A PROJECT REPORT

ON
HOME LOANS OF HDFC BANK
 CHAPTER – 1

INTRODUCTIO

1.1 INTRODUCTION

One of the primary functions of the commercial bank is lending. Through lending commercial banks
meet their objective of making profits. The deposits collected from the public cannot be kept idle. It has
to be utilized in order to derive benefits out of it. The bank collects deposits with the objective of
lending and makes profit out of the interest received and paid. Their main aim is to deal in money and
provide for those who need it. The banker performs the job of lending within the framework of statutes
governing the banking business, the government policy and guidelines issued by the authorities of the
country (RBI in India).

Its likely that people have been practicing lending and borrowing for as long as there has
been a concept of ownership. The history of loans can be documented atleast several thousand years
back. Forms of lending were evident in ancient Greek and Roman times and monetary loans were even
mentioned in religious books. The modern loans started much later than these ancient times. Therefore
lending has its origin in much older times.

In 1949, the BANKING REGULATION ACT defines banking as “ACCEPTING FOR THE
PURPOSE OF LENDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON
DEMAND.”

The core function of commercial banks is granting of credit. Although banks offer a wide
spectrum of financial services, lending has traditionally been their main function. Banks profess
experience, expertise and flexibility in lending which gives them a clear competitive advantage over
other financial institutions. Lending of funds to businessmen, traders and industrial enterprises is one of
the most important activity of a commercial bank.

The term “LOAN” refers to the amount borrowed by one person from another. The
amount is in the nature of loan and refers to the sum paid to the borrower. Thus, from the point of view
of the borrower it is ‘borrowing’ and for the bank it is ‘lending’. Loan may be regarded as ‘credit’ granted
where the money is disbursed and its recovery is made on a later date. It is a debt for the borrower.
While granting loans, credit is given for a definite purpose and for a predetermined period. Interest is
charged on the loan at an agreed rate and intervals of payments.

‘ADVANCE’ is a ‘credit facility’ granted by the bank. Banks grant advances for short term purposes, such
as purchase of goods traded in and meeting other short term trading liabilities. There is a sense of debt
in loan whereas an advance is a facility being availed of by the borrower. Like loans, advances are also
repaid. In the present lesson these two terms are used interchangeably.

1.2 NEED AND IMPORTANCE OF THE STUDY

In the era of growing importance of financial status, there is an increased importance for
various financial institutions which provide such loans.

The main objective of the study of the loans and advances is to understand the lending
policies and the various schemes of financial assistance provided by the bank. The bank works
comparatively different from other financial institutions and banks as it works according to the rules and
regulations and the guidelines by the RBI.

In the post reforms period, banks are facing tough competition due to interest rate
regime. In today’s buyers market, banks are facing cutthroat competition. Hence they are introducing
new loan products to meet the requirements of the various segments of the society to know the
importance of the retail lending in banks.

In this background the topic of personal lending schemes of HDFC BANKis chosen as the
subject matter of this project. The findings of the project may be considered by HDFC BANKwhile
formulating the policies for increasing the volume of personal lending schemes.

As the country is witnessing globalization, privatization and liberalization wave with a strong
influence in culture and its implication, the need for loan have become inevitable at present scenario,
hence there is a need to study the progress and trends. Since more and more competitors have entered
the market with many features in their services.
 The study is also required to analyze the views of the borrowers and to analyze the satisfaction
level of customers. It helps to know in detail the Loans and Advances provided by the bank, right from
its inception stage, growth and future prospects.

1.3 OBJECTIVES OF THE STUDY

The study has been undertaken with the following objectives.

• To analyze banks loans and advances in detail.

• To find out the sources of borrowings and mobilization of loans.

• To know the terms and conditions laid down by the banks for sanction of loans.

• To analyze the loan giving aspect of AXIS BANK.

• To study about the loan policy, credit evaluation and supervision of loans and advances at AXIS
BANK.

• To study in detail about the different types of personal loans offered by HDFC BANKin the
context of purpose, eligibility, interest, etc.

• To know the disbursement of personal loans for the last five financial years.

• To point out the nature of security provided for the loans.

• To distinguish between long term loans and short term loans.

• To outline the procedure for grant of cash credit, overdraft and discounting of the bills of
exchange.

1.4 SCOPE OF THE STUDY.

The study is undertaken at AXIS BANK. The scope is limited to the extent of details study
of various lending schemes at AXIS BANK. Disbursement analysis is done in case of important lending
schemes for the past 5 years.

• The study is mainly concentrated on the lending practices pattern and influence in the
organization’s performance.

• To know more about the loans and advances which help us to explore future prospects.

• To study the precautions to be taken while advancing the loans.

• To analyze the profit sources for a bank by providing loans and advances.
• To evaluate customer’s eligibility, procedure involved for the sanction of loans and advances
and the customer’s mode of repayment.

• The study enables to know about the company’s current position with the help of annual
reports.

• The operational jurisdiction of the research is limited to AXIS bank. The scope covers all loan
schemes of AXIS bank.

• To know and to set its objectives and goals for better performance and growth of the
organization.

• The study helps in ascertaining people’s response on bank lending.

1.5 RESEARCH METHODOLOGY

The data collection methods include both primary data and secondary data.

Primary Data:

Primary data is that data that has not been previously published, i.e. the data is derived from a new
or original study and collected at the source, e.g. in marketing, it is information that is obtained directly
from first-hand sources by means of surveys, observation or experimentation. This is also called first-
hand data.

SOURCES:

• No primary data was collected while doing this project.

Secondary Data:

The secondary data, on the other hand, is basically primary data collected by someone else.
Researchers reuse and repurpose information as secondary data because it is easier and less expensive
to collect. However, it is seldom as useful and accurate as primary data. It can be collected directly
either from published or unpublished sources. It is collected for purposes other than the completion of a
research project and it is used to gain initial insight into the research problem. It is the data that have
been already collected by and readily available from other sources.