Banking Sector Development

CHAPTER-1

BANKING SECTOR DEVELOPMENT

A bank is a financial intermediary that accepts deposits and channels those deposits into lending

activities, either directly or through capital markets. A bank connects customers with capital

deficits to customers with capital surpluses.

Banking is generally a highly regulated industry, and government restrictions on financial

activities by banks have varied over time and location. The current set of global bank capital

standards is called Basel II. In some countries such as Germany, banks have historically owned

major stakes in industrial corporations while in other countries such as the United States banks

are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a

cross-share holding entity known as the keiretsu. In Iceland banks had very light regulation prior

to 2008 collapse.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy,

which has been operating continuously since 1472.

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HISTORY OF BANKS IN INDIA

Without a sound and effective banking system in India it cannot have a healthy economy. The

banking system of India should not only be hassle free but it should be able to meet new

challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its

credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or

cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of

the country. This is one of the main reasons of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the

nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or

for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient

bank transferred money from one branch to other in two days. Now it is simple as instant

messaging or dials a pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the

journey of Indian Banking System can be segregated into three distinct phases. They are as

mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

New phase of Indian Banking System with the advent of Indian Financial & Banking

Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III.

2

Phase I:

The General Bank of India was set up in the year 1786. After, came The Bank of Hindustan and

Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay

(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These

three banks were amalgamated in 1920 and Imperial Bank of India was established which started

as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National

Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of

India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore

were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures

between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the

functioning and activities of commercial banks, the Government of India came up with The

Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per

amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive

powers for the supervision of banking in India as the Central Banking Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit

mobilization was slow. Abreast of it the savings bank facility provided by the Postal department

was comparatively safer. Moreover, funds were largely given to traders.

Phase II:

Government took major steps in this Indian Banking Sector Reform after independence. In 1955,

it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially

in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI

and to handle banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July,

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1969, major process of nationalization was carried out. It was the effort of the then Prime

Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were

nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with

seven more banks. This step brought 80% of the banking segment in India under Government

ownership.

The following are the steps taken by the Government of India to Regulate Banking Institutions in

the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.

1959: Nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalization of seven banks with deposits over 200 crores.

After the nationalization of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense

confidence about the sustainability of these institutions.

Phase III:

This phase has introduced many more products and facilities in the banking sector in its reforms

measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his

name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a

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satisfactory service to customers. Phone banking and net banking is introduced. The entire

system became more convenient and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis

triggered by any external macroeconomics shock as other East Asian Countries suffered. This is

all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not

yet fully convertible, and banks and their customers have limited foreign exchange exposure.

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CHAPTER- II

THE BANKING SECTORS

Banking in India originated in the last decades of the 18th century. The first banks were

The General Bank of India which started in 1786, and the Bank of Hindustan, both of

which are now defunct. The oldest bank in existence in India is the State Bank of India,

which originated in the Bank of Calcutta in June 1806, which almost immediately became the

Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of

Bombay and the Bank of Madras, all three of which were established under charters from the

British East India Company. For many years the Presidency banks acted as quasi-central banks,

as did their successors. The three banks merged in 1921 to form the Imperial Bank of India,

which, upon India's independence, became the State Bank of India.

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http://en.wikipedia.org/wiki/File:Scheduled_banking_structure_in_India.png

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a

consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and

still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company

that issues stock and requires shareholders to be held liable for the company's debt) It was not the

first though. That honor belongs to the Bank of Upper India, which was established in 1863, and

which survived until 1913, when it failed, with some of its assets and liabilities being transferred

to the Alliance Bank of Simla.

When the American Civil War stopped the supply of cotton to Lancashire from the Confederate

States, promoters opened banks to finance trading in Indian cotton. With large exposure to

speculative ventures, most of the banks opened in India during that period failed. The depositors

lost money and lost interest in keeping deposits with banks. Subsequently, banking in India

remained the exclusive domain of Europeans for next several decades until the beginning of the

20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire

d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;

branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in

Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the

British Empire, and so became a banking center.

The Bank of Bengal, which later merged with the Bank of Bombay and the Bank of Madras to

form the Imperial Bank of India in 1921.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in

Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in

1895, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period

of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial

and other infrastructure had improved. Indians had established small banks, most of which

served particular ethnic and religious communities.

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The presidency banks dominated banking in India but there were also some exchange banks and

a number of Indian joint stock banks. All these banks operated in different segments of the

economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign

trade. Indian joint stock banks were generally undercapitalized and lacked the experience and

maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon

to observe, "In respect of banking it seems we are behind the times. We are like some old

fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome

compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi

movement. The Swadeshi movement inspired local businessmen and political figures to found

banks of and for the Indian community. A number of banks established then have survived to the

present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank

and Central Bank of India.

In the favor of Swadeshi movement lead to establishing of many private banks in Dakshina

Kannada and Udupi district which were unified earlier and known by the name South Canara

( South Kanara ) district. Four nationalized banks started in this district and also a leading private

sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian

Banking".

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CHAPTER-III

PRIVATE BANKING SECTOR- INDIA

Private Banks in India started way back and has a history due to the fact that in the past years

they were originally working in private during those days they were supposed to handle the more

able and Indians with their banking services and other banking needs that they would require all

this activities happened around 1921.

During that time there was the Bank of Bengal, Banks of Bombay, and Bank of Madras all this

formed the Imperial Bank of India.

In the year of 1935 the reserve Bank of India was build and it became the centre of all the other

banks taking away the imperial responsibilities that includes the transfer of commercial banking

completely. Whereby in 1955 the Imperial bank of India was renamed and transformed into the

State Bank of India.

The private banks in India after the changes a lot of other Banks occurred in India on 19th July

1969. The government of India had given out an ordinance and nationalized 14 big commercial

banks that includes Punjab National Banks, Allahabad Bank, Canara Bank, Central Bank of India

among others, other public Banks came up to take leading roles in the banking routine.

In the year 1994, the Reserve Bank of India handed out policy this policy was supposed to control

the number of private Banks that were coming up and weren’t taking care of the customers or the

Indian people in general. The policy was of liberation to license and limits the number of Private

Banks which is known as New Generation tech-sway banks.

The global Trust Bank became the first private bank then later was unified with Oriental Banks of

Commerce. The Housing Development Finance Corporation Limited became the first and which

still exists to get a principle approval from the Reserve Bank of India as a Bank in the private

sector.

Presently, Private Banks in India that continued giving out services to the Indian people includes

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banks like ICICI Banks, ING Vyasya Bank, Jammu & Kashmir Bank, Karnataka Bank, Kotak

Mahindra Bank, SBI Commercial and International Bank, etc. they are tech-sway and have

expertise.

The private banks in India have a major role when it comes to serving the Indian people with

their savings since they made the banking services more efficient and customer friendly in that

many Indians now are safe to keep their savings without any doubt and on top of that they have

make other bank to be a competition.

Major private banks in India are:

Bank of Rajasthan

A leading private sector bank, the Bank of Rajasthan was founded on the auspicious day of

Akshya Tritiya on May 8, 1943, at Udaipur. Shri Rai Bahadur P.C. Chatterji, the then finance

minister of the erstwhile Mewar Government, extensively contributed towards the establishment

of the Bank.

Catholic Syrian Bank

With the Swadeshi Movement of early 20th century as its base, Catholic Syrian Bank was

incorporated on 26th November 1920, in the Thrissur district of Kerala. The bank commenced its

operations on 1st January 1921, with an authorized capital of Rs. 5 lakhs and a paid up capital of

Rs. 45270.

Dhanalakshmi Bank

The foundation of Dhanalakshmi Bank Limited was laid down on 14th November 1927, in the

Thrissur district of Kerala. A group of innovative entrepreneurs had started the bank with a

capital of Rs.11, 000 and only 7 employees.

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Federal Bank

Federal Bank Limited was founded as Travancore Federal Bank Limited in the year 1931, with an

authorized capital of Rs. 5000. It was established at Nedumpuram, a place near Tiruvalla, in

Central Travancore (a princely state later merged into Kerala), under Travancore Company's Act.

HDFC Bank

Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd,

was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by

Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval

from RBI, for setting up a bank in the private sector.

ICICI Bank

ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial

institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the

public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an

equity offering in the form of ADRs on the New York Stock Exchange (NYSE)

ING Vysya Bank

ING Vysya Bank Ltd came into being in October 2002, when erstwhile Vysya Bank Ltd was

merged with ING, a global financial powerhouse boasting of Dutch origin. Vysya Bank Ltd, one

of initial banks to be set up in the private sector of India

Jammu & Kashmir Bank

The origin of Jammu and Kashmir Bank Limited, commonly known to be J&K Bank, can be

traced back to the year 1938, when it was established as the first state-owned bank in India. The 11

bank was incorporated on and in the following year it commenced its business, in Kashmir.

Karnataka Bank

Karnataka Bank Limited is a leading private sector bank in India. It was incorporated on 18th

February 1924 at Mangalore, a town located in the Kannada district of Karnataka. The bank

emerged as a major player during the freedom movement of 20th Century India.

Karur Vysya Bank

The Karur Vysya Bank Limited commonly known as KVB was set up by Late Shri M.A.

Venkatarama Chettiar and the Late Shri Athi Krishna Chettiar, the two great visionaries in 1916

in Karur, a textile town in the Tamil Nadu state of India.

Kotak Mahindra Bank

Kotak Mahindra Bank is one of India's leading financial private banking institutions. It offers

banking solutions that covers almost every sphere of life. Some of its financial services include

commercial banking, stock broking, mutual funds, life insurance and investment banking.

SBI Commercial and International Bank

SBI Commercial and International Bank, (SBICI) is a completely owned private auxiliary of

India's biggest banking and financial services set up, the State Bank of India. Established in 1995

to back SBI's corporate and international banking services, the SBI Commercial and International

Bank is the only bank in India to be been awarded ISO-9002 quality systems certification for the

Bank as a whole

UTI Bank

Axis Bank was formed as UTI when it was incorporated in 1994 when Government of India

allowed private players in the banking sector. The bank was sponsored together by the

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administrator of the specified undertaking of the Unit Trust of India, LIC and GIC.

YES Bank

Yes Bank is one of the top most private Indian banks. Awarded by the only Greenfield license

award by RBI in last 14 years, this bank is established and run by Rana Kapoor and Ashok Kapur

with the financial support of Rabobank Nederland, the world's single AAA rated private Bank.

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CHAPTER- IV

BANK LOANS IN INDIA

Due to the unequal distribution of wealth, India has arrived at a situation where the affluent class

gets richer and richer and the underprivileged becomes poorer. To bridge this financial gap and to

satisfy their day to day requirements, Bank plays a vital role by offering various loans to the

finance seekers. Hence every borrower should have prior knowledge on the various Bank Loans

in India, which are eligible for meeting their financial objectives.

The various Types of Bank Loans Offered by Banks in India

Loans offered by Banks in India are mentioned as under:

Personal Loans

Personal Bank Loans are the credits which a bank offers to its customer to meet his instant

personal requirements ranging from home renovation to purchasing of new laptop, a getaway

with family or for reimbursing the credit card liabilities, for buying a new car or for child's

education, etc. Personal loan simplifies the cash flow of the customer besides handling its

immediate needs.

Personal Loans:

Eligibility For salaried Individuals For Self-Employed Individuals

Minimum and

Maximum Age21 years and 58 years respectively 25 years and 65 years respectively

Maximum Annual

Income Rs. 1,20,000 Rs. 1,50,000

Minimum years in 1 year 3 years

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service/ business

Loan Amount Rs 50,000 to Rs 15,00,000

Rs. 50,000 to Rs. 15,00,000

Loan Tenure 1 years to 7 years 1 years to 7 years

Interest Rates 12-24%. 12-24%.

Mode of Repayment Post-dated cheques or Standing

orders to debit from personal A/c

Post-dated cheques or Standing

orders to debit from personal A/c

Home Loans

To buy a dream home is the dream of every person. Home Loan has helped in changing every

Indian's dream into reality. However, the ever increasing property rates and escalating rates of

interest sometimes act as an obstacle. Therefore, before opting for a home loan it is advisable to

check every prospect of the product.

Home Loans:

Eligibility For salaried IndividualsFor Self-Employed

Individuals

Minimum and Maximum Age21 years and 65 years

respectively

21 years and 70 years

respectively

Maximum Annual Income Rs. 1,00,000 Rs. 1,50,000

Minimum years in service/

business1 year 3 years

Loan Amount Rs 2,00,000 to Rs 2,00,00,000

Rs 2,00,000 to Rs 2,00,00,000


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Interest Rates 9-16% 9-16%

Tax Benefits on Home Loans: Any person who opts for home loan is entitled for tax benefits

under Income Tax Act, 1961 on principal and the interest amount in the form of deductions from

the chargeable earnings.

Bank Loans against Property

Property Loan or Loan against property is a kind of loan which is allowed by the bank on the

condition of keeping the customer's current assets as a security with them. These loans are very

useful when other resources of financing get exhausted.

It is significant to recognize that a loan against property is not similar to mortgage. While loan

against property is obtained from the bank by allocating customer's current assets as a security

against the credit, a mortgage is an instrument for purchasing an asset. On the basis of the current

market situations, the paid up cost of the asset and other aspects, the cost of the credit against

asset can range anywhere from 40% to 60% of the asset costs.

Loans against Property:

Eligibility For salaried Individuals For Self-Employed

Individuals

Minimum and Maximum Age 21 years and 60 years

respectively


respectively

Maximum Annual Income Rs. 1,20,000 Rs. 1,50,000

Minimum years in service/

business

1 year 3 years

Loan Amount Rs 2,00,000 to Rs 1,50,00,000

Rs 2,00,000 to Rs 1,50,00,000


Loan to cost ratio 60% of residential cost 50% of commercial cost

60% of residential cost 50% of commercial cost

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Tax Rebate NIL NIL

Business Loans

Before starting a business, the entrepreneur should be mentally and financially prepared to

encounter the fiscal setbacks during the process. To bail the companies out from the fiscal crunch,

several banks in India offers business Loans both for meeting urgent official growth and

expenses.

Car Loans

Every individual want to own a car. Hence, the need for car loans emerges at some point or the

other. While selecting a car loan it is always wise to scrutinize the various options accessible in

the market besides analyzing its fiscal suitability.

Car Loans:

Eligibility For salaried IndividualsFor Self-Employed

Individuals

Minimum and Maximum

Age21 years and 60 years respectively


respectively

Maximum Annual Income Rs. 1,00,000 Rs. 60,000

Loan AmountRs. 1,00,000 (new) and Rs. 50,000

(old) toRs. 20,00,000

Rs. 1,00,000 (new) and Rs. 50,000

(old) toRs. 20,00,000


Loan to cost ratio 85-90% of car cost 85-90% of car cost

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Education Loans

Education Loans offered by various banks in India provide much required assistance to fund your

child's education when all other resources of finance get exhausted. Education Loans are offered

by almost every Indian bank thus providing ample opportunity to students to undergo higher

education both in India and abroad.

Education Loans

Eligibility For Students

Minimum and Maximum

Age16 years and 26 years respectively

Expenses coveredcourse and examination fee, refundable deposits, procurement of

books, travel expenses

Loan Amount for studies in

IndiaUp to Rs 10,00,000

Loan Amount for studies

abroadUp to Rs 20,00,000

Repayment Period 5-7 years

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CHAPTER- IV

HOUSING DEVELOPMENT FINANCIAL CORPORATION (HDFC)

HDFC Bank Ltd. is a major Indian financial services company based in Mumbai, incorporated

in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The

Bank was promoted by the Housing Development Finance Corporation, a premier housing

finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 4,232

ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis.

As of 30 September 2008 the bank had total assets of INR 1006.82 billion.[4] For the fiscal year

2008-09, the bank has reported net profit of Rs.2,244.9 crore, up 41% from the previous fiscal.

Total annual earnings of the bank increased by 58% reaching at Rs.19,622.8 crore in 2008-09.[5]

History

HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited

(HDFC), India's largest housing finance company. It was among the first companies to receive

an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private

sector. The Bank started operations as a scheduled commercial bank in January 1995 under the

RBI's liberalization policies.

Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with

HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders

of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than

1,000. The amalgamated bank emerged with a base of about Rs. 1,22,000 crore and net advances

of about Rs. 89,000 crore. The balance sheet size of the combined entity is more than Rs.

1,63,000 crore.

Business focus

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HDFC Bank deals with three key business segments - Wholesale Banking Services, Retail

Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for

providing working capital finance, trade services, corporate finance and merchant banking. It is

also providing sophisticated product structures in areas of foreign exchange and derivatives,

money markets and debt trading and equity research.

Wholesale banking services

The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian

corporate to small & mid-sized corporate and agri-based businesses. For these customers, the

Bank provides a wide range of commercial and transactional banking services, including

working capital finance, trade services, transactional services, cash management, etc. The bank is

also a leading provider of structured solutions, which combine cash management services with

vendor and distributor finance for facilitating superior supply chain management for its corporate

customers. HDFC Bank has made significant inroads into the banking consortia of a number of

leading Indian corporate including multinationals, companies from the domestic business houses

and prime public sector companies. It is recognized as a leading provider of cash management

and transactional banking solutions to corporate customers, mutual funds, stock exchange

members and banks.

Retail banking services

The objective of the Retail Bank is to provide its target market customers a full range of financial

products and banking services, giving the customer a one-stop window for all his/her banking

requirements. The products are backed by world-class service and delivered to customers

through the growing branch network, as well as through alternative delivery channels like

ATMs, Phone Banking, Net Banking and Mobile Banking.]] [[HDFC Bank was the first bank in

India to launch an International Debit Card in association with VISA (VISA Electron) and issues

the Master card Maestro debit card as well. The Bank launched its credit card business in late

2001. By March 2009, the bank had a total card base (debit and credit cards) of over 13 million.

The Bank is also one of the leading players in the “merchant acquiring” business with over

70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant

establishments.]] The Bank is well positioned as a leader in various net based B2C opportunities

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including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments,

etc.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,

Local Currency Money Market & Debt Securities, and Equities. These services are provided

through the bank's Treasury team. To comply with statutory reserve requirements, the bank is

required to hold 25% of its deposits in government securities. The Treasury business is

responsible for managing the returns and market risk on this investment portfolio.

Distribution network

HDFC Bank is headquartered in Mumbai. The Bank has a network of 1,725 branches spread in

771 cities across India. All branches are linked on an online real-time basis. Customers in over

500 locations are also serviced through Telephone Banking. The Bank has a presence in all

major industrial and commercial centers across the country. Being a clearing/settlement bank to

various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE has a

strong and active member base.

The Bank also has 3,898 networked ATMs across these cities. Moreover, HDFC Bank's ATM

network can be accessed by all domestic and international Visa/MasterCard, Visa

Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.

GROWTH OF HDFC IN EACH DECADE

1994

The Bank was incorporated on 30th August. A new private sector Bank promoted by

housing Development Corporation Ltd. (HDFC), a premier housing finance company. The

bank is the first of its kind to receive an in-principle approval from the RBI for establishment

of a bank in the private sector. Certificate of Commencement of Business was received on

10th October 1994 from RBI.

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The Bank transacts both traditional commercial banking as well as investment banking.

HDFC, the promoter of the bank has entered into an agreement with National West minister

Bank Pc. and its subsidiaries (Natwest Group) for subscribing 20% of the banks issued

capital and providing technical assistance in relation to the banks proposed banking business.

2000

HDFC Bank also signed a memorandum of understanding with Singapore Telecom's e-

commerce arm Sesami.Com Pvt Ltd.

The Bank latter also entered into a partnership agreement with National Computer

Systems, the e-commerce unit of Singtel.

A new company called SESAMi.com (India) has been formed by a strategic alliance

between HDFC Bank and Singapore Telecom's e-commerce company SESAMi.com, to

offer e-commerce solutions for the Indian market.

HDFC Bank entered into a tie-up with Telco by which the bank would provide

preferential financing options for Tata's range of passenger cars including the Indica,

Sumo, Safari, Estate and Sierra.

The Bank has tied up with financial portals, e-brokerages and the National Stock

Exchange to enable broker payments for e-broking ventures.

The Bank has set up 100 new electronic data capture (EDC)Terminals in Mumbai.

HDFC Bank has launched its first B2C payment gateway which allows Visa and

MasterCard credit card-holders to do transaction online and real time.

HDFC Bank has launched its 123rd outlet at Delhi Stock Exchange building at Asaf Ali

Road.

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2005

TMB forges alliance with HDFC Bank

HDFC Bank inaugurates first ATM in Hotel

HDFC Bank ties up with the International Bank of Qatar (IBQ) to launch banking

services in Qatar.

HDFC Bank launches loyalty rewards programs for its debit and credit cardholders under

the name InstaWonderz.

HDFC Bank along with MasterCard International launched credit card targeted at small

and medium-sized enterprises

HDFC Bank has tied up with US-based WL Ross and company LLC for investing in

corporate restructuring

HDFC Bank unveils credit card for farmers

2006

HDFC sets up two more branches in AP

Osim to join hands with HDFC Bank for consumer loans

HDFC Bank inaugurates VbV facility for online shopping

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2007

HDFC Bank has signed an agreement with Tata Pipes to offer credit facilities to farmers

across the country.

HDFC Bank Ltd has appointed Mr. Pandit Palande as an additional Director of the Bank

at the Board Meeting held today i.e. on 24th April 2007.

HDFC Bank Ltd has informed that the Board of Directors of the Bank at its meeting held

on October 12, 2007, has been appointed Mr.Paresh Sukthankar & Mr. Harish Engineer

as Executive Directors on the Board of Directors of the bank. Mr. Sukthankar & Mr.

Engineer have been senior employees of the Bank since 1994 and have held various

positions of responsibility.

The above appointments as Executive Directors of the Bank are subject to approval of Reserve

Bank of India and of the Bank's shareholders.

2008

HDFC Bank Ties Up With Postal Department, Extends Rural Reach

HDFC Bank Wins ‘Nasscom IT User Award the Year'

HDFC Bank Opens Its First Overseas Branch in Bahrain

HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29

HDFC Bank Launches India’s First Rural Banking BPO at Tirupathi

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HDFC Bank Launches India’s First Online Market Linkage Program for Self Help

Groups

2009

HDFC Bank Bags Asia money Award for the Best Domestic Bank

HDFC Bank offers electronic payment collection facility to Guruvayoor Devaswom.

HDFC Bank launches ‘Meritus’ Scholarship Program.

The Asian Banker declares HDFC Bank the Best Retail Bank

2010

With a view to attract long term deposits and prevent premature withdrawal when the

interest rates peak, HDFC, the housing finance major, has decided to pay variable interest

rate on recurring deposits.

HDFC Bank on Feb 19 increased the fixed deposit rates by up to 150 basis points across

maturities, a move that follows the Cash Reserve Ratio hike of 75 basis points by the

Reserve Bank of India last month.

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CHAPTER-VI

HOME LOANS PROVIDED BY BANKS IN INDIA

A person seeking investments for house or a property opts for Home Loans for a variety of

purposes ranging from construction to renovation. The Housing Finance Companies (HFCs) now

offer individuals with various alternatives to choose from while buying a home loan. And the

availability of Home Loans offered is as varied as their requirements.

Home Purchase Loans

Home Construction Loans

Home Improvement Loans

Home Extension Loans

Home Conversion Loans

Land Purchase Loans

Stamp Duty Loans

Bridge Loans

Balance Transfer Loans

Refinance Loans

Loans to NRIs

Home Purchase Loans

This loan is the basic home loan for the purchase of a new home.

Home Construction Loans

This loan is available for the construction of a new home on a said property. The documents that

are required in such a case are slightly different from the ones you submit for a normal Housing

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Loan. If you have purchased this plot within a period of one year before you started construction

of your house, most HFCs will include the land cost as a component, to value the total cost of the

property. In cases where the period from the date of purchase of land to the date of application

has exceeded a year, the land cost will not be included in the total cost of property while

calculating eligibility.

Home Improvement Loans

These loans are given for implementing repair works and renovations in a home that has already

been purchased, for external works like structural repairs, waterproofing or internal work like

tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility

of a home improvement loan, after obtaining the requisite approvals from the relevant building

authority.

Home Extension Loans

An extension loan is one which helps you to meet the expenses of any alteration to the existing

building like extension/ modification of an existing home; for example addition of an extra room

etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite

approvals from the relevant municipal corporation.

Home Conversion Loans

This is available for those who have financed the present home with a home loan and wish to

purchase and move to another home for which some extra funds are required. Through a home

conversion loan, the existing loan is transferred to the new home including the extra amount

required, eliminating the need for pre-payment of the previous loan.

Land Purchase Loans

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This loan is available for purchase of land for both home construction or investment purposes

Stamp Duty Loans

This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of

property.

Bridge Loans

Bridge Loans are designed for people who wish to sell the existing home and purchase another.

The bridge loan helps finance the new home, until a buyer is found for the old home.

Balance-Transfer Loans

Balance Transfer is the transfer of the balance of an existing home loan that you availed at a

higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower

rate of interest.

Re-finance Loans

Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you

have taken drops over the years and you stand to lose. In such cases you may opt to swap your

loan. This could be done from either the same HFI or another HFI at the current rates of interest,

which is lower.

NRI Home Loans

This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or

property in India. The HFCs offer attractive housing finance plans for NRI investors with

suitable repayment options.

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CHAPTER- VII

HDFC HOME LOANS

The road to success is a tough and challenging journey in the dark where only obstacles light the

path. Individual aim is how to get success and the solution for success is customer satisfaction.

All we need is the courage to innovate, the skill to understand your clientele and the desire to

give them your best. Today, nearly three million satisfied customers whose dream we helped

realize, stand testimony to our success. Our objective, from the beginning, has been to enhance

residential housing stock and promote home ownership. Now, our offerings range from hassle-

free home loans and deposit products, to property related services and a training facility. We also

offer specialized financial services to our customer base through partnerships with some of the

best financial institutions worldwide.

HDFC Housing Finance is a vital zone of HDFC bank, which has presented attractive housing

finance schemes for the customers. With more than 25 years of experience in Indian finance

market, HDFC stands head and shoulder above its competitors in the housing loan segment.

HDFC Housing Finance has got a strong impact on the customers who are looking for some

housing finance.

HDFC Housing Finance has got 3 types of housing finance for their customers. HDFC Housing

Finance provides Home Loans for the individuals to purchase fresh or resale house/flat as well as

to construct houses. Home Improvement Loans are for facilitating internal and external repairs

and other structural improvements like painting, waterproofing, plumbing and electric works,

tiling and flooring, grills and aluminum windows. Home Extension Loan is for the extension of

an existing dwelling unit. You can apply for HDFC Home Finance individually or jointly.

29

Adding up the income of the co-applicant would enhance your eligibility for the home loan.

However, the co-applicants need not to be a co-owner of the house.

HDFC Housing Finance pays a maximum of 85% of the total project cost. The maximum loan

amount is based on the repayment capacity of the applicant. You have to repay the loan amount

within 20 years, subject to your retirement age. You can definitely go for some lesser term loan.

There is an 'Adjustable Rate Home Loan' plan available in HDFC Housing Finance.

There are Multiple Repayment Options available in HDFC Housing Finance. Step Up

Repayment Facility, Flexible Loan Installment Plan, and Accelerated Repayment Scheme are

there to give you a wide range of options to choose your plan from.

When you go for HDFC Housing Finance, you have to pay a fee of 1% of the loan amount.

Service taxes are extra as applicable. There are no charges for prepayment. In order to learn more

about housing finance companies in India browse through the site.

Features

Home Loan Counseling - Sharing of over 30 years of home loan experience

HDFC have been a part of a 30 year journey with our 33 Lakh customers. Their home

loan counselors offer you the time tested advice.

Be it legal documentation, project or builder approvals, and technical advice, they look

forward to sharing with you and this service is absolutely free.

Their project approval facility provides our customers the comfort of purchasing

properties from builders who have complied with all basic documentation.

Door Step Service

They offer door step service. Call to HDFC Home Line call for their Sales Executive to assist

30

get in touch with the HDFC Office near you.

We can buy, sell, lease residential or commercial properties through HDFC Realty.

Wide Product Range

They provide loans to meet all our requirements to make that house a home.

Home Loans, Home Improvement Loans, Home Extension Loans, Loans to

professionals for office or clinic, Home Equity Loans (Loan Against Property), Loan

Against Rent receivables, Short Term Bridging Loan.

Loans on Adjustable Rate, Fixed Rate.

Multiple Repayment Option

Step Up Repayment Facility

Helps young executives take a much bigger loan today based on an increase in their future

income, this helps executives buy a bigger home today!

Flexible Loan instalments Plan

Often customers, parents and their children, wish to purchase properties together. The parent

is nearing retirement and their children have just started working. This option helps such

customers combine the incomes and take a long term home loan where in the instalment

reduces upon retirement of the earning parent.

Tranche Based EMI

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Customers purchasing an under construction property need to pay interest ( on the loan

amount drawn based on level of construction) till the property is ready . To help customer

save this interest, we have introduced a special facility of tranche Based EMI. Customers can

fix the instalments they wish to pay till the property is ready. The minimum amount payable is

the interest on the loan amount drawn. Anything over and above the interest paid by the

customer goes towards Principal repayment. The customer benefits by starting EMI and hence

repays the loan faster.

Accelerated Repayment Scheme

Accelerated Repayment Scheme offers you a great opportunity to repay the loan faster by

increasing the EMI. Whenever you get an increment, increase in your disposable income or

have lump sum funds for loan prepayment, you can benefit by:

Increase in EMI means faster loan repayment

Saving of interest because of faster loan repayment

We can invest lump sum funds rather than use it for loan prepayment. The return from

the investments also gives you the comfort of paying the increased EMI

Wide network of financing

With over 200 offices, 90 outreach programs - HDFC is able to provide home loans in over

2400 locations in India. You can apply at your local HDFC office for properties in locations

where we finance.

Rate of Interest

Float Interest Rate : 9.5 %

Processing Fee : 0.50% to 1% of loan amount

Late Payment Charges : NA

Document Retrieval : NA

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CHAPTER-VII

TYPES OF HOME LOANS PROVIDED BY HDFC

NRI (Non Resident Indian) Home Loan

A new home brings with it new hopes, joys and emotions. At HDFC, they have shared new

hopes, joys and emotions with over 33 Lakh customers. Every customer has a specific and

unique concern. Having earned an experience of 30 years in home loans, Their home loan

product is customised to provide you solutions for our unique concern.

Features

Maximum loan

85% of the cost of the property (including the cost of the land) and based on the

repayment capacity of the customer.

Maximum Term

Certain Professionals - 20 years

Others - 7 years

Applicant and Co- Applicant to the loan

Home Loans can be applied for either individually or jointly. Proposed owners of the

property will have to be co-applicants. However, the co-applicants need not be co-

owners.

Adjustable Rate Home Loan

Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The

rate on our loan will be revised every three months from the date of first disbursement, if

33

there is a change in RPLR, the interest rate on our loan may change. However, the EMI

on the home loan disbursed will not change. If the interest rate increases, the interest

component in an EMI will increase and the principal component will reduce resulting in

an extension of term of the loan, and vice versa when the interest rate decreases.

Fixed Rate

Purpose:

Purchase of

Flat, row house, bungalow from developers

Existing freehold properties

Properties in an existing or proposed co-operative housing society or

apartment owner's association

First Power of Attorney purchases in Delhi for DDA flats allotted before

1992.

Existing Loan Customers

1. Home Improvement Loans

This loan facilitates internal and external repairs and other structural improvements like Painting,

Waterproofing and Roofing, Plumbing and Electrical Works, Tiling and Flooring, Grills and

Aluminium Windows compound walls and almost all improvements. etc. One can borrow a

maximum of Rs. 100 lacs or 100% of the cost of renovation, whichever is lower against a new

customer who can borrow only Upto 85 % or Rs 100 lacs whichever is lower.

Features:

Purpose

o External repairs

o Tiling and flooring

34

o Internal and external painting

o Plumbing and electrical work

o Waterproofing and roofing

o Grills and aluminum windows

o Waterproofing on terrace

o Construction of underground/overhead water tank

o Paving of compound wall (with stone/tile/etc.)

Maximum loan

o Existing Customer

100% of the cost of improvement

o New Customer

85% of the cost of improvement

o Subject to market value of the property

Maximum Term

15 years subject to our retirement age




owners.








Fixed Rate

2. Home Extension Loans

35

HDFC provides Home Extension Loans specifically to facilitate the extension of an existing

dwelling unit. The maximum amount of such a loan is Rs. 100 lacs or 100% of the cost of

extension, whichever is lower. This loan can be taken for a maximum of 20 years and is to be

repaid in equated monthly instalments.

Features:

Purpose

HDFC Home Extension Loan makes it convenient for you to extend or add space to our

home. Be it an additional room, a larger bathroom, or even enclosing an open balcony.

Maximum loan

85% of the cost of extension

Maximum Term

20 years subject to our retirement age




owners.








Fixed Rate

3. Home Conversion Loans

36

Existing HDFC borrowers can avail of a Home Conversion Loan to acquire another dwelling

unit, through sale of the existing dwelling unit. The existing loan can be transferred to the new

property with an increase in loan amount based on the current eligibility. This saves the customer

from the hassle of prepaying the first loan and availing of new loan thus saving them prepayment

charges and processing charges to the extent of loan conversion.

4. Top - Up Loans

This product offers an existing resident Indian customer a loan against the mortgage of the

existing property. It helps in encasing the investment in a house without having to dispose it off

to fund various needs related to Higher Education, Purchase of Furniture, Business

Requirements, etc. The maximum loan amount under this product is 60 % of the market value of

the property less the outstanding loan and is subject to the current loan eligibility.

The maximum term of the loan is 10 years. Top up loans can given after 1 to 2 years [based on

our discretion], of the final disbursement of the existing loan or upon possession/completion of

the existing financed property.

E.g.:

Existing outstanding Loan Rs 3 lacs.

Current market value of property Rs 10 lacs

Maximum loan eligibility 60% of market value i.e.

Rs 6 lacs

Actual Loan Eligibility Rs 6 lacs less Rs 3 lacs =

Rs 3 lacs

Property identification and sales service37

HDFC's Property Services Group assists individuals and corporate to locate suitable residential

accommodation in certain major cities and towns in India. These facilities are also available to

Non-Resident Indians.

Property valuations

HDFC undertakes valuation of commercial and residential premises for corporate clients.

Deposits: Individuals (Fixed & Variables)

HDFC has instituted well-defined service standards for both depositors and deposit agents.

HDFC has been able to mobilise deposits from over 10 lac depositors. Outstanding deposits grew

from Rs. 1,458 crores in March 1994 to Rs 23,081 crores in March 2010. Much of this success

can be attributed to its strong brand image, superior services, security and above all, the

significant contribution made by HDFC's deposit agents. HDFC has over 15,000 deposit agents

and distributes all its retail savings (deposit) products primarily through this channel.

HDFC has been awarded “AAA” rating for its deposits from both CRISIL and ICRA for the

FIFTEENTH consecutive year, representing highest safety as regards timely payment of

principal and interest.

Benefits of an HDFC Individual Deposit:

Highest Safety

Tax Benefits

Attractive Returns

Quick Loan Facility

Nomination Facility

Demand Draft Facility

High Service Standards

Electronic Clearing Service

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Tax Benefits

TDS: No tax deduction at source on interest from deposits up to Rs. 5,000/- per branch in a

Financial Year.

Attractive Returns

HDFC deposits are Available throughout the year and offer Attractive, Assured returns to

investors. Interest rates offered are higher than that offered by most of the commercial banks.

Quick Loan Facility

Loan against deposit is available after 3 months from the date of deposit up to 75% of the deposit

amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be

2% above the deposit rate.

Nomination Facility

Individual depositors, singly or jointly, can nominate under this facility. In case the deposit is

placed in the name of a minor the nomination can be made only by a person lawfully entitled to

act on behalf of the minor. Power of attorney holder or any person acting in representative

capacity as holder of an office or otherwise cannot nominate. The nominee shall have the right to

receive the amount due in respect of deposit on death of all the depositors and payment by

HDFC to the nominee shall constitute full discharge to HDFC of its liability in respect of the

deposit.

Demand Draft Facility

Outstation depositors can send demand drafts after deducting demand draft charges. This facility

is not available to investors under Easy way Savings. This facility is applicable for places where

HDFC does not have an office.

High Service Standards

Depositors are offered across the counter services for new deposits, renewals, repayments and

loan against deposit facility. Further, all enquiries through email, post, telephone and in person

are attended to immediately.

39

Electronic Clearing Service

This facility is provided to depositor’s in select centres whereby the interest will be credited

directly to the depositors' bank account. The depositor would receive a credit entry "ECS HDFC"

in his passbook/bank statement. Intimation of interest credited would be sent on an annual basis.

Our bank will not levy any charge for this facility as per present RBI guidelines.

Presently this facility is being offered are at the following centers

ECS Centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai,

Hyderabad, Jaipur, Kanpur, Lucknow, Mumbai, Nagpur, Nasik, New Delhi, Pune and Vadodara.

5. Short Term Bridging Loan

Short-Term Bridging loan makes you realise our dream of buying a bigger and better home and gives you time to

sell our existing property to pay off the loan.

This is a short term loan to help customers with the interim period between the sale of our old

home and the purchase of a new home. You can take the loan even if you are an existing

customer of HDFC.

Features

Maximum loan

90% of cost of new property

Maximum Term

2 years

Applicant and Co - Applicant to the loan



owners.

Fixed Rate

6. Land Purchase Loan

40

Features

Maximum loan

85% of cost of the land and based on the repayment capacity of the

customer.

Maximum Term

15 years subject to our retirement age.


Home Loans can be applied for either individually or jointly. Proposed

owners of the property will have to be co-applicants. However, the co-

applicants need not be co-owners.


Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending

Rate (RPLR). The rate on our loan will be revised every three months

from the date of first disbursement, if there is a change in RPLR, the

interest rate on our loan may change. However, the EMI on the home

loan disbursed will not change. If the interest rate increases, the interest

component in an EMI will increase and the principal component will

reduce resulting in an extension of term of the loan, and vice versa

when the interest rate decreases.

Fixed Rate

Non Residential Premises Loan for Professionals

Features

Purpose

Purchase, Construction, Improvement of Office, Clinic

Eligibility:

o Doctors

o Chartered Accountants

41

o Lawyers

o Other self-employed professional

Maximum loan

85% of cost of the property

Maximum Term

10 years Improvement 5 years. Non residential premises maximum term is 15 years, NRP

improvement remains 5 years.

Applicant and Co - Applicant to the loan

Loans can be applied for either individually or jointly. Proposed owners of the property

will have to be co-applicants. However, the co-applicants need not be co-owners.





on the loan disbursed will not change. If the interest rate increases, the interest



Fixed Rate

7. Home Equity Loan

HDFC Home Equity Loans helps you encash the present market value of the property by taking a

loan by mortgaging the property.

Features

Purpose

Loan can be for any purpose. However, the funds should not be used for speculation or

any illegal purposes.

Customers have benefited by taking loans to meet the following funding requirements

o Education

42

o Marriage Expenses

o Medical Expenses

Property

o Residential

o Non Residential

- Should be Fully Constructed

- Should be a Freehold property having a clear and marketable title.





on the home equity loan disbursed will not change. If the interest rate increases, the

interest component in an EMI will increase and the principal component will reduce

resulting in an extension of term of the loan, and vice versa when the interest rate

decreases.

Fixed Rate

Maximum Loan

o Existing Customers

- Balance of 60% of the market value and present loan outstanding

o New Customers

- 50% of the market value of the property (including the cost of the land)

o Subject to

- Minimum Market Value of the property being Rs.5,00,000 for Residential

property and Rs.7.50 Lacs for Non Residential Property

- Repayment Capacity of the customer

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CHAPTER- VIII

HDFC HOME LOAN RATES

When it is a question of purchasing a home with a home loan, the primary objective of the

borrowers is to find a cheap interest rate loan. HDFC Bank India home loans rates are one of the

cheapest rates that are available in the Indian home loan market

The home loan offered by HDFC Bank for purposes like home construction or purchase of

houses (new/resale). You can make either a single or joint loan application. With an HDFC Bank

home loan, you have the opportunity to finance up to 85% of the value of the property

(comprising stamp duty plus contract value along with registration fees) on the basis of the

ability for repayment of the applicant. But in the case of land loans, the finance is provided up to

70% of the value of the property. Also, the land purchase loans are provided only for DTP

approved sites and not for panchayat approved sites.

About HDFC Bank India Home Loans Rates

HDFC Bank India home loans rates are one of the most competitive rates available in the home

loan market. The table given below will give you an idea about these rates

PlanMinimum Interest

Rate

Maximum Interest

RateEMI Processing Fee

Home loan Plot of Land

HDFC - Special Scheme - 8.25% 8.25% 19,403 0.50% to 1% of loan amount

44

3 – Active

Residential Home loan

HDFC - Fixed 14.25% 14.25% 26,9720.50% to 1% of loan amount, subject to a

maximum of Rs. 10,000.

HDFC - Special Scheme –

38.25% 8.25% 19,403 0.50% of loan amount

HDFC Ltd. Other Plans

HDFC - Special Scheme 3 8.25% 8.25% 19,403 0.50% of loan amount

Briefly the interest rate of each loan mentioned in the above chapter can be charted as per

the current trend can be explained as below

LOAN PURPOSE INTEREST RATE

HOME PURCHASE LOAN Purpose of buying residential

building

8.25%

HOME CONSTRUCTION

LOAN

Building new residential

space

8.25%

HOME IMPROVEMENT

LOAN

For altering the internal

infrastructure of the residence

8.25%

HOME EXTENSION

LOAN

Building a new building upon

the existing one

8.25%

MORTGAGE (HOME

EQUITY LOAN)

Pledging on home 10.5%

LAND PURCHASE LOAN Buying construction land 8.25% (within city limit)

11.77% (out of city limit)

Advantages offered by HDFC Bank India home loans

45

Given below are some important advantages offered by HDFC Bank India home loans:

Flexible repayment terms

All the home loans offered by HDFC Bank India are available with convenient and flexible

repayment terms. The repayment terms have been scheduled to fit the requirements of the

borrowers.

Automated repayment of EMIs (Equated Monthly Installments) on home loans

The borrower has the facility to provide standing instructions to pay off their home loan

installments directly from their savings account with HDFC Bank. This helps you in avoiding the

hassles of collecting, signing and monitoring post-dalted cheques.

Both fixed and floating rate loan options are available

The borrowers have the option of selecting from fixed and floating rate loans. Borrowers are also

allowed to design their loans as partially floating and partially fixed rate loans.

Loan Coverage Term Assurance Plan

This is an insurance policy offered by HDFC Standard Life Insurance Company Limited, which

has been planned to make sure that unforeseen events in your life don’t hamper the interest of

your family and your prized home. The Loan Cover Term Assurance Plan (LCTAP) offers a

onetime payment on the ill-timed death of the life insured. This is a kind of sure risk strategy

which has been devised in such a manner so that the cover reduces while you gradually pay off

your home loan, turning it into an affordable insurance premium plan.

In-house inspection of property deeds

HDFC Bank also gives you the opportunity to scrutinize your property deeds in your home for

your absolute peace of mind.

46

Customer privileges

In case you are an existing customer of HDFC Bank home loan, then you can get other loans

from HDFC Bank like car loans, personal loans, loan against securities and two wheeler loans at

cheaper interest rates.

Schedule of Charges on HDFC Bank India Home Loans

The table given below will help you understand the various charges associated with HDFC Bank

India home loans:

Types of Charges Ecbop Home Loan

Foreclosure penalties

No prepayments permitted during first 6 months

6 months - 5 years - 1.5% of original loan amount

5 years -10 years - 0.75% of original loan amount

Over 10 years - No closure charges

eBOP customers :

Loan repaid from own funds - no foreclosure penalties

Loan repaid from other funds - usual foreclosure penalties.

For Gold Category

6 months - 5 years - 2% of original loan amount

Over 5 years - No closure charges

Cheque swapping charges Rs 500/-

Fees for delayed payment of EMI 2% per month

Duplicate Statement Charges (per statement) Rs 100/- per page subject to a maximum of Rs. 300/-

Bounce Cheque Charges Rs. 500/-

Issue of Duplicate Interest Certificate Rs. 300/-

Issue of Duplicate Provisional Interest Certificate Rs. 300/-

Issue of Amortization Schedule (Duplicate) Rs. 300/-

Duplicate Balance Certificate Rs. 300/-

47

Switch from Fixed to Floating Not Applicable

Switch from Floating to Fixed Not Applicable

Photocopy of Documents Rs. 500/-

CHAPTER- IX

MONETARY GRADES OF HDFC- 2010

The Board of Directors of Housing Development Finance Corporation Limited (HDFC)

announced its results for the first quarter of the financial year 2010-11, following its meeting on

Wednesday, July 14, 2010 in Mumbai. The accounts have been subject to limited review by the

Corporation’s statutory auditors in line with regulatory guidelines.

FINANCIAL RESULTS

For the quarter ended June 30, 2010, HDFC reported a profit before tax of Rs. 966.59 crores as

compared to Rs. 779.92 crores in the corresponding quarter of the previous year – an increase of

24%. During the quarter profit on sale of investments was Nil as compared to Rs 51.31 crores in

the corresponding quarter of the previous year.

After providing Rs. 272 crores for taxes, the profit after tax for the quarter ended June 30, 2010

amounted to Rs. 694.59 crores as compared to Rs. 564.92 crores in the corresponding quarter of

the previous year – an increase of 23%.

TOTAL ASSETS

As at June 30, 2010, the total assets of HDFC stood at Rs. 1,16,111 crores as against Rs. 97,479

crores as at June 30, 2009 – an increase of 19%.

48

Loan Book

As at June 30, 2010, the loan book stood at Rs. 1,01,625 crores as against Rs. 87,046 crores as at

June 30, 2009. Loans sold during the preceding 12 months amounted to Rs. 5,636 crores. The

growth in the loan book inclusive of loans sold is 23%.

The spread on loans over the cost of borrowings for the quarter ended June 30, 2010 stood at

2.34% compared to 2.31% for the year ended March 31, 2010.

Investments

As at June 30, 2010, the unrealised gains on HDFC’s listed investments amounted to Rs. 16,775

crores (previous year Rs. 11,662 crores). This excludes the appreciation in the value of unlisted

investments.

Lending Operations

Individual business for the quarter ended June 30, 2010 was robust with individual approvals

growing by 56% and disbursements growing by 62% as compared to the corresponding quarter

in the previous year. The high growth rates are also partly reflective of a lower base in the

previous year.

Non-Performing Loans

Gross non-performing loans as at June 30, 2010 amounted Rs. 905.03 crores. This is equivalent

to 0.89% of the loan portfolio (previous year – 0.98%) This is the twenty-second consecutive

quarter end at which the non-performing loans have been lower than the corresponding quarter in

the previous year.

Based on a six months overdue basis, the non-performing loans as at June 30, 2010 stood at

0.54% of the loan portfolio as against 0.58% in the previous year.

49

In terms of the prudential norms as stipulated by the National Housing Bank, the Corporation is

required to carry a provision of Rs. 332.68 crores in respect of non-performing assets and general

provision on outstanding standard non-housing loans.

The balance in the provision for contingencies account as at June 30, 2010 stood at Rs. 696.73

crores, which is equivalent to 0.68% of the portfolio. The Corporation’s net non-performing

loans stood at 0.21%.

Resources

As at June 30, 2010, deposits stood at Rs. 23,906 crores as against Rs. 19,728 crores on the

corresponding date last year, registering a growth of 21%. HDFC’s deposits carry a “AAA”

rating from both, CRISIL and ICRA.

During the first quarter of the financial year, loans drawn from commercial banks, financial

institutions and National Housing Bank amounted to Rs. 9,275 crores.

HDFC raised Rs. 3,850 crores through private placements of non-convertible debentures (NCDs)

during the quarter ended June 30, 2010. The NCDs were “AAA” rated by both, CRISIL and

ICRA.

Capital Adequacy Ratio

HDFC’s capital adequacy ratio stood at 14.8% of the risk weighted assets, as against the

minimum requirement of 12%. Tier 1 capital was 13.6% against a minimum requirement of 6%.

Distribution Network

HDFC’s distribution network spans 277 outlets that include 64 offices of HDFC’s distribution

company, HDFC Sales Private Limited (HSPL). In addition, HDFC covers over 90 locations

through its outreach programs. Distribution channels form an integral part of the distribution

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network with home loans being distributed through HSPL, HDFC Bank Limited and other few

third party direct selling associates.

To cater to non-resident Indians, HDFC has offices in London, Dubai and Singapore and service

associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Saudi Arabia – Al Khobar, Jeddah

and Riyadh.

CHAPTER- X

SUGGESTION AND CONCLUSIONS

Suggestions

The net profit should be improved by concentrating on the operating expenses.

The future trend of company’s share falls year by year. This indicates that the performance of

the bank is not at a satisfactory level. So the market value of shares is to be improved.

The fixed asset should be increased, so steps to be taken for improving the present level of fixed

asset.

Conclusion

The performance of HDFC during the study period reveals that operating and financial

performance of HDFC has been good.

The profitability position was also generally good, and the percentage of profit would

make the shareholders more satisfied. Turnover ratio also indicates the effective utilization of

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resources by HDFC home loans during the study period. By implementing suggestions offered

thorough this study, the performance of HDFC would improve further in the years to come.

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