1

S.P MANDALI’S PRIN L.N WELINGKAR INSTITUTE OF MANAGEMENT

DEVELOPMENT & RESEARCH

SUMMER INTERNSHIP PROJECT

ON

COMPETITIVE ANALYSIS (LOAN AGAINST PROPERTY) AND SCOPE FOR

FUTURE GROWTH OF NBFC SECTOR

BY

SIDDHESH ASHOK KADAM

PGDM (2020-2022)

SPECIALISATION - MARKETING

ROLL NO. : 44

INDUSTRY MENTOR - MR. VICKY CHAWHAN

INTERNAL MENTOR - PROF. JYOTI KULKARNI

 2

LETTER OF AUTHORIZATION

Dear Siddhesh Kadam,

We are pleased to offer you Internship program with Anand Rathi Group on the following
terms and

conditions:

1. The internship shall be a part of your curriculum and shall Commence from 1oth June 2021to
7th August 2021.

2. You will be assigned an internship project and the project deliverables will be communicated
to you at the beginning of the internship program. A project guide would also be assigned to
you during this period.

3. Your stipend for the period shall be INR 5000 (Rupees F¡ve Thousand Only) per month.

4. You shall not utilize or divulge to any person or persons any of the Company's trade secrets
or affairs.

5. You shall be responsible for the safe keep and return of Company’s property in good
condition and order which may be in your use, custody or charge. Also, you shall handover all
books, documents, market data or records etc. belonging to the Company or relating to its
business at the end of your internship program.

6. On completion of your internship program, you shall submit a copy of the project report to
the Company.

7. This Internship program is a part of your course and shall not to be considered as direct or
indirect employment. However, your candidature for employment may be considered based on
the Company’s requirements and your overall performance during your internship period.

Please sign a duplicate copy of this letter as a token of acceptance of our offer of internship on
the terms & conditions mentioned above.

Welcome to the team!

3
 4

ACKNOWLEDGEMENT -

The success and final outcome of this project required a lot of guidance and assistance from
many people and I am extremely fortunate to have got this all along the completion of my
project work. Whatever I have done is only due such guidance and assistance and I would not
forget to thank them. I would like to thank Anand Rathi Global Finance Ltd for completing
my internship in this organization and supporting me in all the ways to complete my summer
internship training. I also take this opportunity to express a deep sense of gratitude to mr.
Vicky Chawhan (Anand Rathi Global Finance Ltd) his cordial support, valuable information
and guidance, which helped me in completing this task through various stages I would like to
express my gratitude and indebtedness to the management and staff of Welingkar Institute of
Management Development and Research for providing me this wonderful opportunity to gain
practical industrial exposure in the field of marketing and sales by including this summer
internship as part of my curriculum Lastly, I thank almighty, my parents, brother, sisters and
friends for their constant encouragement without which this assignment would not be possible.

By - Siddhesh Kadam

Welingkar Institute of Management Development and Research

 5

Table of contents -

I Title I

II Letter of Authorization II

III Certification III

IV Acknowledgement VI

V Table of contents V

VI List of Tables VI

VII List of Graphs VII

VIII List of Appendices VIII

a Definitions VIII

b Abbreviations VIII

IX Executive Summary Page - 9

X Company background Page - 10

XI Area of focus Page - 12

a Project Timelines Page - 12

b Location of study Page - 12

c Objective of study Page - 12

XII Introduction Page - 13

a Background to the problem Page - 13

b Statement of the problem Page - 13

XIII Work Design Page - 14

a Detailed description of work plan Page - 14

XIV Data analysis Page - 15

a Major findings Page - 19

b Results Page - 19

XV Conclusions Page - 19

XVI Recommendations Page - 20

 6

XVII Introduction Page – 21

a Background to the problem Page – 21

b Statement of the problem Page – 21

XVIII Work Design Page – 22

a Detailed description of work plan Page - 22

XIX Data analysis Page - 23

a Major findings Page - 31

b Results Page - 31

XX Conclusions Page - 32

XXI Recommendations Page - 32

XXII References Page - 33

 7

List of tables -

● Details of competitors for Loan Against property - Page no: 16 to 18

● Porter’s 5 forces model – Page no: 24

List of graphs -

● NBFCs steadily gaining share of credit – Page no: 25

● Macro indicators suggest significant underdevelopment of NBFC sector in India - Page
no : 26
● NBFC sector growth should accelerate in the medium term in India, Both demand side
and supply side factors to contribute to NBFC growth – Page no: 27
● Growth in middle class and next billion segments will spur demand for consumption
and commercial finance – Page no: 30
 8

LIST OF APPENDICES

a) Definition -

Loan - A thing that is borrowed, especially a sum of money that is expected to be paid
back with interest.

Credit - The ability of a customer to obtain goods or services before payment, based on
the trust that payment will be made in the future.

Client - A person or organization using the services of a lawyer or other professional

person or company.

Penetration - How many users are there for a product. It is one of the measures of a
company or industry's success in getting consumers to use their products.

Proprietorship - The state or right of owning a business or holding property.

Collateral - Something pledged as security for repayment of a loan, to be forfeited in the

event of a default.

b) Abbreviation -

NBFC - Non-Banking Financial Company

LTV - Loan-to-value

LAP - Loan Against Property

SME - Small and Medium Enterprises

MSME - Micro, Small and Medium Enterprise

 9

EXECUTIVE SUMMARY -

Introduction to Summer Internship

Company Name: Anand Rathi Global Finance Ltd.

Industry Mentor: Mr. Vicky Chawhan ( Area Sales Manager )

Interning in the sector: Financial Services

Duration of the Internship: 2 months

Role to be played: Analysis of competitors for loan against property and scope for future growth of
NBFC sector

Start Date of Summer Internship: 10th June, 2021.

End Date of Summer Internship: 7th August, 2021

Anand Rathi Global Finance Limited is a financial services company registered with Reserve Bank
of India as a non-banking finance company (NBFC) and classified as a Loan Company that is
categorized as 'Systemically Important Non-Deposit taking Non-Banking Financial Company
(NBFC-ND-SI).

The Company is engaged in the business of lending and offers products such as Lending to SME
sector, LAP, Construction Finance, Loan against Securities, etc.

In a two-month duration, I was given projects related to Loan against property in which interest
rates for LAP and tenure and Loan to Value were compared among the competitors. The details
were taken from company websites and by contacting company customer care service.

Throughout the internship, the learnings made were related to competitor analysis and what can
be done to improve service to the customers.
 10

Company Background -

Anand Rathi Group (ARG) was established in 1994. ARG has major presence in financial
products like Wealth Management, Investment Banking, Lending, Corporate Finance,
Brokerage & Distribution Services in the areas of Equities, Commodities, Mutual Funds,
Structured Products, Insurance, Corporate Deposits, Bonds & Loans to Institutions,
Corporations and Individuals. ARG caters to more than 5 lacs clients at about 300 locations
through 1200+ offices and business associates.

Anand Rathi Global Finance Ltd. (ARGFL), the NBFC arm of ARG, has a product offering of
SME Lending, Loan against Property, Construction Finance and Loan against Securities such
as Equity, Bonds and Mutual Funds.

SME lending

SME lending was launched in the year 2017 for lending to businessmen, traders, proprietors,
manufacturers and professionals. ARGFL began the SME Lending business in Mumbai and
has now expanded its footprint in markets like Delhi, Bengaluru, Jaipur, Pune & Jodhpur.

Construction Finance

Launched in the year 2016, the construction finance arm of ARGFL lends to real estate builders
who are in need of funds to either start their project or complete the ongoing project from any
stage of construction.

Presence in markets of Mumbai, Pune, Bangalore.

This division of ARGFL lends to individuals, proprietorship firms, company societies, etc.The
product offer is secured against the eligible acceptable collateral such as commercial residential
property or project receivable and cash flows.
 11

Loan against shares

Loan against shares offers you instant liquidity.It helps in sourcing funds for any personal
requirements or to increase holdings/ investment in listed collaterals and you don't have to sell
your securities.
 12

Area of focus -

1) Competitive analysis for Loan Against Property.

2) Scope for future growth of NBFC Sector.

Project timelines -

Start date: 10th June

End date: 7th August

Location of study - Work from home

Objectives of study -

1) To do competitor analysis and find gaps in the market.

2) To analyse best deals offered by competitors.
3) To find the opportunity area for growth of the company.
4) To find future growth opportunities for NBFCs.
5) To identify target customers.
 13

Introduction-

Competitor analysis helps to understand the competitors strengths and weaknesses in

comparison to their own and to identify gaps in the market and then work on to fill it. A
competitor analysis will help to suggest how you can out-do from the competitors in the areas
to attract more customers.

Background to the problem -

LTV ratio is the key factor. It varies from lender to lender. Competitors fight not just on interest
rates but also on LTV ratio. If a lender is ready to go for a higher LTV ratio he may charge a
higher interest rate than average.

Excellent customer service is the key which leads to survival in today’s competitive and
advanced era. It shows how firms are committed to provide quality products or services to their
customers. Customer satisfaction is considered very important nowadays, which eventually
increases customer loyalty. Satisfying the customer is one of the basic objectives of the
organization, as it is often said that the customer is king.

Statement of the problem - Competitive analysis for Loan Against Property.

 14

Work Design -

Qualitative research methodology used in a project for Competitive analysis for Loan Against
Property.

Detailed Description of work plan-

Primary research -

1) Contacted customer service executives of competitor companies to analyse the best LTV,
rate of interest and tenure the company can offer to customers.

2) Called Anand Rathi Global Finance Limited to analyse how efficient customer service is.

Secondary research -

1) Read articles on Loan against property

2) Read articles on customer service.
3) Checked competitors' websites.
 15

Data Analysis -

List of competitors
 16

Interest rate and tenure of competitors for Loan against property.

17
18
 19

Major findings for Competitive analysis for Loan Against Property.

1. Competitors are ready to bargain on interest rates and tenure for loans against property.
2. LTV ratio is a key factor.
3. Time taken to complete the loan process matters the most for applicants.
4. Professional customer service plays an important role to increase sales.

Results:

Companies bargain on interest rates to get deals cracked. And the work of customer
relationship management plays an important role to boost up the sales as we have seen all
NBFCs provide the same products and services so professional customer service can make the
difference.

Conclusions :

- Well planned SOP is needed for proper execution of customer queries. Because customer
service impacts the sales. And millions of people visit online websites and make their decision
from reviews posted.

-The borrower would not mind paying a higher interest rate if he/she can borrow more. (LTV)
 20

Recommendations :

● SOP -

- Greet Client

- Note down details of the client and needs

- Understand client needs

- Help him with solution

- If a solution is not available, arrange a call back within 24 hours or ask him for free

time according to client availability to explain to him the service and benefits.

- If the issue is not solved within 24 hours, escalate the issue to the higher management.

- Once his query is addressed, request the client to rate the service using a feedback link.

- Based on feedback received from clients, appreciate employees.

● Try to offer the best LTV to the clients considering the risk factor in mind.
 21

Introduction -

NBFCs play an important role in Indian financial ecosystem as financial intermediaries

channelizing investments and savings, especially for retail sectors as well as for unbanked
sectors of the Indian economy.

NBFCs have come up as preferred options to meet credit needs over banks because of lower
operational costs, which helps NBFCs to offer cheaper loans to customers. It is able to mitigate
and manage the spread of risks during times of financial threats and have increasingly become
recognized as complementary services to banks.

Problem statement - Scope for future growth of NBFC Sector.

 22

Work Design -

Qualitative Secondary research methodology used in a project for Scope for future growth of
NBFC Sector.

Detailed Description of work plan-

1) Read research papers and articles on NBFCs sector.

2) Applied Porter’s 5 forces model.
 23

Data Analysis -

Porter’s 5 forces model

Barriers to entry: Low

● Licensing requirement: The licensing requirements of RBI for NBFCs are not that
stringent as compared to the banks. There are already 12159 registered NBFCs while
there are only around 180 banks in India.

Bargaining power of consumers: High

● Many alternatives: The consumers have got many alternatives for availing credit.
● Large number of NBFCs: The consumers have a large spectrum to choose from.

Threat of substitutes: Moderate

● Banks: NBFCs were actually created by the government of India as it felt the need to
provide banking facilities to the poor and underprivileged who could not get access to
banks. Thus banks are a perfect substitute for NBFCs.
● Unorganized money lenders: The unorganized money lenders have a strong presence
in the rural markets. They pose a big threat to the NBFCs in the rural areas.

Bargaining power of suppliers: High

● Many alternatives: The suppliers in this case are the depositors or the NBFCs funds.
The suppliers have many alternatives at their disposal to invest their money depending
on their risk appetite. Eg: High risk: stocks, low risk: banks
 24

Intensity of rivalry: High

● Undifferentiated services: The service offerings by NBFCs are almost the same. Thus
there is a low level of service differentiation.
● Marketing strategies: Due to the increased rivalry among the NBFCs, there has been
use of aggressive selling & intensive marketing strategies by the companies to gain the
market share.
 25

NBFCs steadily gaining share of credit

● NBFCs have gained share in the total credit in India. Between 2015 and 2019, NBFC
share in credit rose from 10% to 13%.
● If we consider narrow product segments, the gain in market share is even more
pronounced. In home loans, HFCs' share has gone up from 26%to 38% between FY15
and FY20. In the last 3 years, NBFCs' share in CV financing has gone up from 42% to
46%.
● In smaller ticket segments like micro finance, consumer durables, two wheeler etc,
NBFCs dominate. According to RBI, the NBFC sector is dominated by (NBFCs-ND-
SI) that constitute 85.7% of the total assets of the sector.
 26

Macro indicators suggest significant underdevelopment of NBFC sector in India

Credit penetration in India is low as compared to other economies. On similar benchmarks, the
non bank finance penetration in India is even lower.

While it is commonly expected that credit will grow rapidly as economic growth gathers pace,
it is safe to assume that non bank finance will grow even faster. This is borne out by the growth
rates seen over the past several years.
 27

NBFC sector growth should accelerate in the medium term in India, Both demand side
and supply side factors to contribute to NBFC growth

Indian economy has a huge latent credit demand fuelled by a massive self employed population
that is underserved by banks due to inadequate income proof.

With public sector banks under severe stress due to mounting bad debt, the appetite to lend is
expected to be weak in the medium term till a proper resolution can be found. This will increase
the gap in the market and provide an opportunity for NBFCs to fill in.

The recent developments in deepening of wholesale debt markets also bode well for liquidity
and funding of NBFCs.
 28

NBFCs likely to maintain high growth momentum, Developments and trends augur well
in the medium term.

Large number of government initiatives such as smart cities, improvement in the ease of doing
business in India and renewed focus on infrastructure development will create demand for
credit.

Similarly, Digital India and e-commerce growth will give impetus to the SME sector and
demand for credit. Consumer consumption is also going to see significant rise NBFCs are likely
to benefit from underlying trends and developments in the Indian market.

E-commerce

• India the fastest growing e-commerce sector in the world (43% CAGR)

• Size of market likely to be ~6X in the next five years (~$130-140 bn by 2022)

• 43% of SMEs participated in online sales in FY'15

Smart cities & Urbanization

• 100 smart cities to be built over five years with more than US $7-8 billion investment

• Under "Housing for All", 20 million houses to be constructed in urban areas in next 7 years

• Under urban development Scheme "AMRUT", 500 cities to be developed

Infrastructure development

• ~US $600 billion investment target over five years for infrastructure development

• ~US $130 billion planned investment in railways in the next five years
 29

SME

• Low current penetration levels (~25%) of financing in the SME industry

• Financing gap of more than US $40 billion

• 40% of SMEs in India financed through informal sources or self-financed

Ease of doing business

• Deregulation, delicensing and simplification of procedures; e.g.

– Online application for environmental clearances

– Simplification of allotment of PAN cards

Digital India

• "Digital India" to enable investment of ~US $68 billion and create ~1.8 million jobs

• More than 1 million SMEs expected to plug into digital platforms in the next 5 year
 30

Growth in middle class and next billion segments will spur demand for consumption and
commercial finance

● The accompanying graphs show how demographic profiles in India evolve till 2020.
● The largest household group by income category by 2022 will be the next billion group
with annual income in the range of Rs 1.5 – 5 lakh per annum.
● This segment along with the middle class will drive demand for consumption and
productive credit.
● NBFCs to leverage the enormous growth expected in Next Billion and Middle Class
● NBFCs which focus on these segments will benefit from the huge market developing
over the next 5 years.
 31

Major findings:

NBFCs play an important role in the Indian financial system by complementing and competing
with banks, and by bringing in efficiency and diversity into financial intermediation. NBFCs
are growing their market share and there is scope for growth in future.

- NBFCs offer the same products and services to the customers.

- NBFCs steadily gaining share of credit.
- Macro indicators suggest significant underdevelopment of NBFC sector in India

Results :

The largest household group by income category by 2022 will be the next billion group income
ranges from 1.5 lac to 5 lac rupees. This segment will raise demand for productive credit.Also
we can see growth in different sectors which will also raise demand for credit.Public sector
banks under severe stress due to mounting bad debt, the appetite to lend is expected to be weak
in the medium term till a proper resolution can be found. This will increase the gap in the
market and provide an opportunity for NBFCs to fill in.
 32

Conclusions :

- NBFCs will benefit from underlying trends and developments in the Indian market.
- NBFCs to maintain high growth momentum in the coming time.

Recommendations :

- NBFCs which focus on these segments will benefit from the huge market developing
over the next 5 years.
- The middle class will drive demand for consumption and productive credit.
- Focus should be on E-commerce, SME, Infrastructure sectors.
 33

References -

https://www.researchgate.net/publication/281291087_GROWTH_AND_DEVELOPME
NT_OF_NON-
BANKING_FINANCIAL_COMPANIES_IN_INDIA/link/55e0431108aede0b572ca320/d
ownload

https://www.bajajfinserv.in/loan-against-shares-fees-and-interest-rates

https://www.myloancare.in/loan-against-property-emi-calculator/cholamandalam

https://www.tatacapital.com/loan-against-property/interest-rates-and-charges.html

https://www.creditmantri.com/dhfl-loan-against-property/

https://www.academia.edu/41571984/AN_ANALYTICAL_STUDY_OF_NBFCS_AND_
ITS_IMPACT_ON_THE_FINANCIAL_GROWTH_OF_THE_NATION
34
35