database with other banks and NBFC's. in his office and hurting his ego. SPECIALIZED COLLECTION TOOLS  SHARING OF DATABASE:.Social pressure needs to be put on the customer in such a way that he cannot obtain any form of loan from any banks or NBFC. While taking defaulter list efforts to be taken to ensure the genuiness of the same  LETTERS TO EMPLOYER:.

which are beyond Bucket 7 and it. is felt that recovery under the present circumstances is doubtful due to various factors like customers being a well known or influential person.  PAPER ADS/PUBLIC NOTICE:- For all chromic defaulters. .utmost care should be taken to ensure that the outstanding amount specified in the letter is true and should be used cases in Bucket 4 and above only. a paper advertisement can be put in the local newspaper.

Technical University Lucknow. which are basically taken into consideration is:  To understand the economics of car financing schemes and its benefits to the customer. The major objective for which the study as been undertaken i.e.P.OBJECTIVE The very basic purpose for which the project has been undertaken is for the of the partial fulfillment of the MBA degree programme as required by U. The above is fulfilled by considering the following subobjectives:     Car loan procedure of HDFC Bank Loan amount sanctioned by HDFC Bank Rate of interest charged by HDFC Bank Financing period offered by HDFC Bank .  To understand the management of car loan recovery procedure and measures taken to reduce the default rate.

 Recovery rate regarding financed amount of the bank along with the percentage of defaults   Action against default payments To arrive at some other relevant findings .

Researchers also need to understand the assumptions underlying various techniques and they need to know the criteria by which the can decide that certain techniques and procedures will be applicable to certain problems and other will not. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by researcher in studying his research problem along with logic behind them. It is necessary for the researcher to know not only the research methods/techniques but also the methodology.RESEARCH METHODOLOGY Research Methodology is a way to systematically solve the research problem. We use a particular method of research in the context of our research study and explain why we are using a particular method or technique and why we are not using other so that research results are capable o being evaluated either by the researcher himself or by others. .

organizing and evaluating data. collecting. Exploratory b. design. Application and specification are the main characteristics in a research designs can be classified on the basis of the fundamental objectives of the research. and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. formulating hypothesis or suggested solutions. Descriptive There are mainly two types of research .  Research Design: A research design is purely and simply the framework or plan for study that guides the collection and analysis of data. Research : Research is a scientific and systematic search for pertinent information on a specific topic. making deductions and reaching conclusions. According to Clifford Woody research comprises defining and redefining problems. a. Conclusive 1.

2. Sampling methods can be divided into two. Sampling can save time and money. Again in probability sampling. Sampling is used for a variety of reasons such as: i. Sampling may enable more accurate measurements. 1. . so research design is also descriptive. iv. Sampling remains the only way when populations contain infinitely many members.  Sampling Design : Sampling is a process of obtaining information about an entire population by examining only a part of it. ii. simple random sampling is used. Experimental Since our research is descriptive type. Sampling only remains the only choice when a test involves the destruction of the item under study. iii. This sampling is stratified system. Probability Sampling 2. Non-probability Sampling In my research probability sampling is used.

. Secondary Data Primary data are those which are collected a fresh and for the first time and thus happens to be original in character. In my research the secondary data is collected from the company sales records and from research reports. Secondary data are those which have already been collected by someone else and which have been already been passed through the statistical process. The primary data is collected in the process of questionnaire and interview of the outlets. Primary Data b. Data Collection Method: Data collection methods are generally of two types: a.

Sampling Plan:  Target Population Or Universe : All the resident of Meerut City. . • . • Secondary Data : Company sales record and other Research reports. Tools and Techniques: • Primary Data : Questionnaire and Personal Interview.  Sampling Unit : Any Insurance policy of who works with any insurance company  Sampling Size  Sampling Method : : Around 100 people Judgment and Convenience.

if one wants to have the car along with the fulfillment of other needs. CONCLUSION In today's era. Its future looks to be bright as the ultimate customer (who is the king) is given the utmost care and is considered above all. Sampling Area : Study Shall cover Meerut City. . finance option make it possible. the problem of default becomes the fact of life and therefore HDFC Bank in this field is applying various measures to overcome the problem of default. We have comprehensively discussed the car finance schemes of HDFC Bank. it is not easy for a middle class person to avail a car where he is supposed to fulfill various other important needs of his family which are more basic and necessary than owning a car for the life. But. with the popularity of car financing. So.

Default in payment of car loan is not unusual. the car financing industry will continue to face this problem. Therefore. For how long an individual can get loan? What is the mode of repayment? What is the security for the loan? What is the rate of interest? What is the limit for margin money? What is required for the security? How much processing fees you charge? 10. 5. 9. Who can apply for the loan? How much your organization can lend for car finance? 3. 7. 8. 2. 4. Is there any penalty in case of prepayment? . as historically some creditors have always defaulted in meeting their obligations. APPENDIX STRUCTURED INTERVIEW QUESTIONS 1. 6.

11. What is the loan procedure? 12. default? What actions are taken in case of


1. Books Consulted:   Banking Law and Practice: Money Banking and Finance: P. N. Varshney N.K. Sinha

2. Pamphlets

3. Websites:   yahoo search

 Certificate  Declaration  Acknowledgement  Preface CHAPTER 1  Introduction to topic CHAPTER 2  Company Profile  Business Profile CHAPTER 3  Car Financing

 Reason for car financing  Default in car financing  Measure to get rid of default  Car loans  Types of car loan  Procedure of car loan  Precautions  HDFC Car Loan

CHAPTER 4  HDFC Bank recovery process  Collection Strategy  Field referrals  Specialized collection tools

   

Objective Research Methodology Conclusion Appendix Bibliography

A ON Car Loan Scheme and Recovery Procedure of HDFC Bank (For the fulfillment of Master of Business Administration) .

N. Lucknow) . Sen Gupta Upreti Vipin Roll No H.T.Under the guidance of Mr.O.U. Sandeep Kumar Submitted To: Submitted BY:MR.P.D 0407270149 IIMT MANAGEMENT COLLEGE MEERUT (Affiliated to U. N.