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A PROJECT REPORT ON TO EVALUATE THE MARKET SHARE OF ICICI BANK

OF COMMERCIAL VEHICLES LOAN DIVISION


SUBMITTED IN PARTIAL FULFILLMENT OF Post Graduate Diploma In Business Management 2004-2006 Faculty Guide Prof L. Manish Dadich Project Guide Ms. Sonal Punmiya
Sales manager

SUBMITTED BY SONAL PUNMIYA

S. P. U. (PG) College, Falna Department of BBA

INDEX (Table of Contents)


1. PREFACE ..1- 4

2. ACKNOWLEDGEMENT 3. Executive Summary 4. INTRODUCTION


COMPANY HISTORY OBJECTIVES NEED AND SIGNIFICANCE OF COMMERCIAL VEHICLES LOANS SCOPE OF COMMERCIAL VEHICLES LOANS

5. RESEARCH METHODLOGY
DATA COLLECTION QUESTIONNAIRE FIELD WORK

6. FINDINGS AND ANALYSIS


FINDINGS ANALYSIS OF COMMERCIAL VEHICLES LOANS LIMITATION OF THE PROJECT

7. CONCLUSIONS AND RECOMMENDATIONS 8. BIBLIOGRAPHY

PREFACE
Practical training is an important part of the theoretical studies. It bears immense importance in the field of Business Management. It offers the student to explore the valuable treasure of experience and an exposure to real work culture followed by the industries and there by helping the students to bridge gap between the theories explained in the books and their practical implementations. Training plays an important role in future building of an individual so that she can better understand the real world in which he has to work in future. The theory greatly enhance our knowledge and provide opportunities to blend theoretical with the practical knowledge where trainees get familiar with certain aspects of industries, like shop floor management, production process and industrial relations. I feel proud to get myself trained at ICICI BANK KANPUR that is one of the top most bank in India and whose customer base is increasing rapidly with every passing day. I have taken up training in marketing department and have studied and explored the commercial vehicles loan process of the bank, its market share in the kanpur market and ways of increasing its market share.I availed this opportunity in a very satisfactory manner and have tried to cover each and every aspect that I came across during my training period.

Acknowledgement
Perseverance, inspiration and motivation have always played a great role in the success of any venture. At this level of understanding it is often difficult to understand the wide spectrum of knowledge without proper guidance and advice. This report conveys my heartiest thanks to all the Officers and Employees of ICICI BANK who have given me their full cooperation and devoted their valuable time for rendering me needy services and guidelines during the training period. With those sincere and precious efforts, I have been able to complete my practical training successfully. I wish to express my sincere gratitude to MR. PRANAV KUMAR for providing me the training facilities.

SONAL PUNMIYA

ICICI BANK
BACKGROUND OF THE BANK

ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659 crore at March 31, 2005 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 560 branches and extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa. ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees. At April 4, 2005, ICICI Bank, with free float market capitalization* of about Rs. 308.00 billion (US$ 7.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock

amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with

ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity. *Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities.

Year 1999 saw emergence of ICICI Bank as a key player in consumer finance market that included commercial vehicle financing as well. At this point of time there were number of NBFCs operating all over the country with TATA FINANCE LTD, KOTAK MAHINDRA, SUNDRAM FINANCE,ASHOK LEYLAND FINANCE, TELCO BHPC and some nationalized banks playing a major role. GE also started its operation at that time also. Year 2000, 2001 and 2002 saw ICICI emerging as a key player in this market with better rate of interest and higher level of competitiveness. Year 2003 marked a watershed in ICICI Bank commercial vehicles loan history as they emerged as No.1 player across India. In order to enhance its responsiveness to the market, ICICI commercial vehicles group was further divided into two major groups in 2004. One was for heavy commercial vehicle (HCV) business (vehicles having gross laden weight more than 11 tonnes and above that e.g. LPT 1613) and second one was light commercial vehicles (LCV) (vehicles having gross laden weight upto 11 tonnes that e.g. LPT 909) and used commercial vehicles business. ICICI Bank is largest player in the light commercial vehicles segment with a total market share greater than 25% in India while in the Kanpur market, its share is close to 50% which is one of the best among cities in which ICICI Bank operates.

Reaches you through more than 700 locations across the country. Range of products under one umbrella. Funding of various products like HCVs, Buses, MCVs, LCVs, 3 wheelers & used vehicle. Range of services on existing loans & extended products like funding of new vehicles, refinance on used vehicles, balance transfer on high cost loans, top up on existing loans, Extend product, working capital loans & other banking products.. Preferred financier status with most of the leading manufacturers. Simple documentation. Quick turn around time. Flexible financing solutions to meet the individual requirement.

COMMERCIAL VEHICLES:
ICICI Bank has defined commercial vehicle as the vehicle, which generates earning for its owner and are used for commercial purposes. Commercial vehicles have been divided into 3 parts: Light commercial vehicles: Vehicles, which have a gross laden weight up to 11 tones. Heavy commercial vehicles: Vehicles, which have a gross laden weight more than 11 tones. Used commercial vehicles: These are vehicles, which have been purchased and used by someone else and resold by them.

MANUFACTURER OF LIGHT COMMERCIAL VEHICLES


EICHER MOTORS LTD. SWARAJ MAJZDA LTD. TATA MOTERS LTD. MAHINDRA & MAHINDRA LTD.

MODELS OF LCV
TATA MOTER LTD: There are 700 models in this. Some of them are: LPT 2515, LPT 709, LPT 909, LPT 1109, LPS 3516, TATA 407, TATA 207

SWARAJ MAZDA LTD: SARTAJ, SUPREME, SUPER. In the month of April they introduced SAMRAT. EICHER MOTORES LTD: 1059, 1070,1075,1090 and a new variant of 1090 that is 1095, 1110 MAHINDRA & MAHINDRA LTD: PICK UP, BALERO CAMPER.

SHOWROOMS IN KANPUR
SAWRAJ MAZDA LTD: MAHAJAN BROTHERS Zarib Chowki, kanpur EICHER MOTORES LTD: SHREE VEHICLES PVT. LTD. MAHINDRA & MAHINDRA LTD: JAIN MOTORES FazalGanj, kanpur TATA MOTERS LTD: KAILASH MOTORES G.T. Road, Kanpur. NEW SHUNTY BUNTY AUTO MOBILES PVT. LTD.

ORGANISATIONAL STRUCTURE OF COMMERCIAL VEHICLES


BUSINESS HEAD (NATIONAL SALES MANAGER) ZONAL SALES MANAGER REGIONAL SALES MANAGER AREA SALES MANAGER SALES MANAGER

DST

DSA

OBJECTIVE OF THE PROJECT


On broader lines it is to evaluate the market share of ICICI bank with other banks and NBFCs operating in and around KANPUR city. It is to evaluate and to suggest the means and the ways for the Bank to contribute to not only the overall market growth but also provide to all the stakeholders, a high level of satisfaction level in value chain.

SIGNIFICANCE OF THE PROJECT


The project gives a detailed overview of the commercial vehicle loan market, the major companies dealing in it and their market share. The project will help the companies in knowing their strengths, weaknesses, level and quality of services, their market share. The project suggest the companies ways to increase their market share and quality of services in order to give more satisfaction to its customers and stakeholders.

Data-Collection Methods
Primary Data Collection

Research Instrument
Questionnaire

Research Method
Survey Method

Sample Size
100 Consumers

Target Segment
Male & Female 25-60 years

QUESTIONAIRE
1. Have you taken any loan for commercial vehicles? If yes than which bank? A). ICICI BANK B). HDFC BANK C). CITI CORPORATION D). NBFCs 2. Are you satisfied with policies of the bank? A). YES B). NO 3. Have you faced any problem in the procedure? A). YES B). NO 4. How much time it took for you to get the loan? A). 1-3 Days B). 3-6 Days C). 1 Week D). Greater than 1 week 5. What was the product knowledge of the executive? A). Poor B). Average C). Good D). Excellent 6. Will you refer the bank to anyone in your acquaintance? A). YES B). NO 7. Are you facing any problem in repayment? A). YES B). NO

Primary data was collected by means of a survey. Since the aim was to find out the thoughts, feelings and attitudes of the respondents, the questionnaire method was the obvious choice. Apart from being versatile, this method also afforded the advantages economy and speed, the last being major advantage considering the limited time that was available for the research project. The questionnaire was structured in such a way so as to include close ended as well as open ended questions thus reducing the interviewers bias and producing results that were more reliable and more easily tabulated and interpreted than otherwise would have been possible. SECONDARY DATA COLLECTION Secondary data is the data which is already existing in the printed form of material easily accessible. Secondary data was colleted by both the material supplied by the company in the form of brochures& pamphlets and internet.

Areas under Study:


KANPUR

The analysis was done on the basis of responses of the consumers. The response to each question of the questionnaire was taken into consideration. The analysis was done by finding out the percentage of the customer awareness about the commercial vehicles loan policies. Such kind of questions gave an idea about what kind of core values could the consumer associate to commercial vehicles loan Policies.

POLICY OF FINANCING
FTU (FIRST TIME USER) FINANCING: They have 0 to 1 vehicle. They may be purchase it for commercial or for own purpose. In this case bank finance 80% of the amount. RETAIL FINANCING: In this customer have 2-9 vehicles. Bank finance 90% of the amount. STRATEGIC FINANCING: Customers have more than 10 vehicles. Bank finance 100% of the amount.

KINDS OF FINANCING
1. FINANCING TO NEW CUSTOMER: They finance to new customer with some more formalities 2. TOP-UP LOAN: This loan is basically for exiting customers to meet their working capital requirement for transportation business. Basically it is give to the retail or strategic group of customers having served more than 1/3 of the tenure. 80% of the principal paid is again given to the customers as a fresh loan. 3. USED COMMERCIAL VEHICLE LOAN : USED COMMERCIAL VEHICLE LOAN

REFINANCE

REPURCHASE

REFINANCE : Customer is having one or more free vehicle and intends to get loan on them then he pledges the vehicle to the bank and take the loan. For this the credit worthiness of the applicant is judged and the vehicle condition is also taken into account before arriving at the particular loan amount. REPURCHASE : Customer intends to purchase the vehicle from the seller. ICICI bank pays the amount on behalf of the buyer to the seller. ICICI BANK

BUYER

SELLER

Eligibility

Any individual / Partnership firm / company with more than 2 years business experience. Ownership of a vehicle is not mandatory. Funding extended to First Time User, Transporters and Captive Consumers.

Loan Amount

Loan amount can vary from a few thousands to crores depending upon the specific requirement. Funding can be up to the extent of 100 % of the chassis body funding can be extended on special requirement & on the past experience. Tie up with the leading manufacturers enables us to give the best deals to our customers.

Sanctioning

Loans are sanctioned for all fast-moving assets at locations where the ICICI Bank infrastructure is available be it direct or indirect or Direct Marketing Associates and authorized distributors. While we generally undertake hypothecation funding, we also do HP transactions. We also look into cases of taking over an old high-interest loan and converting it into low interest loan. Once all the details are in our possession, the loan can be sanctioned within 4 hours.

Rates & Fees


Our rates are one of the most competitive in the market. The interest rates are fixed for the tenure of the contract and are calculated on a reducing basis.

Repayment

In general repayment period is of 3 -4 years, however depending on the nature of the deal the tenure can vary from 6 - 60 months. Normally the repayment is done via PDC's or Auto Debit (In case of ICICI Bank account holder). Cheque bouncing charges would be as applicable. The repayment schedule & the amortization schedule would be sent on disbursement of the loan. Foreclosure of the loan is allowed at a charge of 4 % on the principal outstanding. In the event of an accident, our local representative needs to be informed of the same.

Application Process
There is registration on the internet .If customer wish to apply online for Commercial Vehicle Loans and bank will send their representative to visit customer. OR Clients have to contact bank's representative near their residence / office and they will help clients fill in the application form. There is no need for clients to visit the office. All formalities will be completed at customer doorstep itself. Once all the details are in bank possession, the loan can be sanctioned within 4 hours. As a policy bank do not disclose the reasons for rejection. The asset will be hypothecated to ICICI Bank Ltd. till the loan is repaid, ICICI Bank Ltd retains the right to repossess the asset in case a customer does not repay the loan. However, the customer is still the owner of it and the invoice will be in his name. All the original papers will be kept in his possession and photocopies with ICICI Bank Ltd.

FAQ's for Commercial Vehicle Loans


What are the eligibility criteria for availing an ICICI Bank Commercial Vehicle Loan? What are the minimum & maximum loan amounts? What are the loan tenure options? What are the lending rates? How is the interest charged/calculated? Does the customer has to pay any additional charges? What documents does customer need to submit to avail a Commercial Vehicle Loan? How does customer approach ICICI Bank for a Commercial Vehicle Loan? How much time will it take for customer's loan to be approved? Who can be the co-applicants for the loan? Is a personal guarantor a must? What security/collateral does customer have to provide? If customer does not meet all the criteria for the loan, can he still avail of a loan? How does customer repay the loan?

Can customer prepay his loan? Does he need to open an account with ICICI Bank for availing and/ or servicing the loan? What are the stages involved in taking a loan? What are the loan tenure options? The tenure of the loan can range from a period of six months to sixty months depending on the product and customer requirement. How is the interest charged/calculated? Interest is charged on a flat rate based on the scheme applicable for the particular product. Does customer has to pay any additional charges? Additional charges are applicable for specific products and are nominal in nature. What documents does customer need to submit to avail a Commercial Vehicle Loan? To avail a Commercial Vehicle Loan customer will have to submit the following documents: Proof of Address e.g. Passport, Ration Card, Voters ID Proof of Experience in the relevant area Track Record of past loans if availed

Bank Statement ITR in case of specific category of customers

Additional documents like the financial statements for the last two years Transportation Contracts to be submitted for higher quantum of funding. How does customer approach ICICI Bank for a Commercial Vehicle Loan? He can approach us in any of the following ways: Apply online At customer.care@icicibank.com Call at 24 hours Customer Care Centre. He can just walk into any of ICICI branches. Contact any of bank's direct sales agents.

How much time will it take for customer's loan to be approved? The loans are generally approved within 24 to 48 hours of submission of complete documents; however the time taken may vary depending upon the nature of the loan, quantum of funding and location. Who can be the co-applicants for the loan? Customer can have the following as your co-applicants depending upon your status: Blood relatives in case of individuals. Partners in case of Partnership firms Directors in case of Private Ltd companies Is a personal guarantor a must?

Based on customer profile and credit strengths the requirement can be waived, however in other cases he may be required to provide a personal guarantor.

What security/collateral does customer has to provide? No additional collateral required other than the vehicle on which the funding is extended. If customer does not meet all the criteria for the loan, can he still avail of a loan? Yes he can, his application will be considered based on the credit strength of his co-applicant Approval will be at the sole discretion of ICICI Bank Ltd.

Does customer need to open an account with ICICI Bank for availing and/ or servicing the loan? Bank will encourage customer to start a banking relationship with us so that bank will be able to offer host of other value added services, which are complementary to the loan, however opening an account with us is not mandatory. What are the stages involved in taking a loan? The various stages involved are: Application Discussion on specific requirements Evaluation and Approval Documentation Completion of formalities and disbursement.

COMPETITORS OF ICICI

HDFC CITI CORPORATION NBFCs


TATA FINANCE LTD. KOTAK MAHINDRA SUNDRAM FINANCE ASHOK LEYLAND TELCO BPHC

HDFC

Helping Indians experience the joy of home ownership and other loans. The road to success is a tough and challenging journey in the dark where only obstacles light the path. However, success on a terrain like this is not without a solution. As HDFC found out over two decades ago, in 1977, the solution for success is customer satisfaction. All the need is the courage to innovate, the skill to understand the clientele and the desire to give them best. Today, over a million satisfied customers whose dream HDFC helped realize, stand testimony to our success. The objective of the bank, from the beginning, has been to enhance residential housing stock and promote home ownership and provide loans to people for many other purposes like commercial vehicles etc. Now, the offerings of bank are range from hassle-free home loans and deposit products, to property related services and a training facility. HDFC also offer specialized financial services to their customer base through partnerships with some of the best financial institutions worldwide.

CITI CORPORATION

Citigroup is engaged in banking services, retail and corporate lending including commercial vehicle financing, and venture capital and private equity funding in India. Citi has emerged as a strong player in the Indian CV financing business and provides finance to the entire spectrum of CV operators in India through its direct and indirect channels. It has 24 offices across the country to generate direct business and monitor credit quality. The indirect business is supported by the franchisee network consisting of around 125 offices. Citi follows rigorous and objective evaluation systems and procedures for its vehicle financing business. There are several layers of independent checks and balances and scoring systems to ensure objective credit scrutiny, and integrity of the system. Citi rigorously evaluates the credit quality of intermediaries like dealers and franchisees before initiating business. It also tracks macro industry developments and movements in secondary market valuations of CVs to monitor credit risks in the segment. Besides, Citi has strong systems in place to check potential frauds. The overall collection performance and delinquencies in Citis CV and construction equipment portfolio compares favorably to that for industry peers, reflecting Citis strong appraisal, monitoring and recovery systems. The credit quality of the large and medium CV fleet operators has been good, with high collection efficiency, low delinquencies and low non-performing assets (NPAs). The small fleet operators (SFO) segment has exhibited relatively lower collection efficiency and higher delinquencies, in line with the higher risk profile of the segment. However, the NPA proportion in this segment is in line with the industry averages and is only marginally higher than the NPA percentage in Citis direct portfolio. The complete portfolio of Citi consists of varied channels and originators and thus the individual components have different credit quality. However, all contracts are subjected to Citis uniform selection criterion and due diligence, which would ensure that the level of losses remains low. The portfolio would be sold to an SPV, Peoples Financial Services Limited (PFSL), with all the rights, and PFSL will issue PTCs to investors. The transaction would be monitored by an

independent investors representative, and CFIL would be appointed servicer with responsibilities for collection and recovery.

NBFCs
FOR most people, the mention of non-banking finance companies (NBFCs) conjures up images of default and failure. Growth, let alone rates of 40-60 per cent, is not something that is associated with NBFCs. Even as big a name as Tata Finance fell prey to deception. Another, Kotak Mahindra, has expressed its intention to turn into a bank suggesting that such a course may be inevitable for NBFCs that hope to survive. Yet, a handful of companies have turned the consolidation in the NBFC industry into an opportunity. Sundaram Finance, Ashok Leyland Finance and Cholamandalam Finance recorded sizzling growth rates in the year ended March 2002. The period since has been no different with growth rates remaining strong. Indeed, the top-rated companies have managed to consolidate their position in the industry. The focus on the growing retail financing market, their strengths in the management of a retail portfolio and the failure of a number of NBFCs have helped their performance. The turn of events in the economy, such as the liquidity in the banking system, too has helped these companies with better credit rating. With the advantage of low-cost funds, banks have eaten into the market share of NBFCs. But the top-rated ones have managed their costs better and, therefore, countered the competition from banks.

Large market
The volume in the financing market for commercial vehicles, cars, two-wheelers and white goods is estimated at around Rs 50,000 crore. The financing market for cars and commercial vehicles alone is estimated at a little less than Rs 30,000 crore. Importantly, the market, which is large enough for a number of players, is also growing rapidly. Yet, because of competition from banks, it is not easy to make money. Spreads have been under pressure, especially in the car financing segment. In fact, private and

foreign banks are said to virtually control this market in the metros. Some of the top-rated NBFCs describe the pricing in the car financing market in the metros (with lending rates now touching 8 per cent) as insane. Companies such as Kotak Mahindra Primus, which focus on this segment, saw their profits plummet in the year ended March 2002. Most NBFCs have been pushed out of the metros. However, for top-rated NBFCs, the following have emerged as a source of strength: Reach into a number of non-metro locations; Focus on commercial vehicles and two-wheelers; and Strong relationships with their customers and manufacturers Competition for NBFCs has mainly emerged from the new private sector banks, such as ICICI Bank and HDFC Bank, and foreign-owned banks. These banks operate from less than 200 locations, many of which are in the metros. On the other hand, a top-rated NBFC such as Ashok Leyland Finance operates from 251 locations, many of which are in the non-metros. A company such as M&M Financial Services, which had total assets of a little less than Rs 1,000 crore at the end of March 2002, operates from 151 locations. Having been in the business for many years, companies such as Ashok Leyland Finance and Sundaram Finance also boast of strong relationships with their customers. Like the old private sector banks, some of the top-notch NBFCs have customer relationships that have grown over the years. Loyalties are strong and pricing, while being important, is less of an issue. Companies such as Ashok Leyland Finance, Sundaram Finance, Bajaj Auto Finance, Mahindra & Mahindra Financial Services and Cholamandalam Finance also have strong relationships with manufacturers. These linkages have assumed importance given the intensity in competition.

NBFCs have also benefited from focussing on financing commercial vehicles and two-wheelers. These markets have been growing as rapidly as the car financing market. In fact, disbursements of a few top NBFCs in the car financing market have either plateaued or declined since March 2002. In

contrast, competition from private and foreign banks is much less intense in the commercial vehicle and two-wheeler segments. The linkages with manufacturers and customers are also helping them boost disbursements.

Protecting profits
Top-rated NBFCs have not only been successful in managing their market share but also in protecting their profitability. A combination of the factors cited earlier had helped these NBFCs earn better returns on their deployment. In fact, almost all the top-rated NBFCs enjoy a return on total assets that is higher than HDFC Bank's, one of the better run banks. The higher return on assets was despite their operating cost ratio being similar to that of HDFC Bank. For example, operating expenses as a proportion of net margin worked out to 68 per cent for HDFC Bank. On an average, this was not significantly higher than the ratio for most top-rated NBFCs. If return on assets were still superior, then it was because of the higher return on their funds. For top NBFCs, the interest income worked out to 17-21 per cent of their total assets for the year ended March 2002. The liquidity in the banking system also helped these finance companies. Spreads over government securities for AAA rated corporate sector debt instrument are now only 50 basis points. In other words, if the cost of funds for banking companies has declined sharply, then top-rated NBFCs have also benefited from such a decline in interest rates. Some of these companies are now raising funds at 7-8 per cent. Also, these companies have displayed the ability to manage their portfolio without large incidence of non-performing assets. For instance, Ashok Leyland Finance, Cholamandalam Finance and Bajaj Auto Finance boast of net non-performing assets to net advances ratio of less than 1 per cent. It was higher at around 2.4 per cent only in the case of Sundaram Finance. This again has helped them lower the overall cost of operations and, thereby, protect their profitability. Higher profitability and innovative financing options, such as securitization, have also helped in boosting the capital adequacy ratio of these NBFCs. Sundaram Finance, Ashok Leyland Finance,

Bajaj Auto Finance and M&M Financial Services, among others, boast of capital adequacy ratios upwards of 15 per cent. In other words, their balance-sheets continue to be strong to accommodate further growth in disbursements. Since March 2002, the spreads of these companies would have continued to be under pressure and the return on their assets would have declined far more than their cost of funds. However, they are likely to have made up for the decline in spreads through larger volume growth. Overall, higher disbursements will make up for the decline in spreads. This is already reflected in the profits recorded by these NBFCs in the first half of the year ended March 2003. The second half, too, is likely to be no different, as the growth drivers demand for commercial vehicles, cars and two-wheelers have been strong. Will they continue to remain strong beyond March 2003? The top-rated NBFCs, which have emerged stronger after a period of churning in the industry, look set to carve out a niche for themselves in the retail finance market.

Citicorp 9% HDFC Bank 11% ICICI ICICI 50% NBFCs 30% NBFCs HDFC Bank Citicorp

Overall customer survey given an indication that the customers are mostly satisfied lot but if we do an in depth analysis of the same we will find there is basically 2 types of customer. Defaulter customer Good track holder

In first case customers who are deliqutely mostly will not be referring to follow transporters. In second case customers will mostly refer the company to the follow transporters. Largely the trends give the indication that over a period of time ICICI will be require to focus on increasing its customer base i.e. to say attract new customer into its fold as well as to retain the exiting customer otherwise they will fall in lap of other good competitors like HDFC and CITI Corp. To increase the interest rates by 5% base point to remain competitive and better profitability portfolio.

The project was taken as the part of our summer training. As the time was limited so the survey was confined to only Kanpur and adjoining areas. The size of the sample was also limited to 100. The Project is entirely based on the Sample Survey and the assumptions might not be free from errors. The customers perception for the loan policies is the basis of every suggestions and recommendations.

ICICI BANK COMMERCIAL VEHICLES LOAN QUATERLY REPORT QUESTIONNAIRE INTERNET NEWS PAPER ON INTERNET I. THE TIMES OF INDIA II. THE ECONOMICS TIMES III. HINDUSTAN TIMES

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