PROJECT REPORT
On
A STUDY OF LOANS AND ADVANCES OFFERED IN
BAJAJ FINANCE LIMITED
BY
GANGIREDDIGARI JYOTHIREDDY
1NH18MBA23
Submitted to
DEPARTMENT OF MANAGEMENT STUDIES
NEW HORIZON COLLEGE OF ENGINEERING,
OUTER RING ROAD, MARATHALLI,
BENGALURU
In partial fulfilment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the guidance of
A.SHESHU
Sr. Asst. Professor
2018 - 2020
CERTIFICATE
This is to certify that GANGIREDDIGARI JYOTHIREDDY bearing
USN 1NH18MBA23, is a bonafide student of Master of Business
Administration course of the Institute 2018-20 , autonomous program,
affiliated to Visvesvaraya Technological University, Belgaum. Project
report on “A STUDY OF LOANS AND ADVANCES OFFERED IN
BAJAJ FINANCE LIMITED” is prepared by him/her under the
guidance of A.SHESHU in partial fulfilment of requirements for the
award of the degree of Master of Business Administration of Visvesvaraya
Technological University, Belgaum Karnataka. Signature of Internal Guide Signature of HOD Principal
Name of the Examiners with affiliation Signature with date 1. External Examiner 2. Internal Examiner
DECLARATION
I, GANGIREDDIGARI JYOTHIREDDY hereby declare that the project report on “A
STUDY OF LOANS AND ADVANCES OFFERED IN BAJAJ FINANCE LIMITED”
with reference to “BAJAJ FINANCE LIMITED” prepared by me under the guidance of
A.SHESHU, faculty of M.B.A Department, New Horizon College of Engineering.
I also declare that this project report is towards the partial fulfilment of the university
regulations for the award of the degree of Master of Business Administration by
Visvesvaraya Technological University, Belgaum.
I have undergone an industry project for a period of Eight weeks. I further declare that this
report is based on the original study undertaken by me and has not been submitted for the
award of a degree/diploma from any other University / Institution.
Signature of Student
Place:
Date:
ACKNOWLEDGEMENT
The successful completion of the project would not have been possible without
the guidance and support of many people. I express my sincere gratitude to
LAKSHMI NARAYANA TC, MANAGER- CREDIT OPERATIONS, BAJAJ
FINANCE LIMITED, Bangalore), for allowing to do my project at BAJAJ
FINANCE LIMITED.
I thank the staff of BAJAJ FINANCE LIMITED Bangalore for their support
and guidance and helping me in completion of the report.
I am thankful to my internal guide A.SHESHU, for his constant support and
inspiration throughout the project and invaluable suggestions, guidance and also
for providing valuable information.
Finally, I express my gratitude towards my parents and family for their
continuous support during the study.
GANGIREDDIGARI JYOTHIREDDY
1NH18MBA23
TABLE OF CONTENTS
SL. NUMBER CONTENTS PAGE NUMBERS
1 Executive Summary 1
2 Theoretical Background Of The Study 2-28
3 Industry Profile &Company Profile 29-56
4 Application Of Theoretical Framework 57-62
5 Analysis And Interpretation Of Financial
Statements And Reports 63-80
6 Learning Experience- Findings,
Suggestions And Conclusion 81-85
7 Bibliography 86
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EXECUTIVE SUMMARY
I have taken Finance as a specialization with the title of “A STUDY OF LOANS AND
ADVANCES OFFERED IN BAJAJ FINANCE LIMITED “The objective behind this project was to
primarily focus on loans advances offered in Bajaj Finance for the consumers. This required a firsthand
experience in understanding end to end process flow for loans processing to payment disbursement.
Also I discuss about the Bajaj EMI loans, the Bajaj Finserv Lending Company which is one of the
lending company they also make available EMI Loan option for the loan. I have collected the
Secondary data from Books, Company Annual Report & internet Articles etc. Bajaj Finance Ltd is one
of the leading loans issuing company in the India.
I also focused on the surrogates required for loan approval, which documents are necessary for
approval of loan. SWOT analysis of Company. I have also tried to explain the loan procedure Through
this project, I learn how to given a loan on consumer durable product and how to solve customer
difficulties about the documentation. I was dealing with proper customer, provided them loans by
completing their files and getting the approval online form Bajaj Finance Limited website. This
process helped me to better understand the Loan procedure of Loans and Advances at Bajaj Finserv
Lending.
The major part of my project includes the loans issue process, Eligibility criteria, Interest rates, and
processing charges. Financial statements and Loans lending statement analysis in different sectors.
Different analytical tools used to analyze and the calculation of EMI etc.
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CHAPTER - I
THEORETICAL BACKGROUNG OF THE STUDY
INTRODUCTION:-
Money is an essential element for any business, because it fulfills the short term and long term
requirement of funds. It is not possible for the owner to bring all the money himself, so he/she take
recourse to loans and advances. Loans refer to a debt provided by a financial institution for a particular
period while Advances are the funds provided by the banks to the business to fulfill working capital
requirement which are to be payable within one year. The loan amount is required to be repaid along
with the interest, either in lump sum or in suitable installments. It can be a term loan (payable after 3
years) or demand loan (payable within 3 years). In the same way, advances also requirement
repayment along with the interest within one year. These two terms are always uttered in the same
breath, but there are a number of differences between loans and advances.
Meaning of Loans and Advances:-
The term ‘loan’ refers to the amount borrowed by one person from another. The amount is in
the nature of loan and refers to the sum paid to the borrower. Thus From the view point of borrower, it
is ‘borrowing’ and from the view point of bank, it is ‘lending’. Loan may be regarded as ‘credit’
granted where the money is disbursed and its recovery is made on a later date. It is a debt for the
borrower. While granting loans, credit is given for a definite purpose and for a predetermined period.
Interest is charged on the loan at agreed rate and intervals of payment. ‘Advance’ on the other hand, is
a ‘credit facility’ granted by the bank. Banks grant advances largely for short-term purposes, such as
purchase of goods traded in and meeting other short-term trading liabilities. There is a sense of debt in
loan, whereas an advance is a facility being availed of by the borrower. However, like loans, advances
are also to be repaid. Thus a credit facility- repayable in installments over a period is termed as loan
while a credit facility repayable within one year may be known as advances.
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Meaning of Loan:-
The amount lent by the lender to the borrower for a specific purpose like the construction of the
building, capital requirements and purchase of machinery and so on, for a particular period of time is
known as Loan. In general, loans are granted by the banks and financial institutions. It is an obligation
which needs to be repaid back after the expiry of the stipulated period.
The loan carries an interest rate on the debt advanced. Before advancing loans, the lending
institution checks the credit report of the customer, to know about his credibility, financial position and
capacity to pay.
Definition:-
According to Thembi Palane “a loan is a financial transaction in which one party (the lender)
agrees to give another party (the borrower) a certain amount of money with the total expectation of
repayment agreed upon by both parties. Usually there’s a predetermined time for repaying a loan with
conditions attached to it”
According to oxford dictionary “Money that someone borrow from a bank or other financial
organization for a period of time during which they pay interest”
Loan is classified in the following categories:-
On the basis of Security:
o Secured Loan: The loan which is backed by securities is Secured Loan.
o Unsecured Loan: The loan on which no asset is pledged as security is Unsecured Loan.
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On the basis of Repayment:
o Demand Loan: The loan which is repaid on demand of the lender is Demand Loan.
o Time Loan: Loan, which is repaid in full at a future specified date, is Time Loan.
o Installment Loan: Loans which are to be repaid in evenly distributed monthly installments is
Installment Loan.
On the basis of Purpose:
o Home Loan
o Car Loan
o Education Loan
o Commercial Loan
o Industrial Loan
Definition of Advances:-
Advances are the source of finance, which is provided by the banks to the companies to meet the
short-term financial requirement. It is a credit facility which should be repaid within one year as per
the terms, conditions and norms issued by Reserve Bank of India for lending and also by the schemes
of the concerned bank.
Definition:-
According to the oxford dictionary Advance means “an amount of money paid before it is due
or for work only partly completed”
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They are granted against securities which are as under:
Primary Security: Hypothecation of Debtors, Stock Pro-notes, etc.
Collateral Security: Mortgage of land and buildings, machinery, etc.
Guarantees: Guarantees given by partners, directors or promoters, etc.
The following are the forms of Advances:-
Short term loans: Advance in which the entire amount is provided to the borrower at one
time.
Overdraft: A facility provided by the bank in which the customer can overdraw money from
his account up to a specified limit.
Cash Credit: A facility granted by the bank in which the customer can advance money up to
a certain limit against the asset pledged.
Bills Purchased: An advance facility provided by the bank against the security of bills.
The Advantages and Disadvantages of Loan:-
Loan is a form of debt, often with interest. There are several reasons why people apply for loans.
Usually they borrow money to purchase a house, buy a car, or start a business. Often, applying for a
loan is necessary because most do not have available financial resources they need to make a purchase.
Other forms of loans, like the student loans have helped a lot of students get through school. Those
who use student loan debt consolidation clearly have multiple student loans. They do this to manage
their obligations better.
Since loan is borrowed, the lender expects to receive payment with the interest specified. In
addition, borrowers should make the payments at the specified due date for a certain period. This is
where most people have problems. Most problems start when people cannot make the monthly
payments required due to different circumstance. Some finds it difficult to pay their loan because of
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the many other debts they have. Some encounter additional problems such as medical emergencies and
job loss.
Since getting a loan is a commitment, you have to be very careful with your decisions. Choose
the right lender. There is more to picking a lender than just looking for one with the least interest. Keep
in mind that those with low interest require longer period. Remember, when choosing a lender, check
its stability, its flexibility, repayment schemes, and interest rates.
Before you decide to get a loan, it is only right that you review its advantages and disadvantages.
Advantages:-
Below are the advantages of getting a loan. These are also the reasons why many apply for it:
There is a loan for just about anything. If you are in need of money to purchase a house, you can
apply for a housing loan. If you need a car, you can apply for a car loan. With all the loans
available, you will be able to purchase everything you need.
It helps a person afford an expensive purchase. All of us wish to acquire a property. However, we
do not have the amount of money to make the purchase. Loans allow us to do this. They lend us
the money so that we can finally afford our desired property.
Payment is staggered, which makes it affordable. This enables the person to pay off the loan
gradually. If a person has chosen a good deal, he should be able to finish paying off the loan in the
time specified.
One gets the funding he needs. If a person wants to start a business, he can do so by applying for a
business loan. He does not have to wait for his savings to build up before he can start his own
business. They can also use the amount they loan for investment purposes.
Getting a loan is very helpful to start building your dream. However, you have to be very careful
with your decisions. This is because of the problems you will possibly encounter if you
mismanage your loans and other debts. If you have multiple loans, make sure to manage it well.
Use a debt consolidation loan calculator and check if it is better to consolidate all your loans.
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Make sure that you manage your loans from the start. Keep in mind that loans have disadvantages
too.
Disadvantages:-
Here are some of the disadvantages of having loans:
is a long-term debt. This means that you have to deal with it for a specified period, which means
that you have to commit yourself to making monthly payments specified in your agreement for the
period indicated to repay the loans.
If you miss payments, you will face serious consequences. You can face foreclosure or
repossession of the property. In addition, you could also face penalties and legal issues. It will also
reflect in your credit rating, which can lead to a low credit scores.
You may not be able to make early loan repayment. Few lenders give option for early repayment.
Although there are some who will allow you to do this, they will charge you with early repayment
fees.
Loans are very helpful. However, you have to manage them well because you can get into a lot of
trouble if you fail to make the expected payments.
Advantages and disadvantages of Cash Advances:-
At some time or another you will have to use some sort of cash advance system, especially if you don’t
have any credit cards or know someone you can borrow money from. While it may be alright to use
cash advances every so often, becoming dependant on them to help you pay bills every month is not.
Cash advances can be extremely expensive because you are charged a fee in addition to the money you
are borrowing. Overtime, these monthly fees could be used to make a down payment on a house or car.
This is why it is important to learn the proper ways to use this type of loan service and to educate you
about the advantages and disadvantages of cash advances.
Advantages of Cash Advances:-
Pay bills on time and avoid disruption of services. Some people consider having running water,
and/or electricity more of a priority than being charged a service fee for obtaining a cash advance.
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Avoid late fees or penalties. Oftentimes, cash advance fees are less expensive than the late fees or
penalties put into effect by the credit card companies or other lenders.
Most businesses that offer cash advance services do not require an in depth credit check; therefore
people with bad credit are more likely to get approved for cash advances.
You are charged a onetime fee for borrowing the money. And you have a specific amount of time
to pay back the cash advance, otherwise additional fees will apply.
Disadvantages of Cash Advances:-
You are charged a fee based on the amount of money you borrow or based on the percentage of
money you borrow.
Overtime, cash advance fees can add up to quite a bit of money. If you take out a cash advance
every single month for a year and the fee is $15 each month; that is $180 that you are throwing
away. So you may want to see if there is any way you can save a little bit at a time to pay your
bills every month.
If you don’t have the money in your account to pay back the cash advance, you will be charged an
additional fee by the lender.
If you don’t have sufficient funds in your checking account, you will have to pay the fee
associated with insufficient funds put into effect by your financial institution when your check
bounces.
As you can see there are many advantages and disadvantages of cash advances. To find out if a
cash advance is the right solution for your current financial situation, you should first weigh the
pros and cons before you sign on the dotted line. While cash advances may be one of the easiest
ways to obtain cash when you have bad credit or no credit history, they should be used sparingly
and with caution. Make sure to read all the rules and stipulations associated with the cash advance
loan before making an agreement to pay it back. By following these cash advance tips, you will
know when you should use this type of loan and when you should consider other available
options.
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Note:- Cash advances are not entirely bad and not entirely good. However, they do make it possible
for some people to make ends meet when times are tough. Learn some of the advantages and
disadvantages of using cash advances and when you should consider using them to help pay bills.
Utility of Loans and Advances:-
Loans and advances granted by banks and other financial institutions are highly beneficial to
individuals, firms, companies and industrial concerns. The growth and diversification of business
activities are effected to a large extent through bank financing. Loans and advances granted by banks
help in meeting short-term and long term financial needs of business enterprises. We can discuss the
role played by banks in the business world by way of loans and advances as follows:-
Loans and advances can be arranged from banks in keeping with the flexibility in business
operations. Traders may borrow money for day to day financial needs availing of the facility of
cash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaid
within a short period to suit the convenience of the borrower. Thus business may be run efficiently
with borrowed funds from banks for financing its working capital requirements.
Loans and advances are utilized for making payment of current liabilities, wage and salaries of
employees, and also the tax liability of business.
Loans and advances from banks are found to be ‘economical’ for traders and businessmen,
because banks charge a reasonable rate of interest on such loans/advances. For loans from money
lenders, the rate of interest charged is very high. The interest charged by commercial banks is
regulated by the Reserve Bank of India.
Banks generally do not interfere with the use, management and control of the borrowed money.
But it takes care to ensure that the money lent is used only for business purposes.
Bank loans and advances are found to be convenient as far as its repayment is concerned. This
facilitates planning for future and timely repayment of loans. Otherwise business activities would
have come to a halt.
Loans and advances by banks generally carry element of secrecy with it. Banks are duty-bound to
maintain secrecy of their transactions with the customers. This enhances people’s faith in the
banking system.
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Objectives of Loans and Advances:-
General Objective:
The general objective of the study is to figure out the Loan and Advances of Bajaj Finance limited.
Specific objectives are:
1. To have idea regarding various types of Loan and Advances of Bajaj Finance Limited.
2. To identify the loan sanction procedure in different sectors in last some years.
3. To identify the credit approval, their securities and monitoring process of Bajaj Finance Limited
4. To know the loan and advances activities of Bajaj Finance Limited.
5. To identify the recovery rates of the loans in different sectors in last some years and have a
comparison among them.
6. To identify the problems regarding loan and advances and give some recommendations for
improving the effectiveness and efficiency of Loan and Advances services.
Types of loans:-
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Highlights
Loans can be classified basis collateral requirements and usage
Secured loans vary based on the asset used as collateral
Personal loans are the most popular form of unsecured loans
Avail instant financing with pre-approved loan offers
A loan is essentially money borrowed with a promise of return within a specific time period/tenor. The
lender decides a fixed rate of interest that you must pay on the money you borrow, along with the
principal amount borrowed. Let us take a look at the different types of loans that are available in India.
There are various types of loans available in India, and they are classified based on two factors:
- Whether they require collateral
- The purpose they are used for
Based on whether they require collateral, loans are classified into secured loans and unsecured loans.
Let’s take a look at each type.
I. Secured loans:-
These are loans that do require collateral, i.e., you have to provide an asset to the lender as
security for the money you are borrowing. That way, if you are unable to repay the loan, the lender still
has some means to get back their money. The rate of interest of secured loans tends to be lower as
compared to those for loans without collateral.
Types of secured loans:-
1. Home loan
Home loans are a secured mode of finance, that give you the funds to buy or build the home of your
choice. The following are the type of home loans available in India:
Land purchase loan: Purchase land for your new home
Home construction loan: Build a new home
Home loan balance transfer: Transfer the balance of your existing home loan at a lower interest rate
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Top up loan: Can be used to renovate an existing home or have the latest interiors for your new home
Note that while buying a new property/home, the lender requires you make a down payment of at least
10-20% of the property’s value. The rest is financed. The loan amount disbursed depends on your
income, its stability and current liabilities among others.
2. Loan against property (LAP)
Loan against property is one of the most common forms of a secured loan where you can pledge any
residential, commercial or industrial property for availing the funds required. The loan amount
disbursed is equivalent to a certain percentage of the property’s value and varies across lenders.
While some lenders may offer an amount equivalent to 50-60% of the property’s value, others may
offer an amount close to 80%. A loan against property helps you unlock the dormant value of your
asset and can be used to satiate personal life goals such as higher education of children or marriage.
Businesses use a loan against property for business expansion, R&D and product development among
others.
3. Loans against insurance policies
Yes, you can also avail loans against your insurance policy. However, note that all insurance policies
don’t qualify for this. Only policies, such as endowment and money-back policies, which have a
maturity value can be used to avail loans.
Thus, you can’t avail a loan against a term insurance plan as it doesn’t have any maturity benefits.
Also, loans can’t be availed against unit-linked plans as the returns aren’t fixed and depends on the
performance of the market. It’s essential to note that you can opt for a loan against endowment and
money back policies only after they’ve acquired a surrender value. These policies acquire a surrender
value only after paying regular premiums continuously for 3 years.
4. Gold loans
For the longest time, gold has been one of the most favored asset classes. The organized Indian gold
loan industry is expected to touch Rs.3,101 billion by 2019-20, according to a KPMG report, thanks to
flexible interest rates offered by financial institutions.
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A gold loan requires you to pledge gold jeweler or coins as collateral. The loan amount sanctioned is a
certain percentage of the gold’s value pledged. Gold loans are generally used for short-term needs and
have a short repayment tenor compared to home loans and loan against property.
5. Loans against mutual funds and shares
An ideal vehicle for long-term wealth creation, mutual funds can also be pledged as collateral for a
loan. You can pledge equity or hybrid funds to the financial institution for availing a loan. For doing
so, you need to write to your financier and execute a loan agreement.
Your financier then will write to the mutual fund registrar and a lien on the certain number of units to
be pledged is marked. Typically, you can get 60-70% of the value of units pledged as a loan.
Similarly, with shares, financial institutions create a lien against shares against which the loan is taken
and the loan value is equivalent to a percentage of the value of the shares.
6. Loans against fixed deposits
The humble fixed deposit not only offers assured returns but can also come handy when you need a
loan. The amount of loan can vary between 70-90% of the FD’s value and varies across lenders.
However, it’s essential to note that the loan tenor can’t be more than the FD’s tenor.
II. Unsecured loans
These are loans that do not require collateral. The lender lends you the money based on past
associations, and your credit score and history. Thus, you have to have a good credit history to avail
these loans. Unsecured loans usually come at a higher rate of interest due to the lack of collateral.
Types of unsecured loan:-
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1. Personal loan
Offering an instant flush of liquidity, a personal loan is one of the most popular types of unsecured
loans. However, since a personal loan is an unsecured mode of finance, the interest rates are higher
compared to secured loans. A good credit score along with high and stable income ensures you can
avail this loan at a competitive rate of interest. Personal loans can be used for the following purposes-
- Manage all expenses of a family wedding
- Pay for a vacation or an international trip
- Finance your home renovation project
- Fund the cost of your child’s higher education
- Consolidate all your debts into a single loan
- Meet unexpected/ unplanned/ urgent expenses
2. Short-term business loans
Another type of unsecured loans, a short-term business loan can be used to meet their expansion and
daily expenses by various entities and organizations.
- Working capital loans
- Machinery loans and equipment finance
- Small business loans for MSMEs
- Loans for women entrepreneurs
- Loans for traders
- Loans for manufacturers
- Loans for service enterprises
Flexi Loans
A facility whereby you can avail funds from your approved limit and as when required and pay interest
only on the amount used. You can withdraw on your loan limit, any number of times and prepay when
you have extra cash, at no extra cost. Such a unique facility gives you the freedom to be in full control
of your finances unlike rigid term loans and offers you savings on your EMIs by up to 45%. Here, you
also have the option to pay only interest as EMIs, with the principal payable at the end of the tenor.
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Based on what they are used for, loans are classified mainly into:
1. Education loans
Aspiration for higher education from reputed institutions have bolstered the demand for education
loans in the country. This loan covers the basic fees of the course along with allied expenses such as
the accommodation, exam fee, etc. In this loan, the student is the main borrower while parents, siblings
and spouse are co-applicants.
An education loan can be taken for a full-time, part-time or vocational course along with graduation
and post-graduation course in the fields of management, engineering and medicine, among others. The
loan must repaid by the student once the course is complete.
A unique feature of an education loan is the moratorium period, wherein the student has the option of
not paying the EMIs until after 12 months of completing the course or 6 months after he/she starts
working, whichever is earlier.
2. Vehicle loans
A vehicle loan is extended in the form of a two or four-wheeler loan which helps you to buy your
dream vehicle. Vehicle loans are offered either on purchase of a new vehicle or a used one. Your credit
score, ratio of debt to income, loan tenor, etc., play a crucial role in determining the loan amount.
With Bajaj Finserv you can get pre-approved offers on all the above-mentioned loans and there are no
queues, forms or details needed. Here, your loan offer is already approved, so you can avail instant
financing. All you need to do is simply provide some basic details and get your pre-approved offer.
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Documents required for the loan approval:-
Personal Loan:-
One of the options to get money from reputed banks for all needs is through personal loan. And, to
apply successfully for a personal loan an applicant needs to provide certain set of documents.
These documents helps lender (be it a Bank or a NBFC) to know and understand the financial stability
of the borrower and analyze the credit risk. Apart from that it helps a lender know and verify all the
details about the applicant such as age, income, address, employer and employment. It is on the basis
of this a lender decides whether to lend or not to the applicant.
As personal loans are unsecured loans, the lender does not takes anything as collateral for the lending
amount, hence there is always a potential risk of borrower defaulting or absconding on the loan. Hence
to be double triple sure a lender asks for a certain set of documents so that it can learn and analyse the
applicant and then decide.
The documents required for personal loan help a lender to know and understand the following about
the applicant:
1. Identity
2. Age
3. Income
4. Address
5. Existing Loans
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6. Repayment History (if any)
Once a lender has these details, they can know and understand the applicant better. And, using the
information provided, they can come up with the best loan offer for the applicant.
As such, providing the required documents while applying for a personal loan, helps the applicant to
get the best offer.
Above is the checklist of all the required documents for a personal loan.
Home loan:-
Here is a checklist of the documents required to apply for a home loan.
1. Passport Size Photographs
2. Identity Proof: Passport / Driving License / Voter ID / PAN Card / Aadhaar Card.
3. Address Proof: Driving License / Registered Rent Agreement / Electricity Bill (up to 3 months
old) / Passport.
4. Employment Appointment Letter: Required if the current employment is less than 1-year old.
5. Financial Documents:
Last3monthssalaryslip
6monthbankstatement
2 year Form 16
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6. Property Documents: Sale deed, Khata, transfer of ownership.
7. Advance Processing Cheque: A cancelled cheque for validation of bank account.
8. Financial Documents:
For Salaried Individual: 3 month salary slip, Form 16 and bank statement
For Self-Employed Individual: IT returns for last 2 years along with computation of income tax
for past 2 years certified by a Chartered accountant
For Self-Employed Non- Professionals: IT returns for last 3 years along with computation of
income tax for past 2 years certified by a Chartered accountant
9. Complete Home Loan Application form duly filled
Vehicle Loan:-
Here is the checklist of the documents required to apply for a car loan:
Proof of age
Identification proof
Application form
Passport size photograph
Proof of residence
Income proof
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Bank statement
Signature verification proof
Pro-forma Invoice or Rate List
Reasonable interest rates, affordable EMIs, simplistic paperwork, and quick disbursement are a few
reasons why car loans have become such a comfortable option for today’s common man. Now the
dream of owning a car is no longer far-fetched- a few documents are all you need.
Predominantly, the lender banks look for proof that you are a good credit risk and are in a position to
repay the car loan. This information, along with your credit report and score, will directly impact the
interest rates that you are charged.
Since your credit rating will be assessed while applying, it is worth cleaning up any existing debts
before you lodge your initial application. This is sure to improve your chances of approval. If you have
a bad credit history, the lender bank will also want to see your credit card statements, mortgage details
and verification of other loans that you hold.
Educational Loan:-
Documents required for an Educational Loan:
For students seeking a loan for studies within the country, they can provide the following documents.
Duly-filled application form.
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2 passport size photographs.
Graduation, Secondary School Certificate, or High School Certificate or mark sheets
KYC documents that include ID, address, and age proof.
Signature Proof
Income Proof of parents or guardian
If collateral is required, documentation for Immovable property, FDs, etc.
For students interested in a loan to study abroad, they will need to provide the documents below.
Duly-filled application form.
2 passport size photographs.
KYC Documents that include ID, residence and age proof.
A copy of statement of marks or certificates of last examination passed.
Proof of admission to the university and the course
Schedule of course expenses
If you have received a scholarship, a copy of the scholarship letter is needed.
Copy of Foreign Exchange permit if you have it.
Bank account statement for last six months of the borrower, parents or guardian.
Last 2 years’ Income Tax assessment of the borrower, parents or guardian.
For loans with collateral, the details of security offered must be furnished. You might also be
required to provide an advocate’s search and report about its marketability, mortgage ability, etc.
Proof of the source of margin is required.
Educational loans are a sector which is promoted as it gives students the opportunity to study further. It
enhances the growth and development of the citizens and the country. Educational loans are an
investment into the future, so it is important to do your research and take your time. Government and
banks also offer subsidies and lower interest rates to promote education for all.
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Gold loan:-
Two passport size photograph
ID Proof such as Driving License / PAN Card / Form 60/61 / Passport Copy / Voter ID Card /
Aadhaar Card / Ration Card. Any one document needs to be submitted
Address Proof such as Driving License / Voter ID Card / Ration Card / Aadhaar Card / Passport
Copy / registered lease agreement with not older than 3 months utility bills in the name of landlord
(any one)
Proof of land holding in case of agriculture loan of more than Rs. 1 lakh
Terms and conditions of loan agreement:-
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What is a Loan Agreement?
Few people sail through life without borrowing. With few exceptions, almost everyone takes a
loan to buy a car, finance a home purchase, pay for a college education or cover a medical
emergency. Loans are nearly ubiquitous and so are the agreements that guarantee their repayment.
Loan agreements are binding contracts between two or more parties to formalize a loan process.
There are many types of loan agreements, ranging from simple promissory notes between friends
and family members to more detailed contracts like mortgages, auto loans, credit card and short-
or long-term payday advance loans.
Simple loan agreements can be little more than short letters spelling out how long a borrower has
to pay back money and what interest might be added to the principal. Others, like mortgages, are
elaborate documents that are filed as public records and allow lenders to repossess the borrower’s
property if the loan isn’t repaid as agreed.
Each type of loan agreement and its conditions for repayment are governed by both state and
federal guidelines designed to prevent illegal or excessive interest rate on repayment.
Loan agreements typically include covenants, value of collateral involved, guarantees, interest rate
terms and the duration over which it must be repaid. Default terms should be clearly detailed to
avoid confusion or potential legal court action. In case of default, terms of collection of the
outstanding debt should clearly specify the costs involved in collecting the debt. This also applies
to parties using promissory notes as well.
Purpose of a Loan Agreement:-
The main purpose of a loan contract is to define what the parties involved are agreeing to, what
responsibilities each party has and for how long the agreement will last. A loan agreement should be in
compliance with state and federal regulations, which will protect both lender and borrower should
either side fail to honor the agreement. Terms of the loan contract and which state or federal laws
govern the performance obligations required by both parties, will differ depending upon the loan type.
Most loan contracts define clearly how the proceeds will be used. There is no distinction made in law
as to the type of loan made for a new home, a car, how to pay off new or old debt, or how binding the
terms are. The signed loan contract is proof that the borrower and the lender have a commitment that
funds will be used for a specified purpose, how the loan will be paid back and at what amortization
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rate. If the money is not used for the specified purpose, it should be paid back to the lender
immediately.
Other Reasons for Using Loan Agreements:-
Borrowing money is a huge financial commitment, which is why a formal process is in place to
produce positive results on both sides.
Most of the terms and conditions are standard fare – amount of money borrowed, interest charged,
repayment plan, collateral, late fees, penalties for default – but there are other reasons that loan
agreements are useful.
A loan agreement is proof that the money involved was a loan, not a gift. That could become an
issue with the IRS.
Loan agreements are especially useful when borrowing or loaning to a family member or friend.
They prevent arguments over terms and conditions.
A loan agreement protects both sides if the matter goes to a court. It allows the court to determine
whether the conditions and terms are being met.
If the loan includes interest, one side may want to include an amortization table, which spells out
how the loan will be paid off over time and how much interest is involved in each payment.
Loan agreements can spell out the exact monthly payment due on a loan.
It is safe to say that anytime you borrow or lend money, a legal loan agreement should be part of
the process.
On Demand vs. Fixed Repayment Loans:-
Loans use two sorts of repayment: on demand and fixed payment.
Demand notes are usually used for short-term borrowing and are often used when people borrow
from friends or family members. Sometimes banks will offer demand loans to customers with whom
they have an established relationship. These loans typically don’t require collateral and are for small
amounts.
Their key feature is how they are repaid. Unlike longer term loans, repayment can be required
whenever the lender desires, as long as sufficient notification is given. The notification requirement is
usually spelled out in the loan agreement. Demand loans with friends and family member might be a
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written agreement, but it might not be legally enforceable. Banks demand loans are legally
enforceable. A check overdraft facility is one example of a bank demand loan – if you don’t have the
money in your account to cover a check, the bank will loan you the money and pay the check, but you
are expected to repay the bank quickly, usually with a penalty fee.
Fixed term loans are commonly used for large purchases and lenders often demand that the item
purchased, perhaps a house or a car, serve as collateral if the borrower defaults. Repayment is on a
fixed schedule, with terms established at the time the loan is signed. The loan has with a maturity date
when it must be fully repaid. In some cases, the loan can be paid off early without penalty. In others,
early repayment comes with a penalty.
Legal Terms to Consider:-
All loan agreements must specify general terms that define the legal obligations of each party. For
instance, the terms regarding repayment schedule, default or contract breach, interest rate, loan
security, as well as collateral offered must be clearly outlined.
There are some standard legal terms involved in loan agreements that all sides should be aware of,
regardless of whether the contract is between family and friends or between lending institutions and
customers.
Here are four key terms you should know before signing a loan agreement:
Choice of Law: This term refers to the difference between laws in two or more jurisdictions. For
example, the laws governing a specific part of a loan agreement in one state may differ from the same
law in another state. It is important to identify which state (or jurisdiction’s) laws will apply. This term
is also known as a “Conflict of Law.”
Involved Parties: This refers to personal information about the borrower and lender that should be
clearly stated in the loan agreement. That information should include the names, addresses, social
security numbers and phone numbers for both sides.
Severability Clause: This term states that terms of a contract are independent of each other. Thus, if
one condition of the contract is deemed unenforceable by a court, that doesn’t mean all conditions are
unenforceable.
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Entire Agreement Clause: This term defines what the final agreement will be and supersedes any
agreements previously made in negotiations, whether written or oral. In other words, this is the final
say and anything that was said (or written) before, no longer applies.
Interest Rate Determination:-
Many borrowers in their first experience securing a loan for a new home, automobile or credit
card are unfamiliar with loan interest rates and how they are determined. The interest rate depends on
the type of loan, the borrower’s credit score and if the loan is secured or unsecured.
In some cases, a lender will request that the loan interest be tied to material assets like a car
title or property deed. State and federal consumer protection laws set legal limits regarding the amount
of interest a lender can legally set without it being considered an illegal and excessive usury amount.
If the loan includes interest payments, as most do, the terms will be spelled out in the loan’s terms and
conditions. Interest is either fixed fee or floating fee.
A fixed fee, or fixed rate, loan establishes an interest rates that remains unchanged during the
repayment of the loans. If you borrow money with a 4% annual rate, you will pay the lender 4% a year
on the balance due until the loan is paid off. The amount of interest you pay will decrease over time as
the balance is paid down and the principal payment will increase. If you borrow $200,000 to buy a
house, the monthly payment will remain constant, but the portion of the payment that goes to interest
and principal will change each month as the loan is balance is reduced.
Floating fee interest rates, also called variable rate loans, carry interest rates that change over
time. The amount of interest based on a benchmark rate, usually a widely followed index like the
LIBOR those changes regularly. Floating fee rates are adjusted periodically and generally are only
used in complex loans like adjustable-rate home mortgages.
Contract Length & Amortization:-
The length of a loan contract is determined by a lender’s reliance upon an amortization schedule.
Once the lender and the borrower have determined the amount of money needed, the lender will use
the amortization table to calculate what the monthly payment will be by dividing the number of
payments to be made and adding the interest onto the monthly payment.
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Unless there are certain loan conditions that penalize the borrower for early loan payment, it is in
the best interest of the borrower to pay back the loan as quickly as possible. The faster the loan debt is
retired the less money it costs the borrower.
Pre-Payment Fees and Penalties
While the goal to pay back a loan quickly is a financially sound practice, there are certain loans
that penalize the borrower with pre-paid fees and penalties for doing so. Prepayment penalties are
typically found in automobile loans or in mortgage subprime loans. They also can occur when
borrowers choose to refinance a home or auto loan.
Pre-payment penalties are applied to protect the lender, who expects a certain return on his loan
over a certain amount of time. For example, if the borrower repays a 5-year loan in three years, the
lender would be out the interest he expected the last two years of the loan.
Prepayment penalties usually are 2% of the amount due on the loan or six months of interest
payments. It can have a dramatic effect on the cost of refinancing a loan. Many sub-prime loans
include prepayment penalties, which opponents say target the poor, who usually are the ones with
subprime loans.
On the other side are homes financed through government-backed FHA loans. Federal law
specifically forbids prepayment penalties on FHA loans. The exception is if the borrower has a
mortgage that contains a due-on-sale clause and the clause has been allowed as part of the mortgage.
Breach or Default
If a loan contract is paid off late, the loan is considered in default. The borrower can be liable for
a myriad of potential legal damages to compensate the lender for any losses suffered.
The breached or defaulted lender can pursue litigation and have a court hold the borrower liable for
legal costs, liquidated damages and even have assets and property attached or sold for repayment of the
debt. In addition, a breach or default of court judgment can be placed on the borrower’s credit record.
Mandatory Arbitration:-
Mandatory arbitration is an increasingly popular provision in loan agreements that requires parties
to resolve disputes through an arbitrator, rather than the court system.
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More than 50% of lending institutions include mandatory arbitration as part of their loan contracts
because it is supposed to be faster and cheaper than going to court. Arbitration puts the final decision
in the hands of one person, who likely is more experienced and sophisticated about the law than six
jurors in a courtroom.
In most cases, mandatory arbitration clearly favors the lenders, who have legal counsel that
specialize in this area of law on their side. The borrower often has no lawyer or inadequate
representation because lawyers are not guaranteed payment in arbitration cases.
The borrower is at an even bigger disadvantage if the arbitration is binding, meaning there can be
no appeal. The rules in the Fair Credit Reporting Act and the Truth in Lending Act have no bearing in
arbitration cases, which also favors the lender.
Members of the military are especially vulnerable to loan agreements that include mandatory
arbitration. A solider serving out of the country may not be able to attend or have competent
representation at an arbitrary hearing and because of that, lose possession of a car or other asset. The
arbitrator’s decision can’t be appealed, so there is no recourse if the decision goes against the soldier.
Before you sign a loan agreement, read it closely and if it includes a mandatory arbitration clause,
decide whether you are comfortable with that as a means of settling disputes.
Usury and Predatory Protections
Several federal and state consumer protection laws protect consumers against predatory and usury
loan tactics used by lenders. The Truth In Lending Act, Real Estate Settlement Act and the Home
Owners Protection Act federally protect borrowers against predatory lenders.
Many states enacted companion consumer predatory and usury protection acts to protect borrowers.
Both parties benefit because lenders make reasonable interest repayment rates and borrowers receive a
much-needed loan.
Several federal and state consumer protection laws protect consumers against predatory and usury
loan tactics used by lenders.
Promissory Notes:-
Promissory notes resemble loan agreements but lack complexity. Often, they are little more
than commitment-to-pay letters like IOUs or simple payment on demand notes. Usually the borrower
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writes a letter specifying how much money he or she is borrowing and the terms under which it will be
repaid. They are almost always used for small loans between people who know one another well.
Promissory notes are signed and dated and can be legally binding. Promissory notes can be secured or
unsecured. Secured loans offer the lender collateral is the loan isn’t repaid, while unsecured loans
don’t use collateral. They can contain terms about installment payments and interest, though they
might not.
Unlike loan agreements, which can contain complex payment terms, promissory notes are more
like paper trails that document that one person has lent money and that the borrower agrees to repay
the money within a certain amount of time, either in a lump sum or in installments. It’s used primarily
to avoid financial misunderstandings and shouldn’t be confused with a loan agreement, which contains
an assortment of legally enforceable terms and remedies.
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CHAPTER-II
INDUSTRY PROFILE & COMPANY PROFILE
NBFC IN INDIA
NBFC - INDUSTRY OVERVIEW:-
A Non-Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable
securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include
any institution whose principal business is that of agriculture activity, industrial activity, purchase or
sale of any goods (other than securities) or providing any services and sale/purchase/construction of
immovable property. The NBFC sector is an important part of the Indian financial sector. They have
shown dynamism in delivering innovation and in assisting financial inclusion.
NBFCs typically have several advantages over banks due to their focus on niche segment,
expertise in the specific asset classes, and deeper penetration in the rural and unbanked markets.
However, on the flip side, they depend to a large extent on bank borrowings, leading to high cost of
borrowings and face competition from banks which have lower cost of funds.
The growing asset size of the NBFC sector has increased the need for risk management in the
sector due to growing interconnectedness of NBFCs with other financial sector intermediaries. The
Reserve Bank of India (RBI) has been in the recent past trying to strengthen the risk management
framework in the sector, simplify the regulations and plug regulatory gaps so as to prevent regulatory
arbitrage between banks and NBFCs.
The Reserve Bank of India released the ‘Revised Regulatory Framework for NBFCs’ on
November 10, 2014 which broadly focuses on strengthening the structural profile of NBFC sector,
wherein focus is more on safeguarding of the depositors money and regulating NBFCs which have
increased their asset-size over time and gained systemic importance.
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Due to subdued economic growth, last two years, have been challenging period for the
NBFCs with moderation in rate of asset growth, rising delinquencies resulting in higher provisioning
thereby impacting profitability. However, comfortable capitalization levels and conservative liquidity
management, continues to provide comfort to the credit profile of NBFCs in spite of impact on
profitability.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM):-
Non-banking finance companies (NBFCs) form an integral part of the Indian financial system.
They play an important role in nation building and financial inclusion by complementing the banking
sector in reaching out credit to the unbanked segments of society, especially to the micro, small and
medium enterprises (MSMEs), which form the cradle of entrepreneurship and innovation. NBFCs’
ground-level understanding of their customers’ profile and their credit needs gives them an edge, as
does their ability to innovate and customize products as per their clients’ needs. This makes them the
perfect conduit for delivering credit to MSMEs.
However, NBFCs operate under certain regulatory constraints, which put them at a disadvantage
vis-à-vis banks. While there has been a regulatory convergence between banks and NBFCs on the asset
side, on the liability side, NBFCs still do not enjoy a level playing field. This needs to be addressed to
help NBFCs realize their full potential and thereby perform their duties with greater efficiency.
Moreover, with the banking system clearly constrained in terms of expanding their lending
activities, the role of NBFCs becomes even more important now, especially when the government has
a strong focus on promoting entrepreneurship so that India can emerge as a country of job creators
instead of being one of job seekers. Innovation and diversification are the important contributors to
achieve the desired objectives.
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IMF (International Monetary Fund) cuts India’s growth rate to 4.8% citing slowdown in local
demand, stress in NBFC sector
8 per cent for the current fiscal year which is expected to rise to 5.8 per cent in 2020?
The IMF attributed the slash in growth rate to the slowdown in demand in the domestic market
and stress in the nonbank financial sector.
“India’s growth is estimated at 4.8 percent in 2019, projected to improve to 5.8 percent in 2020
and 6.5 percent in 2021,” said IMF in a statement.
The 5.8 per cent estimate in 2020 is down by 0.9 per cent from the previous estimate.
The steep cut in India’s growth rate has affected the IMF’s projection on the world economy,
which is now expected to expand 2.9 per cent in 2019 as compared with the previous forecast at
3.0 per cent.
In its World Economic Outlook Report, IMF stated that the growth markdown largely reflects a
downward revision to India’s projection, where domestic demand has slowed more sharply than
expected amid stress in nonbank financial sector and a decline in credit growth.
According to IMF, the global economy is expected to accelerate to 3.3 per cent in 2020 from 2.9
per cent in 2019. Further, it is expected to rise to 3.4 per cent in 2021.
However, the IMF has in its latest estimates trimmed the global growth rate by 0.1 per cent each
for 2019 and 2020 and by 0.2 percentage for 2021.
Earlier in December, IMF chief economist Gita Gopinath had estimated a likely cutdown in
India’s growth estimate during the January review.
United Nations had also cut down India’s growth estimate for Financial Year 2020 to 5 per cent
from 5.7 per cent. World Bank had also cut its estimate to 5 per cent from its earlier prediction of
6 per cent
NBFC crisis:-
The continuing liquidity crunch facing non- banking financial companies is likely to result in creasing bad loans risks for banks both from these shadow banks as well as from companies relying on such lenders for funding, warns a report.
The spillover of stress among NBFCs to borrowers, and ultimately to banks, will hinder improvements in banks' asset quality, profitability and capital, which is credit negative.
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Owing to liquidity crisis, NBFCs are forced to reduce lending, leading to funding constraints for
borrowers relying on non-bank lenders.
This increases the risk of loan losses for NBFCs, and as a result, they will continue to have difficulty in obtaining funding.
Also, as NBFC customers' financials weaken, banks will reduce lending to them, which in turn
will further worsen their funding stress and can lead to more bad loans from these companies for
banks, it warned.
A type of NBFC credit to controlling shareholders, or promoters, of large listed companies across
various industries is also emerging as a source of asset risk for banks.
Corporate promoters use their company shares as collateral to borrow, mostly from NBFCs or
mutual funds, typically for the purpose of making investments, including in external businesses
"The risk for banks is that promoters with weak governance can use company resources to repay
their debt, causing financial damage to their businesses, which as a consequence, can default on
their own loans from banks, the report said.
Refinancing can be difficult for promoters of companies as investments they make using
Loans are often illiquid, a problem made worse by tighter availability of credit from NBFCs.
The report further said the non-bank lenders collectively have a large market share in retail and
SME loans, a segment that has grown rapidly in recent years and now is susceptible to asset
quality deterioration as the economy slows.
"A curtailing of lending by NBFCs will add to risks from retail loans for banks by reducing the
availability of credit that individuals can use for refinancing and by contributing to the slowdown,"
the agency said.
The report also said real estate companies are under significant stress, and tighter funding will
further increase stress in the sector. It could lead to more NPLs for banks because they have large
exposures to NBFCs active in real estate lending.
Banks also have direct exposures to real estate companies, and the growing stress in the NBFC
sector will result in more impairment of bank loans to these borrowers.
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SWOT Analysis of NBFCs
Strengths:-
High on service aspect
Strong last-mile approach
Focus on recovery
Easy and fast appraisal and disbursements
Regional linkages
Able to generate higher yield on assets
Attained critical mass in terms of size
Own employees versus DSAs
Weaknesses:-
Weak in urban markets
Weak credit history of most NBFCs
Largely restricted to the regional markets (say South India)
Weaker risk management and technology systems
Too much of diversification from core business
Higher regulatory restrictions
Opportunities:-
Augmentation of capital and leveraging for growth
Large untapped market, both rural and urban and also geographically
Demographic changes and under-penetration
New opportunities in credit card, personal finance, home equity and distribution of mutual fund
schemes
Tie-up with global financial sector giants
Blurring gap between banks in terms of costs of funds
Securitization, to liberate funds to fuel asset growth
Threats:-
Weak financial health of many of the NBFCs
High cost of funds
Asset quality deterioration may not only wipe out profits but also net worth
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Entry of foreign players in post-2009 scenario
Growing retail thrust within banks
CRISIL NBFC REPORT:-
"However, increases in banks' real estate NPLs will be marginal as their direct exposures to real estate companies remain small, growing more slowly than NBFC loans to the sector," it said
After witnessing healthy growth over the past few years, non-bank credit growth slowed down in the second half of fiscal 2019 due to the tight liquidity conditions that engulfed the sector. Consequently, Non Bank Financial Companies (NBFCs) which were gaining market share from banks across major asset classes in the past could not do so in fiscal 2019.
Going forward, NBFCs will need to recalibrate their strategies in order to deal with the changing business dynamics. How would this impact the credit growth of the sector? When is the liquidity situation going to improve? Can NBFCs achieve pre-2018 growth in the medium term or will the growth remain anemic?
What are the key factors that will drive their growth? Will their earnings growth trajectory be lower? What will be the capital that they will need over the next 1-2 years? What will separate the winners from the losers? Where are the opportunities for growth?
CRISIL Research's NBFC Report, 2019 delves deep into the fast-changing industry landscape to come up with the answers. The report contains CRISIL Research's perspective on growth prospects, competitive scenario and the attractiveness of the 11 segments in which NBFCs operate and also gives a perspective on the emerging fintech market.
The coverage also includes:
Outlook on growth and delinquencies, credit costs by segment
Segment-wise profitability outlook, considering business growth, resource profile and asset
quality
Detailed assessment of competitive scenario with banks and market share of NBFCs in various
segments
Perspective on regulatory direction in each segment
Financial and operational benchmarks across various segments
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Profiles of over 200+ NBFCs, detailing key operational and financial parameters
Details of fund-raising in various NBFC segments
Level of digital medium usage in origination and appraisal process
Product segments covered
Housing finance Low cost housing finance
Infrastructure finance MSME finance - secured (including LAP) and unsecured
Auto finance Wholesale finance
Micro finance Gold loans
Consumer durables finance Construction equipment finance
Education loans
Coverage
Overview For each of the segments covered
Outlook on yields and spreads in fiscals 2019 and 2020 Overall growth in the industry
Relative attractiveness of the NBFC segments based
on growth and profitability outlooks Market share of NBFCs vs banks
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Competitive positioning of NBFCs across key segments Growth outlook for NBFCs
Outlook on asset quality in the NBFC industry Profitability of NBFCs: Review & outlook
View on the borrowing mix of NBFCs Asset quality: Review & outlook
Capital-raising requirement in the medium term Key growth drivers and challenges
Growth in NBFC:-
The challenges faced by non-banks in access to funding following the credit cliff event in
September 2018 and recent defaults by some large non-banks has only increased the risk aversion
of lenders and investors.
A clear differentiation is visible between groups of non-banks. At an overall level, players with a
strong parentage are still getting funds, while those without any parentage continue to face
challenges.
Bifurcating this further, wholesale NBFCs without strong parentage are the worst hit. Home loan-
and retail- focused non-banks are relatively better off.
With all of this, growth in the second half of fiscal 2019 was around half of what was seen in the
first half. But given the strong growth in the first half, growth in overall non-bank credit in fiscal
2019 was still at ~15%, with assets under management reaching Rs 23.7 lakh crore.
Growth is expected to be remain subdued at least in the first half of fiscal 2020, with overall assets
under management growth for the year estimated at 12-13%. With securitization expected to
sustain as a preferred funding mode, the on-balance growth of non-banks is expected to be lower.
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COMPANY PROFILE:-
BAJAJ GROUP:-
Bajaj Group is an Indian conglomerate founded by Jamnalal Bajaj in 1926, Mumbai. Bajaj Group is one of the oldest & largest conglomerates based in Mumbai, Maharashtra. The group comprises 34 companies & its flagship company Bajaj Auto is ranked as the world's fourth largest two- and three-wheeler manufacturer. some of the notable companies are Bajaj Electricals, Mukand Ltd & Bajaj Hindustan Ltd. Involvement in various industries that include automobiles (2- and 3-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance. The Group is headed by Rahul Bajaj.
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BAJAJ GROUP OF COMPANIES:-
Bachhraj & Company Pvt. Ltd.
Bachhraj Factories Pvt. Ltd.
Bajaj Allianz General Insurance Company Ltd.
Bajaj Allianz Life Insurance Company Ltd.
Bajaj Auto Finance Ltd.
Bajaj Auto Holdings Ltd.
Bajaj Auto Ltd.
Bajaj Electricals Ltd.
Bajaj Finserv Ltd.
Bajaj Holdings & Investment Ltd.
Bajaj International Pvt. Ltd.
Bajaj Sevashram Pvt. Ltd.
Bajaj Ventures Ltd.
Baroda Industries Pvt. Ltd.
Hercules Hoists Ltd.
Hind Lamps Ltd.
Hind Musafir Agency Ltd.
Jamnalal Sons Pvt. Ltd.
Jeevan Ltd.
Maharashtra Scooters Ltd.
Mukand Engineers Ltd.
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Mukand Global Finance Ltd.
Mukand International Ltd.
Mukand Ltd.
GROUP STRUCTURE:-
BAJAJ FINSERV LIMITED:-
Bajaj Finance Limited, a subsidiary of Bajaj Finserv, is an Indian Non-Banking Financial Company
(NBFC). The company deals in Consumer Finance, SME (Small and Medium-sized Enterprises)
Commercial Lending, and Wealth Management. Originally incorporated as Bajaj Auto Finance
Limited on March 25, 1987, the non-bank singularly focused on providing two and three wheeler
finance. After 11 years in the auto finance market, Bajaj Auto Finance Ltd launched its initial public
issue of equity share and was listed on the BSE and NSE.. At the turn of the 20th century, the company
ventured into the durables finance sector. In the subsequent years, Bajaj Auto Finance diversified into
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business and property loans as wellhttps://en.wikipedia.org/wiki/Bajaj_Finance - cite_note-3. In the year
2006, the company’s assets under management hit the Rs.1,000 crore mark and is currently at
Rs.52,332 crore. 2010 saw the company’s registered name change from Bajaj Auto Finance Limited to
Bajaj Finance Limited.
Bajaj Finserv was formed in April 2007 as a result of its demerger from Bajaj Auto Limited as a
separate entity to focus purely on the financial services business of the group. The process of
demerger was completed in Feb 2008.
This demerger was not only to unlock the value in the high growth business areas of Auto,
Insurance, Finance sectors and Wind Power but to also to independently run these core businesses
and strengthen their competencies.
The wind power project, the stakes in the life and general insurance companies and consumer
finance along with their respective assets and liabilities got vested in Bajaj Finserv Limited. In
addition to that, cash and cash equivalent of INR 8,000 million (then market value) was also
transferred to the company.
The demerger has enabled investors to hold separate focused stocks and also facilitated transparent
benchmarking of the companies to their peers in their respective industries.
The constantly changing demographics and dynamics of the Indian economy, has led to creation
of various needs of the customer.
The Indian customer now demands proper avenues of channelizing their savings, financial
protection and is also desirous of spending more on valuable goods and services.
All these wants need to be met by dynamic players in the financial services space. Bajaj Finserv
was formed specifically to cater to these needs.
The company was also formed to touch and improve the lives of a growing number of people in
the country, and in doing so, deliver superior corporate values to its shareholders.
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He operating companies carry with them the Bajaj brand, which carries with it decades of
commitment to business ethics, integrity and highest standards of fiduciary responsibility.
Vision and Mission of the Organization:-
Vision:
Bajaj Finserv has a vision to become a full-fledged financial services company and be the financial
partner to the Indian consumer and help him across his financial needs, whether for finance, for
investment management, for protection or for post-retirement support, throughout his lifecycle.
Mission:
Bajaj Finserv aims to be the most useful, reliable and efficient provider of Financial Services. It is our
continuous endeavor to be a trustworthy advisor to our clients, helping them achieve their financial
goals.
Area of operation:
Consumer Durable Finance
Two and Three Wheeler Finance
Lifestyle product finance
Vendor finance
Construction Equipment Finance
Objective of the Organization:
Our main objects as contained in our Memorandum of Association include:
1. To Finance industrial by way advance ,deposit or lend money, securities and propertied or with any
Company, Body corporate, trust, firm, person or association whether falling under the same
management or otherwise, with or without security and on such terms as may be determined from
time to time, and to carry on and undertake the business of finance and investment and to provide
venture capital, seed capital, loan capital and to participate in equity preference share capital or to
give guarantees on behalf of the company in the matter and to promote companies engaged in
industrial and trading business and to act as Financial Consultants, Management Consultants,
Brokers, Dealers, Agents and to carry on the business of share broking, money broking ,exchange
42 | P a g e
Departments
Administration Collections Marketing Product
Credit Team Human Resources Operations Sales
broking, bill broking and general brokers for shares ,debentures, debenture-stock, bonds, units,
obligations, securities ,commodities, bullion currencies and to manage the funds of any person,
firm, body corporate or trust by investment in various avenues like Growth Fund, income fund, risk
fund, tax exempt funds, pension /superannuation funds and to pass on the benefits of portfolio
investments to the investor as dividends, bonus, interest, etc.
2. To carry on the business as an investment company and to underwrite, sub-underwrite, to
investigating , and acquire by gift or otherwise and hold, sell, buy or otherwise deal in shares
debentures, debentures-stocks, bond, units, obligations and securities issued or guaranteed by Indian
or Foreign Governments, States, Dominions, Sovereigns, Municipalities.
Different Departments
Organization structure
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RAHUL BAJAJ
[Chairman]
NANOO PAMNANI
[vice-chairman]
SANJIV BAJAJ
[CEO]
SANDEEP JAIN
[CFO]
RAJIV JAIN
[Managing Director]
Organization Hierarchy:
A key issue in accomplishing the goals identified in the planning process is structuring the work of
organization. Organizations are group of people, with ideas and resources working toward common
goals. The purpose of the organizing function is to make the best use of the organizations resources to
achieve organizational goals. Organizational Structure is the formal decisions making framework by
which job tasks are divided, grouped and coordinated. Formalization is an important aspect of
structure. It is the extent to which the unit of organization is explicitly defined and its policies,
procedures and goals are clearly stated. It is the official organizational structure conceived and built by
top management. The formal organization can be seen and represented in chart form. An organization
chart displays the organizational structure and shows job titles, lines of authority and relationship
between departments. Organizational Structure allows the expressed allocation of responsibilities for
different functions and processes to different entities. Ordinary description of such entities is as branch
site, department, work group and single group of people.
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Management:
Name Designation
Rahul Bajaj Chairman
Ranjan Sanghi Director
Rajiv Bajaj Director
Rajendra Lakhotia Director
D J Balaji Rao Director
ANUP SAHA
[President Consumer business]
Deepak bagati
[ [President collections & SME]
ASHISH PANCHAL [President – Rural, Insurance & Liabilities
and Chief of Staff]
M M Muralidharan Treasurer
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Omkar Goswami Director
Madhur Bajaj Director
Dipak Poddar Director
D S Mehta Director
Gita Piramal Director
Rajeev Jain Managing Director
Nanoo Pamnani Vice Chairman
Sanjiv Bajaj CEO
Product Profile of the Organization:
Bajaj Finserv Lending offers loans for various needs. We offer loans for Bajaj Auto Two Wheelers under the
name of Bajaj Auto Finance Ltd. We offer Consumer Durable Loans, Personal Loans, Loan against Property,
Small Business Loans, Construction Equipment Loans, Loan against Securities and Insurance Services under the
name of Bajaj Finserv Lending. Bajaj Finserv Lending is one of the most diversified NBFCs in the market
catering to more than 5 million customers across the country. Apart from being a well-recognized organization,
they pride us for holding the highest credit rating of FAAA/Stable for any NBFC in the country today. The
product offerings include Consumer Durable Loans, Personal Loans, Loan against Property, Small Business
Loans, Two-wheeler and Three – Wheeler Loans, Construction Equipment Loans, Loans against Securities and
Insurance Services.
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Home Loan
Construction
Equipment Loan
Consumer
Durable Loan
Product
Portfolio
Three/Two
Mortgage Loan Wheeler Loan
Personal and
Small Business
Competitors for BAJAJ FINSERV:-
IDFC FIRST BANK
SHRIRAM CITY
MAHINDRA FINANCE
HDFC BANK
DEAL 4 LOANS
BANK BAZAAR
MUTHOOT FINANCE
EDELWISS
RELIANCE CAPITAL
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Consumer Finance
Durable Finance
Lifestyle Finance
Digital Product Finance
EMI Card
2 & 3 Wheeler Finance
Personal Loan
Loan against FD
Extended warranty
Gold Loan
Home Loan
Retail EMI
Retailer Finance
E-commerce
Co-branded Credit Card
Co-branded Wallet
Today, we are the top consumer electronics, digital products, lifestyle products and personal loans
lenders in India.
SME Finance
Home Loan
Loan against Property
Gold Loan
Lease rental discounting
Business Loan
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Loan Against Shares
Professional Loan
Working Capital Loans
Developer Finance
Used Car Finance
Present in the top 40 cities in India, our SME business is growing at the rate comfortably higher
than the industry.
Commercial Lending
Vendor Financing
Large Value Lease Rental Discounting
Loans against Securities
Financial Institutions Lending
Light Engineering Finance
Corporate Finance
Warehouse Financing
Investment
Fixed Deposit
Mutual Funds
Personal Loan Interest Rates & Charges
Bajaj Finserv offers attractive interest rates on personal loans up to Rs.25 lakh that can help you meet a
range of financial requirements. Get collateral-free loans, with minimum documentation, flexible tenor
and disbursal within 24 hours of approval.
With Bajaj Finserv Personal Loan, you do not have to worry about any hidden fees or charges. Here
are more details on the personal loan interest rates and charges:
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Rate of Interest on Personal Loans in India
Types of Fees Charges Applicable
Personal Loan Interest Rates 12.99% onwards
Processing fees Up to 4.13% of the loan amount(Inclusive of taxes)
Bounce Charges Rs. 600 - 1200 Per bounce (Inclusive of applicable taxes)
Penal interest 2% of EMI amount per month + applicable taxes or Rs. 200
per month (Inclusive of taxes), whichever is higher.
DOCUMENT/ STATEMENT
CHARGES
Statement of Account/ Repayment
Schedule/ Foreclosure Letter/ No
Dues Certificate/ Interest
Certificate/ List of documents.
Download your e-statements/ letters/ certificates at no extra
cost by logging into Customer Portal – Experia.
You can get a physical copy of your statements/ letters/
certificates/ List of Documents from any of our branches at a
charge of Rs. 50/- (Inclusive of taxes) per statement/ letter/
certificate.
If you are a salaried professional aged between 25 and 58 years living in India, you can easily qualify
for a loan. As long as you match the personal loan eligibility criteria and minimum net salary specified
based on your city of residence, you can avail a loan with ease and best personal loan interest rates.
Below is table for other fees and charges:
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Personal Loan Foreclosure Charges
Loan Variant Charges
Term Loan 4% plus applicable taxes on Principal Outstanding amount as on the date
of such full pre-payment
Flexi Term Loan 4% plus applicable taxes on total withdrawable amount* (*Total loan
amount that you can withdraw under Flexi Loan from time to time as per
the repayment schedule) on the date of levy of such charges).
Flexi Hybrid Loan 4% plus applicable taxes on total withdrawable amount* (*Total loan
amount that you can withdraw under Flexi Loan from time to time as per
the repayment schedule) on the date of levy of such charges).
Personal Loan Part-prepayment Charges
Borrower Type Time Period Part-Prepayment Charges
All borrowers More than 1 month from date of
loan disbursal
2% + applicable taxes on part-
payment amount paid*
*Part-prepayment made should be more than 1 EMI.
*These charges not applicable for Flexi Loan facility.
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Annual/Additional Maintenance Charges
Loan Variant Charges
Flexi Term Loan 0.25% plus applicable taxes, on the total with drawable amount irrespective of
utilization on date of levy of such charges
Flexi Hybrid Loan 0.25% plus applicable taxes, on the total with drawable amount irrespective of
utilization on date of levy of such charges
*These charges will be levied annually.
Education Loan:- 10.45% per Anum
Gold Loan:-
Fees & Charges
Types of Fees Applicable Charges
Interest rate 12% p.a. onwards
Processing fee Rs.25 to 50 Inclusive of taxes
Part payment NIL
Foreclosure NIL
Penal interest 3 % (inclusive of taxes)
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Types of Fees Applicable Charges
DOCUMENT/STATEMENT CHARGES
Statement of Account/ Repayment
Schedule/Foreclosure Letter/No Dues
Certificate/Interest Certificate/List of documents
Download your e-
statements/letters/certificates at no extra cost
by logging into Customer Portal – Experia.
You can get a physical copy of your
statements/letters/certificates/List of
Documents from any of our branches at a
charge of Rs. 50/- (Inclusive of taxes) per
statement/letter/certificate.
Business Loan Fees & Interest Rates
Bajaj Finserv offers the lowest rate of interest on Business Loan. Read more about our latest interest
rate and fees and charges below.
Business Loan Interest Rate in India
Types of Fees Applicable Charges
Rate of interest 18% p.a. onwards
Processing fees Up to 2% of the loan amount (Inclusive of taxes)
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Business Loan Interest Rate in India
Types of Fees Applicable Charges
DOCUMENT/STATEMENT
CHARGES
Statement of Account/
Repayment
Schedule/Foreclosure Letter/No
Dues Certificate/Interest
Certificate/List of documents
Download your e-statements/letters/certificates at no extra
cost by logging into Customer Portal – Experia.
You can get a physical copy of your
statements/letters/certificates/List of Documents from any of
our branches at a charge of Rs. 50/- (Inclusive of taxes) per
statement/letter/certificate.
Bounce charges Up to Rs. 3000 (Inclusive of applicable taxes)
Penal interest (Applicable in
case of non-payment of monthly
Instalment on/before the Due -
Date)
2% per month
Document processing charges Rs. 1449 + applicable taxes
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Annual/Additional Maintenance Charges
Loan Variant Charges
Flexi Term Loan 0.25% plus applicable taxes of the Total Withdrawable Amount (as per the
repayment schedule) on the date of levy of such charges.
Flexi Hybrid Loan 1.0% plus applicable taxes of the Total Withdrawable Amount during initial
tenure. 0.25% plus applicable taxes of the Total Withdrawable Amount during
subsequent tenor.
Strategy Drivers:-
When we thought of our strategy to achieve the Big Goal, we kept in mind an important element: what
strength of our past do we want to carry into the future? Of all our options, one thought resonated
across, reflecting in all our outcomes over the course of our existence – Sustainability. It is the legacy
that our history has created. This is the outcome of over half a century of work of our parent – the
Bajaj Group. Delivered through each business that the Group has ventured into. Anything that we do
has to pass through this critical filter. Each of the five drivers of our strategy build on this core.
Focus on Existing Customers
More products per customer cannot be achieved by more customers but more satisfied customers.
More satisfied our customers, more likely they’ll partner with us for their next big pursuit. More likely,
they’ll recommend their family and friends to us. The more our customers recommend us, the less we
need to worry on getting new customers. The less we worry on getting new customers the more we’ll
focus on existing customers.
Perpetual State of Beta
In today’s world, innovative thoughts don't need years to become break-through realities, nor do they
take years to become a commodity. Newly received information becomes vapid in a few hours, new
products get duplicated overnight, one of many becomes one of one in days. The point here is rather
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simple—the need for continuous change, continuous improvement and continuous reinvention. The
reason for us to continue to be better than our previous best. At Bajaj Finserv, we call it the Perpetual
State of Beta. We were the first to introduce a 3-min on the spot approval for our Durable Finance
offer. We are now down to 3 seconds. By the time you have finished reading this, we would have
added another partner to our Lifestyle Finance portfolio. And some of our customers would have
already downloaded all their loan account statements through the online portal. The result of our
obsession with sustainability – even if it is about your efforts.
Invest Deep in Technology
Across industries, technology is changing the way enterprises operate and deliver products. At Bajaj
Finserv, we adopt to newer and emerging technologies keeping in mind the needs and preferences of
our customers. This complements our digital personalization framework enabling our customers to
transact without the restrictions of time, place and proximity. Can I apply online? Yes. Will I get a
regular statement of account? Yes. With every single detail of your loan? Yes. Giving me access
anytime, anywhere? Yes. Can I foreclose my loan? Yes. Will I be charged for foreclosures? No. Can I
borrow back some of the loan I’ve repaid? Yes. Without a human interface? Yes.
We deploy technology not to take the human touch away but to give a richer customer experience,
allowing a customer to exercise choices even when it comes to being serviced. Because technology
alone is not the output, it is the creativity with which it is used that delivers the objective.
Every year for the last five years, we have continued to increase our spends in technology by putting
money where our mouth is. This gives an unmatched flexibility of engaging with us for every
financing related need. The more delighted you are, the easier it will be for you to choose us the next
time you have a financial need.
Build Partnerships with the Best in the World
Our bias for the best in the world comes from our obsession for our Big Goal. We believe when our
customers buy a product or service from us, they are placing their trust in us. Trust itself is a delicate
matter. It needs both expertise and experience, together. When we partner with SFDC for our online
capabilities, with Microsoft for our software and with TCS for process mapping, and CRISIL for
auditing us, we believe we’re implementing zero tolerance to compromise.
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We’re not a blow-hot, blow-cold partner. We’re as determined in our relationship with our partners as
we are with each of you as customers. And even for our partnerships, we have created benchmarks in
innovation in how we have deployed their systems and processes to create bold new realities.
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CHAPTER- III
APPLICATION OF THEORETICAL FRAMEWORK
RESEARCH METHODOLOGY:-
Review of literature:-
Thilakam and Saravanan (2018) writes on “CAMEL Analysis of NBFCs in Tamil Nadu” in
‘International Journal of Business and Administration Research Review’. Financial intermediation
is a crucial function of Banks, Non Banking financial companies (NBFCs) and Development
Financial Institutions(DFIs) the post reform period in India is characterized by phenomenal growth
of NBFCs complementing the role of banks in mobilizing funds and making it available for
investment purposes. During the last decade NBFCs have undergone wide volatility and change as
an industry and have been witnessing considerable business upheaval over the last decade because
of market dynamics, public sentiments and regulatory environment. To evaluate the soundness of
NBFCs in Tamil Nadu over a decade, the authors made an attempt of CAMEL criteria for analysis
of selected Companies. Based on findings the suggestions were offered to overcome the difficulties
face by selected NBFCs in their development.
Shail Shakya (2017) published a working paper entitled “Regulation of Non-banking Financial
Companies in India: Some Visions & Revisions”. Non-Banking Financial Companies are pioneer
in their cash deployment, accessibility to the markets and others to count. NBFCs are known for
their higher risk taking capacity than the banks. Despite being an institution of attraction for the
investors, NBFCs have played a significant role in the financial system. Many specialized services
such as factoring, venture capital finance, and financing road transport were championed by these
institutions. NBFC sector has more significantly seen a fair degree of consolidation, leading to the
emergence of large companies with diversified activities. However, the recent financial crisis has
highlighted the importance of widening the focus of NBFC regulations to take particular account
of risks arising from the regulatory gaps, from arbitrage opportunities and from inter-connectedness
of various activities and entities associated with the financial system. The regulatory regime is
lighter and different than the banks. The steady increase in bank credit to NBFCs over the recent
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years means that the possibility of risks being transferred from more lightly regulated NBFC sector
to the banking sector in India can’t be ruled out.
Ravi Puliani and Mahesh Puliani (2016) writes a book entitled “Manual of Non-Banking
Financial Companies”. The book discussed the glossary of terms that are used in banking operations
and non-banking activities. The book covers the circulars and directions issued by Reserve Bank of
India from time to time to control, manage and regulate the business of NBFCs.
Taxmann’s (2013) published “Statutory Guide for Non-Banking Financial Companies” is
published by Tax mann’s Publications, New Delhi. The book listed the laws relating to Non-
Banking Financial Companies. The rules and laws governing the kinds of businesses undertaken by
differ- ent types of NBFCs are also discussed.
Amit Kumar and Anshika Agarwal (2014) published a paper entitled “Latest Trends in Non-
banking Financial Institutions” in ‘Academicia: An International Multidisciplinary Research
Journal’. In Indian Economy, there are two major Financial Institutions, one is banking and other
is Non-Banking. The Non-Banking Financial Institutions plays an important role in our economy as
they provide financial ser- vices on wide range, they also work to offer enhanced equity and risk-
based products, along with this they also provide short to long term finance to different sectors of
the economy, and many other functions. This paper examines the latest trends in Non-Banking
Financial Institutions. This paper analyzes the growth and enhanced prosperity of financial
institutions in India.
A potential cash machine Subramaniam, Arun June 2012
The article focuses on the emergence and growth of the Bajaj Finserv, a new company in financial
services industry in India, under the leadership of Sanjiv Bajaj, an engineer. It informs that the
company is diversified, well capitalized and soundly managed as it owes its success to its growth in
retail industries. It also informs that the focus of the company is on the customers of retail industries
as it has trained its agents to sell wider range of insurance products.
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Bajaj Finserv sacks some senior officials who were cutting deals to mask loan defaults
Finance Snapshot2014
The article reports that the Indian financing company Bajaj Finserv Ltd. has fired some of its senior
executives who were cutting deals to cover loan defaults. It states that two senior officials of the
group company Bajaj Finance Ltd (BFL) were fired, while three other employees left the company.
It mentions that the irregular transactions of the officials which aimed at showing the borrowers'
accounts had bounced.
EMI Finance App For Pre-Approved Loans
Business World (2015)
The article offers brief information on the Bajaj Finserv Experia equated monthly instalment (EMI)
finance app.
Bajaj Finserv Launches India's First Consumer Durable Finance App With Instant Loan
Approvals(2015)
The article reports on the launch of India's first easy monthly instalment (EMI) finance app from
consumer durable finance company Bajaj Finserv. It says that the consumers will find the app
useful for buying items, including smartphones, furniture, and televisions, on EMIs. Comments
from Bajaj Finance Ltd.'s chief executive officer (CEO) Rajeev Jain are provided
STATEMENT OF THE PROBLEM
Loan is one of the major elements of finance to a common man. The banks advance money in no of
ways like Housing Loan, Education Loan, Property Loan, Personal Loan, Vehicle Loan, Etc.
Banks usually follow different procedure for advancing different types of loan and advances. In
order to know the different procedure in sanctioning different kinds of loans and the rate of interest
charged to different type of loan this study has been undertaken.
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OBJECTIVES OF THE STUDY
To analyze different types of loans and advances made by Bajaj Finance Limited.
To list out some important loans and advance of the Interest Bajaj finance limited and there
interest rates and security needed for granting loans and advances.
To analyze the financial position of the Bajaj finance limited.
To make suggestions and recommendations based on the study
SCOPE OF THE STUDY
The study covers the following: Meaning of loans and advances, Utility of loans and advances,
Borrowing rate and lending rate, Lending of money, Nature and security of loans, Procedure of
granting cash credit, overdraft and discounting bills, Statutory & other restrictions on loans &
advances, The Advantages and Disadvantages of Loans, Engaging recovery agents by banks,
Functions of commercial banks, The role of commercial banks, Types of loans granted by commercial
banks, The study is limited to the information provided by the bank officials.
SOURCES OF DATA
Primary Data:
The primary data has been collected directly from the executives and employees of the Bajaj Finserv
by personal interview.
Secondary Data:
The secondary data has been collected from various published and unpublished source like: Broachers,
Director’s reports, published Financial Statements of the Bajaj finance limited, Bajaj Finserv official
websites and Annual general meeting.
REFERENCE PERIOD
This reference period is selected for the study for last 4 years i.e. 2014-15 to 2018-19. This study was
done on interpretation what made by comparing various data during research work.
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STATISTICAL TOOLS USED FOR DATA ANALYSIS
The statistical tools used to analyze the data are:
Percentages
Column Chart
LIMITATION OF THE STUDY
All the possible care has been taken to collect the information and make the study as authentic as
possible. However it is subjected to certain information. They are as under:
All the findings and recommendations, which are stated, are applicable only for the current period.
The study is limited to the extent to the data given by the bank.
Based on limited information it is not possible to arrive at a proper conclusion.
The interpretation of the study is not complete as primary records of the bank are inaccessible
except Annual reports.
The Accuracy of the study depends on the accuracy of information and records provided by the
Bajaj Finance Limited.
CHAPTER SCHEME
CHAPTER 1-INTRODUCTION TO LOANS AND ADVANCES
This chapter covers-Meaning of loans and advances, Utility of loans and advances, Borrowing rate and
lending rate, Lending of money, Nature and security of loans, Procedure of granting cash credit,
overdraft and other restrictions on loans & advances, The Advantages and Disadvantages of Loans,
Engaging recovery agents by banks, Functions of commercial banks, The role of commercial banks,
Types of loans granted by commercial banks, The study is limited to the information provided by the
bank officials.
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CHAPTER 2 - PROFILE OF THE BAJAJ FINANCE LIMITED
This chapter covers History of Bajaj Finserv limited, Vision and mission of the organization. NBFC
Industry profile performance of NBFC in India. SWOT analysis of NBFC and Bajaj finance limited,
organization structure, areas of operation and objectives of the organization.
CHAPTER 3 - RESEARCH DESIGN
This chapter includes -Statement of the problem, objectives of the study, scope of the study, sources of
data Collection, Reference period, Statistical tools used for data analysis, limitation of the study.
CHAPTER 4 - ANALYSIS AND INTERPRETATION OF THE BAJAJ FINANCE LIMITED
This chapter includes all tables & charts, interpretation & analysis showing Loans and advances,
Income Statement, Balance sheet for the year ending 2014-15 to 2018-2019.
CHAPTER 5 - SUMMARY
This chapter covers Findings, Conclusion and Suggestion.
DATA ANALYSIS AND INTERPRETATION
Table No 4.1
Table Showing Consumer Lending f
Year
Total Loans
2014-2015
32,410
2015-2016
44,229
2016-2017
60,196
2017-2018
82,422
2018-2019
1,15,888
Chart No 4.1
Chart Showing Consumer Lending
CHAPTER – IV
DATA ANALYSIS AND INTERPRETATION
Consumer Lending for the Period 2014-15 to 2018-
Total Loans
Consumer lending
32,410
13,202
229
18,996
196
27,159
422
30,944
888
44,989
Chart Showing Consumer Lending for the Period 2014-15 to 2018
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DATA ANALYSIS AND INTERPRETATION
-19
% Of Total Amt
40.73
42.95
45.12
37.54
38.82
15 to 2018-19
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Analysis and interpretation:-
The above table and Chart shows the consumer position year by year. It was 40.73% of total loans lend
by bajaj finserv. But it increased to 42.95% in 2015-16 and 45.12% in 2016-17. But it decreased in
2017-18 to 37.54% and again it was increased to 38.82%.
The total Consumer loans issued by the bajaj finserv is increased year by year but when compared to
the total loans it was fluctuating once it was increased and it was decreased.
Table No 4.2
Table Showing SME Lending for the Period 2014-15 to 2018-19
Year
Total Loans
SME Lending
% Of Total Amt
2014-2015
32,410
15,550
47.98
2015-2016
44,229
18,692
42.26
2016-2017
60,196
22,082
36.68
2017-2018
82,422
11,434
13.87
2018-2019
1,15,888
15,759
13.60
Analysis and interpretation:-
The above table and below Chart shows the SME position year by year. It was 47.98% of total loans
lend by Bajaj Finserv. But it decreased to 42.26% in 2015-16 and 36.68% in 2016-17 again decreased
in 2017-18 to 13.87% and again it was decreased to 13.60%.
The total SME loans issued by the Bajaj Finserv are increased year by year but when compared to the
total loans it was decreased year by year.
Chart No 4.2
Chart Showing SME Lending
Table No 4.3
Table Showing Rural Lending f
Year Total Loans
2014-2015 32,410
2015-2016 44,
2016-2017 60,
2017-2018 82,
2018-2019 1,15
Lending for the Period 2014-15 to 2018-19
Lending for the Period 2014-15 to 2018-19
Total Loans
Rural Lending
32,410
333
,229
1,339
,196
3,072
,422
5,458
15,888
9,243
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% Of Total Amt
1.03
3.03
5.10
6.62
7.98
Chart No 4.3
Chart Showing SME Lending
Analysis and interpretation
The above table and Chart shows t
lend by bajaj finserv. But it was increasing year by year when we observe the above table we can see
the year by year increasing it was increased to 7.
The total Rural loans issued by the bajaj finserv is increased year by year even in when compared to
other type of loans the rural lending loans are increasing year by year.
Chart Showing SME Lending for the Period 2014-15 to 2018-19
Analysis and interpretation:-
The above table and Chart shows the Rural Lending position year by year. It was 1.03
y bajaj finserv. But it was increasing year by year when we observe the above table we can see
the year by year increasing it was increased to 7.98% in 2018-19
The total Rural loans issued by the bajaj finserv is increased year by year even in when compared to
other type of loans the rural lending loans are increasing year by year.
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he Rural Lending position year by year. It was 1.03% of total loans
y bajaj finserv. But it was increasing year by year when we observe the above table we can see
The total Rural loans issued by the bajaj finserv is increased year by year even in when compared to
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Table No 4.4
Chart Showing Commercial Lending for the Period 2014-15 to 2018-19
Year
Total Loans
Commercial Lending
% Of Total Amt
2014-2015
32,410
3,325
10.26
2015-2016
44,229
5,202
11.76
2016-2017
60,196
7,883
13.10
2017-2018
82,422
34,586
41.96
2018-2019
1,15,888
45,897
39.60
Analysis and interpetation:-
The above table and below Chart shows the Commercial Lending position year by year. It was 10.26%
of total loans lend by bajaj finserv. But it increased to 11.76% in 2015-16 and 13.10% in 2016-17 in
2017-18 to 41.96% and was reduced to 39.60%.
The total Rural Lending loans issued by the bajaj finserv are increased year by year but when
compared to the total loans it was decreased year by year.
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Chart No 4.4
Chart Showing Commercial Lending for the Period 2014-15 to 2018-19
Scheme Chart for loan approval
Schemes Description
12/4 It means the 4months payment will be taken as an advance and remaining payment will be distributed in 8 months.
10/2 It means the 2 months payment will be taken as an advance and remaining payment will be distributed in 8 months.
18/6 It means the 6 months payment will be taken as an advance and remaining payment will be distributed in 12 months. And it is long term scheme.
24/6 It means the 6 months payment will be taken as an advance and remaining payment will be distributed in 18 months. And it also long term scheme.
10/0 It means there is no any advance payment will be taken, all payment will be distributed in 10 months.
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4.1 CASE STUDY:
Name of the Applicant Mr. Ranjeet Kumar
Age 35 year
Permanent Address Gulmohar Park, ITI Road
near ICICI Bank, Aundh
Pune -411007
Residential Address Mahatma Gandhi Road
Bangalore, karnataka- 560001
Occupation Service
Company Name capgemini
Salary 80,000/-PM
Purchase of Products
I. Samsung LED TV
II. Samsung Washing Machine
Cost of Products
I. Rs.40,000
II. Rs.35,000
Document Required for Loan
I. Address Proof:- Rent agreements, electricity or gas bills.
II. ID Proof: - Pan Card or Voting Card or Driving License.
III. Income Proof:- SBI platinum credit card
IV. Problem :- Address Proof
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Mr.Ranjeet Kumar has the address proof but this Address Proof of other city, so as per loan
requirement address proof should be of current city
Name of the Applicant - Mr.Ranjeet Kumar
Table No.4.4 Case Study 1
Solution:-
a. Calculation of EMI and Down payment:
Scheme-:12/4 (Ref.Table No.4.1)
Particular Eligibility criteria for loan
approval
Applicable for Loan
Occupation Service
Company Name SunGard
Salary Rs.9,60,000 PA
House Rented
Place(Stay) bangalore
Document Required
Address Proof Bank Statement
ID Proof PAN Card ,Voting Card
Credit Card SBI Credit Card (Platinum)
Products
Samsung 40’ LED TV Rs.40,000
Samsung Washing Machine Rs.35,000
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Cost of Product-: Rs.75, 000
Down payment -:Rs.25, 000 (Rs.75, 000/12*4)
EMI-: Rs.6250*8 Month= Rs.50, 000
b. How to Approve the Loan:
I. Minimum Required Salary for taken a loan –Rs.8000/-and Above, So Mr.Ranjeet Kumar has
Rs.80000/-PM Salary so he is applicable for loan.
II. As an address proof for taken a loan it is must to Mr.Ranjeet Kumar to submit either Rent
agreement or credit card statement which is on current city address.
As an ID proof requirement he should be provide voting card or PAN Card or Passport.
Case No.4.2
Name of the Applicant Ms.Smita Badiyani
Age 26 year
Residential Address 990A, outer ring road, 2nd phase
Hosakerehalli, Bangalore,
Karnataka-560085
Occupation Service
Company Name Infosys, Pune
Salary 50,000/-PM
Purchase of Products
I. LG Refrigerator
Cost of Products
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I. Rs.36,000
Document Required for Loan
I. Address Proof:-Rent Agreements
II. ID Proof: - Pan Card or Voting Card or Driving License. And marriage Certificate.
III. Income Proof:-3 Month Bank Statement.
Problem ID Proof
As per the documents require for the approval of loan, Ms.Smita Badiyani should submit the ID
Proof of she’s current name.
Name of the applicant - Ms.Smita Badiyani
Table No.4.5: Case Study 2
Particular Eligibility criteria for loan
approval
Applicable for Loan
Occupation Service
Company Name Infosys
Salary Rs.6,00,000 PA
House Rented
Place Kondhwa
Document Required
Address Proof Rent Agreement
ID Proof Marriage Certificate
Bank Statement 3 Month bank statement
Product
LG Refrigerator Rs.36,000
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Solution:
a. Calculation of EMI and Down payment:
Scheme-:12/4(Ref.Table No.4.1)
Cost of product-:Rs.36, 000
Down payment-: Rs.12, 000 (Rs.36, 000/12*4)
EMI-: Rs.3000*8 Month = Rs.24, 000
b. How to approve the Loan:
I. She has the 50,000 PM salary; the minimum salary should be 8000 PM, so she is applicable for
the loan.
II. As per the requirement of loan approval document, if lender leaves on the Rent bases then he or
she should submit the Rent agreement which would be on Rs.1000/- stamp paper. This document
criteria fulfilled by Ms.Smita Badiyani.
III. For the ID Proof required the PAN Card, Voting Card and Driving Licenses.
Ms. Badiyani has the PAN Card but problem is that she’s is not having the current name i.e. after
marriage on the PAN Card. For solving this problem, we have taken the Marriage Certificate
along with PAN Card Copy.
IV. For the Income Proof required Credit Card, or Existing Customer or any bank loan as well as 3
Month Bank Statement, So she have the 3 Month Bank Statement from Feb to May, and also her
780 score in CIBIL records.
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Case No.4.3
Name of the Applicant Mr.Anurag Kasat
Age 45year
Residential Address Shree Niwas, ITI Road,
near Croma Showroom,aundh
Bangalore -560016
Occupation Service
Company Name Mahindra and Mahindra
Salary 50,000/-PM
Purchase of Products
I. Sony LED TV
Cost of Products
I. Rs.52,000
Document Required for Loan
I. Address Proof:-Electricity Bill, Telephone Bill, Passport
II. ID Proof: - Pan Card or Voting Card or Driving License or Passport
III. Income Proof:-HDFC Credit
Problem nil
Mr. Anurag Kasat has all the required documents are correct so we provide the loan for the
anurag kasat without any problem.
Name of the applicant:-Mr.Anurag Kasat (Existing Customer)
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Table No.4.6: Case Study 3
Particular Eligibility criteria for loan
approval
Applicable for Loan
Occupation Service
Company Name Mahindra and Mahindra
Salary Rs.6,00,000 PA
House Own
Place Aundh
Document Required
Address Proof Passport
ID Proof Passport
Credit Card HDFC Bank
Product
Sony LED Rs.52,000
Solution:-
a. Calculation of EMI and Down payment:
Scheme: 10/0 (Ref.Table No.3.1)
Cost of product: Rs.52, 000
Down Payment: Rs.250 (Processing Fess)
EMI: Rs.5200*10 Month=Rs.52, 000
b. How to approve the loan:
I. Mr.Anurag Kasat has the Existing Customer of Bajaj Finserv Lending, for the Existing Customer
can pay the down payment through cash as well as credit or Debit Card. So Mr.Kasat pays the
down payment by cash.
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II. Due to the system Error the loan has been rejected, When the Mr.Kasat has produced the copy of
NOC to the Bajaj Finserv Lending. Then the Company sorts out his problem by updating the
previous loan history of Mr.Kasat.
III. For reflecting the database changes system required the duration of one month so after reflecting
the changes his loan get approved.
Case No.4
Name of the Applicant Mr. Chandra Sekhar Reddy
Age 27 year
Residential Address #10, Vivekananda layout,
Marathalli, munnekolal
Bangalore -560068
Occupation Service
Company Name One Indian BSC
Salary 35,000/-PM
Purchase of Products
I. Sony LED TV
II. Samsung Washing Machine
Cost of Products
I. Rs.42,000
II. Rs.30,000
Document Required for Loan
I. Address Proof:-Electricity Bill, Telephone Bill, Passport
II. ID Proof: - Pan Card or Voting Card or Driving License or Passport
III. Income Proof:-ICICI Bank Credit Card
Problem ID Proof Name
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Name of Mr. Chandrasekhar Reddy on the credit card and Pan Card is mismatch i.e. Chandra sekhar
on credit card and Chandra reddy on PAN Card.
Name of the applicant:-Mr.Chandra Sekhar Reddy
Table No.4.7: Case Study 4
Particular Eligibility criteria for loan
approval
Applicable for Loan
Occupation Service
Company Name Alfa Laval
Salary Rs.4,20,000 PA
House Own
Place Bangalore
Document Required
Address Proof Electricity Bill
ID Proof Pan Card
Credit Card ICICI Bank
Product
Sony LED Rs.42,000
Samsung washing Machine Rs.30,000
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Solution:-
a) Calculation of EMI and Down payment:
b) How to approve the Loan:
I. Mr.Akshay Kadam has the entire document i.e. Address Proof, ID Proof, and Income Proof, but
he is only having the problem with ID Proof.
II. For solving the ID Proof problem we have taken the Govt.Gadget Letter from him.
Case No.5
Name of the Applicant Mr. Avinash Thite
Age 50 years
Permanent Address Kariyamanna agrahara road,
Dashabhuja Ganesh Temple,
Kadubesenahalli, Bangalore-560103
Occupation Own Business
Company Name Omkar Trading
Purchase of Products
I. Sony LED TV
II. Sony Home Theater
Cost of Products
I. Rs.52,000
II. Rs.35,000
Particular Sony Samsung
Scheme 18/4 12/4
Cost of product Rs.42,000 Rs.30,000
Down Payment Rs.9,336 (Rs.42,000/18*4) Rs.10,000(Rs.30,000/12*4)
EMI Rs.2,334*14 Month=Rs.32,676 Rs.2,500*8 Month=Rs.20,000
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Document Required for Loan
I. Address Proof:-Electricity Bill, Index-II, Telephone Bill.
II. ID Proof: - Pan Card, Voting Card, Driving License. and Passport.
III. Income Proof: - Credit Card, Any Bank Loan.
Problem Case rejected due to less CIBIL Score
CIBIL Scores Required Criteria:-
Minimum CIBIL Score required for loan approval is 750 or more; Mr.Avinash Thite has 710 CIBIL
Score, His score below the criteria so loan has been rejected.
Application process for loan approval:
First pitch the customer,after pitching the customer the next process is to explore them overall
loan process of 0% interest sceheme .Once the customer is agreed, then ask the customer for the
required documents like ID-proof, Address proof i.e voter ID,driving licence,aadhar card and
cancelled cheque etc to approve the loan.After compliting the submition procedure of
documentation,the next step is to decide the surrogate of the customer.
Customer should be fill up the application form,then the details of customer get stored by the
executives in to the sales force softwear.
Once all this loan process is done, the unique case ID will be generates. Then all the control goes
in to the hand of company approval department.
After approval of loan , customer should sign the agreement document (which includes the terms
and conditions), then next process is to generate the invoice of loan and product amount.
On the basis of invoice,memo of disbursement is gets generate.
Along with the loan procedure documents, disbursment memo will get forward to the bajaj finserv
, Pune branch office premises. Then all the attached documents are scrutinze by the operational
department of bajaj finserv’s.
Once the loan procedure of the company is satisfied then this douments get sealed by the approval
stamp.
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Surrogates Required for Loan Approval:
There are two types policy are as below:
A.WOW Policy
B.WOW Lite Policy
A.WOW Policy:
WOW Policy mostly used for those customer who are in the listed companies, have the credit card, as per
the rule of company the maximum Loan to Value(LTV) 83% to 90% it depend on the customer document.
Following are the Surrogates included in that Policy:
Credit Card (Max LTV 83% up to 125000)
Listed Companies (Max LTV 90% up to 100000)
RC of Vehicle (Max LTV 83%)
Existing Customer (Max LTV 90% up to 50000)
CIBIL Score (Max LTV 90% up to 125000)
Salaried (Max LTV 90% up to 125000)
Instant
B.WOW Lite Policy:
WOW Lite Policy used for those customers whose net exposure is up to25000 to 35000.and as per the
company rules the maximum Loan to Value (LTV) is 83% for all surrogates.
Following are the Surrogates included in that Policy:
Credit Card (Max LTV 83% up to 35000)
Listed Companies (Max LTV 83% min salary 7500)
RC of Vehicle (Max LTV 83% up to 25000)
Existing Customer (Max LTV 83%)
CIBIL Score (Max LTV 83%)
Salaried (Max LTV 90% Min net salary 7500)
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CHAPTER – V
FINDINGS
While paying through credit card, that much amount is blocked from the card. As there is
monthly limit in each card, so it is wise to go for Bajaj Finserv Lending.
Bajaj Finserv Lending provided loan on consumer durable product to the customer as per the
surrogates.
Flexible EMI scheme in many products are available. Bajaj Finserv Lending provides many
schemes such as 12/4, 10/2, 18/6, 24/6 etc. Customer can choose any EMI Scheme option
according to their paying capability.
As per the requirement of finance company for address proof would be required current place
proof, and for ID proof required the valid name of person it shows with the help of case studies.
Consumer lending is increasing year by year but it is a small % increase in the loans.
The SME (small and medium enterprise) Loans are decreased year by year. The nearly 20%
decrease year by year when compared to previous years
The rural lending was increased year by year but the increasing is around 2%onnly when
compared to the total loans.
The commercial Lending drastically increased after the 2017 FY. The sudden increase of 20% in
the 2017 and it was decreased 2%.
Based on the customer review awareness on the no cost EMI policy is around 60%.
The behavior of the Bajaj Finance Employees is good only the 3 members out of 42 are given
bad rating.
48% of people know about No cost EMI through Friends.
The 13 people out of 42 are interested to take new loans who are not taken loans before.
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The most of the people are feel the charge of loans in Bajaj Finserv is medium, the 3 people feel
that it is high and the 5 people low
Based on the 2 policies the Bajaj Finserv will issue loans to the customers based on their
financial capability.
Only 90% loan only issued by the Bajaj Finserv to the customers, the remaining 10% should bear
by the customer.
If the CIBIL score is low the Bajaj Finance will not issue loan.
The address proof and the financial strength proof (credit card, bank statement, job proof, and the
previous loan records, CIBIL Score card ) is mandatory for every loan issued by the company,
The overall rating is good on the Bajaj Finserv loans, procedures and the service provided.
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SUGGESTIONS
The Bajaj Finserv has to increase the advertisements on the NO COST EMI policy
The SME lending is decreased year by year the company has to look into the SME loans.
The banks are the competetors for bajaj Finance Limited, they are acquiring more SME loans
year by year result in decreasing in the Bajaj Finserv SME Loan Lending.
The interest rates and the loan processing charges has to decrease in Bajaj Finance Limited, this
will help in more customers to get attracted to words the company.
The processing time taking is more when comapred to the competetors so the Bajaj Finance
Limited has to use technology to improve their loan approval systems.
The commercial lending is increase suddenly it is good the recovery is little bit risky.
The Rural Lending is increased year by year but the increase is less, the company has to look
into this and increse more lending.
The some of the new customres are interested to take loans in the company the representatives
has to take intiative to complete the deal.
The no of documents required for the loan approval is more, it has to minimized.
The Company is taking long time to approve the loan, so my suggestion is to use the technology
for the quick loan approvals.
Based on the customer reviews the Baja Finserv should open more number of branches, the
people are not able to access the branches.
The online system of loan approval and the online and the receiving the applications should
increase.
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The Bajaj Finserv is not mostly concentrating on the digital media for the advertisements, I
strongly recommend to use the digital media for the advertisements.
The company has to increase the issue of credit cards.
The credit cards issuing by the company are not valid for some type of transactions like to add
money to wallets, this has to be resolved.
The Bajaj Finserv not able to meet the competetion with the banks in issuing loans, and as well
as the recovery.
I recommend to issue more secured loans to the customers instead of un secured loans.
I suggest the Bajaj Finance to issuing more Educations loans and the gold loans, in this 2 types
of loans the company is too back.
I recommend the company to issue more SME loans as they are decreasing day by day, this will
happen only when the processing charges and the interest rates will less compared to the banks.
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CONCLUSION
The study has been conducted on “A STUDY ON THE LOANS AND ADVANCES OFFERED IN
BAJAJ FINANCE LIMITED”.
According to the objectives through the study As we know the population is been increasing day by
day the more and more people will not have employment opportunity due to this, the interested people
will come for the loans to start their own business, but the people who are in middle class people they
have the basic needs due to less income the middle class people will come to take loans to fulfill their
needs, the needs in the sense like house construction and for vehicle. The company also provides the
loans for the staff who are working in the bank for less rate of interest. The loans like, festival advance,
staff vehicle loans, staff house building etc….
If an customer wants the loan the company representatives will help the customers to have huge
amount for less rate of interest. If the customer’s performance / transaction are good in the company the
company will provide advances, over draft etc
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BIBLIOGRAPHY:-
Guide to Security & Documentation of Loans & Advances Paperback – 1 January 2017
Documentation for Loans and Advances by S K Bagchi
A study on loans and advances by vinayak-kulkarni
WEBLIOGRAPHY :-
https://www.bajajfinserv.in
www.google.com
https://www.bajajfinservmarkets.in
ANNEXURE:
Process of Granting Loan:
1. Documentation- Documentation like Credit card, driving license, PAN card, etc. is required to provide
loan to the customers.
2.. Various requirements- As mentioned in surrogates various slabs are there according to which customers
are provided loan.
Application Form for EMI Card
1%SIMILARITY INDEX
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1%PUBLICATIONS
%STUDENT PAPERS
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2 1%
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JYOTHIREDDY_FINAL_PROJECT_REPORT.pdfORIGINALITY REPORT
PRIMARY SOURCES
R. Kannan, K. R. Shanmugam, SaumitraBhaduri. "Non-Banking Financial CompaniesRole in India's Development", Springer Scienceand Business Media LLC, 2019Publication
"Business and Management Practices in SouthAsia", Springer Science and Business MediaLLC, 2019Publication