A

PROJECT REPORT

ON

“BAJAJ HOUSING FINANCE LIMITED”

SUBMITTED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE MASTERS OF BUSINESS

ADMINISTRATION (MBA)

SUBMITTED BY

DNYANESHWAR UTTAM KARHALE

UNDER THE GUIDANCE OF

Dr./PROF. PRASHANT KOTASTHANE

SINHGAD BUSINESS SCHOOL, PUNE - 411 004

BATCH 2019-22

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 CERTIFICATE OF GUIDE

This is to certify that the dissertation Report entitled “A Project report on BAJAJ HOUSING

FINANCE LIMITED” is a bonafide work carried out by DNYANESHWAR KARHALE, student of

Masters of Business Administration in MARKETING, SINHGAD BUSINESS SCHOOL Erandwane, Pune,

for the fulfilment of the degree. The work is original research work completed under my supervision and

guidance.

Signature of Dean Signature of Guide

Date: Date:
Place: Place:

2
 DECLARATION

I hereby declare that the dissertation report entitled “A project report on Bajaj Housing Finance Limited

written and submitted by me to Savitribai Phule Pune University, in partial fulfilment of the requirement

for the award of the degree of Master of Business Administration under the guidance of Prof. PRASHANT

KOTASTHANE Sir, this is my original work based on the material collected by myself.

Signature DNYANESHWAR KARHALE

Date:

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 ACKNOWLEDGEMENT

At the start, I would like to express my sincere gratitude to Prof. PRASHANT KOTASTHANE Sir, My

project guide for successful completion of my project in partial fulfilment of Master of Business

Administration (M.B.A.) under his able guidance to allow me to work on such an interesting subject. He

provided me proper and correct direction for completion of project work. His continuous guidance during

the course of project helped me in channelizing my efforts, quite appropriately.

Signature

DNYANESHWAR KARHALE

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 INDEX

SR NO. CHAPTER NAME PAGE NO.

1 Executive Summary 2.

2 Introduction 4.

3 Organization Profile 6.

4 Research Design and Methodology 14.

5 Conceptual Background 18.

6 Data Analysis and Interpretation 26.

7 Finding, Suggestions and Conclusion 40.

8 Annexure 35.

9 Bibliography 46.

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 EXECUTIVE SUMMERY

The project allotted to me with the title is project report on the bajaj
housing Finance limited. The objective behind This project was to primarily focus on Modus
Operandi of Bajaj Finance for housing finance. Brief summary of the year gone by and the
emerging trends in the wake of COVID-19 pandemic Are discussed below.

FY2020 began with an expectation that the year would witness a slowdown in
the growth Owing to a significant moderation in economic activity. Recognising the economic
headwinds, The Government of India undertook various measures to boost growth — which included
a Substantial tax relief to the corporate sector to facilitate investments. Even without the terrible
Effects of COVID-19, India’s GDP growth was rapidly slowing down. It was 5.9% in January-March
2019; fell to 5.6% in April-June 2019; then yet again to 5.1% in July-September 2019; followed by
4.7% growth in October-December 2019. At the time of writing this Management Discussion and
Analysis, we do not have the official data for GDP growth in the fourth quarter of FY2020 (i.e.
January-March 2020).

Before the COVID-19 pandemic and lockdown, both the RBI and the
Central Statistical Office (CSO) Of the Government of India had revised the GDP growth rate
downwards. The RBI changed its Full year GDP growth estimate from an initial 7.2% to 6% in
February 2020. In a similar vein, the Second advance estimates of national income for FY2020
released by the CSO on 28 February 2020 was substantially lower: GDP growth for FY2020 was
pegged at 5% — a decadal low — Compared to 6.1% in the financial year FY2019; and growth in
gross value added was estimated At 4.9% in FY2020 versus 6% in FY2019. Table 1 gives the data on
real GDP and gross value added (GVA) growth over the last four financial years.

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 The outlook for the coming year is expected to be extremely demanding.
In the current situation, Lending businesses face four truly daunting challenges of (i) disruption in
business acquisition, (ii) providing customers adequate relief on their debt servicing obligations, (iii)
dealing with a Weakened customer service and debt recovery infrastructure, and (iv) continuing to
service Their own debt.

To overcome the COVID-19 crisis, governments across the world will

look to the financial sector To help in reviving their economies. Having stated our concerns, given
BHFL’s healthy capital Adequacy, strong liquidity position and robust risk metrics, we at BHFL are
confident Of successfully dealing with these challenges in FY2021.

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 INTRODUCTION

Housing finance market has seen a steady growth over the years with the
overall share of Outstanding individual housing loans of banks and HFCs to GDP (at market prices)
having Increased from 6.6% in 2010-11 to 9.6% in FY2019 (source NHB Annual report 2018-19).
However, the growth in the housing finance sector has witnessed a moderation since FY2019 in The
backdrop of a slowdown in economic activity.While the importance of HFC sector in credit
intermediation continued to grow, repayment Default by a systemically important NBFC in
September 2018 brought the focus on asset-liability Mismatches (ALM) of the NBFCs and HFCs.

The Government of India announced a partial credit Guarantee scheme for

first loss of up to 10% for 6 months to public sector banks to buy high Rated pooled assets of
NBFCs and HFCs of up to H 100,000 crore to enable funding. During FY2020, the transition of
supervision of HFCs from NHB to RBI was announced, With this change all players in the housing
finance sector are now governed by a single regulator.

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 Also, with banks transitioning to external benchmark linked pricing of loans,
there would be greater Transparency in pricing of home-loans across various providers of finance to
home loan buyers.In order to provide a growth impetus to the housing sector multiple policy
measures were

Announced, some of which were:

L reduced GST on certain category of housing, income tax relief for home
loan customers and developers of affordable housing, measures to introduce liquidity for home loan
providers like (i) relaxation of on-lending Guidelines (ii) relaxation of minimum holding periods in
securitisation/assignment guidelines And (iii) NHBs Liquidity infusion facility (LIFt)

COVID-19 will impact demand for home loans and further accentuate the ALM
challenges of the HFC sector. The RBI’s moratorium measures for customers is likely to put
additional stress on Many HFCs.

To ease liquidity pressure on NBFCs and HFCs, the RBI has taken multiple
actions including A Targeted Long-Term Repo Operation (TLTRO) for the sector of H 50,000 crore
and a special Financing window through SIDBI, NABARD and NHB of another H 50,000 crore to
enable financing NBFCs and HFCs. It remains to be seen whether the RBI will open a direct window
to support the NBFC and HFC sector.

The COVID-19 pandemic is also expected to result in a deterioration in the

asset quality of the Financial sector. HFCs too will face similar pressures. Early indicators of non-
delinquent customers Opting for moratoriums reflect a considerable level of anxiety from customers.
It remains to Be seen how this anxiety eases when economic activities resume. A long-drawn
lockdown or Frequent lockdowns of economic activities may require RBI to frame forbearance
schemes for Impacted customers without impacting asset classification.

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 ORGANIZATION PROFILE

BHFL (earlier known as ‘Bajaj Financial Solutions Ltd.’) was

incorporated as a subsidiary of Bajaj Finserv Ltd. (‘BFS’) on 13 June 2008. It was acquired by BFL in
November 2014 with the Intent to conduct housing finance business in a dedicated subsidiary
company. The Company’s Name was changed to Bajaj Housing Finance Ltd. On 14 November 2014
and it received its Certificate of registration from NHB as a Housing Finance Company on 24
September 2015. BHFL started full scale operations effective February 2018. BHFL closed FY2020
with Assets under Management (AUM) of H 32,705 crore compared to H 17,562 crore as at the end of
FY2019 – which Represented a growth of 86%.During the year, BHFL raised equity capital of
approximately H 1,500 crore by way of rights issue To BFL of 1,333,333,329 equity shares of face
value of H 10 at a price of H 11.25 per equity share (inclusive of premium of H1.25 per equity share).
The Company’s net worth was H 5,585 crore as At 31 March 2020.

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Performance highlights, FY2020 Performance highlights of FY2020 are given below:

 Assets under management grew by 86% to H 32,705 crore.

 Total income increased by 130% to H 2,646 crore.
 Net interest income rose by 122% to H 1,030 crore.
 Total operating cost to net interest income improved significantly to 33% from 64% in
FY2019.
 Impairment on financial instruments was H 124 crore – included a contingency
provision of H 50 crore for COVID-19.
 Gross NPA and Net NPA was at 0.08% and 0.05%, respectively, among the lowest across
all HFCs.
 Profit before tax (PBT) increased sharply by 281% to H 567 crore.
 PAT grew by 283% to H 421 crore.
 As on 31 March 2020, capital adequacy was 25.15% – well above the NHB norms of
13%.

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BHFL focusses on the following business verticals:

(i) Home loans,

(ii) Loan against property,
(iii) Lease rental discounting,
(iv) Developer loans and
(v) Rural mortgage loans.

BHFL’s capital adequacy stood at a healthy 25.15% as on 31 March 2020

which was well above the regulatory stipulated norms of 13%. Its tier I capital adequacy was
24.48%.BHFL continued to prudently manage its asset liability management (ALM) with a
mix of short term and long-term borrowings from banks and money market. It has a
comprehensive liquidity Assets under management grew by 86% to H 32,705 crore.

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Home loans

BHFL focusses on mass affluent salaried customers for its home loans business with loans
ranging from H 35 lakh to H 150 lakh and operates in 40 locations across India. Home loans
business remained in a hyper competitive state throughout FY2019.
BHFL’s strategy of micro market presence across locations and pre-launch approved project
finance led acquisition model has supported its entry in the under-construction home loans
business. BHFL uses both proprietary ‘direct to customer’ and developer channel to acquire home
loan customers.

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Loan against property

BHFL focusses on SME and mass affluent individual customers for its loan against property
(LAP) business. It is currently present in 26 locations across India for LAP business. LAP
offering enables SME customers to raise long term borrowings by mortgage of their
residential and commercial properties. BHFL acquires its LAP business predominantly
through ‘direct to customer’ channel which enables lower cost of acquisition and higher
customer retention.

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Lease rental discounting

BHFL focusses on ‘high net worth individuals’ and developers for offering lease rental
discounting in top 8 locations across India. Loan size in this business range from H 5 crore to
H 100 crore with an average loan size of nearly H 20 crore. BHFL focusses on commercial
properties occupied by prominent lessees under a long-term lease contract. Financing facility
under this program is offered basis underlying lease rental cashflows and secured by mortgage
of the property and escrow of the lease rentals.

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Developer loans

BHFL offers ‘construction finance’ (CF) and inventory finance predominantly to developers
with a track record of timely delivery of projects in 8 locations across India. Average loan size
for this business ranges between H 15 crore to H 35 crore. These relationships enable BHFL
to acquire retail customers for home loans. BHFL offers construction finance to approved
developers for their small to mid-sized projects where all development approvals have been
obtained. CF disbursements are made over the construction period basis stage of completion.
The repayments of CF facility are secured through escrow arrangement. Inventory finance is
offered to developers against their unsold completed construction inventory.

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Rural mortgage loans

BHFL offers home loans and loans against property to salaried and relatively underserved
selfemployed customers across 75 small towns in India. Rural mortgage loans help BHFL to
widen its geographic reach, expand customer franchise and reduce portfolio concentration
risk.

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 METHODOLOGY

The study is made on the basis of secondary data. The annual report of the
firms was a great Collect Help in collection of necessary information. Methodology is a systematic
procedure of collecting information in order to analyse and Verify a phenomenon. The collection of
information is done through two principal sources.

The Company has adopted the use of three scenarios, representative of its
view of forecast economic conditions, required to calculate unbiased expected loss.
They represent a most likely outcome i.e. central scenario and two less likely outer scenarios referred
to as the upside and downside scenarios. The Company has assigned a 10% probability to the two
outer scenarios, while the central scenario has been assigned an 80% probability. These weights are
deemed appropriate for the unbiased estimation of impact of macro factors on ECL. The key scenario
assumptions are used keeping in mind external forecasts and management estimates which ensure that
the scenarios are unbiased.

The Company has used multiple economic factors and tested their
correlations with past loss trends witnessed. The economic factors tested were GDP growth rates,
growth of bank credit, wholesale price index (WPI), consumer price index (CPI), industrial
production index, crude oil prices, exchange rate and policy interest rates. Based on past correlation
trends, CPI and policy interest rates were the two factors having acceptable correlation with past loss
trends which were in line with management views on the drivers of portfolio trends. These factors
were assigned appropriate weights to measure ECL in future economic conditions.

Given the Covid-19 pandemic, the Company has considered additional stress in the central and
downside scenarios:

l Central Scenario: Centre for Monitoring Indian Economy (CMIE) released its latest estimate of
unemployement rate which was at a elevated level of ~23% for March 2020 end till first week of
April 2020 - this was significantly higher from 7.66% published for December 2019. Similarly, CPI
which hovered between 3.42% to 5.86% for quarter ending September 2019 and December 2019,
resepctively, has been projected to peak at 6.54% in September 2020 for stressed central scenario -
representing anticipated stress impact due to lockdown and disruption in supply chains and increased
prices for food and beverages.

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l Downside Scenario: The Company has considered additional stress impact on unemployment rate
as estimated by Moody’s forecast of Covid-19 scenarios for current expected credit loss (CECL)

Primary Data:

It is the information collected directly from sales finance department for further studies, it Was mainly
through interviews with concerned officers and staff, either individually or Collectively, sum of the
information has been verified or supplemented with personal Observation and real timework experience.

Secondary Data:

Secondary data is the published data. It is already available for using and its saves time. The Mail
source of secondary data are published market surveys, government publications Advertising research
report and internal source such as sales, sales records orders, customers Complaints and other business
record etc. the study has also depended on secondary data to Little extent, which is collected through
internal source.

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 RESEARCH DESIGN

A research design is the arrangement of conditions for collection and

analysis of data in a Manner that aims to combine relevance to the research purpose with economy
in procedure Research Design is the conceptual structure within which research is conducted. It is
the Overall operational pattern or framework of the project that stipulates what information is to Be
collected from which sources by which procedure.

Exploratory Research: To gain familiarity with a phenomenon or to achieve new Insight into it. Studies with
this object in view are termed as exploratory or formularize Research studies.Descriptive Research: To
portray accurately the characteristics of particular Individual, situation of a group. Studies with this object
are view is known as descriptive Research studies.
Empirical Research: To gain knowledge by means of direct and indirect
Observation or experience. Empirical evidence can be analyzed quantitatively or Qualitatively.
Considering the importance of decision areas, it was decided to undertake an exploratory Survey.
Exploratory research is concerned with discovering the general nature of the Problem and the
variables that relates to it.When I was making this project the prime thing was to study Balance sheet
and Accounts of different firms. I have done that by collecting the required information through
Firm’s manual and data available on internet. During the SIP, the Research Method which I Applied
was Exploratory and Descriptive research which help me to gain more insight of the Operation which
is done during the Consumer Durable goods financing.

During the project I Got to know how Bajaj Finserv Lending approves a Loan
to various Customers on the basis Of different Document available with them. I explored different
tools and techniques to Convert a Credit Card & Cash buyer into Finance buyer, and also how to build
a good Relationship with the sales person as they are main key to get customer and not to let the
Competitors win.

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In Finance sector there is always a win-lose situation exist but during the Peak season I observed that
win-win situation comes into picture but only for a short Duration.I also learned how the sales
executive use their instinct to judge a customer is genuine or not But this not always help, sometime a
genuine customer becomes a fraud customer which Directly harm the Sales Executive incentive status
as there is company policy to stop the Incentive whenever there is fraud case pop up from the concern
SE.

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 CONCEPTUAL BACKGROUND

Bajaj Housing Finance Limited was incorporated, as a wholly owned

subsidiary of Bajaj Finserv Limited, on 13 June 2008 with the main object of undertaking, inter alia,
distribution of financial products and to act as corporate agent under the provisions of IRDA Act,
1999. In 2014, consequent to the transfer of shares from Bajaj Finserv Limited to Bajaj Finance
Limited (BFL), the Company became wholly owned subsidiary of Bajaj Finance Limited. The
Company, on 10 November 2014, has amended its Memorandum of Association and Articles of
Association to enable it to carry on housing finance business and allied activities. The name of the
Company was changed from Bajaj Financial Solutions Limited to Bajaj Housing Finance Limited
w.e.f. 14 November 2014. The Company is registered with National Housing Bank as a housing
finance institution without accepting public deposits with effect from 24 September 2015.

Brief summary of the Business carried on by the Company and its subsidiaries
together with details of divisions and branches or units,

We are a wholly owned subsidiary of Bajaj Finance Limited. We

received a Certificate of Registration (not valid for acceptance of public deposits) from the
National Housing Bank (“NHB”) dated 24 September 2015 to carry on the business of a housing
finance institution. We offer a wide range of housing finance products like home loans, home
improvement loans, loans against property, etc. predominantly across the middle and premium
segments.

Bajaj Housing Finance Limited is one of India’s leading NBFCs and is

primarily focused on retail financing. Over the years, Bajaj Finance Limited has built a strong market
presence through its core competencies, good understanding of the business, its nationwide network
of branches and competitive, flexible and speedy lending services. The Company primarily deals in
the financing of two and three wheelers, consumer durables, business loans, personal loan cross-sell,
salaried personal loan, mortgage loans, loan against securities, commercial loan and rural lending
etc., The Company also is a corporate agent for distribution of Life and General Insurance products,
etc. and is also an AMFI registered mutual fund distributor.

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STRATEGY DRIVERS

When we thought of our strategy to achieve the Big Goal, we kept in

mind an important element: what strength of our past do we want to carry into the future?
Of all our options, one thought resonated across, reflecting in all our outcomes over the course of our
existence – Sustainability. It is the legacy that our history has created. This is the outcome of over
half a century of work of our parent – the Bajaj Group. Delivered through each business that the
Group has ventured into. Anything that we do has to pass through this critical filter. Each of the four
drivers of our strategy are built on this core.

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Focus on Existing Customers:

More products per customer cannot be achieved by more customers but more
satisfied customers. More satisfied our customers, more likely they’ll partner with us for their next big
pursuit. More likely, they’ll recommend their family and friends to us. The more our customers
recommend us, the less we need to worry on getting new customers.
The less we worry on getting new customers the more we’ll focus on existing customers. Perpetual
State of BetaIn today’s world, innovative thoughts don't need years to become break through realities.
Nor do they take years to become a commodity. New news becomes stale over a few hours, new
products get duplicated overnight, one of many becomes one of one in days. The point in this is rather
simple. The need for continuous change, continuous improvement, continuous reinvention. Reason
for us to continue to be better than our previous best.

At Bajaj Housing Finance Limited, we call it the Perpetual State of Beta. The
strive for improvisation at every stage of our process which helps us deliver better products & better
processes to our customers. Invest Deep in TechnologyCan I apply online? Yes. Will I get a regular
statement of account? Yes. With every single detail of your loan?
Yes. Giving me access anytime, anywhere? Yes. Can I foreclose my loan? Yes. Will I be charged
for foreclosures? No. Can I borrow back some of the loan I have repaid? Yes.
Without a human interface? Yes. Are all my transactions on the online portal safe? Yes. How safe? 164
Bit. What's that?""

We deploy technology not to take the human touch away but to give you a
richer customer experience, allowing you to exercise your choices even when it comes to being
serviced. Because technology alone is not the output, it is the creativity with which it is used that
delivers the objective.

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 Over the years, we have continued to increase our spends in technology by
putting money where our mouth is. A disproportionate amount of investment in technology is not
through CAPEX but OPEX. It gives us the advantage of being irrelevant to depreciating returns. It
gives you an unmatched flexibility of engaging with us for every financing related need. The more
delighted you are, the easier it will be for you to choose us the next time you have a finance need.

Do you have a single loan account number with your bank? No?
Surprising." Build Partnerships with the Best in the WorldOur bias for the best in the world comes
from our obsession for our Big Goal. Webelieve when our customers buy a product or service from
us, they are placing their trust in us. Trust itself is a delicate matter. It needs both expertise and
experience, together. When we partner with SalesForce for our online capabilities, with Microsoft for
our software, with TCS for process mapping, and CRISIL for auditing us, we believe we’re
implementing zero tolerance to compromise.

We’re not a blow-hot, blow-cold partner. We’re as determined in our

relationship with our partners as we are with each of you as customers. And even for our
partnerships, we have created benchmarks in innovation in how we have deployed their systems and
processes to create bold new realities.

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 What are the Types of Home Loan?

Borrowers can select from different types of home loan available to suit their
residential property purchase needs. Some of them include the following.

Home Loans for New House Purchase

Avail a housing loan to finance the purchase of a new house with Bajaj
Housing Finance Limited. The advance comes with attractive features and is sanctioned on fresh
terms of lending. The advance enables borrowers to make the most of available home loan tax
benefits.First-time homebuyers can also apply for interest subsidy under the Pradhan Mantri Awas
Yojana.

Home Renovation Loans

Borrowers can also avail a home loan to meet the renovation expenses or the
cost of constructing an extension for an existing house property.

Home Loans for Property Construction

The housing finance is suitable to fund house purchase when a residential

property is undergoing construction.

Joint Home Loans

Individuals with limited income and repayment capacity can also avail a high-
value joint home loan to purchase a residential property of their choice. The co- applicants under a
joint housing advance must be a parent, spouse, sibling, son, or daughter. Under a joint housing
advance, the home loan tax exemptions are available to both co- borrowers.

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Balance Transfer Home Loans

Existing home loan borrowers can avail a balance transfer housing loan.
Such a loan is refinanced from an existing lender to a new one for better terms of lending. Bajaj
Housing Finance Limited also brings the Home Loan balance transfer facility with other attractive
features like low home loans interest rates and a high-value Top-Up Loan. Borrowers can utilise the
advance to fulfil their diverse funding needs as it comes with zero end-use restriction.

Pre-approved Home Loans

Bajaj Housing Finance Limited provides pre-approved home loans to

existing customers to simplify loan processing. The advance is provided according to the customer’s
credit profile, and the pre-approved offer can be accessed only with minimum personal details like
name and contact number.Other best home loan types available include housing loans for women, for
government employees, for private employees, for bank employees, etc.

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 Things to Consider Before Buying a Home

House purchase is a critical decision with sizeable financial implications,

both when self-financing such purchase and when availing a housing loan for property purchase.

Size and location of the property

The choice of a suitable size and accommodation during house

property purchase depends on your family requirements. Selection should be based on space
available in measurement units like sq. Ft. as well as accommodations such as a number of
bedrooms.Property location also contributes significantly. Take care of social infrastructural
availability like hospitals, shopping areas, educational institutions, etc. when deciding a
property’s location. These factors also typically determine the market price of a property.

RERA Compliance and Encumbrance-free Title

Checking the RERA compliance for a property ensures it’s reliability in

terms of encumbrance-free title, construction permissions, quality of property, and seller credibility,
and must be checked before property purchase.

Affordability

Home buyers must also consider the property price and match it with their
affordability to make a suitable decision. Availing a housing loan to finance house purchase when the
market price of a selected property is high can be a smart financial decision. Meet only a handful of
home loan eligibility criteria to avail a feature-rich housing finance.Bajaj Housing Finance Limited
provides high-value home loans in India at attractive rates to make financing house purchase
affordable. Existing borrowers can also opt for a home loan balance transfer to refinance their
outstanding loan amount at a reduced interest rate and other favourable terms of lending.

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Property Aesthetics

The aesthetics of a house property also contribute to an individual’s decision

regarding house purchase. They can include factors like sustainable design, view, layout, interior as
well as exterior design, etc.

Age of the Property

A property’s age determines its remaining life and contributes critically to

its market price as well as resale value. Age of a property also contributes to lender assessment
when availing home loans in India for residential property purchase. A newly constructed property
with a long shelf life commands a high market price as well as resale value, and helps raise a
substantial fund as a housing loan when mortgaged.

Stage of Construction

Individuals must also consider the project completion status when

purchasing a house property under construction. It can help determine tax benefits availability
when financing house purchase through a home loan.Other essential considerations to make
before purchasing a house include the availability of amenities, developer’s reputation, security,
tax payment status of the seller, choice of lender when availing a home loan, etc.

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 Data Analysis and Interpretation

As a HFC, BHFL is exposed to credit, liquidity and interest rate risk. It

continues to invest in talent, processes and emerging technologies for building advanced risk and
underwriting capabilities. BHFL has a well-defined risk governance structure which provides for
identification, assessment and management of risks. Risk management involves making decisions and
establishing governance systems that embed and support effective risk process, as well as building an
organisational culture that supports agility. The Company has a Risk Management Committee (RMC)
that comprises of its directors and members of its senior management team.

Management Discussion and Analysis 12th ANNUAL REPORT 2019- 20

11 BHFL’s balanced approach to portfolio management coupled with a rigorous portfolio review
mechanism has enabled it to pick up early warning signals and take corrective actions. BHFL loan
portfolio continues to remain healthy and in the growth mode. A robust governance framework
ensures that Board and its Committees approve risk strategies and delegates credit authorities, and
robust underwriting practices and continuous risk monitoring ensure that portfolios stays within
acceptable risk levels.

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 BHFL follows NHB prudential norms for asset classifications and
Expected Credit Loss (ECL) model prescribed under Ind AS for provisioning. The unprecedented
health scare caused by COVID-19 which led to a countrywide lockdown is going to have a varying
impact on different sectors of the economy. Salaried individuals may have to contend with a scenario
of reduced income and/or job losses. Corporates, SMEs and MSMEs will struggle on account of
reduced economic activities and business rhythm that is no longer efficient due to severe disruption in
both demand and supply. All these will lead to major cash flow constraints and erosion in the asset
value. These developments in turn will severely test risk management framework across financial
sector;

31
 BHFL will be no exception. To provide relief on debt servicing
obligations, the RBI has permitted financial institutions to offer moratorium to their borrowers on
instalments falling due between 1 March 2020 to 31 May 2020. With uncertainties about the pace of
easing of the lockdown restrictions, the time needed to restart the economy and attaining some level
of normalcy, the servicing of debt obligation by these customers need to be monitored closely. Based
on early indicators of moratorium and delayed payment metrics observed in April 2020, the Company
has made a contingency provision of H 50 crore for COVID-19 in FY2020.

Assets under management

Partnerships and services

In partnership with various financial service providers, the Company offers
the following products to its customers: life insurance, general insurance, health insurance, online
primary healthcare, property search services and other financial services products.

32
Financial performance

Table gives BHFL’s financial performance for FY2020 vis-à-vis the FY2019.

BHFL’s financials

33
Asset liability management (ALM)
BHFL had a total borrowing of H 25,600 crore as on 31 March 2020.
It has a robust Asset Liability Committee (‘ALCO’) and Investment committee which meets every
month and continuously monitors asset-liability mismatches to ensure that there are no imbalances on
either side of the Balance Sheet.

The ALM position of BHFL is based on the maturity buckets as per the
guidelines issued by NHB. BHFL assesses behavioralised maturity pattern of its assets and liabilities
and maintains adequate liquidity for its business. BHFL has maintained its ALM position well within
the 15% negative mismatch permissible for 0 to 14 days and 14 days to 30 days individually, and
cumulative mismatch up to 1 year bucket under the extant NHB norms. Its liquid investments as on
31 March 2020 were H 3,150 crore.

BHFL has an Asset Liability Committee as required under NHB circular no

Ref. NHB ND/DRS/ Pol-No.35/2010-11 dated October 11,2010 to monitor its ALM. It also has an
Investment policy which covers interest rate and market risk. ALCO and Investment committee meets
every month to review macroeconomic conditions affecting housing finance business, liquidity
situation and interest rate environment, and provide direction to treasury on fund planning and
business metrics. The Company also has a board approved Interest rate and currency risks hedging
policy to hedge itself for any adverse movement in interest rate and currency risk and it continuously
tracks the movements across these metrics

34
A) What is Bajaj Housing Finance Limited ?
1. Banking financial services.
2. Non banking financial services.

B) Are you aware about the product and services of Bajaj Housing Finance Limited ?
1. Yes.

2. No .

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C) If you are looking home loan, which financial services you will choose ?
1.State Bank Of India (SBI)
2. Bajaj Housing Finance Limited.(BHFL)
3. HDFC Housing Finance Limited.(HDFC)
4.Dewan Housing Finance Limited.(DHFL)

D) Is Bajaj Housing Finance Ltd good for home loan ?

1.Yes.
2. No.

Is 6aj a F

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E) Which financial services give low interest rate ?
1. DHFL
2. BHFL
3. SBI
4. HDFC

F) What is your opinion about the rate of interest offered by the BHFL ?
1.Low
2. Medim
3. High

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G) Which type of rate of interest do you prefer mostly ?
1.Fixed rate of interest.
2.Floating rate of interest.

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 Annexure

Questionnaire :-

1. Which factors determine my home loan eligibility?

An individual’s eligibility for a home loan is determined by various factors.

They include his/her age, income, employment status, place of residence, and property value. The
amount of a home loan available also depends on property specifics apart from the set home loan
eligibility criteria.They include its age, location, accessibility, social infrastructural facilities
available, current market price, and the resale value. Based on these parameters, the lender decides an
LTV for the property, and sanctions the loan.
Borrowers can make a higher down payment to increase their eligibility for the advance.

2. What is the minimum salary for a home loan?

A salaried individual applying for a home loan must fulfil the minimum
salary threshold depending on his/her city of residence. For cities like Delhi, Mumbai, Faridabad,
Ghaziabad, Noida, Thane, etc., the minimum salary requirement is Rs.30,000.For cities like
Ahmedabad, Bangalore, Ahmedabad, Bhopal, Baroda, Chennai, Goa, Hyderabad, Kolkata, Mysore,
Nagpur, Pune, etc. the minimum salary requirement is Rs.25,000. Make sure to utilise a home loan
EMI calculator to assess a suitable loan amount that keeps your EMIs affordable as per your salary.

3. What is the difference between a fixed rate and a floating rate home loan?

Home loan interest rate levied by lenders is either fixed or floating. A

fixed rate means that interest is charged on a home loan at a constant rate throughout the loan tenure.
It helps borrowers determine the total interest payable at the onset of the repayment tenure.A floating
rate of interest on home loans is linked to an internal or external benchmarking system that the lender
follows. Such interest rate changes as per any change in the benchmark lending rate. Availing a home
loan at the floating interest rate benefits a borrower when the market rate predictions show a
declining trend.

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4. Can I prepay my outstanding home loan amount?

Yes, borrowers can opt to prepay their outstanding home loan amount at
any time before the loan tenure ends. They can do so by availing either the part- prepayment or
foreclosure facility against a nominal charge. A part-prepayment facility allows borrowers to reduce
their total loan liability by a significant margin.The foreclosure feature allows individuals to close their
loan account early via complete repayment in a lump sum.
Bajaj Housing Finance Limited levies nil charges on part-pre-payment or foreclosure facilities when
Home Loans are availed on floating interest rates.

5. Can I avail tax deductions on my home loan?

Yes, you can avail home loan tax benefits annually on both the principal
and interest amount paid towards the total repayment liability. Section 80C of the Income Tax Act
1961 allows annual tax deduction of up to Rs.1.5 lakh on home loan principal repayment. Section 24B
also allows a home loan tax exemption of up to Rs.2 lakh on interest paid annually for a self-occupied
property. In case of a rented property, the benefits do not carry any maximum limit.For properties
under construction, tax benefits on interest payment are limited to Rs.30,000 annually. First time home
buyers purchasing a home under the Pradhan Mantri Awas Yojana can also claim an additional
interest tax deduction of Rs.50,000 under section 80EE.

6. Can I switch from a fixed rate to a floating rate during my home loan tenure?

Yes, borrowers can switch from a fixed rate home loan to a floating rate loan
against a nominal fee payment. They must take care to go for a cost-benefit analysis before going for
the switch to ensure that the floating rate interest charge helps save on the total repayment liability.
Doing so is advisable when a further home loan interest rate reduction is ascertained in the
market.Borrowers can also opt for a home loan balance transfer facility when planning to check the
total interest accumulation on their home loans.

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7. What are the different types of home loans available in India?

Choose from the available home loan types to finance your house purchase,
construction or renovation suitably. The prominent home loan types available in India include, new
home loans, home construction loans, home loans for renovation, joint home loans, housing finance
for women, housing finance for government employees, loans for private employees, pre-approved
home loans etc.

8. Can I take 2 home loans at a time?

Yes, an existing borrower can avail a second home loan to finance his/her
house purchase plans. The loan amount in that case depends on various factors like the income, age,
credit profile, and city of residence. A second home loan on the same property is, however, not
allowed as per CERSAI.A borrower must also meet the home loan eligibility criteria laid down by the
lender to avail the housing finance. When in need of additional funds to carry out home renovation or
reconstruction, opt for a balance transfer facility with Bajaj Housing Finance Limited. It brings a high-
value top-up loan of up to Rs.50 lakh with no end-use restriction for convenient financing of diverse
funding needs.

9. How to apply for a home loan?

You can apply for a home loan online in a few simple steps. Fulfil the
minimum eligibility criteria laid down by Bajaj Housing Finance Limited, and proceed to apply
online. To do so, fill up the application form with your personal, financial, employment, and
residential details. Next, fill in the loan amount required and a suitable tenure. Submit the duly filled
form with the relevant documents to complete application.Utilise a home loan eligibility calculator to
estimate a suitable loan amount as per your age, income and city of residence, and apply accordingly
for improved chances of approval.

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10. How do joint home loans work?

Two or more co-applicants can apply for a joint home loan with the required
eligibility. It allows the co-borrowers to avail a high-value loan through combined eligibility, and lets
them share the repayment burden equally over the tenure.To avail a joint home loan, the co-borrowers
must also share the property ownership. For each year of repayment, the co-borrowers can also claim
income tax benefits individually as per their share of repayment amount paid.

11. Is it mandatory to have a co-applicant when applying for a home loan?

If yes, who can be a co-applicant for my home loan?No, financial institutions

provide home loans individually to eligible applicants. Individuals lacking the necessary eligibility or
requiring a higher loan amount can apply with a co-applicant for a joint home loan.The co-applicant for a
joint home loan can either be a parent, spouse, sister,brother, son or daughter. Each co-applicant must
individually fulfil the home loan eligibility criteria to qualify for the required housing loan amount.

12. What is MCLR?

Marginal Cost of Funds based Lending Rate or MCLR is an internal

benchmarking system that financial institutions use to set their consumer lending rates for home loans
and other advances. It comes with a reset period spanning 3 months, 6 months, 1 year, or 2 years, and
is released by financial institutions monthly. Factors contributing to MCLR determination include the
marginal cost of funds, operating cost, tenure premium and the negative carry on Cash Reserve Ratio.
With the introduction of RLLR or Repo Linked Lending Rate, the MCLR-based lending system is set
to be replaced with a more transparent, repo-rate receptive method of interest rate determination.

13. How can NRIs get a home loan?

NRIs can avail a home loan by fulfilling minimum eligibility criteria and
documentation requirements. They need to age between 18 and 60 years, and should apply with a
co-applicant who is a resident Indian to avail a housing loan.The home loan eligibility criteria for
NRIs also include a work experience of not less than 2 years in the current company. They also
need to carry the educational qualification set by the lender to avail the loan.

38
14. Do I need a guarantor for home loan?

No, as home loans are secured via residential property mortgage, a

guarantor is not required to avail the advance. Borrowers must, however, fulfil the minimum
eligibility criteria to qualify.The loan amount available as housing finance depends on various
eligibility factors like the applicant’s income, age, property value and age, location, etc. The lender’s
LTV also determines the maximum amount available to a borrower as a home loan. Bajaj Housing
Finance Limited provides home loans to eligible borrowers up to an LTV, i.e. the maximum
percentage value of the property’s market price, of 85%.

39
 FINGIND, SUGGESTIONS AND CONCLUSION OBJECTIVES

OBJECTIVES

1. To study about bajaj housing Finance limited.

2. To know the services provided by BHFL

3. To Analysis profit and loss of between covid pandemic

4. To study how many people trusted on BHFL

PURPOSE FOR THE STUDY

Main purpose of this study is to identify the best finance services provided by the BHFL. How BHFL
provide service to the people’s and how they face any situation.

FINGIND, SUGGESTIONS

In these unprecedented times, Company is focused on capital preservation, balance sheet protection
and operating expenses management. Company has healthy capital adequacy, strong liquidity
position, low gross and net NPA, large mass affluent customer franchise to cross sell, diversified
portfolio mix and strong risk management orientation. As a result, Company is confident of
navigating the challenges posed by Covid-19.

▪ Amidst Covid-19, the Company has taken a cautious stance, and has tightened
underwriting and LTV norms across all businesses till July 2020.

▪ There was no business in the month of April on account of nationwide lockdown. Green & Orange
zones have resumed operations in May with Red zones opening up for business in phased manner
and with reduced capacity.

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▪ Company operates predominantly in top 30 cities and since most of these cities are in Red zone, it
is likely to take longer time to gain momentum.

▪ As of 15th May 2020, the Company had liquidity buffer of ₹ 3,400 crore representing 13% of its
total borrowings. Given the environment, Company will continue to run high liquidity buffer, despite
an impact on cost of funds in the short term.

▪ Company has stress tested its liquidity model and is comfortably placed to meet its
repayment obligations and business growth for a foreseeable period.

▪ Company has strong control over operating expenses with modularity built across various line
items. In addition, variable cost approach for sourcing and loan processing leads to self balancing of
expenses in line with volume movement.

▪ Company has started to prepare itself for potential Covid-19 impact. It took one-time
provision amounting to ₹ 50 crore in Q4.

▪ As of 30 April 2020, ~10% of the Company’s AUM was under mortarium. Of customers under
mortarium, 70% have no recent bounce history with us.

▪ Company is currently executing significant ramp up of its collections capacity to manage Covid-
19 bounce portfolio.

▪ Gross NPA & Net NPA stood at 0.08% and 0.05% as of 31 March 2020. Company has offered
moratorium to all its Non NPA customers basis requestor on a suo-moto basis. However, as a
matter of prudence, Company decided that a set of customers with 60 days overdue and high
likelihood of moving into NPA should not be offered moratorium.

▪ Capital adequacy remained strong at 25.15% as against regulatory requirement of 13%, would
help support continued growth for the company.

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LIMITATION OF THE STUDY

 The study is confined to the extent of interpreting data which is collected only from

22respondents of selected consumer durables. As the sample was chosen randomly this

might not be an actual representative of the total population

 The study is based on primary data. The respondents are chosen randomly from

thedifferent places of pune.

LITERATURE REVIEW

CORPORATE CATALYYST INDIA‟s research on consumer behavior

financing reports that customers who are seeking finance are conscious about interest being charged
for white goods there is perceptible shift towards low cost financing schemes. India‟s consumer
market is riding the crest of the country‟s economic boom. Driven by a young population with access
to disposable incomes and easy finance options, the consumer market has been throwing up
staggering figures.

The market share of MNCs in consumer durables sector is 65 per cent.

MNC's major target is the growing middle class of India. MNCs offer superior Technology to the
consumers whereas the Indian companies compete on the basis of firm grasps of the local market,
their well acknowledged brands, and hold over wide distribution network. India officially classifies its
population in five groups, based on annual household income (based on year 1995-96indices). These
groups are: Lower Income; three subgroups of Middle Income; and Higher Income. Household
income in the top 20 boom cities in India is projected to grow at 10 per cent annually over the next
eight years, which is likely to increase consumer spending on durables. With the emergence of
concepts such as quick and easy loan, zero equated monthly installment (EMI) charges, loan through
credit card, loan over phone, it has become easy for Indian consumers to afford more expensive
consumer goods.

42
Key Industry Dynamics Industry Size : Rs. 350 billion

Key Categories : White Goods, Brown goods and Consumer electronics.

Competitive land scape : Dominated by Korean majors like LG and Samsung in most of the

segments

Margin Profile : Low margin, dependant on volumes

Growth opportunities : Lower penetration coupled with increasing disposable income Based on
study of Ali Hortaçsu (Department of Economics, University of Chicago and NBER),
GregorMatvos(University of Chicago Booth School of Business & NBER), Chad Syverson
(University of Chicago Booth School of Business and NBER) and Sriram Venkataraman
(UNCKenan-Flagler Business School) financial distress affects consumer markets in a profound
manner.The Durable goods channel is a potentially important source of indirect costs of financial
distress.

Domestic durable goods manufacturers alone account for about 7 percent of

U.S. value added, and many other products and services have long-lived “durable- like” elements in their
provisions, making them subject to the mechanism described above.
Automobiles, the specific subject of our study, represent a significant fraction of household wealth. They
account for about 5 percent of consumption in the U.S.and are the nonfinancial asset most commonly held
by households (Bucks et al. (2009)).

Prima facie evidence suggests the mechanism does in fact operate in the
auto industry: In a 2006 survey, 23 percent of consumers who avoided the “Big 3” (more recently
referred to as the “Detroit 3”) brands listed those companies‟ financial conditions as a reason for
avoidance (J.D. Power (2006)). Moreover, despite the lack of evidence, policy programs aimed at
helping U.S. car manufacturers were based on the premise oflargeindirect costs of financial distress,
through warranties in particular. Measuring the size of any such effect is empirically challenging,
however. While financial distress can reduce the demand for durable goods, causality can also operate
in the opposite direction: negative demand shocks affect firms‟ cash flows and therefore can induce
financial distress. This generic problem has plagued the literature on the effects of financial distress
and indirect costs of bankruptcy, whether these indirect costs are from the consumer, supplier, or

43
employee side.Our study, besides focusing on an inherently interesting set of products and firms, can
avoid many of these identification issues. We study the effect of financial distress on the prices of used
cars in car auctions conducted by a major car auction house in the United States from January 1, 2006
to November 14, 2008.

We compare shifts in the prices of a manufacturer‟s cars to a measure of

that manufacturer‟s likelihood of bankruptcy.As we discuss below, we believe our data is rich enough
to provide sources ofidentification ofthe links between cars‟ values and their manufacturer‟s financial
distress that are unlikely to be driven by reverse causation, where price drops lead to distress rather
than vice versa.Looking for such effects in used car auctions holds several advantages over new car
markets.Wholesale car markets are very liquid; prices can rapidly adjust to changes in the economic
environment.Their decentralized nature makes them less exposed to strategic pricing, and their
participants are autodealers who are knowledgeable about the product and the final demand
environment.

Additionally, unlike a drop in new car prices, a decrease in used car prices
does not directly affect manufacturers‟ cash flows, decreasing the potential for reverse
causality.Titman (1984)& researchers have reportedthat during boom period consumer durable buyers
do not care about high interest cost lending whereas during recession lower interest costs are
mandatory to increase the white good .In consonance with the globaltrend, over the years, demand for
consumer durables has increased with rising income levels, double-income families, changing
lifestyles, availability of credit, increasing consumer awareness and introduction of new models.
Products like air conditioners are no longer perceived as luxury products.

44
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1. Bajaj Finance"Economic Times

2. post-tax profit of Rs.408 crores"Economic Times

3. Bajaj Finance scaled up its business"The Hindu Business Line

4.Bajaj Finance Limited" Money Control

5. Bajaj Finserv Holds 57.28% of Total Share"The Hindu Business Line. Retrieved 2016- 07-26.

6. Bajaj housing Finance limited annual report 2018-19

7. L&T Finance Ltd. (2019-20). 2019-20 Annual report. L&T Finance Online database.

8. Bajaj Finserv Ltd."The Economic Times. Retrieved 2014-11-03.

9. Bajaj Finserv to float a housing finance company" Times of India. Retrieved 2014-11-03.

10. Bajaj Finserv reports 15% rise in Q1 consolidated net profit" Archived 4 November 2014 at the
Wayback MachineFinalaya. Retrieved 2014-11-03.

11. Bajaj Finserv's Q1 consolidated net profit rises 14%" Business Standard. Retrieved 2014
11-03.

12. Bajaj Finserv Annual Report March 2018".

13. Post division, brothers Rajiv and Sanjiv Bajaj taking Bajaj Group to new highs". The
Economic Times. Archived from the originalon 7 July 2014. Retrieved 3 November 2014.

14. Bajaj Finserv Ltd windfarm (India)"The WindPower. Retrieved 2014-11-03.

15. Bajaj Finserv Ltd."The Economic Times. Retrieved 2014-11-03.

16. Bajaj Auto demerger approved" The Economic Times. Retrieved 2014-11-03.

17. Bajaj Holdings and Investment Ltd".ww.bajajauto.com. Retrieved 21 January2019.

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 BIBLIOGRAPHY

Website

1. www.bajajhousingfinance.in

2. www.Wikipedia.com

3. www.Google.com

Magazine

Business Today.

Bussines World.

Bajaj Housing Finance Ltd Annual Report 12th.

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