You are on page 1of 80

CHAPTER (1)

INTRODUCTION

(1.1) INTRODUCTION TO INDUSTRY:A Bank is a financial institution and a financial intermediary that accepts deposits and
channels those deposits into lending activities, either directly by loaning or indirectly
through capital markets. A bank links together customers that have capital deficits and
customers with capital surpluses.
Due to their influential status within the financial system and upon national economies,
banks are highly regulated in most countries. Most nations have institutionalized a system
known as fractional reserve banking, in which banks hold only a small reserve of the funds
deposited and lend out the rest for profit. They are generally subject to minimum capital
requirements based on an international set of capital standards, known as the Basel
Accords. Banking in its modern sense evolved in the 14th century in the rich cities of
Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and
lending that had its roots in the ancient world. In the history of banking, a number of
banking dynasties have played a central role over many centuries. The oldest existing bank,
Monte dei Paschi di Siena, was founded in 1472 in Siena, Italy.
The origins of modern banking can be traced to medieval and early Renaissance Italy, to
the rich cities in the north like Florence, Lucca, Siena, Venice and Genoa. The Bardi and
Peruzzi families dominated banking in 14th century Florence, establishing branches in
many other parts of Europe. One of the most famous Italian banks was the Medici Bank, set
up by Giovanni di Bicci de' Medici in 1397. The earliest known state deposit bank, Banco
di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy.
Modern banking practice, including fractional reserve banking and the issue of banknotes
emerged in the 17th and 18th centuries. Merchants started to store their gold with the
goldsmiths of London, who possessed private vaults, and charged a fee for that service. In
exchange for each deposit of precious metal, the goldsmiths issued receipts certifying the
quantity and purity of the metal they held as a bailee; these receipts could not be assigned,
only the original depositor could collect the stored goods.

Gradually the goldsmiths began to lend the money out on behalf of the depositor, which led
to the development of modern banking practices; promissory notes (which evolved into
banknotes) were issued for money deposited as a loan to the goldsmith. The goldsmith paid
interest on these deposits. Since the promissory notes were payable on demand, and the
advances (loans) to the goldsmith's customers were repayable over a longer time period,
this was an early form of fractional reserve banking. The promissory notes developed into
an assignable instrument which could circulate as a safe and convenient form of money
backed by the goldsmith's promise to pay, allowing goldsmiths to advance loans with little
risk of default. Thus, the goldsmiths of London became the forerunners of banking by
creating new money based on credit.
The Bank of England was the first to begin the permanent issue of banknotes, in 1695. The
Royal Bank of Scotland established the first overdraft facility in 1728. By the beginning of
the 19th century a bankers' clearing house was established in London to allow multiple
banks to clear transactions. The Rothschild's pioneered international finance on a large
scale, financing the purchase of the Suez canal for the British government.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena,
Italy, which has been operating continuously since 1472. It is followed by Berenberg Bank
of Hamburg (1590) and Sveriges Riks bank of Sweden (1668)

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994.
The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.

Fig (1.1)

Excellence, Product Leadership and People, they believe that the ultimate identity and
success of their bank will reside in the exceptional quality of people and their extraordinary
efforts. They are committed to hiring, developing, HDFC Bank comprises of a dynamic and
enthusiastic team determined to accomplish the vision of becoming a World-class Indian
bank. HDFC banks business philosophy is based on our four core values - Customer
Focus, Operational motivating and retaining the best people in the industry.

EVOLUTION- The history of banking is closely related to the history of money


but banking transactions probably predate the invention of money. Deposits initially
consisted of grain and later other goods including cattle, agricultural implements,
and eventually precious metals such as gold, in the form of easy-to-carry
compressed plates. Temples and palaces were the safest places to store gold as they
were constantly attended and well built. As sacred places, temples presented an
extra deterrent to would-be thieves.

The First Bank The Romans, great builders and administrators in their own right, took
banking out of the temples and formalized it within distinct buildings. During this time
moneylenders still profited, as loan sharks do today, but most legitimate commerce, and
almost all governmental spending, involved the use of an institutional bank. Julius
Caesar, in one of the edicts changing Roman law after his takeover, gives the first
example of allowing bankers to confiscate land in lieu of loan payments. This was a
monumental shift of power in the relationship of creditor and debtor, as landed
noblemen were untouchable through most of history, passing debts off to descendants
until either the creditors or debtors lineage died out.

Emergence of merchant banks- The original banks were "merchant banks" which were
first invented in the Middle Ages by Italian grain merchants. As the merchants and
bankers grew in stature based on the strength of the Lombard plains cereal crops, many
displaced Jews fleeing Spanish persecution were attracted to the trade. They brought
with them ancient practices from the Middle and Far East silk routes. Originally
intended for the finance of long trading journeys, these methods were applied to finance
the production and trading of grain

Leading Indian Banks by Assets and Market Capitalization Market Majority Asset Size
Stock Bank Capitalization Shareholding (in $ Billions) Listing (in $ Billions) Mumbai,
State Bank of India Government.

Nature of the Industry:- Banks safeguard money and provide loans, credit,
and payment services such as checking accounts, debit cards, and cashiers checks.
Banks also may offer investment and bank products. As a variety of models for
cooperation and integration among finance industries have emerged, some of the
traditional distinctions between banks, bank companies, and securities firms have
diminished. In spite of these changes, banks continue to maintain and perform their
primary roleaccepting deposits and lending money.

GROWTH- Recent developments. Declining home prices were one cause of the
recent financial crisis. As home values declined, many borrowers stopped paying on
their home loans (mortgages.) With prices of houses declining and increasing rates
of default, banks suffered large losses. Some banks suffered larger losses than other
banks because they made riskier mortgage loans or owned mortgages concentrated
in areas of the country with the largest housing price declines. Many banks with
large losses were bought by other, stronger banks, or were taken over by the FDIC.

TRENDS 1. The financial crisis has caused banks to re-assess their business
fundamentals like profitability and client relationship management to improve client

retention and cross selling capabilities 2. Banks are renewing their focus on the
fundamental assets of customer, staff and capital rather than product innovation for
long-term growth to become well managed 3. Banks are increasing risk transparency to
help reduce operational risk and comply with corporate governance regulations and
standards 4. Banks are focusing on staff efficiency to make them more aligned with the
banks risk and profit strategy by enhancing their IT solutions 5. Banks are moving
from a product-centric approach to a client-centric approach with a 360-degree
understanding of their clients to better manage and maintain client relationships

TRENDS-4 Banks are deploying client profitability analytics to enhance


performance by analyzing profitability at multiple levels Banks are seeking data
reporting technology and proactive approaches to better manage clients and client
portfolios. Banks are trying to better leverage the best of existing infrastructures while
adding new platforms for operational and cost efficiencies. Banks are accelerating the
use of algorithmic approaches to complex back-office tasks for increased automation
and efficiency. Banks are looking to do more with less by balancing cost reduction with
process improvements using business process management and business activity
monitoring.

(1.2) INTRODUCTION TO COMPANY:HDFC BANK:The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank Limited',
with its registered office in Mumbai, India. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995. The Housing Development Finance
Corporation (HDFC) was amongst the first to receive an 'in principle' approval from the
Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's
liberalization of the Indian Banking Industry in 1994.

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of
over 1416 branches spread over 550 cities across India. All branches are linked on an
online realtime basis. Customers in over 500 locations are also serviced through
Telephone Banking. The Bank also has a network of about over 3382 networked ATMs
across these cities.

The promoter of the company HDFC was incepted in 1977 is India's premier housing
finance company and enjoys an impeccable track record in India as well as in international
markets. HDFC has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned to promote
a bank in the Indian environment.

The shares are listed on the Bombay Stock Exchange Limited and the National Stock
Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on
the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global
Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange.
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was
formally approved by Reserve Bank of India to complete the statutory and regulatory
approval process. As per the scheme of amalgamation, shareholders of CBOP received 1
share of HDFC Bank for every 29 shares of CBOP.

The merged entity now holds a strong deposit base of around Rs. 1,22,000 crore and net
advances of around Rs. 89,000 crore. The balance sheet size of the combined entity would
be over Rs. 1,63,000 crore. The amalgamation added significant value to HDFC Bank in
terms of increased branch network, geographic reach, and customer base, and a bigger pool
of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited (another new
private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private
banks in the New Generation Private Sector Banks. As per the scheme of amalgamation
approved by the shareholders of both banks and the Reserve Bank of India, shareholders of
Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

HDFC Bank offers a wide range of commercial and transactional banking services and
treasury products to wholesale and retail customers.
The bank has three key business segments:

i.

Wholesale Banking Services The Bank's target market ranges from large, blue
chip manufacturing companies in the Indian corporate to small & midsized
corporate & agricbased businesses.

ii.

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 onestop window for all his/her banking requirements.

iii.

Treasury Within this business, the bank has three main product areas Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities, and
Equities. The Treasury business is responsible for managing the returns and market
risk on this investment portfolio.

HDFC Securities (HSL) and HDB Financial Services (HDBFSL) are its subsidiaries.
Services offered by the company:

Personal Banking

Accounts & Deposits

Loans

Cards

Forex

Investments & Insurance

NRI Banking

Accounts & Deposits

Remittances

Investments & Insurance Loans Payment Services

Wholesale Banking

Corporate

Small & Medium Enterprises

Financial Institutions & Trusts

Government Sector

ICICI BANK:Financial services and wide range of banking products are offered by ICICI Group and
retail customers through a variety of delivery channels and through its specialized group
companies, subsidiaries and affiliates in the areas of personal banking, investment banking,
life and general insurance, venture capital and asset management. In their respective sectors
ICICI Group companies have enhanced and maintained their leadership position with the
support of strong customer focus.
Second largest Indias bank is ICICI with the total assets of Rs. 3,793.01 billion (US$ 75
billion) at March 31, 2009 and for the year ended March 31, 2009 profit after tax is Rs.
37.58 billion. In India, the ICICI bank has a network of 1,451 branches and total ATMs are
4,721 and existed in 18 countries.

STATE BANK OF INDIA:-

10

The evolution of State Bank of India can be traced back to the first decade of the 19th
century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June
1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809.
It was the first ever joint-stock bank of the British India, established under the sponsorship
of the Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April
1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal.
These three banks dominated the modern banking scenario in India, until when they were
amalgamated

to

form

the

Imperial

Bank

of

India,

on

27

January

1921.

An important turning point in the history of State Bank of India is the launch of the first
Five Year Plan of independent India, in 1951. The All India Rural Credit Survey Committee
proposed the takeover of the Imperial Bank of India, and integrating with it, the former
state-owned or state-associate banks. Subsequently, an Act was passed in the Parliament of
India in May 1955. As a result, the State Bank of India (SBI) was established on 1 July
1955. This resulted in making the State Bank of India more powerful, because as much as a
quarter of the resources of the Indian banking system were controlled directly by the State.
Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The State
Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices
comprising branches, sub offices and three Local Head Offices, inherited from the Imperial
Bank. Instead of serving as mere repositories of the community's savings and lending to
creditworthy parties, the State Bank of India catered to the needs of the customers, by
banking purposefully. The bank served the heterogeneous financial needs of the planned
economic development

(1.3) INRODUCTION TO TOPIC:-

11

PERSONAL LOAN
Many times people would have experienced financial crisis. During such events they
would have borrowed money from their neighbour or acquaintance. These kinds of loans
which are available in banks and other financial institution are known as personal loan. A
personal loan can be a secured or unsecured one depending upon the company's practices,
credit history etc.
What are personal loans?
What are its uses?
What are the types in it?
What are the benefits of secured and unsecured loans?
Who will provide personal loans?
How one can avail personal loans?

Personal loan

A personal loan is a sum of money that an adult person borrows to meet his financial needs
and requirements. An individual can take an easy personal loan or a guaranteed personal
loan for a variety of reasons. Loans for personal debt help provide funds to purchase that
dream boat or car, pay for mortgage arrears or home improvement requirements. In
fact personal loans help meet most of the financial emergencies that an individual can think
of.
Personal loans are often the most preferred type of loan on account of their flexibility.

The two most common types of personal loans are:


a) Secured Loans
b) Unsecured Loans

12

Both these options are linked to the choice that one can use any fixed asset to serve as
collateral to secure an easy personal loan.

Who Will Help Provide Personal Loans and How?

There are many banks and financial institutions that would help provide with easy personal
loans or guaranteed personal loans.
As all of them would have their own sets of terms and conditions by which they abide, it
would be smart to consult with as many lending institutions before arriving at a decision of
personal loan. Talk to them about the financial requirements. Check the quotes that they
give.
Once the formalities of taking a loan completed, the banks would give a lump sum of
money. This could be repaid over a period of time. The longer the period of repayment, the
lesser the interest rate.
The lenders have a duty to inform the borrowers of the rate of interest that they would be
charging. Be sure to investigate whether the rate of interest charged is fixed or floating.
Check with the banks also about any other prepayment penalties, and other costs incurred
for securing a loan.

Online Personal Loans


Loans are offered by not only lenders in the locality but also by internet lenders. They
could either be directly deposited in the bank account or mailed by way of cheque.
Repayments could be automatically debited from the account to suit convenience. Be sure
to make payments on time, or else one may incur additional penalties.
Guaranteed online personal loans come with lower rates of interest than credit cards.

13

The first guaranteed personal loans could be a small sum; but once it is proved that
payments can be made on time, it is most likely to be assured a larger sum the next
time one opt for a guaranteed online personal loan.

How to apply for a personal loan:Step 1) Enquiry with a financier:The first step is to get in touch with a lender. It is required to get in touch with
as many lenders as possible and get them to make loan offers. Then negotiate with them
to get the best interest rate.
Check if there are any special offers.
After getting all the banks to make their offers, select the lender based on the information
given.

Step 2) Documents Collection:After finalizing the lender, the lender's direct selling agent will visit and collect documents
supporting proof of income, residence proof, and identity. It may be required to
produce copies of IT returns, salary slips, bank statements, passport, driving
licence, and other relevant documents. These requirements vary from lender to
lender.

Step 3) Field Investigation Agency Representative Visit:After submitting the documents, a field investigator will visit home to double check the
facts provided in the documents, such as the place of residence, tenure at work
place and so on. It is essential to be present during this visit; otherwise the
investigator could report that the facts provided do not actually add up, thus forcing the
lender to reject the loan application.

14

Step 4) Loan approved:Once the lender is satisfied with the veracity of the documents provided, the
loan is approved. The lender then disburses the amount through cheques or demand
drafts (DD).

Documentation:Compared to other types of personal loans requires to produce the least number of
document.
The necessary documents required can be classified into three:

D o c u m e n t s S u p p o r t i n g I d e n t i t y,

Residence

Income

Identity Proof:
A copy of any of passport or driving license, voters ID, PAN card, credit card
with photograph, or employee ID card with photograph. Any one of the above
documents with photograph is proof that he is the same person as profess to be.

Proof of Residence:

A copy of passport, ration card or voters ID, if his reside at the same place as
entered in the above-mentioned documents. If he is staying as a tenant on rent, in a
place different from where he have been issued the ration card, passport, or voters ID,
he can produce utility bills (electricity or telephone) of the place as proof of residence.

Income proof

15

The proof of income for salaried individuals differs from that of self-employed
individuals. Salaried p e o p l e n e e d t o s u b m i t t h e i r l a t e s t s a l a r y s l i p , f o r m
1 6 f o r t h e l a s t f i n a n c i a l y e a r, a n d t h e i r b a n k statement for the last 6
months. Self-employed people need to provide their IT returns for the last
2years, balance sheet, and profit & loss account as proof of income.

Prime Consideration before Applying a Loan


Remember to always borrow in a responsible manner. Never borrow more than it can be
repaid.
Indulge in some serious shopping to seek the best rates for personal loans. By comparing
the best rates for personal loans and for unsecured personal loans, a comprehensive idea of
the choices offered would be got, before signing the credit agreement.
Always remember to read the small print, before actually taking the step to sign on the
dotted line. Whether opting for a personal loan ,or a secured loan, and are actively seeking
unsecured personal loan best rates, or the best rates for personal loans, it should be
checked first if there are provisions for :
An early repayment fee where a redemption fee is charged if loan is repaid before the end
of its term (sometimes the fee could be as much as two month's interest, which
would considerably add to the cost of your personal loan)
An arrangement fee for purposes of setting up the loan
For a break or deferment period where it is exempt from making the repayment for a
specific period of time on account of some difficulty in repayment .However the interest
accrued during this break period is still payable, and could be added to the outstanding loan
balance.

Charges applicable before and after the Personal Loan

16

Very often we fail to read the fine print in a loan document. The real cost
of personal loan is visible only when factor in numerous other charges levied. If intend to
make comparisons with other types of loans, it is necessary to take into account
these charges to arrive at the real cost.
For example, the processing fee or prepayment fee in the case of a personal
loan will be different from that of a loan against property.
Here is a list of all charges that are levied either before the loan is disbursed or
through the course of the loan or when the loan is terminated:

Description of Charges:

Processing fee

Prepayment fee

Charge for late payment (loans)

Cheque bounce Charges

Duplicate statement charges

Documentation charges

Service tax

1) Processing fee:Processing fee is the amount charged by banks to cover the cost of processing
the loan application.
Processing fees vary from one bank to another. Some banks ask to pay the processing fee
up front even before the loan is sanctioned. This is often charged when loan application is
submitted along with the supporting documents.
The processing fee is generally a percentage of the loan amount and is between 1-2 percent
for personal loans. Some banks levy a flat charges of Rs . 1 0 0 0 o r 2 0 0 0 u p f r o n t

17

a n d t h e n d e d u c t t h e b a l a n c e processing fee (if any) from the loan amount before


disbursal.
The processing fee is non-refundable. Some banks say the processing fee will be refunded
if the loan is not sanctioned. It is recommended to take this in writing from the bank as
technically, processing fee is non-refundable.

2) Pre-payment fee:The pre-payment fee is the penalty paid by the borrower for foreclosing the
loan before the actual tenure. Pre-payment fees are levied as a percentage of
the outstanding principal of the loan amount. The pre-payment fee varies from
bank to bank. It varies from 2-5 percent of the outstanding loan amount, if the
repayment amount exceeds 25 percent of the outstanding loan amount.

3) Charges for late payment:When the monthly instalment (EMI) towards repayment of a loan is delayed the bank
collects the instalment along with late payment charges. The late payment charge is also
known as the delay p a y m e n t c h a r g e s o r t h e o v e r d u e p a y m e n t c h a r g e s . L a t e
p a y m e n t c h a r g e s a r e f i x e d a t t h e t i m e o f signing the loan contract.
This is chargeable you make the payment after the due date. Late payment fees range from
2-3 per cent of the EMI.

4) Cheque Bounce charges:Charges: Cheque bounces mean that a cheque has been presented for clearance, but the
amount written on Cheque exceeds that available balance in the account. It is often
colloquially referred to as a bounced cheque. Business frequently use the term dishonoured
cheque. If post-dated cheques are given to the bank to debit the EMI from the customer
account, it is to be ensured that there are sufficient funds in the account every month. If a
single cheque bounces, the bank charges anything from Rs 250 to Rs 500as penalties.

18

5) Duplicate statements charge:Whenloan is sanctionedthe lender gives the customer a statement detailing the repaymentsc
hedule. If he loses it, he can request the bank to issue a duplicate statement. The statement
indicates the balance loan amount and the remaining EMIs. Banks charges anywhere
between Rs 100 to Rs 500for issuing duplicate statements.

6) Documentation charges:Banks levy documentation charges towards the various documents pro
v i d e d t o w a r d s t h e l o a n application. Many banks employ third-party vendors to do
the document verification. The expense on this account is usually passed on the customers,
which ranges from Rs 500 or Rs 1000.

7) Service tax:Service tax is a tax levied on service providers who have annual revenue of more than 8 lakh.
Banks loans too fall under the purview of service tax. service tax is charged at the rate of 12.36 per
cent.

Personal Loan: Eligibility Criteria:The person eligible for a personal loan are a salaried individual, self-employed individual
(own business), or a self-employed professional (doctor, lawyer, etc.). Other factors such as
income, age, residence, work experience, repayment capacity, past obligations and place of
work are also taken into account. A personal loan can be used for any purpose provided it is
legitimate; the end use of the lender need not be mentioned

19

Personal Loan: Eligibility Criteria: Basics:-

Personal Loan eligibility calculator:


Calculate the personal loan amount likely to get from the lender.

Personal Loan Eligibility Calculator for Self-Employed:


If self-employed, this calculator will tell the amount of personal loan one likely to get.

Personal Loan: Interest Rates:


Interest rates charged on personal loans vary across various banks.
There are primarily 3 kinds of interest rates, most commonly offered by banks are:

Fixed interest rate ,

Floating interest rate,

Flat rate

Of the rates offered, flat rates can be considered the most expensive as in other cases, the
reducing balance method is used for calculation.

TYPES OF PERSONAL LOANS


A Personal Loan is one which is borrowed from a bank, or a building society or institution,
or from any other lender as a lump sum of money. It would ideally be the best option to
consolidate all of the debts into one, so that the overall amount of monthly repayments is
reduced.
Short term personal loans, secured personal loans, fast cash personal loans, no credit
personal loans, military personal loans, second chance personal loans, Christian lending

20

personal loans- all these are available to a person who is looking to borrow money between
one and five years.
There are basically Two Types of Personal Loans. They are:

1) A Secured Loan
A secured personal loan is so called due to the security or the collateral that is involved in
the whole process of lending.
It is a loan that requires the consumer to provide the lender with some form of collateral or
security- that is his property or his home, either mortgaged or owned- other than just his
verbal assurance of repaying the loan.
In other words, it is a loan that has been secured on the borrower's assets.

Points to Remember Before Opting For A Secured Personal Loan:If the borrower agrees to a secured personal loan using his home as collateral, he should be
prepared for the eventuality of forfeiting it to the lender, should he not make his
loan payments and interest on time and according to the agreed terms.
The lender would sell the property to recover his money and cover any additional expenses
incurred while doing so.
Before he signs up for even a small secured personal loans, the borrower has to make sure
that he can afford the monthly payments. It would be in his best interest therefore to read
the credit agreement terms carefully, paying special attention to the interest rate and term of
the loan, the total amount that is payable, and the repayments required.

21

Benefits of a Secured Loan:The benefits of secured personal loans are various, the primary being:

That they can be repaid with lower monthly payment, over a longer period of time.

That the rate of interest charged on the loan would be much lower than a comparable
instant unsecured personal loans, thereby making the option of a secured personal loan
cost-effective. One also does not have to worry about unmanageable loan repayments
terms, on account of the low interest rates. Further the personal loan could also be offering
a more flexible repayment period.
That, if the borrower is the owner of a home, the chances of a lower rate of interest being
charged on the loan are high, since he has secured the loan based on the strength of his
assets. Failure to repay the loan would mean foreclosure or repossession of this asset by the
lender, thereby greatly reducing the lender's risk. Hence, the low interest rates. On secured
loans, the typical APR is 6-25%.
Secured loans are more easily available at very reasonable rates, to those with
adverse credit rating that is, with a tarnished history of defaults, arrears, and bankruptcy,
and to those with a poor credit record, for example, people who are self employed or those
who have just changed jobs.
The borrower is allowed funding that ranges from 3000 pounds (if you want a small
secured personal loan) up to 50000 pounds, and some lenders are willing to contemplate
lending more. This is much more funding than an instant unsecured personal loan would
allow, and where the maximum amount that one could borrow would be for a limit up to
25,000 pounds. Secured personal loans are the loans which require a large amount that
could be repaid over a longer term.

22

The borrower could consolidate his more expensive borrowings into a single monthly
repayment that is much cheaper. He could opt for a secured loan in order to consolidate
debt, and to replace the high interest rate loan with a much lower one.
The easy availability of the secured personal loan is another benefit for consumers.
Because of the low risk that funding a secured loan poses to its lenders, very few
applications for a personal secured loan are turned down.
Another benefit would involve the flexibility of use of the secured personal loan. This type
of loan could be tuned to meet the needs of any financial requirement, be it debt
consolidation, home improvement.
Only when the borrower has adequately provided for its amortization, can the benefits of
the secured personal loan be enjoyed. Therefore it would be smart to make preparations for
the loan repayments from the very beginning, and to choose that mode of loan repayment
that most suits.
Secured Personal Loans are now available in the UK, with a wide pool of lenders,
especially online, so that one could browse and book the best personal secured loan vide
the Internet, in terms of interest rates and other conditions

2) The Unsecured Personal Loans


This is a loan where:The borrower is not required to pledge any collateral, to secure the loan. It is also called a
Signature Loan, as the only collateral required is the borrower's signature. This loan is
based solely on the borrower's credit, can be utilized for any purpose, and does not insist
upon home ownership and great credit.

23

Since this instant unsecured personal loans are not been secured on the assets of the
borrower, the creditor has no right to these assets, should the borrower default on
repayments.
However, the lender has the right to legal claims to recover his money, which may entail
the borrower having to sell his assets to repay the loan.
As this loan is not secured, and as the lender's risk is consequently high, the rate of interest
or APR would be higher than that charged on a personal secured loan.
The lender just may limit the unsecured personal loan to exclude certain purposes.

Useful / Benefits of an Unsecured Personal Loan

There is no requirement of collateral. The borrower is not obliged to pledge his hard
earned assets. Instead, he can take advantage of his credit history.
There are no financial statements or no documents of tax returns required. The borrower is
not encumbered with too much paper work if he chooses to opt for instant unsecured
personal loans. That is most lenders of guaranteed unsecured personal loans, offer what is
called a stated loan, where the borrower's information on his financial circumstances need
not be ratified by supporting financial statements or tax returns documents. This is
especially advantageous for those firms or individuals whose reported financial statements
are not necessarily a reflection of their true earnings.
There is no requirement of a business plan for an unsecured personal loan. Traditionally
lenders require an elaborate business plan complete with pro forma's and budget. This
procedure can be both costly and time consuming, with no guarantee of securing loan
approval. But with unsecured personal loans there is no need for a business plan.

24

Quick approvals-the network of unsecured personal loan lenders would require very little
time to approve the instant unsecured personal loan. There is an easy application processmost lenders of unsecured personal loans require only a one-page application.
Therefore we see that all good personal loans are a rare breed, and to be achieved with
persistent effort, tact and patience- be they unsecured personal loans, instant unsecured
personal loans, secured personal loans..

Fast Cash Advance Loan

Sometimes, a person may be in need of a quick payday loan, so that he could meet an
unexpected money crisis. Car repair and other unexpected bills usually occur at
inconvenient times. In case he does not have the extra cash to meet these unexpected
expenses, he could really consider applying for a cash advance.

A Fast Cash Advance Loan:

It is similar to a bank loan only cash advances are a lot easier to qualify for, and enjoy a
shorter term. Chances that the application for a bank loan may be denied are high as banks
have a requirement of sufficient income, a collateral and good credit rating.
It has a two week term. Therefore the loan is due along with the next paycheck. It is
required that the applicant must be at least 18 years of age. The cash advance company
would also be checking out/confirming the salary and employment. While the company is
keen to help, it also wishes to satisfy itself that the loan repaid.
It renders eligibility to receive funds up to a maximum of $1000, with a cash advance.
Some companies allow larger sums to be borrowed.

25

Typically fast cash advance loans are due within the period of two weeks. Taking the
circumstances of the borrower into consideration however, some cash advance companies
would expect that at least half the loan amount will be repaid in two weeks, and the
balance in a month. Such loans are called 30 Day Payday Loans.
But it should be remembered that before taking such a 30 day payday loan, a company
must be chosen that allows for long term loans, and assumption should not be made that
all cash advance companies would give long term cash advance.
Military Personal Loans are easy for servicemen to get anytime. Military jobs involve
good salaries and high status and sometimes these could complicate matters by incurring
extra expenses.

A Military Payday Loan

It is offered by military loan companies to help servicemen to buy a home or a car, or any
other requirement that needs higher costs. These companies offer varying types of loans,
for example, bereavement loan, career service loan, disaster relief loan, that are easy and
at the same time affordable. It is specifically for men and women of the military and can be
got by anybody in the military, even those with bad credit history.
It Can be easily obtained by vide electronic transfer, after making the application online.
This is one of the biggest advantages- that a military man can get his application wherever
he may be.
A second advantage would be the low rate of interest.
The military man is given the choice of his own repayment schedule. If he cannot repay
with one payday check, then he can do it with successive ones.
If he wants cash instantly, but payday is still far, he can apply for funding of the Instant
Military Payday Loan. Retired army servicemen usually apply for the fast cash loan, and
retired military loans also do not discriminate between ranks of ex servicemen.

Military Loan

26

To qualify for a Military Loan certain requirements are necessary. Pioneer Military Lending
(an online service) for instance, requires that one must be:
An Active Duty Military Personnel to be able to qualify for a loan for military personnel

A Full Time Active Reserve Personnel

Retired Military Personnel with a 20Year career or

A Department of Defence Military Personnel (GS-6 or above)

27

CHAPTER (2)
LITERATURE REVIEW

2. Literature Review:It is relevant to refer briefly to the previous studies and research in the related areas of the
subject to find out and to fill up the research gaps, if any. Literature on financial services
can generally be found; a number of books are available on banking related aspects as
merchant banking, loan syndication, securitization, profitability and productivity etc. but,
few studies are undertaken on the role of technology in the banking services.
2.1) Uppal R.K. (2010) studies the extent of mobile banking in Indian banking industry
during 2000-2007. The study concludes that among all e-channels, ATM is the most
effective while mobile banking does not hold a strong position in public and old private

28

sector but in new private sector banks and foreign banks m-banking is good enough with
nearly 50 pc average branches providing m-banking services. M-banking customers are
also the highest in e-banks which have positive impact on net profits and business per
employee of these banks. Among all, foreign banks are on the top position followed by new
private sector banks in providing m-banking services and their efficiency is also much
higher as compared to other groups. The study also suggests some strategies to improve mbanking services.
2.2) Abdullah D.N.M.A. and Rozario F. (2009) study the influence of service and product
quality towards customer satisfaction. 149 respondents from one of the well known hotel in
Kuala Lumpur, Malaysia are selected as a sample. Psychometric testing is conducted to
determine the reliability and validity of the questionnaire. The study finds positive
significant relationship between place/ambience and service quality with customer
satisfaction. Although, relationship between food quality and customer satisfaction is
significant, it is in the negative direction. Future researchers can concentrate on
determining attributes that influence customer satisfaction when cost/price is not a factor
and reasons for place/ambience is currently becoming the leading factor in determining
customer satisfaction.

2.3) Aktan B., Teker E. and Erosy P. (2009) examines the usage of internet in Turkey to
make a basic due-diligence investigation for the financial institutions, including banking,
stock trading, insurance and provision of financial information over the period 2005 and
2008. The findings show that internet usage in Turkey with its young population has
continued to grow dramatically in financial services in terms of customers and financial
transactions of various natures.
2.4) Hua G. (2009) investigates the online banking acceptance in China by conducting an
experiment to investigate how users perception about online banking is affected by the
perceived ease of use of website and the privacy policy provided by the online banking
website. The 110 undergraduate students in Chinese University are involved in the

29

investigation. The study finds that both perceived ease of use and privacy policy have a
significant impact on users adoption of online banking. The study also investigates relative
importance of perceived ease of use, privacy, and security. Perceived ease of use is of less
importance than privacy and security. Security is the most important factor influencing
users adoption. The study also discusses the implications of these results and limitations
2.5) Migdadi Y.K.A. (2008) aims to identify the quality of internet banking service
encounter of the retail banks in Jordan, and to identify the quality dimensions that should
be improved or sustained. The study evaluates the banks' web sites by using the web site
quantitative evaluation method (QEM) in March 2008 for sixteen retail banks in Jordan.
The results indicate that the banks in Jordan have significant positive quality of the internet
banking service encounter, further the banks' web sites are rich in their content and
significant in the navigation, but the speed of home page down load and web site
accessibility should be developed in the future.
2.6) Khan M.S. (2007) examines the service quality of education sector and internet
banking by employing SERVQUAL. The data is collected through questionnaire from
students, alumni, parents and recruiters of technical institutions for education quality and
from internet banking customers for internet banking quality. The study employs factor
analysis to differentiate the dimensions of service quality into different factors and
concludes that all type customers are more concerned with academic factor to improve the
education service quality while in case of internet banking customers are satisfied with
reliability of services but not very much satisfied with user friendliness dimensions.
The results indicate that privacy/security and fulfilment do not contribute significantly
towards the overall service quality and the males and females differ in their views towards
service quality dimensions. The study also suggests some measures to improve service
quality and explore future areas of further research.
2.7) Chopra V.K. (2006) highlights the importance of IT and business re-engineering in
achieving the objectives of banks. The paper concludes that PSBs and old private sector
banks are slow in imbibing technology in their operations, whereas new private sector
banks and foreign banks are early adopters of the technology and increasing the

30

competition. The paper emphasizes that IT along with the business process re-engineering
can provide ideal technology environment catering to the stated business objectives.
2.8) Kukkudi and Deene (2006) study the impact of ATMs on customer satisfaction with
special reference to SBH in Gulbarga district with sample size of 100 respondents. It
concludes that ATMs are used mostly by the age group of 25 35 years comprising more
male members. 79 pc uses ATMs weekly where 85 pc are aware about the restrictions
concerning ATMs usage and the numbers of ATMs are sufficient to meet current needs. It
suggests popularizing ATMs among the maximum customers.
2.9) Awamleh R. and Fernandes C. (2005) employ the Diniz (1998) model to evaluate
websites of 19 foreign and 16 local banks in the United Arab Emirates. Data is collected
from internet banking users in the United Arab Emirates in September 2004 and to examine
the data, a factor analysis and multiple regression analysis are conducted. Results suggest
that although the banking sector in the United Arab Emirates is a regional leader, internet
banking in the United Arab Emirates is yet to be properly utilized as a real added value tool
to improve customer relationship and to attain cost advantages. It reveals that convenience
and security of internet banking transactions have a significant impact on satisfaction. The
study also discusses implications of results and future research areas.

31

2.10) Rao N.V.M., Singh P. and Maheshwari N. (2005) study e-Business models and reallife experiments that have been circling around the e-business models in some selected banks
chosen, from public sector and private sector banks. The study concludes that most of the
banks offering Internet banking facility in India has high overall scores indicating high
quality of their websites at all the functional and interactivity levels. ICICI Bank, State Bank
of India and Bank of India now have mobile ATMs or vans that go along a particular route in
a city and are stationed at strategic locations for a few hours every day. Almost all the internet
banks have privacy statements and about half of these have a security statement. The model
suggests that the performance of the banking sector has improved considerably. It is believed
that a mathematical approach proposed in this paper will find extensive application in other
sectors of the economy also.
2.11) Matousek R. and Taci A. (2004) examine the cost efficiency of the 38 selected Czech
commercial banks in 1990s by applying the distribution free approach model and compare
the performance of different bank groups. The study concludes that efficiency levels at good
small banks have been actually above comparative levels at old big banks during 1993-95
although not very significantly performed better over a six years 1993-98. It concludes that
efficiency of Czech banking sector increases during analysis period and foreign banks are
more efficient than the other banks, although their efficiency is comparable with the good
small banks efficiency in early years of their operation. The study reveals that early
privatization of state-owned commercial banks and more liberal policy towards foreign banks
will enhance the efficiency in the banking system.
2.12) Dhillon, Batra and Dhyani (2003) study the impact of relationship marketing and
trends of customer relationship in selected PSBs (SBI) and private sector banks (ICICI) in
Chandigarh. The study concludes that ICICI bank is doing well in credibility, access,
communication, understanding the customers, tangibles, reliability, responsiveness,
competence and courtesy as their mean value is greater than that of SBI but from security
point of view, SBI is better. The study suggests that PSBs can also improve their image by
relationship marketing and further this relationship marketing will be helpful in transforming
the Indian banking system.

32

2.13) Mishra B.S. (2003) examines whether a locative efficiency of Indian banking system
has improved after the introduction of financial sector reforms in the early 1990s. Efficiency
for 23 states of India is also compared and finds improvement in overall a locative efficiency
of majority states in the post reforms period. The study also concludes that improved
efficiency is more marked for the service sector than for industry across the states as
agriculture and industry sector witness a decline in a locative efficiency.

2.14) Elyasiani E. and Rezvanian R. (2002) contrast the production technologies and cost
characteristics of foreign owned banks (FOBs) and domestic owned banks (DOBs) within a
cost minimization context. In the study, labour, capital and borrowed funds are inputs and
consumer loans, real estate loans, investment securities and other earning assets are output.
The study concludes that cost structures are not identical in FOBs and DOBs but scale and
scope economy measures, relative to own-group cost structure are not widely different and no
clear pattern can be established between measures and ownership type. An increase in
production of investment securities has no effect on average cost of production and hence
there is no threat of dominance or shift in financial decision making from USA to outside
world through cost channel.
2.15) Swamy B.N.A. (2001) analyzes the comparative performance of different bank groups
in India over the period 1995 to 2000 and studies the impact of deregulation and competition
in a liberalized economy. The study concludes that share of public sector banks in assets of all
scheduled commercial banks is the highest but recorded steady decline whereas new private
sector banks have succeeded to enhance their share in assets witnessed deterioration in the
profit performance. Although, public sector banks have succeeded to reduce cost and NPAs
but still have high costs and NPAs as compared to new private sector and foreign banks
which reflect the favourable effect of technology adoption by private banks. Overall, profit
performance of foreign banks is superior mainly due to greater share of income generated
from fee-based activities.

33

2.16) T. Padamasai (2000) evaluates the profitability, productivity and efficiency of Indian
five big public sector banks i.e. SBI, PNB, BOB, BOI, Canara Bank as these are big five
banks among the Indian nationalized commercial banks and have places in worlds top 40
banks also. Six parameters such as deposits, advances, investments, profits, net NPAs and
CAR of five banks have been analyzed separately for all the selected countries and the
various parameters of productivity, profitability and efficiency are compared by naming it as
B-Efficiency Model. The study concludes that productivity and profitability of five big banks
has increased throughout the post-reforms period in terms of selected ratios of each
parameter, but on account of efficiency, the performance of the top five banks is very
dismissal as inefficiency has increased during the study period. It suggests that if the
government sells its share in the profit making banks, it will be able to bail out the weak
banks.
2.17) Malik A.K. (1995) investigates the impact of change by adopting computerization in
the working of an education institution and the impact is related with the nature of
technological change on organizational structure, work process, motivation and moral of
users as well as their productivity. The study conducts through questionnaires and interview
with simple statistical techniques such as mean and chi-square test. The focus of the study is
on managing the technological change. The study concludes that technological change has
resulted in increased productivity of users and the change is being accepted by the users
because of their personal enthusiasm rather than well-planned activity of the management.
2.18) Garg M. (1994) compares the profitability of Indian scheduled commercial banks with
foreign banks for the period of 1970 to 1990. The study reveals that Indian scheduled
commercial banks have achieved remarkable progress in last two decades under study,
particularly in branch expansion in rural areas, deposits mobilization and credit deployment
to priority sector and small borrowers but their profits have not kept pace with their growth
and hence, their share in profits have come down, whereas foreign banks with a much smaller
geographical spread and resources base, earn almost as much as by way of profits as the 20
nationalized banks put together. It is concluded that there is a lot of difference in the pattern
of advances and investments and even lending rates of Indian and foreign banks. The study
suggests giving more autonomy to Indian commercial banks in their functioning.

34

2.19) Sharma (1993) studies the need of computerization in Indian banking system. The
study reveals that computerization has become almost inevitable in the present changing
environment to keep pace with the advanced technology, innovations etc. Computerization
has made the banking activities easy, saving time, cheap and convenient with use of credit
cards and ATMs. At the end, it concludes that computerization has accelerated the
productivity and efficiency of banks. Even when there are some problems, we can convert the
defects of such systems by expanding banking and computer education, and then modern
computerized banking can be introduced to bring better quality of life with minimum possible
expenditure.

35

CHAPTER (3)
RESEARCH
METHODOLOGY

3.1) Introduction:Research methodology is a way to systematically solve the research problem. In research
methodology we study the various steps that are generally adopted by researcher in studying
his research problem along with logic behind them.
36

Research is defined as human activity based on intellectual application in the investigation of


matter. The primary purpose for applied research is discovering, interpreting, and the
development of method and systems for the advancement of human knowledge on a wide
variety of scientific matters of our world and the universe.

3.2) Research Design:Research design initially an extensive exploratory research was undertaken to gain insights
into the general nature of the research problems and objectives to obtaining information to
study the objectives of the problem to study the availability of time and money for the
research work, the possible decisions alternatives and the relevant variables that need to be
considered while designing questionnaire. Along the lines of this exploratory research the
research objectives were refined and the questionnaire was designed. With survey was
conducted into achieve the primary objectives.

The research design used in this project is Descriptive in nature.


Descriptive research includes surveys and fact-finding enquiries of different kinds. The main
purpose of this descriptive research is description of the state of affairs as it exists at present.
The main characteristic of this method is that the researcher has no control over the variables;
he can only report what has happened and what is happening.

3.3) Sampling Design:Sample-A part of population is called sample. In other words, a selected or sorted unit from
the population is known as sample. In fact, a sample is that part of population which we
select for the purpose investigation.

For Example:-If an investigator selects 200 students from 2000 students of a college who
represent all of them, then these 200 students will be term as a sample.
Thus, sample means some units selected out of a population which represented.

3.3.1) Sampling Methods:37

The method of selecting a sample out of a given population is called sampling. Now, a day
there are various methods of selecting a sample from a population in accordance with various
needs.

A) Probability sampling method:Probability sampling methods are such methods of selecting a sample from the population in
which all units of the universe are given equal chances of being included in sample.

There are various variant of probability sampling method:1)


2)
3)
4)
5)

Simple Random Sampling


Stratified Random Sampling
Systematic Random Sampling
Multistage Random Sampling
Cluster Random Sampling

B) Non- Probability sampling method :Non-Probability sampling methods are those methods in which selection of units is made on
the basis of judgment of the investigator rather than on the basis of Probability or chance.

3.3.2) Judgment Sampling:Under this method the selection of the sample items depends exclusively on the judgment of
the investigator. In other words the investigator exercises his judgment in the choice and
includes those items in the sample which he things are most typical of the universe with
regard to the characteristics under study.

3.3.3) Convenience sampling Technique:This is used in exploratory research where the researcher is interested in getting an
inexpensive approximation of the truth. As the name implies, the sample is selected because
they are convenient. This non probability method is often used during preliminary research
efforts to get a gross estimate of the results, without incurring the cost or time required to
select a random sample.
38

For making this project report I have used non- probability sampling methods and
Convenience sampling techniques

3.4) SAMPLE SIZE:Details of the sampling size, I have made questionnaire. No. of respondents during the
research is 100.

3.5) Collection Of Data:3.5.1) Sources of data collection:


Data collection is in-fact, the most important aspect of a survey. While collecting data utmost
care must be exercised because data constitute the foundation on which the superstructure of
statistical analysis is built. If the data are inaccurate and inadequate the entire analysis may be
faulty and the decision taken would be misleading.
The data can be collected from primary and secondary sources. The basic premises of
my study are supplemented with the secondary data.

Primary Data:The Data, which are collected directly by the researchers and according to his/her
requirement. These types of data are collected through interviews, observations, discussion
etc.

Interviews
Personal Investigation
Observation Method
Information from correspondents
Information from superiors of the organization

Secondary Data:The secondary data is the data, which is not directly collected by the researchers but is
already prepared by the other people.

39

Internet

Banking books relating to loans

Banking journals

There are two methods of Data Collection and I have used both methods i.e., primary method
and secondary method as well. In primary method for data collection, I have conducted a
survey.
The sample size for both the survey was 100. In addition, Primary data has been collected
through Structured Questionnaires, Personal Interviews & Discussion with the employees.
Secondary data has been given by the Company executives in the form of previous records
and I have taken other data from the company website & internet.
3.6)

ORGANISING THE DATA:-

The information / data collected during data process are organizing and presented in a
comprehensible sequence to make the understandable. The data, thus obtained is then edited,
classified and put in a tabulated form to make it understandable.

3.7) PRESENTATION OF DATA:After organizing the data, it is ready for presentation. These are presented in different modes
like charts, tables, and diagrams etc. The main objective of presentation is to put collected
data into a reliable form.

3.8) ANALYSIS OF DATA :1. Questionnaires


2. Pie chart and Bar chart

1) Questionnaires:-

40

This is the most popular tool for the data collection. A questionnaire contains question that
the researcher wishes to ask his respondents which is always guided by the objective of the
survey.

2) Pie chart and Bar chart:(a) Pie chart:This is very useful diagram to represent data, which are divided into a number of categories.
This diagram consists of a circle of divided into a number of sectors, which are proportional
to the values they represent. The total value is represented by the full create. The diagram bar
chart can make comparison among the various components or between a part and a whole of
data.
(b) Bar chart:This is another way of representing data graphically. As the name implies, it consist of a
number of whispered bar, which originate from a common base line and are equal widths.
The lengths of the bards are proportional to the value they represent.
After organizing and presenting the data, the research then has to proceed towards
conclusions by logical inferences. The whole data is then analyzed by bringing raw data to
measured data and then summarizing the data buy applying analytical methods to manipulate
the data so that their interrelationship and quantitative meaning become evident.
3.9)

Need of the study:-

The need of the study was highlighted by the bank authorities to understand the awareness,
perception preference and expectation from the bank across the various income and age
groups and matching the same to the industry standards.

3.10) Justification of Study:The study has been carried for the purpose of analyzing the level of loan in relation to the
services provided by the bank, under the study. The significant of this data analysis lies in
understanding the trends amongst customers and provides relevant feedback to the bank for
the up gradation of their services in the rapidly changing and evolving sector.
41

3.11) Rationale of the study:This study is conducted to assess the information about the personal loan. This study is
conducted in consideration of the loan provided to different people according to their needs.
This study contains data and tables of the research so studied. Along with these are the
specific interpretations of the said information. Moreover, the study shall be a potent tool in
providing information of the product. This study could be used as a benchmark for other
company.

3.12) Objectives of the Study:A summer training report was undertaken to fulfil the partial requirement as prescribed by
MBA course of Kurukshetra University. Beside this, this report is prepared in order to
understand how theoretical knowledge is practically implied. Thus, the objectives of the
study are highlighted as follows:

Main Objective:To know about the Personal Loan of HDFC BANK

Sub Objectives of the Study:

To understand the types of loans provided by HDFC Bank to its customers.

To understand the level of awareness of personal loan of HDFC Bank

To study about personal loan disbursement by HDFC Bank.

To know about the short term and low cost personal loan.

3.13) LIMITATIONS OF THE STUDY

The study is restricted only to HDFC Bank.

The study is limited to quantitative data.

The sample size does not represent the true population.


The respondents obtained cannot be considered as true, there can be based.
42

Some of the respondents did not take the questionnaire seriously.

3.14) INTERPRETATION:Interpretation is the last and main step of research methodology. Interpretation means to bring
out meaning of data & to convert mere data into information. After analysis of the data,
various conclusions are found out on the basis of logical inferences. Without interpretation
research study cant be completed.

3.15) TESTING OF HYPOTHESIS:The theory of testing of hypothesis parameters employs various statistical techniques to arrive
at such decisions on the basis of the sample study.
In attempting to arrive at decisions about the population on the basis of sample information, it
is necessary to make assumptions about the population parameters involved. Such
assumptions called a statistical hypothesis which may be true or not.

Non-Parametric Tests:Non-Parametric Tests do not require any assumptions about the parameters or about the
nature of population. By non-parametric tests we mean those statistical tests which do not
depend either upon the shape of the distribution or upon the parameters of the population
mean, standard deviation, variance etc. In addition to these, non-parametric tests do not
require measurements as strong as requires by parametric tests.

APPLICATION OF TEST:Chi Square Test:Chi-square is a statistical test commonly used to compare observed data with data we would
expect to obtain according to a specific hypothesis. For Example:- if, according to Mendel's
43

laws, you expected 10 of 20 offspring from a cross to be male and the actual observed
number was 8 males, then you might want to know about the "goodness to fit" between the
observed and expected. Were the deviations (differences between observed and expected) the
result of chance, or were they due to other factors. How much deviation can occur before
you, the investigator, must conclude that something other than chance is at work, causing the
observed to differ from the expected? The chi-square test is always testing what scientists call
the null hypothesis, which states that there is no significant difference between the expected
and observed result.
The formula for calculating chi-square (X2) is:
X2 =

44

(O-E) 2/E

CHAPTER NO (4)
DATA ANALYSIS
AND INTERPRETATION

45

4). Data Analysis and Interpretation:4.1)

Scale

No. of Respondents

Percentage

Yes

80

88

wa

No
Total

20
100

20
100

re

ne

ss about the personal loan provided by bank.


(Personal loan provide by bank)
Table No: 4.1
(Awareness about personal loan)

No. of Respondents

20%

Yes
No

80%

Fig No: 4.1

Interpretation:80% of customers know about the personal loan provided by bank and 20% of customer
having no knowledge about the loan. In the market various financial institution are existed
whose deals in personal loan. Thus most of the peoples know about personal loan provided
by bank.

4.2)

Name of different banks who deals in personal loan.


46

Bank Name

No. of Respondents

Percentage

HDFC

30

30

ICICI

20

20

SBI

40

40

PNB

10

10

Total

100

100

(Personal loan of different bank)

Table No: 4.2


(Awareness of Personal loan of different bank)
45
40
35
30
Bank Name
No. of Respondents

25
20
15
10
5
0
1

4
Fig No: 4.2
47

Scale

No. Of Respondents

Percentage

Yes
No
Total

70
30
100

70
30
100

Interpretation:30% of customers know about the personal loan provided by HDFC bank and 20% of
customer having knowledge about the ICICI loan, 40% of customers know about the personal
loan provided by SBI bank and 10% of customer having knowledge about the PNB personal
loan. Thus the peoples are aware about the personal loan provided by bank.
4.3)

Awareness about the personal loan of HDFC Bank.


(Personal loan provided by HDFC bank)

Table No: 4.3


(Awareness of personal loan provided by HDFC bank)

No. Of Respondents
80
70
60
50

NO. OF Respondents

40
30
20
10
0
Yes

No
Fig No: 4.3

Interpretation:48

Scale

No. Of Respondents

Percentage

70%
of
customers are aware about the personal loan provided by HDFC Bank and 30% of customer
having no awareness about the personal loan. They have no knowledge about the personal
loan which is provided by bank.
Yes

4.4)

70

70

Applicability of personal loan provided by bank.


(Applicability of loan)

Table No: 4.4


(Applicability of personal loan)
70
60
50
40

SCALE
NO. OF Respondents

30
20
10
0
Yes

No
Fig No: 4.4
49

No. Of Respondents
No. Of Respondents

Percentage
Percentage

35
60
40
25
100

35
60
30
25
100

15

15

Investment

20

20

Others

05
100

05
100

Reasons
Scale
Home Renovation
Yes
No
Marriage
Total
Education

Total

Interpretation:In HDFC Bank 60% of customers prefer the personal loan and 40% of customer may be
prefer the others banks for taking the personal loan or may not be. Because of the different
services, different terms and policies provided by bank

4.5)

Reason for applying personal loan.


(Applicability of personal loan)

Table No: 4.5


(Reasons of applicability of personal loan)

50

Reasons
35
30
25
20
15
10
5
0

Fig No: 4.5

Applying Chi square Test:a) Set up the null hypothesis that the reason of applying the personal loan. On the basis of the
hypothesis, the expected frequency of each reasons of applying personal loan =
np=1001/5=20

Observed
Frequency(O)
35
25
15
20
05

Expected
Frequency(E)
20
20
20
20
20

(O-E)

(O-E)2

(O-E)2/E

15
05
-05
0
-15

225
25
25
0
225

11.25
1.25
1.25
0
11.25
(O-E)2/E=25

Applying X test

51

X2= [(O-E) 2/E]


=

25

b) Degree of freedom:-- v = n-1


v = 5-1= 4

c)The tabulated value X2 at 5% level of significance for 5 d.f.is = 9.49


d) Since, the calculated value of X2 is more than the table value, so reject he null hypothesis.

Interpretation:- In Hypothesis testing it is necessary to make assumptions about the


population parameters involved. Such assumptions called a statistical hypothesis which may
be true or not.
In this hypothesis testing researcher used Non-Parametric test by non parametric tests we
mean those statistical tests which do not depend upon the shape of the distribution of data.
Null Hypothesis is rejected because table value of chi square is less than the calculated value
of Chi Square So Alternative Hypothesis is accepted.

52

53

Reasons

Frequency

Percentage

Low interest rate

35

35

Quick approval

25

25

Brand name

10

10

Customer of the bank

15

15

Easy apply

10

10

Other
05
Total
100
son for choosing HDFC Bank personal loan.
(Selection of personal loan)

Table No: 4.6


(Reason of selection of personal loan)

54

05
100

4.6)
Rea

Frequency

10%

Low interest rate


Quick approval
Brand name
Customer of the bank
Easy apply
other

5%
35%

15%
10%
25%

Fig: 4.6

Interpretation:Mostly people are prefers the personal loan of HDFC bank for reasons of lowest rate of
interest as well as fast services. Saving the money is the first main motive of any customer.
So according this the customer prefers the HDFC bank personal loan.

Applying Chi square Test:a) Set up the null hypothesis that the reason of applying the personal loan. On the basis of the
hypothesis, the expected frequency of each reasons of applying personal loan =
np=1001/6=16.67, 17

Applying X test:Observed
Frequency(O)
35
25
10
15
10
05

Expected
Frequency(E)
17
17
17
17
17
17

(O-E)

(O-E)2

(O-E)2/E

18
8
-7
-2
-7
-12

324
64
49
4
49
144

19.05
3.76
2.88
0.235
2.88
8.47
(O-E)2/E =37.275

X2= [(O-E) 2/E]


=
55

37.275

b) Degree of freedom:- v = n-1


v = 6-1= 5

c) The tabulated value X2 at 5% level of significance for 5 d.f.is = 11.07


d) Since, the calculated value of X2 is more than the table value, so reject he null hypothesis.

Interpretation:- In Hypothesis testing it is necessary to make assumptions about the


population parameters involved. Such assumptions called a statistical hypothesis which may
be true or not.
In this hypothesis testing researcher used Non-Parametric test by non parametric tests we
mean those statistical tests which do not depend upon the shape of the distribution of data.
Null Hypothesis is rejected because table value of chi square is less than the calculated value
of Chi Square So Alternative Hypothesis is accepted.

56

57

58

Reasons

Frequency

Percentage

Borrow from relatives

45

45

Borrow from financial company

05

05

Credit card overdraft

15

15

Apply personal loan from Bank

25

25

Others

10

10

Total
100
100
erent sources provided by bank when you are facing financial problems.
(Sources of solving financing problem)

Table No: 4.7


(Methods of solving financing problem)

59

4.7)
Diff

Frequency
50
45
40
35
30
25
20
15
10
5
0

45
Reasons
Frequency
25
15
10
1

5
2

Fig No: 4.7

Interpretation:Various options are available of solving the financial problems. 45% prefers for borrow the
money from friends and relatives and 65% people prefers the loan or others. According the
situation peoples

4.8)

Satisfaction level of people with the updated/timely information provided by


Bank.
(Customer Satisfaction)
Table No: 4.8
Response

No. Of Respondents

Percentage

High Satisfied

35

35

Satisfied

45

45

Dissatisfied

20

20

Total

100

100

(Satisfaction of customer)

60

No. Of Respondents
High Satisfied

Satisfied

20%

Dissatisfied

35%

45%

Fig No: 4.8

Interpretation:Customer satisfaction is the first and most important motive of any bank. So provide the
timely and update information to the customer. Mostly customers are satisfied with the
updated information provided by bank.

4.9)

Any expectation to personal loan provided by bank.


(Expectation about personal loan)

Table No: 4.9


(Expectation about personal loan provided by bank)

61

Scale

No. Of Respondents

Percentage

Yes
No
Total

40
60
100

40
60
100

NO. OF Respondents
70
60
50
40

NO. OF Respondents

30
20
10
0
Yes

No

Fig No: 4.9

Interpretation:Every customer has different thinking about the personal loan provided by bank. Some
people want some expectations from bank. Thus 40% of customers want expectation from the
bank but 60% customers doesnt want any expectation from bank.

4.10) Different characteristics of Instalments of personal loan?


(Schedule of instalments)
Characteristics

No. Of Respondents

Percentage

Repaid in a series payment

25

25

Repaid in a lump sum

15

15

62

Set on monthly basis

50

50

Payment period from 1-5


year
Total

10

10

100

100

Table No: 4.10


(Characteristics of repayment of loan)

Payment period from 1-5 year

Set on monthly basis

Repaid in a lump sum

Repaid in a series payment


0

10

20

30

40

50

60

Fig No: 4.10

Interpretation:Personal loan are repaid in instalments. These instalments are fixed monthly as per their
amount. The minimum time period is 1 year and maximum is 5 years. In which 12-60
instalments ate made for repayment of personal loan.

4.11) Different sources of personal loan in the market?


(Sources of personal loan)

63

SCALE

NO. OF Respondents

Percentage

60
40
100

60
40
100

Yes
No
Total
Table No: 4.11

(Awareness about sources of personal loan)


No. Of Respondents

Yes
No

40%
60%

Fig No: 4.11

Interpretation:60% of customers know about the different sources of personal loan which are available in
the market and. 40% of customer does not know about the sources of personal loan which are
exists in the market.

4.12) Different rates given by customer of personal loan of HDFC Bank?


(Customer Feedback)
Rate

No. Of Respondents
64

Percentage

Fair

20

20

Average

30

30

Good

40

40

Excellent

10

10

Total

100

100

Table No: 4.12


(Response of customer regarding personal loan)

No. Of Respondents
Excellent
Good

NO. OF Respondents

Average
Fair
0 5 10 15 20 25 30 35 40

Fig No: 4.12

Interpretation:Customer feedback is very important thing for staying in the market for long time period.
Feedback/Response of customer is mostly are good regarding the HDFC bank personal loan.
Because these bank provide the services to the customer.

4.13)

Satisfaction level of people with the interest rate provided by the bank on
personal loan.
(Interest rate charge by bank)
Response

NO. OF Respondents
65

Percentage

Agree

50

50

Cant say

20

30

Disagree

30

30

Total

100

100

Table No: 4.13


(Satisfied

with the interest rate charged on loan)


No. Of Respondents

30%
50%

Agree
Cant say
Disagree

20%

Fig No: 4.13

Interpretation:From the above table show that 50% said that they are agree with interest rate which is
charged by the bank on loan schemes, 30% said they are disagree, 20% cant said anything
about the interest rate charge by HDFC bank on personal loan.

4.14) Buying level of peoples regarding personal loan at any scheme.


(Schemes on personal loan)
66

Response

No. of Respondents

Percentage

Yes

70

70

No

30

30

Total

100

100

Table No: 4.14


(Schemes on personal loan)

No. of Respondents
Yes

No

30%

70%

Fig No: 4.14

Interpretation:Various schemes are provided by bank on personal loan. From above statement 70%
customer prefers the personal loan on schemes and 30% of customers do not prefer the
personal loan on schemes.

4.15) Attractive attracts you more too personal loan of HDFC Bank.
(Attracts more to personal loan)
67

Rate

NO. OF Respondents

Percentage

Service

40

40

Loyalty

20

20

Goodwill

30

30

Any other

10

10

Total

100

100

Table No: 4.15


(Attracts more to personal loan)

NO. OF Respondents
Service

Loyalty

Goodwill

Any other

10%
40%

30%
20%

Fig No: 4.15

Interpretation:From the above table, shows that 40% respondent said that the services are best, 20% said its
loyalty and 30% said the goodwill of bank in market and 10% any others factors which
attracts them toward HDFC bank.

4.16)

Liking of peoples to take personal loan from HDFC Bank.

68

(Like to take loan from bank)


Scale

No. of Respondents

Percentage

Yes

60

60

No

40

40

Total

100

100

Table No: 4.16

(Like to take loan from bank)

No. of Respondents
Yes

No

40%
60%

Fig No: 4.16

Interpretation:The above table shows that 60% respondents said that they are likely to take loan because
they say that interest rate charged by bank is less comparatively than other bank and 40%
respondents said they dont want to take loan from HDFC Bank because they are not aware
about the bank interest rate.

69

CHAPTER (5)
FINDINGS OF THE STUDY

5.1 FINDINGS: 60% customers are satisfied with the loan of HDFC bank..
70

80% respondents are aware about the loan provided by the bank.
Maximum customers are getting the loan as per their expectations.
50% respondents rated HDFC bank services as average.
40% respondents are satisfied with the interest rate provided by the bank on personal
loan scheme.
30% respondents are affected by the goodwill of HDFC bank for services.
45% respondents are satisfied with updated information provided by the bank.
60% customers are prefer the HDFC bank personal loan
Family members are creating more effect on decisions regarding personal loan.
Interest rate is main factor consider by customers when taking loan.
Most of the customer prefers the repayment of loan in higher duration.
Most of the customers consider the policies of bank regarding personal loan.
Governments employees are prefer the HDFC bank. Similarly self employed &
businessmans also prefer the HDFC Bank.
60% respondents are likely to take loan from HDFC bank..

5.2 SUGGESTIONS:

71

As with any financial product, when it comes to taking out a personal loan it pays to
shop around and compare APRs. The APR (annual percentage rate) tells the true cost
of a loan taking into account the interest payable, any other charges, and when the
payments fall due.

Before you apply for a loan, check the small print to see if youre eligible. Some best
buys come with some onerous conditions. Sainsburys Bank offers a loan rate of 5.6
per cent, for example, but applicants must have a Nectar Card and have used it at
Sainsburys in the past six months. NatWest and RBS only offer their best loan rates
to current account customers.

It might seem unlikely at the time when you take out a personal loan but dont
forget that its possible you will be able to pay off your debt early. Many loan
providers will apply a charge if you wish to do so, so its a good idea to check how
much this might cost before you apply for a particular deal. If you think there is a
good chance you will want to settle your loan early, it may be worth searching for a
deal that comes without any early repayment charges.

Payment protection insurance (PPI) has had some bad press but its still a useful
product for some people. Its designed to cover your monthly loan or credit card
repayments if you are unable to meet them due to sickness or unemployment. If you
decide you need this type of protection, its vital you shop around for the cheapest
deal: buying a policy direct from your lender could still cost you far more than buying
from a standalone provider

72

5.3) CONCLUSION:-

In my report I have tried to show the study of personal loan of personal loan of
HDFC BANK.
The bank is good in terms of customer satisfaction. Procedure of loan financing
is easy and fast in HDFC BANK. Family members & increasing standard
of living plays an important role in the decision of taking personal loan.
HDFC BANK is the leading bank in the country, it provides a variety of products and
services to different segments of customers.
The bank aims to serve customers from teenagers to senior citizens, hence different
products designed to suit specific requirements of the above.
Aim to serve all classes of the society from the salaried middle class to
the high income business class. Customers are categorized and segmented according
to their requirements and needs.
The banking sector in world is going to become highly competitive in future.
Currently as many banks are already operating in personal loan in the market.
Keeping in view all the expectations and requirements of the people HDFC bank
develops these financial products.
In this hyper competitive market every company has to do something unique to
sustain and excel in the market. This can be in the form of innovativeness in financial
products. The only motto of HDFC bank is to provide the loan on minimum rate of
interest.
In spite of all these, HDFC Bank also provides training to its employees and gives
them rewards time to time by appraising their performance.

73

BIBLOGRAPHY

74

BIBILOGRAPHY:-

Shashi K. Gupta , Finanacial Management Kalyani Publishers, Established in 1963

Philip Kotler, Marketing Management, Pearson education 2nd Ed.

Leon G. Schiffman, Consumer Behavior, Prentice-Hall India 8th Ed.

Kothari C.R. 2004. Research Methodology (2nd ed). New Delhi: New Age
International (P) Limited Publishers.

Journal of Interlibrary Loan, Document Delivery & Information Supply (1993 - 2004)

Journal of Interlibrary Loan & Information Supply (1990 - 1993)

Web Site:

www.apnaloan.com

www.hdfcbank.com

www.iseekloan.com

Search Engine:

www.google.com

www.wikipedia.com

75

ANNEXURE

Dear Sir/Madam,
I am a management student conducting a survey as a part of my summer training project on
PERSONAL LOAN OF HDFC BANK
Name:
Occupation:
Place:
Date:

1. Have you ever heard about the personal loan provided by bank?
Yes

No

2. Do you know the name bank who deals in personal loan?


HDFC

ICICI

SBI

PNB

3. Are you aware about the personal loan of HDFC Bank?


Yes

No

4. Have you ever applied personal loan?


76

Yes

No

5. Reason for applying personal loan?


Taxation

Home Renovation

Marriage

Education

Investment

Others

6. Reason for choosing HDFC Bank personal loan?


Low Interest Rate

Quick Approval

Brand Name

Customer Of The Bank

Easy Apply

Others

7. What will you do when you are facing financial problems?


Borrow from relatives

Borrow from financial company

Credit card overdraft

Apply personal loan from Bank

Others

8. Any expectation to personal loan provided by bank?


Yes

No

9. What are the characteristics of Instalments of personal loan?

77

Repaid in a series payment


Set on monthly basis

Repaid in a lump sum


Payment period from 6 months to 5 year

10. Do you know the source of personal loan in the market?


Yes

No

11. How do you rate the personal loan of HDFC Bank?


Fair

Average

Good

Excellent

12. Are you satisfied with the interest rate provided by the bank on personal loan?
Agree

Cant say

Disagree

13. Do you buy the product at any scheme?


Yes

No

14. What attracts you more of personal loan of HDFC Bank?


Service

loyalty

Goodwill

Any other

15. Are you satisfied with the updated/timely information provided by Bank?
High Satisfied

Satisfied

Dissatisfied

16. Do you like to take personal loan from HDFC Bank?


Yes

No
78

79

80