PROJECT REPORT

ON
A Comparative study on performance Of LICHFL and HDFC

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

AWARD OF THE DEGREE OF

Master in Business Administration in

Financial Management
(MBA FM)

SUBMITTED BY
Mohammad Bilal
Fac No. 21FMMCA123
En No. GJ2162

UNDER THE SUPERVISION OF

M.MOHSIN KHAN
professor

DEPARTMENT OF COMMERCE
ALIGARH MUSLIM UNIVERSITY, ALIGARH (INDIA)
2023

1
 TABLE OF CONTENTS
Certificate
declaration
Acknowledgement

Chapter 1 -
Introduction
Industry profile
Objectives of the study
Research methodology
Limitations of the study
Chapter 2 -
Review of Literature

Chapter 3 -
Housing Development Finance Corporation- An overview
LIC Housing Finance Limited- An overview

Chapter 4 -
Data Analysis & Interpretation
Financial Report Analysis
Comparison Accounting ratios

Chapter 5 -
Findings, Conclusion & Suggestions

Bibliography

2
 CERTIFICATE

This is to certify that the project entitled “A Comparative study on performance Of LICHFL
and HDFC” submitted by Mohammad Bilal Who is currently studying in the course MASTER
OF BUSINESS ADMINISTRATION (FINANCIAL MANAGEMENT) of Department of
Commerce, Aligarh Muslim University, Aligarh has been done under my guidance.

Place: Aligarh SIGNATURE OF SUPERVISOR

Date:

3
 DECLARATION

I hereby declare that the project entitled A Comparative study on performance Of

Housing Development Finance Corporation & LIC Housing Finance Limited submitted to the
ALIGARH MUSLIM UNIVERSITY in fulfillment of the requirements of the course MBA
FINANCIAL MANAGEMENT is my work done during 2021 - 2023 under the supervision and
guidance of PROF.M. MOHSIN KHAN Professor in Department of Commerce, Aligarh Muslim
University, Aligarh.

Place: Aligarh SIGNATURE OF THE CANDIDATE

Date:

4
 ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been

possible without the kind support and help of many

individuals. I would like to extend my sincere thanks to all of them.

It has been great honor and privilege to undergo training. I am highly

indebted to PROF.M. MOHSIN KHAN SIR for their guidance and

constant supervision as well as for providing necessary information

regarding the project and for their support in completing the project.

His constant guidance and willingness to share his vast knowledge

made us understand this project and its manifestations in great depths

ad helped us to complete the

assigned tasks on time. I would like to express my gratitude towards

my parents and My teachers for their kind cooperation and

encouragement which help me in completion of this project. My

thanks and appreciations also go to my colleagues in developing the

project and people who have willingly helped me out with their

abilities

MOHAMMAD BILAL

5
 ABSTRACT
Housing Finance is a high-flying sector these days and is tipped to grow at a
phenomenal 36% P.a. Banks and financial institutions have brought sea changes in
their strategies and there is shift from seller’s market to buyer’s market. Liberal tax
incentives by the government, low and competitive interest rates for housing finance has
made this sector as red-hot sector. House is center and domestic device for mankind's
moral and substance development ever since the dawn of civilization. Housing is one of
the most important that we human beings need. Adequate housing is essential for human
survival with dignity. There are many things that we would find difficult, if not
impossible to do without good-quality housing. Housing shortage is a universal
phenomenon. It is more acute in developing countries. The housing scenario has become
more critical in India in recent years. India has initiated so many housings reform that
has taken many forms and manifestations characterized by the reduction in social
allocation, cutbacks in public funding and promotion of a real estate culture in close
partnership between the state and private actors. Mortgage financing markets canplay
an important role in stimulating affordable housing markets and improving housing
quality in many countries. Unfortunately, these are still in infancy in India. Thislack of
development often translates into lower homeownership rates or poor housing quality.
Most of these problems stem from the central dilemma that the resources are always too
limited and housing development heavily depend on the financial institutions such as
banks, credit corporations and development banks for the supply of finance to meet their
daily financial needs. Against this backdrop, this paper will assess basic nuances of
Indian financing system. Housing Development Finance Corporation Ltd (HDFC)is one
of the leaders in the Indian housing finance market with almost 17% market share as
on March 2010. Serving more than 38 lakh Indian customers as on March 2021, HDFC
also offers customized solutions that fit to the need of the customer. In the FY 2020-21, it
registered a net profit of `4528.41 crore. It also registered a net profit of ` 971 crore in
the quarter ended September 30, 2021.LIC Housing Finance
another major player in housing finance sector in India with hold of 8% market share.It also
registered a net profit of 256.50 crore in April- June quarter of 2021.This paper performs
analytical study of Housing Finance in India with special reference to HDFC and LIC
Housing Finance Ltd and analyzes the performance of this sectorwhile identifying the its
problems and challenges.

6
 Chapter 1-
INTRODUCTION
Housing is one of the basic needs of mankind in terms of safety, security, self-esteem, social status, cultural
identity, satisfaction, and achievement. Growth in the housing sector is regardedas one of the indicators,
which has a reflection on the health of a particular economy. Today, for India to achieve balanced economic
growth, it is essential to boost construction activity in the housing sector. Since Independence growth in the
Indian population has aggravated the problem of housing for Indian citizens. Out of the total population of
1027 million about 742 million live in rural areas and 285 million live in the urban areas. There are 27 cities
with morethan one million populations. This rapid urbanization has led to many homeless households, rapid
growth of slums and unauthorized colonies, rampant speculation and deficient availability of water sanitation
and basic facilities. This has also brought along with itdisproportionately higher demand for housing- be it
for upper market, middle market and for low-income category of population. Real estate and dwellings have
a share of 5.9 per cent in India’s GDP and a growth of 7.2 percent in 2020-21. The growth of real estate
services in has been consistently impressive at over 25 per cent since 2015-16 with26.3 per cent growth in
2020-21. Housing is a necessity for human life and second largest generator of employment, next only to
agriculture. Housing activities have both forward and backward linkages in nearly 300 sub-sectors such as
manufacturing (steel, cement, and builders’ hardware), transport, electricity, gas and water Supply, trade,
financial services, and construction which contribute to capital formation, income opportunities, and
generation of employment. In 2012-13 property prices have moderated. As per the National Housing Bank
(NHB) RESIDEX index for the quarter July-September 2012 compared to April-June 2012 (covering 20
cities, with 2007 as base year), there is a general decline in prices of residential properties in some smaller
towns, while there is increase in some other cities which is marginal.In view of increased urbanization, the
housing requirements in urban areas have been witnessing increase over the years. The Eleventh Five Year
Plan (2007-12) estimated housing requirement of24.7 million units in urban areas of which 99 percent was
in the economically weaker sections/lower income groups (EWS/LIG) segment. As per the estimation of the
Task Force on Housing Requirements in Urban Areas during the Twelfth Five Year Plan Period (2012-17),
the housing requirement in urban areas is 18.7 million units of which 18.5million are for the EWS/LIG
segment. As per a McKinsey Report, the demand for affordable housing willbe 38 million by 2030. To
support the growth of the housing and real estate sector, many institutions have been setup especially for
financing. While these institutions largely cater to the formal sector, access to finance by the informal market
segment largely remains untapped. As this untapped market segment is significant and growing, the
Government of India has announced various measures like the Interest Subsidy Scheme for Housing for the
Urban Poorand setting up of the Credit Risk Guarantee Fund Trust for Low Income Housing. However, due
to limited housing finance solutions, the gap between housing demand and supply is
Development, Growth and Policy implications of Housing Finance in India: An Evidence from
HDFC and LICHFL

widening. Besides the mortgage market in India is also underdeveloped. While advanced countries like the
US were rattled by the sub-prime crisis, Indian banks have Demonstrated a great amount of maturity in their
lending for the housing sector. The government has also takenmany policy measures for this sector. Rapid
increase in land prices, absence of a long-term funding and lending market at fixed rates, limited developer
finance, the Urban Land Ceiling Regulations Act (ULCRA) continuing in some states, existing lower floor
area ratio in cities, high stamp duties and difficulties in land acquisition are some other issues which need
to be addressed. ‘Affordable Housing for All’ is another challenge as the demand for housing by the
EWS/LIG segment Has increased.

7
 INDUSTRY PROFILE

Introduction of Banking

Banks are institutions that accept deposits from customers or the public to provide loans to the
poor and expand other SD services. Now the private sector banks are introduced and their
functions are changed. Private sector banks have become profit centers, insurance companies and
mutual funds. However, nationalized banks provide loans for rural development activities such
as education and agriculture. Therefore, they are always service-oriented.

Banks offer facilities for depositing and withdrawing money when needed. It provides a safe
place to save money and lends money to the borrower for the job well done. They provide
savings accounts, deposits and loans using these deposits.

History of Banking in India

Phase - I

The General Bank of India was established in the year 1786. Banks in Bengal and Hindustan
have since been established. In 1809, the East India Company was called the Presidential Banks
in 1843, when the bank of Mumbai and Bank of Madras were established as independent banks
in 1840. In 1920, these three banks emerged. Imperial Bank of Indi launched and founded
European shareholders and individual shareholders.
The first exclusive bank in India was the Allahabad Bank and was founded in 1965. The Punjab
National Bank Ltd. was founded in 1894 and is headquartered in Lahore. The Indian Bank,
Canara Bank, Indian Bank, Mysore Central Bank in India and Baroda Bank were established
between 1906 and 1913, in 1935 the Reserve Bank of India was established.

8
 The growth at this phase was very slow and faced periodic failures between the years 1913 and
1948. In 1949, the Indian Government proposed the Banking Companies Act to simplify the
functions and activities of commercial banks. This law was later amended to become the
Banking Regulations Act of 1949, in accordance with the amended Act of 1965. The Reserve
Bank of India is authorized with wide power to supervise the banks in India.
At that time the public had low confidence in the bank. The mobilization of deposits was very
slow in the wake. The postal service offered a better savings bank and was relatively safe.
Merchants also received more money.

Phase - II
After independence, the reform of the Indian banking sector by the government has reached
important milestones. In 1955, in the urban and rural areas the Imperial Bank of India was
nationalized through large scale banking facilities. The State Bank of India was created to
manage federal and provincial government banking across the country and served as a key agent
for RBI.
On July 19, 1960, the seven banks constituting the subsidiaries of the State Bank of India were
nationalized. Former Indian Prime Minister Indira Gandhi has made considerable efforts to
nationalize the country's commercial banks.
Seven banks that continued the reform of the banking sector in 1980 were carried out during the
second stage of nationalization. In India, 80% of the banking sector belongs to the government.

To regulate the banking system in India the Indian government has taken the following steps:
 The decree implementing the Banking Act dates from 1949.
 The State Bank of India was nationalized in 1955.
 The State Bank of India subsidiary was nationalized in 1959.
 The coverage of insurance was extended to deposits until 1961.
 14 major banks were nationalized in the year 1969.
 In 1971 credit guarantee companies were established.
 Local rural bank was created in 1975.
 Seven banks with more than 200 deposits were nationalized in 1980.

9
 After nationalization of banks public sector agencies grew to about 800 percent of deposits, and a
substantial increase of 11,000 percent thereafter.
Public banks have a lot of confidence in sustainability.

Phase III

At this point, there was an introducing to facilities in the banking sector with more products. The
committee was created in 1991 and was working on the liberalization of banking practices under
the chairmanship of Mr. Narasimha.
Foreign banks and ATMs flood the country. More important than money over time, we have
implemented more convenient online and telephone banking. We strive to provide a satisfactory
service to our customers.
The Indian financial system is highly resilient. It is protected from crises caused by external
macroeconomic shocks, as has been the case for other East Asian countries. Indeed, they all have
flexible exchange rate, high foreign exchange, capital accounts but are not yet fully convertible.
Banks and their clients have limited exposure to currency risk.

10
 Indian Scheduled Banks

TABLE NO – 1.1 (A) Scheduled Commercial Banks in India.

Public sector Private sector Foreign Banks in Regional Rural

Banks Banks India Bank

(29) (28) (30) (103)

 Other Public
Sector Banks
(PNB)

 Nationalized
Bank

 State Bank of
India and its
Associates

TABLE NO – 1.2 (B) Scheduled Cooperative Banks in India.

(55) Scheduled Urban Cooperative (31) Scheduled State Cooperative

Banks Banks

11
 There is competition between private banks. In the banking sector there are a total of twenty
seven private sector banks. Eight of these are new, actively selling products and introducing
advanced technology, and the remaining 19 are former private sector banks. These days there is
always a competition between the new private sector bank and public sector banks. The new
personal space will be referred to the bank created in the 1990s in accordance with the guidelines
of the Narasimha Committee Bank.

Indian Banking Industry

By 2010, the Bank of India is expected to have $ 1 trillion in assets because of its phenomenal
pace and growth. There are technological innovations to develop the banking sector in India and
develop in the economy and the middle class.
There are more than 320 million middle-class people in this country. Some factors that promise
continuous expansion of banks are raising incomes, increasing correlation with economic
growth, improved living standards and the economic situation.
It is more focused on expanding retail banks and rural banks during the IT revolution.
Stakeholders have more innovative ways to deliver new customer-focused financial products and
services. Banks have begun to pay more attention to mergers and acquisitions in order to
capitalize on economies of scale. Indian banking assets are expected to reach $ 1 trillion by 2010
and foreign capital inflows are expected to increase. The focus should be on securing a small
number of big players that can compete globally rather than securing a large number of
fragmented players.

12
Growth of Foreign Banks in India

There will be more names added to the list of foreign banks of India by 2019 to 2020. The best
private bank in the world is the UBS Bank Swiss by EURO Money.

Following are the foreign banks to establish their business in India.

 Cookman Bank South Korea

 Royal Bank of Scotland
 Nonghyup Bank
 Netherlands Cooperative Rabo Bank
 Industrial and Commercial Bank of China
 US-based GE Capital
 Credit Suisse Group
 Switzerland's UBS

13
OBJECTIVES OF THE STUDY
 To study the customer’s satisfaction levels towards housing finance banks in India.
 To understand why customers preferred the HDFC and LIC Housing Finance Ltd. forhome loan
in India.

HYPOTHESIS
Some of the Hypotheses that are tested in this study are as follows:
 There is no association between Age, Educational Qualification, Profession, YearlyIncome of
Respondents and the Amount of Loan Applied for.
 There is no association between the Age, Yearly Income, Profession, EducationalQualification of
Respondents and Sanctioned Loan Amount.
 There is no association between Days taken for Sanctioned Loan and Type of Banks

METHODOLOGY
The study is based on primary as well as secondary data. Primary data are collected through theresponses
of the customers through questionnaires which were specially prepared for this study.The questionnaire
contained questions regarding the general and socio-economic characteristicsof the respondents such
as age, religion, educational qualification, etc. and about their reason for taking home loan, term, rate of
interest, procedure etc. We conducted the pilot studyby selecting five respondents each banks including
HDFC and LIC Housing Finance Ltd. Based on their responses, some questions were modified and the
modified questionnaire wasfinally canvassed among the 150 selected respondents. A sample size of 140was
used since 140respondents have taken for detailed study because it is not possible to cover the whole
universeconsisting of all the customers. Among these 140 respondents,70 respondents were selected from
HDFC Bank and another 70 respondents were selected from LICHF Ltd. Primary data also included
information collected by personal interview with managers of HDFC and LIC Housing Finance Ltd.
There was extensive use of secondary information in the form of books,articles published in magazines,
journals, newspaper, reports of HDFC and LIC Housing Finance Ltd., websites, circulars, pamphlets of the
banks, clippings etc. The questionnaires werefilled up during the period of April, 2020 to March 2021. The
sample was selected using a convenient sampling. The collected data were scrutinized and edited. The edited
data were analyzed using the software “Statistical Package for Social Sciences” (SPSS) and
meaningful conclusion were arrived by constructing simple and two-way tables and by using statistical
techniques like chi-square test. Simple table were constructed for analyzing the general information of the
sample. Two-Way table were constructed for the comparative analysis and to know the relationship between
two factors. At last, the associations between different variables were tested by using the chi-square test.

14
Limitations of the study
● In order to conduct this study, data has been taken from FY15 onwards, and hence the results and analysis
of the same, might be biased if we take into account a much longer time period
.
● This study has been conducted based on data derived from the financial statements of the bank and a
number of qualitative aspects might have been ignored while undertaking this study.

● This study has been conducted based on historical performance and the same has been analyzed. As such,
the conclusions might not hold up in the future as the future might be completely different from the past.

15
 CHAPTER 2-

REVIEW OF LITERATURE

The issue of housing and housing finance has been receiving increasing attention over the recentdecade in the
extant literature. There have been many studies revised on various observations on this area, few of these
namely; housing is an essential element of life for most human beingspolarized by Naik (1981). According
to J.P. Sah (2011),"housing is not a static but a growing problem and it was cited in Manorama Year Book
(1997) as the modern concept of housing does not limit the idea of housing merely to the provision of shelter
and it is an in an integral part of overall policy improvements of human settlements and economic
development. Krishnamacharya (1980), has stated in the preamble of the National Housing Policy, "shelter
is abasic human need and as an intrinsic part of human settlement, is closely linked with the processof overall
socio-economic development. Housing is an element of material culture, is one of such devices to overcome
threats against physical elements to lives and serves as an importantpurpose by making the provision of
shelter and portrays that housing is as an important precursor of the national business cycle. In this view
Some empirical exercises made on importance of housing among others Satyanarayana (1987), India year
Book (1988), Andar C. Ghent and Michael T. Ouyang (2010), Deshpande (1975) and Ringwald (1977),
Gopinath Rao (1988), Dr. C. Hari Chandran (1989), Solanki (1989), highlighted the magnitude of the
housingproblem in our country is so heavy, that it will require considerable passage of time for the country
to offer a sweet home to every family in our nation. Chacko (1989) believed housing shortage in India in
1981 was 21 million units. In the beginning of the 7th five- year plan in 1985, it was put as 24.7 million
units. Madhav Rao et al. (1995) suggested a multifaceted housing difficulty like ours requires a concrete
national attempt. Amin Y. Kamet(2011), opined that the housing problem has become synonymous with
housing shortages. Erwin Melnyk. (2010) studied about the barriers and opportunities for the further diffusion
of labels for highly energy efficient houses. The Major subsidized housing projects in developing countries
specified by Gonzalo Risaralda (2011) Richard Harris and Chinwe Giles (2003) have done tremendous work
on identified three phases in the evolution of international housing policy since 1945: public housing (1945–
1960s), sites-and-services(1972–1980s), and market enabling (1980s–present. In the opinion of Nickell and
Dorsey (1976)20, the three methods of financing home ownership are cash, cash and credit and contract
method. R.M. Buckley (1989) portrayed that Bank lending for housing finance during the period from 1972
to 1989. Munjeet et al., (1990) opined that credit flows into the housing sectororiginates therefore from
formal or informal sector like, budgetary allocations, of central and state governments, financial institutions
like the LIC, Unit Trust of India, Commercial Banks, provident funds, and Public Sector Institutions such
as HUDCO.As cited by Tiwari (2012), Housing finance in India has grown at a rapid pace during the last
two decades. However, the share of outstanding housing loans as a percentage of GDP stood at only 7.3%
in 2005. Hence,this study emphasizes the importance of affordable housing. Macroeconomic stability and
thehousing sector are inextricably linked. It is estimated that for one Indian Rupee (Rs.) invested
Development, Growth and Policy implications of Housing Finance in India: An Evidence from
HDFC and LICHFL

in housing; Rs. 0.78 gets added to the gross domestic product of the country. The housing sectorhas strong
backward and forward linkages to over 250 ancillary industries. Thus, this is an attempt to make a conceptual
framework about Indian housing finance system.

16
 CHAPTER 3-

HDFC BANK – AN OVERVIEW

The Reserved Bank of India approved "in principle" the first housing development company in
the year 1944, HDFC who were the first among the others to establish a private sector bank as
part of the liberal Indian banking sector by RBI. On August 1944, it was registered with an
office-based Mumbai and received the name of "HDFC bank limited". In January 1995, HDFC
Bank began operating as a planned commercial bank.

HDFC is proud of its incredible performance not only in India but also in other international
markets. It is well known as the premier executive housing finance company in India. To be the
leader in mortgage credit market the company has maintained a reliable growth from its
inception in 1977. HDFC has secured a broad client base from the corporate sector for its home-
based credit facilities and retail mortgage expertise in advanced and other market segments. It is

well positioned to promote the bank in the Indian market because of its strong market reputation
and its highly qualified experience in the financial markets.

In 1995, the facile mission, ‘World Class Indian Bank’ had been the starting point for the HDFC
bank to begin its operations. They soon came to the realization that an individually driven mind
that put great emphasis on the product quality and service excellence would be the only way to
achieve their mission. As for today, the bank can proudly declare that they are not far from reaching
their goals.

17
Promoters

1. Housing Development Finance Corporation Limited (Indirect Foreign Holding)

– No of shares 432,307,917 i.e. 19.7%.

2. HDFC Investments Limited (Indirect Foreign Holding)

– No of shares 150,000,000 i.e. 6.87%.

3. HDFC Holding Limited (Indirect Foreign Holding)

– No of shares 5,000 i.e. 0%.

18
 Mission Statement

Reposition the bank as the best Indian financial service group and take a strong global
commitment to customer satisfaction, shareholder, and employee satisfaction. Also play a leading
role in the expansion & diversification of financial services with a focus on development.

Vision Statement

 Through high sustained earnings per share, maximize the shareholder value.
 Be a pioneer of development finance (housing) in the country.
 To be a banking institution with mutual cultural attention and dedication.
 A satisfying and excellent work environment offering continuous learning opportunities.

Quality Policy

 Best customer service.

 Unbiased decisions in all dealings.

 Be ready to take on a challenge and be innovative.

 Team work.

 Honest and disciplined in the policy provided by the system.

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Products & Services Profile

PERSONAL BANKING

TABLE NO – 1.3

Loan Product Deposit Product Investment & Insurance

 Construction
Equipment
 Safe Deposit  Knowledge Centre
 Health Care
Lockers  Equity and Derivatives
 Vehicles
 Mudra Gold Bar
 Home loans  Fixed deposit
 Insurance
 Retail business banking  Demat a/c
 Mutual Fund
 Loan Against Property  Saving a/c
 Bonds
 Personal loan  Current a/c
 General and Health
 Auto Loan
Insurance
 Loan Against Security
 Credit card
 2-wheeler
 Education
 Gold
 Commercial
 Tractor
 Working Capital
Finance

20
 Cards Payment Services Access To Bank

 Credit Card  Net Safe  Instant Alert Mobile

 Debit Card  E–Money Banking
 Prepaid Card Electronic Funds  ATM
Transfer  Phone Banking
 Online Payment  Net Banking
for Direct Tax  One View
 Merchant  Branch Network
 Prepaid Refill  Email Statements
 Direct Pay
Forex Services
 Visa Money
Transfer
 Bill pays
 Product & Services
 Visa Bill pay
 Forex service Branch
 InstaPay
Locater
 RBI Guidelines
 Trade Services

21
 WHOLESALE BANKING

TABLE NO – 1.4

Corporate Small and Medium Financial Institutions and Trusts

Enterprises

 Funded Services  Specialized Services BANKS

 Internet Banking  Funded Services
 Fund Transfer
 Non Funded  Internet Banking
 ATM Tie-ups
Services  Non Funded Services
 Clearing Sub-Membership
 Value Added  Value added services
 Tax Collection
Services
 RTGS – sub membership
 Corporate Salary a/c

Trusts

Stock Brokers

Insurance Companies

Financial Institutions

Mutual Funds

Commodities Business

22
 NRI SERVICES

TABLE NO – 1.5

Accounts & Deposits Remittances

 Accounts for Returning Indians  Africa

 Rupee Saving a/c  North America
 Foreign Currency Deposits  South East Asia
 Rupee Current a/c  Middle East
 Rupee Fixed Deposits  UK
 Europe
 Others

Cheque Lockbox

Funds Transfer Cheques/DDs/TCs

India Link

Quick remit

Telegraphic/Wire Transfer

Investment & Insurances Loans

23
  Private Banking  Loans Against Deposits
 Portfolio Investment Scheme  Home Loans
 Mutual Funds  Gold Credit Card
 Insurance  Loans Against Securities

Payment Services Access To Bank

 Net Safe  Installer

 Online Donation  ATM
 Direct Pay  Net Banking
 Visa Money  One View
 Bill Pay  Email Statements
 Inscape  Branch Network
 Phone Banking

Areas of Operation

 All over India. (Headquartered in Mumbai, Maharashtra)

 Bahrain
 Hong Kong
 Dubai

24
Key Executives

Abhay Aima - Group Head

Aditya Dhananjai Kumat - Senior Manager

Aditya Puri - CEO

Aditya Puri - Managing Director

Ankush Pitale - Executive Vice President

Arup Kumar Rakshit - Senior Executive Vice President

Cheshta Chopra Sharma - Vice President

Kaizad Bharucha - Executive Director

Keki Mistry - Director

Malay Patel - Director

MD Ranganath - Addnl. & Ind.Director

Rajesh Kumar Rathanchand - Group Head

Ravi Narayan - Group Head

Samrat Bose - Senior Vice President

Sashidhar Jagdishan - Chief Financial Officer

Shyamala Gopinath - Chairperson

Silvestre Anthony Pereira - Vice President

Srikanth Nadhamuni - Director

Umesh Chandra Sarangi - Director

Vitthal Mangesh Kulkarni - Senior Vice President

25
Competitors Information

TABLE NO – 1.6

Company Leadership CEO Score Employees Total funding Revenue

HDFC BANK Aditya puri 87/100 94,907(2018) $ 3.1 B $ 8.7 B
CEO
KOTAK Uday S kotak 76/100 33,013(2017) $250 M $ 4.3 B
MAHINDRA CEO
BANK
IDBI BANK Rakesh Sharma 88/100 27,570 (2016) $783.5 M $ 3.4 B
CEO
IDFC BANK V.Vaidyanathan 88/100 7043 (2018) - $ 1.4 B
CEO
INDUSIND Romesh Sobti 95/100 25314 (2017) $925 M $ 3.5 B
BANK CEO
SBI Hardayal Prasad 81/100 264041(2018) - $ 573.1 M
CEO
AXIS BANK Amitabh 86/100 59,600 (2018) $1.9 B $ 2.3 B
Chaudhry
CEO
TATA Rajiv Sabharwal 90/100 3407 - $ 81.6 M
CAPITAL CEO
ICBC Gu Shu -- 461749(2016) $500 M $ 104 B
President
ADITYA Lalit Naik 56/100 20250 - $ 28.4 B
BIRLA NUVO Managing
Director

26
AU ALL- Sanjay Agarwal 77/100 8515(2017) $ 46 M $ 45M
SMALL Managing
FINANCE Director
BANK

27
SWOT Analysis

Strength

 The second largest private bank in India is HDFC. Across India this private sector has
13,160 automated teller machines HDFC Bank is successfully running 4,963 branches in
2,727 cities.
 HDFC ATM bank cards are a popular choice online transactions and shopping, one of the
reasons being that the cards are internationally compatible with all MasterCard/ Visa,
Visa electron / Maestro and American Express cards. In compassion to other private
banking branches HDFC have a high of customer satisfaction rate.
 HDFC provides highly skilled staff who are able to help customers make
sensible investments. Working in private banking can be a stressful and draining job
however the attrition rates at HDFC making it one of the better companies to work for
within the private banking sector.
 HDFC has a good recognition among the people and they have received a lot of awards: -
 The guidance of HDFC Bank’s financial advisors are good when it comes to guide the
customers to make the right investments.

Weakness

 In contrast, HDFC still have difficulties with competitors for example in rural areas ICICI
bank has a stronger presence and popularity.
 Individuals using private banking in rural areas feel safe and secure with their bank,
which makes it difficult for HDFC to be considered for banking with them.
 HDFC has created doubt in investors’ minds and may have lost out on investors due to
their constant increasing and decreasing of share prices.
 There is lack in performance in the banks product categories and it is not reached in the
market.
 High end clients are only been focused by the banks. Middle class and others are been
ignored most of the time.

28
Opportunities

 When it comes down to debt HDFC have more opportunities compared to the other
government banks this is due to the fact that they have worked to recover from its bad
debt and improve its bad debt portfolio.
 HDFC have many branches in different countries and continue to prosper and gain more
opportunities abroad.
 The company has the opportunity for a growth in profit rate, because the assets quality
parameters are beneficial when compared to government banks.
 Due to strong financial positions, there are greater scope for acquisitions and
strategic alliances.

Threats

 ICICI still remain a threat to HDFC which makes it difficult to widen market share.
 Government banks are constantly working on ways to become more modernized which is
increasing the competition between government and private banks such as HDFC.
 Foreign banks have received up to 74% from the RBI for bank investments within India
this will threaten banks such as HDFC
 Private Banks, new age banks and non-banking financial companies are increasing in
India.
 There is an increase of 0.18% to 0.20% in the non-performing assets (NPA) of HDFC.
Even though it is a minor change in terms of financial health of the bank it isn’t a good
sign.

29
Future Growth & Prospects

HDFC Bank has increasing net profit of 20% year on year backed by robust growth in loan book.
They are one of the most profitable private institution banks and one of the largest. There is an
increase in the net interest income of 22% and a stable net interest margin of 4.3%. Further there
was an increase in the non-interest income of 27% YoY

Additionally, there is a massive growth in the bank’s operating leverage. Significantly there is a
decline in its core cost-to-income of 39.5% as against 41.2%. There is a controlled growth in the
digital initiatives and branch network. HDFC Bank made some contingent provisions on its
agriculture lending books which leads to the increase in the provisions by 64% YoY.

In comparison to the year 2017 there is an increase of 24% in the total advances in the year
December 2018 as HDFC Bank reported total advances of Rs780, 951 Cr. There is a robust growth
of 24% each in the domestic retail and corporate in total advances. The Bank continues to grow its
loan book at much ahead of system and their performance is commendable.

There is a growth of 13% YoY in Banks current and savings account compared to the growth in
time deposits was much stronger as there is an increase of 29% YoY. Due to this the CASA ratio
declined slightly to 41% as compared to 42% in last quarter. At the end of December 2018, the
impeccable asset quality with gross and net non-performing assets are at 1.4% and 4% respectively.
The bank is maintaining this continuously.

For many years HDFC Bank has been the most consistent performer on the street. They are the
most profitable bank and they are continuously growing day by day and they are delivering
earnings growth in the high-teens. Ahead of the industry the growth of the loan is continuously
strong, its margin is steady and asset quality remains as pristine as ever. Not only withstanding its
huge size, HDFC Bank is also gaining market share at a growing pace aiding sustainable high
earning growth.

30
Financial Statement

TABLE NO – 1.7

31/03/18 31/03/17 31/03/16 31/03/15 31/03/14

Capital and

Liabilities:

Total Share 519.0 512.5 505.6 501.3 479.8

Capital

Equity Share 519.0 512.5 505.6 501.3 479.8

Capital

Reserves 105,775.9 88,949.8 72,172.1 61,508.1 42,998.8

Net Worth 106,295.0 89,462.3 72,677.7 62,009.4 43,478.6

Deposits 788,770.6 643,639.6 546,424.1 450,795.6 367,337.4

Borrowings 123,104.9 74,028.8 53,018.4 45,213.5 39,438.9

Total Debt 911,875.6 717,668.5 599,442.6 496,009.2 406,776.4

Other 45,763.7 56,709.3 36,725.1 32,484.4 41,344.4

Liabilities &
Provisions

Total 1,063,934.3 863,840.2 708,845.5 590,503.0 491,599.5

Liabilities

31/03/18 31/03/17 31/03/16 31/03/15 31/03/14

Assets

Cash & 104,670.4 37,896.8 30,058.3 27,510.4 25,345.6

31
 Balances

Balance with 18,244.6 11,055.2 8,860.5 8,821.0 14,238.0

Banks,
money at
Call

Advances 658,333.0 554,568.2 464,593.9 365,495.0 303,000.2

Investments 242,200.2 214,463.3 163,885.7 166,459.9 120,951.0

Gross Block 3,607.2 3,626.7 3,343.1 3,121.7 2,939.9

Net Block 3,607.2 3,626.7 3,343.1 3,121.7 2,939.9

Other Assets 36,878.7 42,229.8 38,103.8 19,094.9 25,124.6

Total Assets 1,063,934.3 863,840.2 708,845.5 590,503.0 491,599.5

32
 LIC Housing Finance-
An overview
LIC Housing Finance Limited (LIC HFL) is one of the largest Housing Finance Mortgage loan
companies in India having its Registered and Corporate office at Mumbai. LIC HFL is a subsidiary
company of LIC. The main objective of the company is to provide long-term financing to individuals
the purchase or construction of houses or flats for residential purposes; The company also finances
for the purpose of repair and renovation of existing flats and houses. The NBFC also provides f
inancing on existing property for business and personal needs and gives loans to professionals for
purchase or construction of Clinics, Nursing Homes, Diagnostic Centres, Office Space and for
purchase of equipments. The Company is very well known for providing long term financing to
individuals engaged in the business of construction of houses or flats for residential purpose. LIC
of India also holds promoter and controller status in IDBI Bank Ltd. from January 2019;[2]

HISTORY
The company was incorporated on June 19, 1989, under the Companies Act, 1956. It is promoted by
Life Insurance Corporation of India and went public in the year 1994. The maiden global depository receipt
(GDR) issue was launched in 2004.[3] The Authorized Capital of the Company is Rs.1500 Million
(Rs.150 crore) and its paid-up Capital is Rs.1009.9 Million (Rs.100.99 crore). The Company is registered with
National Housing Bank and listed on the National Stock Exchange (NSE) & Bombay Stock Exchange Limited
(BSE) and its shares are traded only in Demat format. The GDR's are listed on the Luxembourg Stock Exchange.

OPERATION’S
In FY-2019, It has 9 regional offices, 24 Back-offices, and 282 marketing Offices across India.[2] It also has 2
foreign offices in Kuwait and Dubai to cater to the Non-Resident Indians in the Persian Gulf countries covering
the residents of Bahrain, Dubai, Kuwait, Qatar, and Saudi Arabia. It has more than 450 centres across India.
The company also has more than 12000 marketing intermediaries or agents to guide through the loan processes.
It also has an online home loan approvals facility through its website.

EMPLOYESS
The company had 1345 employees as on 31 March 2013, out of which 444 were women (31%) and 4 were
employees with disabilities.
In its Annual report for FY 2012-13, the company reported that loan assets per employee as at 31 March 2013 were
Rs. 53.63 crore and net profit per employee was Rs. 70.51 lakh.[6] In the same financial year, it incurred
INR 98.15 crore on employee benefit expenses.[6]
As of 2019, the company has a total of 2103 employees, with a net profit per employee amounting to approximately
Rs. 94.62 lakh.

33
 Listings and Shareholding
Listing: The equity shares of LIC HFL are listed on Bombay Stock Exchange and
the National Stock Exchange of India. Its Global depository receipts are listed on
the Luxembourg Stock Exchange.
Shareholding: On 31 March 2016, 48.49% of the equity shares of the company were owned by LIC. The Foreign Institutional
Investors (FII) held approx. 32% of the shares. Around 158,000
individual Shareholders (as on 31 March 2016) Shareholding[5] public shareholders own approximately 9% of its
shares. The remaining 18% shares are owned by Others.[5]

Promoter (LIC) 40.31%

Foreign Institutional Investors (FII) 32.45%

Mutual Funds 10.12%

Individual shareholders 09.32%

Bodies Corporate 03.47%

Insurance companies 02.08%

GDRs 00.16%

Others 02.09%

34
NURTURING HOPES AND HAPPINESS
OUR JOURNEY OF EVOLUTION
1989
• Year of incorporation
• Lending commences from firstoffice in Delhi

1994
• Launched IPO of ` 120 Crore

2002
• Achieved Credit Rating (AAA)
• Set up Dubai office, marking firstoverseas presence

2004
• Loan portfolio crosses ` 10,000 Crore
• First HFC to do GDR issue; the US$ 29 MnGDR issue was over-subscribed

2009
• QIP of US$ 135 Mn
over-subscribed 6 times

2012
• Received award for BestHFC from CNBC-TV18
• Received award “Best in Home Finance” from Construction Industry

2014
• Received Best HFC Award from ABP News

2015
• Loan portfolio crosses ` 1,00,000 Crore
• Won Best Housing Finance Companyaward by BFSI Awards
• Won award for Best Data Quality in HFC by CIBIL

35
• 2017
• Won Best HFC Award by Outlook Money

• Crossed ` 1,50,000 Crore in assets

• Won BFSI Best CEO Award from Business Today

2018
• Profiled in India’s Leading BFSI Companies 2018 by Dun & Bradstreet

2019
• Crossed ` 2,00,000 Crore in assets
• Voted as the Brand of the Decade 2019 by BARC Asia

2020
• Ranked as the Best Private Issuer 2019 on Electronic Bidding Platformby National Stock Exchange
• Received Data Quality Award by Transunion CIBIL in the Housing Finance Company category at the TU CIBIL Annual
Conference 2019
• Awarded the ‘Best Housing Finance Company’ at the National RealEstate Congress Leadership & Awards, 2019
• Listed as ‘The Outperforming Housing Finance Company 2019’ byOutlook Business
• Featured amongst the Top 10 Most Consistent Wealth Creators according to the “Motilal Oswalt 24 Annual Wealth
Creation Study, 2019”

2022
• Global CSR, Excellence & Leadership Award 2021-22
• Recognized as one of the “The Best Organization for Women”by Economic Times
• Economic Times awarded LIC HFL as one of the“Best Brands for 2021”
• Recognized by Kendra Saini Board for valuable contribution inthe past to Veer Naris

36
 E61,848 CRORE
KEY NUMBERS THAT DEFINE US

Disbursement
E2,51,120 CRORE
Up 8% YoY
Outstanding Loan Portfolio
30 LAKH
Number of Customers

18.08%
Capital Adequacy Ratio

5.10%
Incremental Cost of Funds
4.64%
Gross NPA

E92.73 LAKH
Profit Per Employe
2.29%
Net Interest Margin

2022 2,51,120 2,467

2020 2,10,578 2,392

2013 77,812 1,446

2008 21,936 985

37
 CHAPTER 4-
DATA ANALYSIS AND INTERPRITATION

WHAT ARE FINANCIAL KPIS?

Financial KPIs (key performance indicators) are metrics organizations use to track, measure, and
analyse the financial health of the company. These financial KPIs fall under a variety of
categories, including profitability, liquidity, solvency, efficiency, and valuation.

By understanding these metrics, you can be better positioned to know how the business is
performing from a financial perspective. You can then use this knowledge to adjust the goals of
your department or team and contribute to critical strategic objectives.

For managers, these metrics and KPIs should be made available internally and distributed on a
weekly or monthly basis in the form of email updates, dashboards, or reports. If they’re not
readily distributed, you can still become familiar with the metrics via financial statement
analysis.

WHAT IS FINANCIAL STATEMENT ANALYSIS?

Financial statement analysis is the process of reviewing key financial documents to gain a better
understanding of how the company is performing. While there are many different types of
financial statements that can be analyzed as part of this process, some of the most important,
especially to managers, include the:

1. Balance Sheet: A statement that lists a business’s assets, liabilities, and owners’ equity
at a specific point in time.
2. Income Statement: A statement that summarizes a business’s revenues, expenses, and
profits over a period.
3. Cash Flow Statement: A statement that captures how cash flow is affected by
activities from the balance sheet and income statement, categorized into operating,
investing, and financing activities.
4. Annual Report: A document that describes the company’s operations and financial
conditions, and typically includes the documents listed above, in addition to other
insights and narrative from key figures within the company.

38
 FINANCIAL PERFORMANCE MEASURES TO MONITOR

The metrics below are typically found in the financial statements listed above and among
the most important for managers and other key stakeholders within an organization to
understand.

1. Gross Profit Margin

Gross profit margin is a profitability ratio that measures what percentage of revenue is
left after subtracting the cost of goods sold. The cost of goods sold refers to the direct
cost of production and does not include operating expenses, interest, or taxes. In other
words, gross profit margin is a measure of profitability, specifically for a product or item
line, without accounting for overheads.

Gross Profit Margin = (Revenue - Cost of Sales) / Revenue * 100

LICHFL

GP MARGIN = 19919.07-17174.87/19919.07 x 100 = 13.78%

HDFC

GP MARGIN = 47957.07-30743.89/47957.07 x 100 = 35.89%

39
2. Net Profit Margin

Net profit margin is a profitability ratio that measures what percentage of revenue and
other income is left after subtracting all costs for the business, including costs of goods
sold, operating expenses, interest, and taxes. Net profit margin differs from gross profit
margin as a measure of profitability for the business in general, taking into account not
only the cost of goods sold, but all other related expenses.

Net Profit Margin = Net Profit / Revenue * 100

LICHFL

Net Profit Margin = 2778.15/19919.07 x 100 = 13.94%

HDFC

Net Profit Margin = 13742.18/47957.07 x 100 = 28.65%

40
3. Working Capital

Working capital is a measure of the business’s available operating liquidity, which can be
used to fund day-to-day operations.

Working Capital = Current Assets - Current Liabilities

LICHFL

Working Capital Ratio = 1016.56-207.42 = 809.14

HDFC

Working Capital Ratio = 2294.38-4168.53 = -1874.15

41
4. Current Ratio

Current ratio is a liquidity ratio that helps you understand whether the business can pay
its short-term obligations—that is, obligations due within one year— with its current
assets and liabilities.

Current Ratio = Current Assets / Current Liabilities

LICHFL

Current Ratio = 1016.56/207.42 = 4.9:1

HDFC

Current Ratio = 2294.38/4168.53 = 0.55:1

42
5. Quick Ratio

The quick ratio, also known as an acid test ratio, is another type of liquidity ratio that
measures a business’s ability to handle short-term obligations. The quick ratio uses only
highly liquid current assets, such as cash, marketable securities, and accounts receivables,
in its numerator. The assumption is that certain current assets, like inventory, are not
necessarily easy to turn into cash.

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

LICHFL

Quick Ratio = 1016.56/207.42 = 4.9:1

HDFC

Quick Ratio = 2294.38/4168.53 = 0.55:1

43
6. Leverage

Financial leverage, also known as the equity multiplier, refers to the use of debt to buy
assets. If all the assets are financed by equity, the multiplier is one. As debt increases, the
multiplier increases from one, demonstrating the leverage impact of the debt and,
ultimately, increasing the risk of the business.

Leverage = Total Assets / Total Equity

LICHFL

Leverage = 254567.46/24671.84 = 10.31:1

HDFC

Leverage = 631322.65/120251 = 5.25:1

44
7. Debt-to-Equity Ratio

The debt-to-equity ratio is a solvency ratio that measures how much a company finances
itself using equity versus debt. This ratio provides insight into the solvency of the
business by reflecting the ability of shareholder equity to cover all debt in the event of a
business downturn.

Debt to Equity Ratio = Total Debt / Total Equity

LICHFL

Debt to Equity Ratio = 229167.14/24671.84 = 9.28:1

HDFC

Debt to Equity Ratio = 335781.38/120251 = 2.79:1

45
8. Total Asset Turnover

Total asset turnover is an efficiency ratio that measures how efficiently a company uses
its assets to generate revenue. The higher the turnover ratio, the better the performance of
the company.

Total Asset Turnover = Revenue / (Beginning Total Assets + Ending Total Assets / 2)

LICHFL

Total Asset Turnover = 19919.07/ (235633.32+254567.46/2) = 0.081:1

HDFC

Total Asset Turnover = 47957.07/ (560923.52+631322.65/2) = 0.080:1

46
10. Return on Equity

Return on equity, more commonly displayed as ROE, is a profitability ratio measured by

dividing net profit over shareholders’ equity. It indicates how well the business can
utilize equity investments to earn profit for investors.

ROE = Net Profit / (Beginning Equity + Ending Equity) / 2

LICHFL

ROE = 2778.15(20521.31+24671.84/2) = 0.123:1

HDFC

ROE = 30743.89/(108783.65+120251/2) =O.268:1

47
11. Return on Assets

Return on assets, or ROA, is another profitability ratio, similar to ROE, which is

measured by dividing net profit by the company’s average assets. It’s an indicator of how
well the company is managing its available resources and assets to net higher profits.

ROA = Net Profit / (Beginning Total Assets + Ending Total Assets) / 2

LICHFL

ROA= 2778.15/ (235633.32+254567.46/2) = 0.113:1

HDFC

ROA = 13734.18/ (560923.52+631322.65/2) = 0.023:1

48
 FINANACIAL STATEMENT OF LICHFL

BALANCE SHEET
AS AT MARCH 31, 2022

Note As at As at
March 31, 2022 March 31, 2021
Assets
(1) Financial Assets
(a) Cash and Cash Equivalents 5 822.19 1,329.15
(b) Bank Balance other than (a) above 6 115.20 17.57
(c) Derivative Financial Instruments 7 79.17 5.69
(d) Receivables 8
(I) Trade Receivables - -
(II) Other Receivables - -
(e) Loans 9 2,45,296.33 2,28,114.27
(f) Investments 10 6,198.60 4,635.61
(g) Other Financial Assets 11 16.57 105.87
Total Financial Assets 2,52,528.06 2,34,208.16
(2) Non-Financial Assets
(a) Current Tax Assets (Net) 12 135.17 -
(b) Deferred Tax Assets (Net) 13 1,368.08 912.93
(c) Property, Plant and Equipment 14.1 135.74 130.32
(d) Capital Work in Progress 14.2 0.04 -
(e) Intangible Assets under Development 14.3 1.45 3.63
(f) Right of Use Assets 14.4 128.64 110.78
(g) Other Intangible Assets 14.5 21.75 2.29
(h) Other Non-Financial Assets 15 141.15 139.02
(i) Assets Held for Sale 107.38 126.19
Total Non-Financial Assets 2,039.40 1,425.16
Total Assets 2,54,567.46 2,35,633.32
LIABILITIES AND EQUITY
LIABILITIES
(1) Financial Liabilities
(a) Derivative Financial Instruments 7 - -
(b) Lease Liabilities 143.12 121.03
(c) Payables 16
(A) Trade Payables
(i) Total outstanding dues of micro enterprises and small enterprises 2.79 2.80
(ii) Total outstanding dues of creditors other than micro enterprises andsmall 61.51 93.32
enterprises
(B) Other Payables
(i) Total outstanding dues of micro enterprises and small enterprises - -
(ii) Total outstanding dues of creditors other than micro enterprises andsmall - -
enterprises
(d) Debt Securities 17 1,27,341.99 1,25,597.96
(e) Borrowings (Other than Debt Securities) 18 76,447.22 62,132.74
(f) Deposits 19 18,073.50 18,335.67
(g) Subordinated Liabilities 20 1,795.44 1,795.12
(h) Other Financial Liabilities 21 5,508.99 6,598.06
Total Financial Liabilities 2,29,374.56 2,14,676.70
(2) Non-Financial Liabilities
(a) Current Tax Liabilities (Net) 22 - 7.76
169.98 142.48
(b) Provisions 23
(c) Other Non-Financial Liabilities 24 351.08 285.07
Total Non-Financial Liabilities 521.06 435.31
(3) EQUITY
110.08 100.99
(a) Equity Share Capital 25
(b) Other Equity 26 24,561.76 20,420.32
Total Equity 24,671.84 20,521.31
Total Liabilities and Equity 2,54,567.46 2,35,633.32

49
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED MARCH 31, 2022

Note Year ended as at Year ended as at

March 31, 2022 March 31, 2021
(1) REVENUE FROM OPERATIONS
(i) Interest Income 27 19,688.46 19,697.11
(ii) Fees and Commission Income 28 98.17 78.82
(iii) Net gain on Derecognition of Financial Instruments under 29 19.40 9.45
amortised cost category
(iv) Others 30 113.04 61.77
Total Revenue from Operations (1) 19,919.07 19,847.15

(2) Other Income (includes Dividend of ` 5.20 crore) (Previous year ` 5.77 crore) 31 33.95 0.54
(3) Total Income (1+2) 19,953.02 19,847.69

(4) Expenses
(i) Finance Costs 32 14,153.65 14,452.58
(ii) Fees and Commission Expenses 33 135.54 109.15
(iii) Net Loss on Derecognition of Financial Instruments under 34 33.59 27.42
Amortised Cost Category
(iv) Impairment on Financial Instruments (Expected Credit Loss) 35 1,988.24 1,317.61
(v) Employee Benefits Expenses 36 563.32 293.18
(vi) Depreciation, Amortization and Impairment 14.1, 14.4 & 14.5 52.44 49.44
(vii) Others Expenses 37 248.09 249.74
Total Expenses (4) 17,174.87 16,499.12

(5) Profit Before Tax (3-4) 2,778.15 3,348.57

(6) Tax Expense:
- Current Tax 944.43 958.00
- Tax Expense for Earlier Years - (21.33)
- Deferred Tax (453.56) (322.44)
Total Tax Expenses (6) 490.87 614.23
(7) Net Profit after Tax (5-6) 2,287.28 2,734.34

(8) Other Comprehensive Income

(i) Items that will not be reclassified to Profit or (Loss) (6.31) (0.68)
(ii) Income Tax relating to items that will not be reclassified to Profit or (Loss) 1.59 (1.72)
Other Comprehensive Income (4.72) (2.40)
(9) Total Comprehensive Income for the year 2,282.56 2,731.94

(10) Earnings per Equity Share

Basic (`) 43.14 54.18
Diluted (`) 43.14 54.18

50
CASH FLOW STATEMENT
FOR THE YEAR ENDED MARCH 31, 2022

Year ended as at Year ended as at

March 31, 2022 March 31, 2021
A. Cash Flow from Operating Activities
Profit Before Tax 2,778.15 3,348.57
Adjustments for
Depreciation, Amortization and Impairment (other than Financial Instruments) 52.44 49.44
Share Issue Expenses 1.28 -
Exchange differences on translation of assets and liabilities (Net) 0.31 0.01
Impairment on Financial Instruments (Expected Credit Loss) 1,988.24 1,317.61
Loss/(Gain) on disposal of Property, Plant and Equipment Dividend (0.01) (0.01)
and Interest Income classified as Investing Cash FlowsUnwinding of (10.24) (5.77)
discount (34.18) (27.38)
Interest Expense 14,153.65 14,452.57
Interest Income (19,460.20) (19,514.31)
Adjustments for
Movements in Provisions and Gratuity (Increase) / (6.31) (0.68)
Decrease in Other Financial Assets (48.66) 531.69
(Increase) / Decrease in Other Non Financial Assets Increase / (0.69) (49.23)
(Decrease) in Other Financial Liabilities Increase / (Decrease) (925.44) 339.56
in Other Non Financial LiabilitiesInterest Paid 181.77 45.41
Interest Received (14,629.39) (15,004.05)
Cash generated from Operations 19,404.50 19,696.50
Income Tax paid 3,445.22 5,179.94
Net Cash Outflow from Operations (1,087.36) (624.58)
Loans Disbursed (Net of repayments)Asset 2,357.86 4,555.36
held for sale (19,116.93) (21,623.83)
Net Cash Outflow from Operating Activities (A) 18.81 (126.19)
B. Cash Flow from Investing Activities (16,740.26) (17,194.66)
Payments for Purchase of Property, Plant and Equipment
Proceeds from Sale of Property, Plant and Equipment (34.89) (10.60)
Payments for Purchase of Investments 0.03 0.01
Proceeds from Sale of Investments (2,203.31) (554.05)
Dividends Received 626.95 1,442.60
Interest Received 5.20 5.77
Net Cash (Outflow)/ Inflow from Investing Activities (B) 5.04 -
(1,600.98) 883.72

51
 Year ended as at Year ended as at
March 31, 2022 March 31, 2021
C. Cash Flow from Financing Activities
Proceeds from Borrowings Repayment 1,52,314.44 1,20,384.58
of Borrowings (1,36,243.92) (1,09,504.18)
Proceeds from issuing shares (net of issue expense) 2,334.23 -
Deposits (Net of repayments) (52.31) 5,843.43
Payments towards Lease Liability Transfer to (49.05) (44.64)
Investor Protection Fund (1.25) (1.07)
Dividends paid to Company's Shareholders (467.55) (403.73)
Net Cash Inflow from Financing Activities (C) 17,834.59 16,274.38
Effect of exchange differences on translation of foreign currency cash andcash (0.31) (0.01)
equivalents
Net Increase/ (Decrease) in Cash and Cash Equivalents (A+B+C) (506.65) (36.55)
Cash and Cash Equivalents at the beginning of the year 1,329.15 1,365.72
Cash and Cash Equivalents at the end of the year 822.19 1,329.15
Cash and Cash Equivalents as per above comprise of the following
(i) Cash on hand 4.33 5.96
(ii) Balances with Banks (of the nature of cash and cash equivalents) 700.99 1,155.77
(iii) Cheques, drafts on hand 116.87 167.42
Balances as per Statement of Cash Flows 822.19 1,329.15

52
 FINANCIAL STATEMENT OF HDFC
Balance Sheet
FOR THE YEAR ENDED MARCH 31, 2022

` in Crore
Notes As at March 31, As at March 31,
2022 2021
ASSETS
(1) Financial Assets
(a) Cash and cash equivalents 5 565.49 769.97
(b) Bank balances other than (a) above 6 227.44 374.78
(c) Derivative financial instruments 7 1,322.80 2,154.48
(d) Receivables
(i) Trade receivables 8 178.65 155.38
(ii) Other receivables - -
(e) Loans 9 5,54,862.51 4,85,294.26
(f) Investments 10 68,592.22 68,636.77
(g) Other financial assets 11 5,573.54 3,381.42
(h) Non-current financial asset held for sale 10.3 - 156.46
Total Financial assets 6,31,322.65 5,60,923.52

(2) Non-financial assets

(a) Current tax assets (net) 12.1 2,617.55 2,356.88
(b) Deferred tax assets (net) 12.2 1,549.88 1,655.30
(c) Investment property 13 2,685.74 840.57
(d) Property, plant and equipment 14 1,073.94 986.42
(e) Other intangible assets 15 369.91 369.46
(f) Other non-financial assets 16 1,198.58 331.64
(g) Non-current non-financial asset held for sale 13.3 44.21 134.79
Total Non-financial assets 9,539.81 6,675.06
TOTAL ASSETS 6,40,862.46 5,67,598.58

53
 Liabilities and Equities
Liabilities
(1) Financial liabilities
(a) Derivative financial instruments 7 3,824.36 1,660.86
(b) Payables
(i) Trade payables 17.1
– Total outstanding dues of micro enterprises and small 9.52 7.48
enterprises
– Total outstanding dues of creditors other than micro 334.65 331.67
enterprises and small enterprises
(ii) Other payables
– Total outstanding dues of micro enterprises and small - -
enterprises
– Total outstanding dues of creditors other than micro - -
enterprises and small enterprises
(c) Debt securities 18 1,95,929.63 1,82,054.73
(d) Borrowings (other than debt securities) 19 1,39,851.75 1,05,179.18
(e) Deposits 20 1,60,899.76 1,50,131.13
(f) Subordinated liabilities 21 3,000.00 4,000.00
(g) Other financial liabilities 22 14,527.69 12,991.70
Total financial liabilities 5,18,377.36 4,56,356.75
(2) Non-financial liabilities
(a) Current tax liabilities (net) 23 441.30 441.29
(b) Provisions 24 270.02 251.29
(c) Other non-financial liabilities 25 1,522.78 1,766.60
Total Non-financial liabilities 2,234.10 2,459.18
TOTAL LIABILITIES 5,20,611.46 4,58,815.93
(3) EQUITY
(a) Equity share capital 26 362.61 360.79
(b) Other equity 27 1,19,888.39 1,08,421.86
TOTAL EQUITY 1,20,251.00 1,08,782.65
TOTAL LIABILITIES AND EQUITY 6,40,862.46 5,67,598.58

54
 STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED MARCH 31, 2022

` in Crore
Notes Year ended Year ended
March 31, 2022 March 31, 2021
(I) Revenue from operations
(i) Interest income 28 43,297.21 42,771.96
(ii) Surplus on deployment in liquid instruments 28.1 561.40 812.78
(iii) Dividend income 29.1 1,510.99 733.97
(iv) Rental income 29.2 81.08 77.16
(v) Fees and commission income 29.3 252.63 211.65
(vi) Net gain on fair value changes 29.4 938.47 956.48
(vii) Profit on sale of investments and investment 29.5 259.29 1,395.49
properties (net)
(viii) Income on derecognised (assigned) loans 29.6 1,056.00 1,190.25
Total Revenue from operations 47,957.07 48,149.74
(II) Other income 33.13 26.12
(III) Total Income (I + II) 47,990.20 48,175.86
(IV) Expenses
(i) Finance cost 30 26,739.21 28,614.76
(ii) Impairment on financial instruments (expected 31 1,932.00 2,948.00
credit loss)
(iii) Employee benefit expenses 32 1,060.79 914.11
(iv) Depreciation, amortisation and impairment 13, 14 & 15 172.29 158.78
(v) Other expenses 33 839.60 725.12
Total Expenses 30,743.89 33,360.77
(V) Profit Before Tax (III - IV) 17,246.31 14,815.09
(VI) Tax expense 12.3
- Current tax 3,514.25 3,040.65
- Deferred tax (10.12) (252.86)
Total Tax Expense 3,504.13 2,787.79
(VII) Net Profit After Tax (V - VI) 13,742.18 12,027.30
Sub Total (A) 34 (55.14) 1,677.52
(B) (i) Items that will be reclassified to profit/(loss) 118.93 75.77
(ii) Income tax relating to items that will be (29.93) (19.07)
reclassified to profit/(loss)
Sub Total (B) 34 89.00 56.70
Other comprehensive income (A + B) 33.86 1,734.22
(IX) Total comprehensive income (VII + VIII) 13,776.04 13,761.52
(X) Earnings per equity share 35
Basic (`) 76.01 67.77
Diluted (`) 75.20 67.20

55
 CASH FLOW STATEMENT
FOR THE YEAR ENDED MARCH 31, 2022

` in Crore
Year ended Year ended
March 31, 2022 March 31, 2021
A CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax 17,246.31 14,815.09
Adjustments for:
Depreciation, amortization and impairment 172.29 158.78
Impairment on financial instruments (expected credit loss) 1,932.00 2,948.00
Share based payments to employees 390.24 338.42
Net gain on fair value changes (938.47) (956.48)
Interest expense 26,476.16 28,383.48
Interest income including surplus on deployment in liquid (43,858.61) (43,584.74)
instruments
Profit on sale of investments and investment properties (net) (259.29) (1,395.48)
Profit on sale of property, plant and equipment (net) (0.24) (0.06)
Upfront gain on derecognized (assigned) loans (606.50) (706.72)
Utilization of shelter assistance reserve (0.04) (0.03)
Operating profit before working capital changes and 553.85 0.26
adjustment for interest received and paid
(Increase)/decrease in financial and non-financial assets (1,363.08) 3,540.06
Increase/(decrease) in financial and non-financial liabilities 719.14 (3,014.87)
Cash from/ (used in) operations before adjustments for (90.09) 525.45
interest received and paid
Interest income received including surplus on deployment in 44,192.26 43,703.69
liquid instruments
Interest expense paid (26,450.14) (29,335.32)
Taxes paid (net of refunds) (3,700.19) (2,039.03)
Net cash from operations 13,951.84 12,854.79
Loans disbursed (at amortized cost) (net) (72,477.05) (48,813.18)
Redemption of mutual funds units (net) 14,115.44 7,521.10
Net cash used in operating activities A (44,409.77) (28,437.29)

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (115.28) (63.00)
Sale proceeds from property, plant and equipment 0.62 0.53
Net cash used for property, plant and equipment (114.66) (62.47)
Purchase of investment properties (1,559.54) (91.27)
Sale proceeds from investment properties 180.72 57.14
Net cash used for investment properties (1,378.82) (34.13)
Investments
- In subsidiary company (46.44) (55.00)
- In associate company (0.25) (0.50)
Other investments:
- Purchase of investments (19,532.68) (9,572.69)
- Sale proceeds from investments 6,290.35 1,225.01
Sale proceeds from investments in associates 210.62 -
Net cash used in investing activities B (14,571.88) (8,499.78)

56
 ` in Crore
Year ended Year ended
March 31, 2022 March 31, 2021
C CASH FLOW FROM FINANCING ACTIVITIES
Share capital - equity 1.82 14.38
Money received against warrants - 307.03
Securities premium on issuance of equity shares (net) 1,452.94 11,845.95
Sale proceeds of investments in subsidiary companies 236.45 1,484.25
Proceeds from issuance of debt securities and subordinated 1,03,707.00 1,05,660.00
liabilities
Repayment of debt securities and subordinated liabilities (87,935.90) (99,111.04)
Borrowings (other than debt securities) and subordinated 34,686.09 233.79
liabilities (net)
Deposits (net) 10,851.42 17,837.24
Payments of lease liability (70.00) (63.76)
Dividend paid - equity shares (4,152.65) (3,642.68)
Net cash from financing activities C 58,777.17 34,565.16
Net decrease in cash and cash equivalents [A+B+C] (204.48) (2,371.91)
Add: cash and cash equivalents as at the beginning of the 769.97 3,141.88
period
Cash and cash equivalents as at the end of the period 565.49 769.97
Components of cash and cash equivalents
Cash on hand 0.59 0.49
In current accounts 31.53 367.87
In deposit accounts with original maturity of 3 months or less 500.03 200.23
Cheques on hand 33.34 201.38
Total 565.49 769.97

57
 Scenario of Indian Housing
Shortage of housing has persisted since independence. Though the government of India has
made certain efforts to curb this problem in different 5-year plans but unless private and public
sector make concerted and entrepreneurial efforts jointly, this problem cannot be solved. Ifwe
look at the scenario of Indian housing in different years then it can be said that joint
efforts have given this problem a soluble shape.

Housing Shortage Surplus in India

Year 1971 1981 1991 1996 2001 2011 2021
Housing Shortage/Surplus +1.8 -1.7 -14.6 -23.3 -22.9 -13.66 -19.4
(In millions)
Except in the year 1971 in all other periods acute shortage of housing units is visible from
the above data. The surplus period in the housing sector was restricted to before 1981 and that
too was because of the reasons, which are known to be unfavorable. Of the 19.4 million shortfalls
in dwelling units in the country, nearly 16 million is estimated to be in rural areas. In the next
five years 33 million incremental housing i.e., more precisely 6.6 million per year as against
availability of 3 million houses at present is required. Keeping in view the above scenario of
shortage of housing a clear-cut housing policy is the need of the hour.

Housing Finance Disbursements

YEAR BANKS HFCs* ACHFS (Others) TOTAL
2012 1805.62 4627.74 314.72 6748.08
(26.76) (68.58) (4.66)
2013 1454.77 5767.55 519.57 7570.12
(16.96) (76.17) (6.87)
2014 3951.99 7454.27 665.88 12075.14
(32.73) (61.73) (15.54)
2015 3597.40 9812.03 700.86 14110.29
(25.49) (69.53) (4.98)
2016 5531.11 12637.85 867.72 19063.68
(29.12) (66.29) (14.59)
2017 8566.41 14614.44 677.58 23858.43
(35.97) (61.25) (2.8)
2018 23553.37 17832.01 641.48 42026.86
(56.04) (42.43) (1.47)
2019 32816.39 20862.23 623.08 54301.7
(60.43) (38.41) (1.26)
2020 50398.00 26000.00 421.10 76819.10
(65.60) (33.8) (0.6)
2021 58623 27411 388 86422
(67.83) (31.72) (0.45)
Source: Compiled from the data base of NHB.

58
Broadly we can categorize the providers of housing finance in three categories: (1) Housing
Finance
Companies (HFCs), (2) Banks and (3) Housing Co-operative societies. As on 31 st March 2003
number of housing finance companies on the mailing list of National Housing Bank (NHB)
was 349out of
that only 63 companies furnished the required data and only 30 of these were approved for
financial
assistance from NHB. Disbursements of Housing Loans by the major players like HFCs, Banks
and
Housing Cooperative societies in different years are depicted in the following Table: 2. The
trends of the
data depict that over the year’s banks has sizably increased their market share from 26.76% in
2012 to
67.83% in 2015. The total disbursements of housing loans have also shown unprecedented
growth over the
years. In the post liberalization era housing finance industry has registered unprecedented
growth.

59
 CHAPTER 5-
FINDINGS,CONCLUSION AND SUGGESTION’S

FINDING’S
Level of Customer Satisfaction with respect to various aspects
The survey findings with respect to the level of customer satisfaction with various
aspectscan be shown in the following table

Particular Total Number Weighted Average Level of Rank

of Respondents Sum Satisfaction
(N)
Promptness of the 140 478 3.41 1
sanctioning of Loan
Promptness in disbursement 140 388 2.77 7
Safety-security- Privacy 140 420 3.00 4
Loan Availability 140 467 3.34 2.5
The service quality 140 416 2.97 5
Easy/Cumbersome way of loan 140 468 3.34 2.5
process
Cooperation of Staff 140 355 2.54 8
Documentation 140 321 2.29 11
Guarantee 140 342 2.44 10
Security 140 279 1.99 12
Rate of Interest 140 344 2.46 9
EMI 140 409 2.92 6
Level of Customers’ Satisfaction with Various Aspects

The above table indicates that the average level of satisfaction to customers is more than
neutral state with respect to all the aspects except the service quality, cooperation of staff,
documentation, guarantee, security, rate of interest, EMI where the mean score was found less
than 3. Therefore, these aspects need more attention and shows good scope of improvement.
Further, based on weighted sum, ranking is done against various aspects of customer
satisfaction in order to know which aspect contributes the most towards maximizing the
satisfaction and which one gives a negative effect.

60
A. Knowledge about the features of HDFC and LIC Housing Finance Ltd
The respondents in question 2 were requested to answer whether they know all the features of
HDFC and LIC Housing Finance Ltd Whether they ever taken the Housing finance facilities
from HDFC or from LIC Housing Finance Ltd. The results are given below:

Knowledge of Features of HDFC and LIC Housing Finance Ltd

Knowledge about the No. of Percentag Knowledge about the features of
Features of HDFC Respondents ee LIC Housing Finance
Yes 45 64.3% Yes 50 71.4%
No 25 35.7% No 20 28.6%
Total 70 100% 70 100%
Source: Primary Data
It can be seen from the above table 2 out of 140 respondents, 45 (64.5%)have knowledge of
the features of HDFC and 67 (71.4%) have the knowledge of feature of LIC Housing Finance.

61
 SUGGESSTION’S

B. Suggestions to Improve Service Quality

In order to improve the service quality, the respondents made some recommendations which are
quantified based on importance in the following table Development, Growth and Policy
implications of Housing Finance in India: An Evidence from
HDFC and LICHFL

: Suggestions to Improve Service Quality of Both HDFC and LIC Housing Finance Ltd
aSource: Primary Data

Suggestions Number of Response Percentage

Fast Sanction 78 55.7%
Fast Disbursement 60 42.9%
Full Staff Cooperation 45 32.1%
No Guarantors need 95 67.9%
Less Documentation 100 71.1%
Less Interest Rate 89 63.6%
Less Hidden Charges 86 61.4%
Less EMI 28 20%
Quick Payment 32 22.9%
No Harassment 21 15%

62
HDFC
Strong retail loan growth, stable margins and steady asset quality were the key highlights of
HDFC’s June quarter performance. Maintaining its market leadership in the housing finance
market, HDFC delivered a growth of 17 per cent in net profit in its core business. This was
driven by strong growth in individual loans. The incremental growth in loans during the quarter
came entirely from this segment. Individual loans grew 24per cent (net of loans soldin the
preceding 12 months). Including these loans, growth has been 31 per cent during the quarter.
Non-individual loan growth was slower at 11 per cent. Loans to individuals now contribute
close to 67 per cent of total loans as against 64 per cent in the previous year. The company’s
average loan size during the quarter was Rs 21.9 lakh as against Rs 21.6 lakh in theJune quarter
last year. The spreads have remained stable at 2.3 per cent, with individual loans registering a
marginal uptick during the quarter. The company’s net interest margin slipped a marginal 10
basis points to 3.9 per cent.

BOND FOCUS
HDFC’s funding mix remains skewed towards bonds, which now constitute 59 per cent of the
overall borrowing. The share of bank loans is just 8 per cent, which has worked well for the
company, given the high base rates of banks. However, the company has the flexibility to shift
between various sources of funding, depending on the movement of interest rates. This should
help maintain stable spreads. HDFC also maintained stable asset quality, with gross non-
performing assets at 0.77 per cent of loans. The capital-adequacy ratio stood at a healthy 16.3
per cent against the mandated 12 per cent.

LIC HFL
LIC Housing Finance posted lower-than-expected results for the September quarter due to
dwindling loan growth and lower margins. Not surprisingly, the stock ended flat at Rs 242.95
at the Bombay Stock Exchange (BSE) on Wednesday. The net profit growth of 147 per cent
year-on-year in the recently concluded quarter appears healthy, given the previous
corresponding period’s growth, which was impacted by a steep rise in provisions for bad loans
to comply with the change in provisioning requirements of the National Housing Board (NHB).
Loan growth, however, was in-line with Street expectations (23 per cent YoY growth), but this
was LIC Housing Finance’s lowest loan growth since the June 2020 quarter (when loans grew
by 36.8 per cent). Notably, this metric has fallen every quarter since June 2020 – with the
September quarter following the same trend. This is in sharp contrast to its larger peer, HDFC
which was able to maintain its loan growth between 19-22 per cent in the same period. The
moderation can be attributed largely to falling corporate disbursements in this period. Corporate
disbursements fell 62 per cent sequentially to Rs 121 crore and 71 per cent when compared to
the September 2021 quarter. In the September 2020 quarter, the individual loan growth also
came off to 21 per cent from 29 per cent in the June 2020 quarter. Consequently, the net interest
income came in lower than analysts’ expectations. For this year though, analysts expect loan
growth to remain at 23 per cent.

63
Margins
As against an expectation of improvement, the net interest margins (NIMs) contract ed by eight
basis points (bps) sequentially to 2.1 per cent. However, easing cost of funds provided some
cushion to margins in the quarter. LIC Housing Finance Director and Chief Executive V K
Sharma, said “It is encouraging to note that there is a 10 per cent increase in the number of
customers, which is a very good sign. The other good indication is that the incremental cost of
funds is showing some trends of easing.” Notably, the company had indicated that loans worth
Rs 2,500 crore (under the Fix-O-Floaty product) will be re-priced in the upward direction in the
September quarter, pushing margins up. But, there is no clarity on the same in the results Lower
corporate disbursement is another factor that has hit the net interest margins. We will closely
watch the margin and corporate disbursement trends in the next two quarters.” Asset quality
remained strong for the quarter gone by as gross non-performing assets (NPA) improved to
0.60 per cent versus 0.64 per cent year before. Though the net NPAs inched up to 0.28 per cent
versus 0.12 per cent earlier, the sequential fall of 84 per cent in provisioning to Rs 694 crore is
an indication of improving asset quality.

64
 CONCLUSION
Housing Finance is a specialized form of finance and efficiency of Housing Finance systemin a
country is one of the basic indicators of the growth of its economy. Hence understanding the efficiency
and effectiveness of Housing Finance system is very much essential and relevant.In a country like India,
which is still at developing stage even after the 57 years of Independence, only sound Housing Finance
system can fulfill the needs of poor and middle-class people regarding their housing problems. There is a
need of joint efforts on the part of government, housing finance companies and regulatory agencies to
chalk out comprehensive action plan to meet the challenges of housing finance so that housing need of
every common man can be fulfilled. The Indian housing finance market cannot be looked at
independently of the government’s role in the overall financial sector, which is nowadays characterized
bya process of liberalization. However, the Indian government has tried, and is still trying, albeit toa lesser
extent, to stimulate economic development by control-ling interest rates and directing credit to priority
sectors. Furthermore, private sector housing finance has been developed since1977 and the creation of the
National Housing Bank has helped the sector to develop further. In addition to specific guidelines and
directions of HFCs, lending regulations, refinancefacilities and the Home Loan Account scheme were set
up with the intention of serving the small man. However, the intentions conflict with reality. The poor
still face problems of accessibility, affordability, and suitability of formal housing finance through HFCs.
HFCs tend mainly to serve households with incomes above medium level, because the lending criteria
(long-term credit, large loan size and tight methods of repayment) most closely fit the life-style of this
income group. This clientele is known to the HFCs and can be served relatively easily, after careful
checking of their repayment capacity, without fearing high defaultrates. The same lending criteria, apart
from a lower interest rate, are used for the poor. The poorare then treated as extremely risky, instead of the
lending criteria being questioned. Development, Growth and Policy implications of Housing Finance in
India: An Evidence from HDFC and LICHFL.

65
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