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RETAIL BANKING WITH SPECIAL REFERENCE TO HOME

LOANS FROM HSBC BANK

EXECUTIVE SUMMARY

Objectives:

To take a comparative study for Home Loans of HSBC vis-à-vis competitors-

SBI, ICICI, HDFC.

To study home loans offered by HSBC and the process of disbursement of home

loans.

To study procedure, process, legal and technical issues involved with home loans.

Try to make an in-depth study of rate of interest, tenure, and documentation,

processing time, eligibility of H.S.B.C.

To study strategies followed by Maxim Credits for

a) Marketing Home Loans product;

b) Getting loans approved by H.S.B.C. for potential borrowers.

To try and make suggestions in the light of conclusion emerging from the study

for the improvement in the performance of the company.

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LIMITATIONS OF THE STUDY:

i. The scope of comparative study is limited to selected banks only not all the

private financial institutions.

ii. Time is a major constraint. As the project study was for a limited period only the

necessary information had been taken in to consideration.

iii. The area is restricted to Hyderabad only.

iv. Lack of in depth information from competitors point of view, in order to maintain

business secrecy.

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Methodology:

The data during the study was collected through primary and secondary sources of

data.

Primary data:

It includes personnel discussions with the director of Maxim credits services

private limited and marketing executive, field staff of HSBC India.

Secondary data:

Includes brochures, news papers, magazines, journals and product manual Maxim

credit service private limited, some information is downloaded from respective web sites.

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INTRODUCTION

(HOME LOANS)

Housing is one of the basic necessities of man. And the capital required per

dwelling is so large that few individuals can raise it from their own savings. There is

therefore a great need and scope for the development of arrangements for supplying loans

or finance for the purpose of house construction. However for some reason or the other,

the shelter sector of the Indian Financial system remained utterly underdeveloped till the

end of the 1980’s. The lack of adequate institutional supply of credit for house building

was stressed as an important gap in the process of financial development in India. In the

recent past the authorities have initiated certain steps to bridge this gap. However, in the

past couple of years many banks and financial institutions had been set up for financing

housing loans. Banks such as HSBC, ICICI, HDFC and SBI had been playing an

important role in meeting housing finance requirements.

Retail banking consists of a large number of small customers who consume

personal banking and small business services. Retail banking is largely intra-bank; the

bank itself makes many small loans. The retail banking sector has witnessed radical

process innovation, where new technology has altered the way tasks are performed.

Home-loan is a part of Retail banking assets:

“Retail banking is that part of commercial banking, concerned with the activities

of individual customers, generally in large number”.

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Shelagh Heffernan.

Personal loan:

A personal loan helps to solve a customer’s immediate requirement, like cash for

marriage, jewellery, furniture’s, electronic appliances, office furniture etc. Many financial

institutions are offering such loans.

Professional loan:

The professional always have the desire for advance equipment to have an edge

over the competitors or need for extending the office to grow his business.

Home loans:Home loan helps to solve the customer’s problem. The financial institutions

provide loans for construction of house, purchase of ready property etc.

Insurance:Its value added services given to customer off home loan and personal loan the

basic insurance covered is fire insurance and home loan related protection plan and

personal accident insurance covered for personal loans.

Term loans:

Term loans are sources of long-term debt. In India, they are generally obtained for

financing large expansion, modernization or diversification projects. Therefore, this

method of financing is also called project financing.

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RETAIL BANKING ASSETS

Personal Loan Professional Loan

Home Loan Insurance

Features of term loans

Term loans represent long-term debt with a maturity of more than one year. They

are obtained from banks and specially created Financial Institutions (FIs) in India by

private placement rather than a public subscription, as is the case with most debenture

issues. The purpose of term loans is mostly to finance the company’s capital

expenditures.

Term loans have a number of basic features. They include the following:

(1) Maturity

(2) Direct Negotiation

(3) Security

(4) Restrictive Covenants and

(5) Repayment schedule

Maturity

Banks and specially created Financial Institutions (FIs) are the main sources of

term loans in India. Fis provide term loans generally for a period of 6 to 10 years. In

some cases, a grace period (moratorium) of 1 to 2 years is also granted. This is the period

during which the company has not to make any payment. Commercial banks advance

term loans for a period of 3 to 5 years.

Direct Negotiation:

A firm negotiates term loans for project finance directly with a bank of FI. Thus

term loan is a private placement. Sometimes debentures may also be privately placed to

Fis, but most debentures issues are placed for public subscription and low cost of raising

loan. Unlike in the case of public issues, the firm needs not to underwrite term loans.

Thus it avoids underwriting commission and other flotation costs.

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Security:

Term loans are always secured. They are secured specially by the assets acquired

using term loan funds. This is called primary security. The company’s current and future

assets also generally secure term loans. This is called secondary or collateral security.

Also the lender may create either fixed or floating charges against the firm’s assets. Fixed

charges mean legal mortgage of specific assets .for creating a fixed charge, then firm has

to pay a heavy stamp duty which may be equal to 2 ½ per cent of the amount of loan.

Floating charge is a general mortgage (equitable mortgage) covering all assets. In this

case, stamp duty is only ½ percent. Floating charge provides the firm with relative

flexibility as it can deal with its assets in the normal course of business without obtaining

lender’s approval.

Restrictive Covenants:

In addition to the asset security, lender would like to protect itself

further.therefore, FIs add a number of restrictive covenants. A financially weak firm

attracts stringent terms of loan lenders. The borrowing firm has generally to keep the

lender informed by furnishing financial statements and other information periodically.

Repayment schedule:

The repayment schedule or loan amortization specifies the time schedule for

paying interest and principal. Payment of loan is a legal obligation. Interest charges are

tax deductible in the hands of the borrowing firm. The general rate of interest on term

loans in India is 15 percent. For companies undertaking their projects in specified

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backward areas, loans at concessional interest rate (usually 1 ½ percent lower) are

available.

The common practice in India to amortize loan is to require repayment of

principal in equal installments (semi-annual or annual) and pay interest on unpaid

(outstanding) loan. Thus the interest payment will decline over years, and the total loan

payment (interest plus principal) will not be equal in each period. Paying loan in

installments saves the company from repaying huge amount at the end of loan maturity.

Such payments are called balloon payments.

ORGANISATIONAL PROFILE –

INTRODUCTION TO HSBC GROUP –

Who is HSBC?

We are the world's local bank.Headquartered in London, HSBC is one of the largest

banking and financial services organizations in the world. HSBC's international network

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comprises around 10,000 offices in 82 countries and territories in Europe, the Asia-

Pacific region, the Americas, the Middle East and Africa.

With listings on the London, Hong Kong, New York, Paris and Bermuda stock

exchanges, around 200,000 shareholders in over 100 countries and territories hold shares

in HSBC Holdings plc. The shares are traded on the New York Stock Exchange in the

form of American Depositary Receipts.

Through an international network linked by advanced technology, including a rapidly

growing e-commerce capability, HSBC provides a comprehensive range of financial

services: personal financial services; commercial banking; corporate, investment banking

and markets; private banking; and other activities.

Group History

The HSBC Group has an international pedigree, which is unique. Many of its principal

companies opened for business over a century ago and they have a history, which is rich

in variety and achievement.

The HSBC Group is named after its founding member, The Hong Kong and Shanghai

Banking Corporation Limited, which was established in 1865 to finance the growing

trade between China and Europe.

2006

2006 was a year of development and change for HSBC.

Strategic acquisitions throughout the year increased market share and customer numbers

especially in the Americas. In February HSBC Latin America Holdings (UK) Limited

entered an agreement to acquire the majority of Lloyds TSB’s branch assets in

Paraguay, and this was quickly followed by the acquisition in March of a stake in

Financiera Independencia - one of Mexico’s leading companies in the sub-prime

consumer loans market with over 100 offices throughout the country. In November, the

bank entered fresh pastures with the purchase of Grupo Banistmo. This banking group,

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based in Panama, gave the bank access to the markets of Colombia, Costa Rica, El

Salvador, Honduras and Nicaragua for the first time in its history.

HSBC continued to focus on the development of its

personal financial services business in Asia especially in China where the bank was able

to offer a new RMB deposit service to domestic customers. Business customers also

benefited with the launch of the International Business Centres, which facilitate SMEs

around the world with their cross border trading.Climate change and environmental

issues remained important to HSBC during the year. Eight thousand bins were removed

from HSBC’s head office in June as part of the programme to reduce the amount of waste

sent to landfills by 8% by the end of 2007. In June HSBC signed up to the UN principles

for responsible investment and was also named the winner in the first FT Sustainable

Banking Awards.

In May HSBC bid farewell to Sir John Bond, and welcomed Stephen Green as Group

Chairman.

2005

In 2005, HSBC marked 140 years in China by increasing

its stake in the country. The Group opened new branches in Chongqing and Chengdu in

the west of the country and in March became the first foreign bank to provide local

currency services from its branch in Beijing. HSBC began selling insurance through Ping

An Insurance, China’s second largest life insurer, and increased its stake in the company

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to 19.9%. In November, HSBC was the title sponsor of the inaugural HSBC

Champions golf tournament in Shanghai.

In the Middle East, HSBC reopened its branch in Kuwait, while in the US, the integration

of Household International with the Group’s North American operations was completed,

under the name ‘HSBC Finance Corporation’.

HSBC continued to tackle the issues of climate change, and reducing the social and

environmental impact of its operations. In October, it became the first major bank to go

carbon neutral, and in May and August, published sector guidelines governing its

activities in the freshwater infrastructure and chemicals industries.

In 2005, HSBC published the world’s most comprehensive survey of global attitudes to

ageing and retirement, while in November, Sir John Bond, HSBC Chairman since 1988,

announced he is to retire in May 2006.

2004

HSBC grew organically and through strategic acquisitions in 2004.

The Bank of Bermuda joined the Group in

February and minority stakes were acquired in

India’s UTI Bank and China’s Bank of

Communications Ltd. In the UK, HSBC bought

the retail financial services arm of the Marks and

Spencer Group.

The HSBC brand was adopted by its Mexican subsidiary, G F Bital, early in the year and

in September the majority of the bank’s North American businesses, including Household

International, were united under the name HSBC North America.

HSBC continued its long-standing commitment to the environment, becoming a founder

member of the Climate Group in April and announcing its intention in December to

become the first major bank to go carbon neutral.

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2003

In April, the new Group head office in Canary Wharf in

London officially opened to house some 8000 staff. HSBC's

purchase of Household International Inc. added substantially

to the Group's business and profile in the United States;

Household’s network of over 1300 branches in 45 states

provided consumer finance to 53 million customers. In France

CCF agreed to increase its stake in French private bank

Banque Eurofin S.A. to 83.95 per cent and to acquire two

further branches of Banque Worms. HSBC also acquired

Keppel Insurance Pvt Ltd, a provider of life insurance and

Islamic insurance in Singapore; and took full ownership of

Equator Holdings Ltd.

2002

From 2002, the HSBC identity carried the strapline of

'The world's local bank', emphasising the Group's

experience and understanding of a great variety of

markets and cultures. The Group also began its five-year 'Investing in Nature'

programme, a partnership in environmental projects with Earth watch, WWF and Botanic

Gardens International.

HSBC acquired and recapitalized Grupo Financiero Bital in Mexico at a total cost of

US$1.9 billion. This new member of the Group brought 5.5 million new customers and

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1,400 branches in to the network. Elsewhere, HSBC acquired a 10 per cent share of Ping

An Insurance Company of China, the second largest life insurance operator in the

country.

2001

Purchases during the year included the NRMA Building Society Limited in Australia,

Demirbank of Turkey and a 97 per cent interest in China Securities Investment Trust

Corporation, Taiwan’s leading asset management company. In December, the bank also

took an 8 per cent share in the Bank of Shanghai, which was established in 1995 and

operates a network of almost 200 branches in the city. 2001 also saw the opening of the

only branch in the HSBC network that is open 365 days a year - in Pune in

Western India.

2000

In April, HSBC announced a US$11 billion

recommended offer for Credit Commercial de

France (CCF). Established in 1894, CCF brought

into the Group a network of 650 branches in

France and long experience of personal, corporate,

investment and private banking, greatly

strengthening HSBC’s presence in the euro zone. The deal was completed in July and in

that month HSBC Holdings plc was listed on the Paris Stock Exchange for the first time.

During the year HSBC launched HSBC Premier, a new international service for HSBC’s

most valuable personal customers.

1980-1999

During the 1980s HSBC concentrated on moving into those markets where it was not yet

fully represented. In the United States this expansion centred on the purchase of Marine

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Midland Bank. After taking a 51 per cent interest in the bank in 1980, full ownership was

completed in 1987. In Europe the bank sought a similar investment and in 1987 it took a

14.9 per cent share in Midland Bank in the UK. A co-operation agreement between

HSBC and Midland allowed the two banks to consolidate and rationalise their

international activities by reciprocal transfers of business.

The formation of HSBC Holdings plc in 1991, creating a

holding company for the entire Group with its shares

quoted in London and Hong Kong, showed that the Group

viewed Europe, and the London market in particular, as a

vital part of its future development. This strategy was

made clear when HSBC Holdings announced that it

would make a recommended offer for full ownership of Midland. The final offer, which

became unconditional in July 1992, valued Midland at £3.9 billion and lifted the Group’s

total assets from £86 billion in 1991 to over £170

billion in 1992. HSBC’s acquisition of Midland created one of the largest

financial organisations of its kind in the world.

HSBC continued to grow through strategic acquisitions in both the developed and

emerging markets: purchases in Argentina and Brazil in 1997 were balanced by the

addition of the Republic New York Corporation to the HSBC Group in 1999. In

November 1998 the Group announced the adoption of a unified brand, using HSBC and

the hexagon symbol everywhere it operates, with the aim of enhancing recognition of the

Group and its values by customers, shareholders and staff throughout the world.

1946-1979

After the Second World War HSBC quickly restored its head office powers and functions

to Hong Kong. In the immediate post-war period the bank quickly took on a key role in

the reconstruction of the Hong Kong economy. Its support for the skills and experiences

of newcomers to Hong Kong was especially vital to the upsurge in manufacturing in this

period.

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In its other markets, however, the bank needed to make major readjustments. Most of the

mainland offices in China were closed between 1949 and

1955, leaving only the Shanghai office to continue its

long and eventful service. These changes carried the risk

that the bank was over-concentrating its interests in Hong

Kong. The bank addressed this concern by diversifying its

business in a series of alliances and acquisitions.

In the Asia-Pacific region, key additions were the

Mercantile Bank in 1959; a controlling interest in Hang

Seng Bank Limited in 1965; and the formation of a

merchant bank arm, Wardley Limited, in 1972. The

history of the Mercantile Bank stretched back to its

foundation in Bombay (now Mumbai) in 1853 and the

bank was particularly strong in the Indian sub-continent and Malaysia. Hang Seng Bank,

in contrast, was a local Hong Kong bank established in 1933. These developments were

complemented by the purchase of The British Bank of the Middle East in 1959 and the

establishment of the Hong Kong and Shanghai Banking Corporation of California in

1955.

By the 1970s the bank had firmly developed a policy of expansion by acquisition or

formation of subsidiaries with their own identities and expertise.

1900-1945

In the early years of the twentieth century, HSBC

widened the scope of its activities in the East. It became

increasingly involved in the issuing of loans to national

governments, especially in China, to finance

modernization and internal infrastructure projects such as

railway building. The First World War brought disruption

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and dislocation to many businesses but the 1920s saw a return to prosperity in the East as

new industries were developed and trade in commodities such as rubber and tin soared.

The bank’s new head office in Hong Kong (1935) and the new buildings at major

branches such as Bangkok (1921), Manila (1922) and Shanghai (1923) reflected this

confidence. In contrast the political outlook in China grew increasingly uncertain.

Throughout the 1930s, in keeping with its long-standing connections with government

finance in China, the bank took a leading part in efforts to stabilize the Chinese national

currency.

In the Second World War, the majority of the bank’s staff in the East became

prisoners of war as the Japanese advanced through Asia. The chief manager, Sir

Vandeleur Grayburn and his designated successor died while prisoners in Hong Kong.

The bank survived under the guidance of its London Advisory Committee who were

empowered to act as a Board of Directors in 1943, and under the leadership of Arthur

Morse who became Chairman and Chief Manager of the bank at the same time. With

most of the branch network shut down the bank adjusted to wartime conditions whilst

always making plans to return to its home.

1865-1899

The HSBC Group is named after its founding member, The Hong Kong and Shanghai

Banking Corporation Limited, which was established in 1865 to finance the growing

trade between Europe, India and China.

The inspiration behind the founding of the bank was

Thomas Sutherland, a Scot who was then working for the

Peninsular and Oriental Steam Navigation Company. He

realised that there was considerable demand for local

banking facilities in Hong Kong and on the China coast

and he helped to establish the bank which opened in Hong

Kong in March 1865 and in Shanghai a month later.

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Soon after its formation the bank opened agencies and branches around the world.

Although that network reached as far as Europe and North America, the emphasis was on

building up representation in China and the rest of the Asia-Pacific region. HSBC was a

pioneer of modern banking practices in a number of countries. In Japan, where a branch

was established in 1866, the bank acted as adviser to the government on banking and

currency. In 1888, it was the first bank to be established in Thailand, where it printed the

country’s first banknotes.

From the outset trade finance was a strong feature of the local and international

business of the bank, an expertise that has been recognised throughout its history.

Bullion, exchange, merchant banking and note issuing also played an important part. By

the 1880s, the bank was acting as banker to the Hong Kong government and also

participated in the management of British government accounts in China, Japan, Penang

and Singapore. In 1874 the bank handled China’s first public loan and thereafter issued

most of China’s public loans. By the end of the century, after a strong period of growth

and success under the leadership of Thomas Jackson (chief manager for most of that

period from 1876 to 1902), the bank was the foremost financial institution in Asia.

Board of Directors

The Board of Directors of HSBC Holdings plc

S K Green, Group Chairman

Age 57. An executive Director since 1998; Group Chief Executive from 2003 to

26 May 2006. Joined HSBC in 1982. Chairman of HSBC Bank plc, HSBC Bank USA,

N.A., HSBC Private Banking Holdings (Suisse) SA, and HSBC USA Inc. A Director of

HSBC France, The Hong Kong and Shanghai Banking Corporation Limited, Grupo

Financiero HSBC, S.A. de C.V., HSBC North America Holdings Inc. and HSBC

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Trinkaus & Burkhardt AG. Group Treasurer from 1992 to 1998. Executive

Director, Corporate, Investment Banking and Markets from 1998 to 2003.

*The Baroness Dunn, DBE, Deputy Chairman and senior non-executive

Director

Age 66. An executive Director of John Swire & Sons Limited and a Director of Swire

Pacific Limited. A non-executive Director since 1990 and a non-executive Deputy

Chairman since 1992. A member of the Nomination Committee. A non-executive

Director of The Hong Kong and Shanghai Banking Corporation Limited from 1981 to

1996. A member of the Asia Task Force. A former Senior Member of the Hong Kong

Executive Council and Legislative Council.

†Sir Brian Moffat, OBE, Deputy Chairman and senior independent non-

executive Director

Age 67. A non-executive Director since 1998 and a non-executive Deputy Chairman

since 2001. Chairman of the Group Audit Committee and of the Nomination Committee.

A non-executive Director of Macsteel Global BV. Former Chairman of Corus Group plc

and a former member of the Court of the Bank of England.

M F Geoghegan, CBE, Group Chief Executive

Age 52. An executive Director since 2004. Joined HSBC in 1973. A Director and,

since 6 March 2006, Deputy Chairman of HSBC Bank plc. A Director of The Hong Kong

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and Shanghai Banking Corporation Limited, HSBC France and HSBC Private Banking

Holdings (Suisse) SA. President of HSBC Bank Brasil S.A.-Banco Múltiplo from 1997 to

2003 and responsible for all of HSBC’s business throughout South America

from 2000 to 2003. Chief Executive of HSBC Bank plc from 2004 to 6

March 2006. A non-executive Director and Chairman of Young Enterprise.

†The Rt Hon the Lord Butler of Brockwell, KG, GCB, CVO

Age 68. Master, University College, Oxford. A non-executive Director since

1998. Chairman of the Corporate Responsibility Committee, a member of the

Nomination Committee and Chairman of the HSBC Global Education Trust. A non-

executive Director of Imperial Chemical Industries plc. A member of the International

Advisory Board of Marsh McLennan Inc. Chaired the UK Government Review of

Intelligence on Weapons of Mass Destruction in 2004. Secretary of the Cabinet and Head

of the Home Civil Service in the United Kingdom from 1988 to 1998.

†R K F Ch’ien, CBE

Age 54. Chairman of CDC Corporation and of its subsidiary, China.com Inc. A

non-executive Director since 1998. A member of the Group Audit Committee. Non-

executive Chairman of HSBC Private Equity (Asia) Limited and a non-executive

Director of The Hong Kong and Shanghai Banking Corporation Limited since 1997.

Non-executive Chairman of MTR Corporation Limited and a non-executive Director of

Convenience Retail Asia Limited, Inchcape plc, VTech Holdings Limited and The Wharf

(Holdings) Limited.

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†J D Coombe

Age 61. Chairman of Hogg Robinson plc. A non-executive Director since March

2005. A member of the Group Audit Committee and, since 1 June 2006, a member of the

Remuneration Committee. A non-executive Director of GUS plc and of the Supervisory

Board of Siemens AG. A member of The Code Committee of the Panel on Takeovers and

Mergers. A trustee of the Royal Academy Trust. Former executive Director

and Chief Financial Officer of GlaxoSmithKline plc. A former Chairman of

The Hundred Group of Finance Directors and a former member of the Accounting

Standards Board.

†R A Fairhead

Age 44. Chief Executive Officer of the Financial Times Group Limited and a

Director of Pearson plc. A non-executive Director since 2004. A member of the Group

Audit Committee. A non-executive Director of The Economist Newspaper Limited.

Former Executive Vice President, Strategy and Group Control of Imperial Chemical

Industries plc.

D J Flint, CBE Group Finance Director

Age 51. Joined HSBC as an executive Director in 1995. A Director of HSBC

Bank Malaysia Berhad. A non-executive Director of BP p.l.c. Chaired the Financial

Reporting Council's review of the Turnbull Guidance on Internal Control. Served on the

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Accounting Standards Board and the Standards Advisory Council of the International

Accounting Standards Board from 2001 to 2004. A former partner in KPMG.

†W K L Fung, OBE

Age 57. Group Managing Director of Li & Fung Limited. A non-executive

Director since 1998. A member of the Corporate Responsibility Committee and of the

Remuneration Committee. A non-executive Director of The Hong Kong and Shanghai

Banking Corporation Limited and Deputy Chairman since May 2005. A non-executive

Director of CLP Holdings Limited, Integrated Distribution Services Group Limited and

VTech Holdings Ltd. A member of The Trade Development Council and the Hong Kong

Logistics Development Council. Former Chairman of the Hong Kong General

Chamber of Commerce, the Hong Kong Exporters' Association and the Hong

Kong Committee for the Pacific Economic Co-operation Council.

†S Hintze

Age 61. Former Chief Operating Officer of Barilla S.P.A. A non-executive

Director since 2001. A member of the Corporate Responsibility Committee and of the

Remuneration Committee. A non-executive Director of Premier Foods plc. A former

non-executive Director of Safeway plc and the Society of Genealogists, a registered

charity. A former Senior Vice President of Nestlé S.A. With Mars Incorporated from

1972 to 1993, latterly as Executive Vice President of M&M/Mars in New Jersey.

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†J W J Hughes-Hallett

Age 56. Chairman of John Swire & Sons Limited. A non-executive Director since

March 2005. A member of the Group Audit Committee since 1 June 2006. A non-

executive Director of The Hong Kong and Shanghai Banking Corporation Limited from

1999 to 2004. A non-executive Director and formerly Chairman of Cathay Pacific

Airways Limited and Swire Pacific Limited. A trustee of the Dulwich Picture Gallery, the

Hong Kong Maritime Museum and the Esmée Fairbairn Foundation. A member of the

London School of Oriental and African Studies Governing Body.

†Sir Mark Moody-Stuart, KCMG

Age 65. Chairman of Anglo American plc. A non-executive Director since 2001.

Chairman of the Remuneration Committee and a member of the Corporate Responsibility

Committee. A non-executive Director of Accenture Limited, a Governor of Nuffield

Hospitals, President of the Liverpool School of Tropical Medicine and Chairman of the

Global Business Coalition on HIV/AIDS, Chairman of the Global Compact Foundation.

A former Director and Chairman of The 'Shell' Transport and Trading Company, plc and

former Chairman of the Committee of Managing Directors of the Royal Dutch/Shell

Group of Companies.

†G Morgan

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Age 60. Founding President and Vice Chairman of EnCana Corporation. A non-

executive Director since 1 October 2006. A Director of SNC-Lavalin Group Inc., and

Alcan Inc. A member of the Board of Trustees of The Fraser Institute and the Accenture

Energy Advisory Board of Accenture Limited. Chief Executive Officer of EnCana

Corporation until 1 January 2006 and a former non-executive Director of HSBC Bank

Canada.

†S W Newton

Age 64. Chairman of The Real Return Holdings Company Limited. A non-

executive Director since 2002. A non-executive Director of Flying Brands Limited. A

Member of the Advisory Board of the East Asia Institute and of the Investment Board at

Cambridge University. A member of The Wellcome Trust Investment Committee.

Founder of Newton Investment Management, from which he retired in 2002.

† S M Robertson

Age 65. Non-executive Chairman of Rolls-Royce Group plc and the founder

member of Simon Robertson Associates LLP. A non-executive Director since 3 January

2006. A non-executive Director of Berry Bros. & Rudd Limited, The Economist

Newspaper Limited and The Royal Opera House Covent Garden Limited. Chairman of

Trustees of the Royal Academy Trust and the Ernest Kleinwort Charitable Trust. A

trustee of the Eden Project and the Royal Opera House Endowment Fund. A former

Managing Director of Goldman Sachs International. Former Chairman of Dresdner

Kleinwort Benson and a former non-executive Director of Inchcape plc, Invensys plc and

the London Stock Exchange.

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*H Sohmen, OBE

Age 66. Chairman of Bergesen Worldwide Limited, Bergesen Worldwide

Offshore Limited and Bergesen Worldwide Gas ASA. Chairman and President of BW

Corporation Limited (formerly World-Wide Shipping Group Limited) and Chairman of

The International Tanker Owners Pollution Federation Limited. A non-executive Director

since 1990. A non-executive Director of The Hongkong and Shanghai Banking

Corporation Limited from 1984 to 2005 and Deputy Chairman from 1996 to May 2005.

†Sir Brian Williamson, CBE

Age 61. Chairman of Electra Private Equity plc. A non-executive Director since

2002. A member of the Nomination Committee. A non-executive Director of Resolution

plc and a member of the Supervisory Board of Euronext NV. A senior adviser to Fleming

Family and Partners. Former Chairman of London International Financial Futures and

Options Exchange, Gerrard Group plc and Resolution Life Group Limited. A former non-

executive Director of the Financial Services Authority and of the Court of The Bank of

Ireland.

* Non-executive Director

†Independent non-executive Director

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D J Shaw, Adviser to the Board

Age 60. An Adviser to the Board since 1998. Solicitor. A partner in Norton Rose

from 1973 to 1998. A Director of The Bank of Bermuda Limited and HSBC Private

Banking Holdings (Suisse) SA.

R G Barber, Secretary

Age 55. Group Company Secretary since 1990. Joined HSBC in 1980;

Corporation Secretary of The Hongkong and Shanghai Banking Corporation Limited

from 1986 to 1992. Company Secretary of HSBC Bank plc from 1994 to 1996.

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COMPANY PROFILE

1. Name of the Company : Maxim Credit Services Pvt. Ltd.

2. Status : Private Limited

3. Origin

a. As a DSA of : HSBC India Limited

b. In the year : 1999

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c. Place : Andhra Pradesh

4. Operations :

Operates in : Hyderabad

Operates through : Office situated in Hyderabad

Engaged : Marketing of Financial Products

such as Home loan, Personal

loans, and Insurance.

ADDITIONAL SERVICES : To act as a Financial Advisor:

Management Consultant: and

Provide services in various fields

5. No of employees : 50

6. Maxim Credits : Address - 4th floor, Hira

Mansion Lake Hill Road,

Basheer Bagh, Hyderabad-

463 #: 232223444, 23222830

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PROFILE OF MAXIM CREDITS

Maxim Credit Services Private Limited was established in the year 1999 with the

main objectives to Market Financial products such as Car Loans, Home Loans, Personal

Loans, Insurance etc., and to act as Direct Marketing Associates of HSBC India Ltd.

The Registered office of the Company is situated in Hyderabad. It is incorporated,

under the Companies act 1956.

(1 of 1956)

Company Limited by shares

However, the main object of Maxim Credit is to carry out business in India or else

where mainly to act as Consultant, Advisor, Representative, Signatories, Liaison, Agent,

Service Man, Middleman, Arbitrator, Liquidate and Secretary in all its branches such as

management, Commercial, Personnel, Sales Promotion Public Welfare, Portfolios

Management, Energy Savings, Banking, Research and Development Technical know-how

Merchant Banking, Secretariat services, Financial management, and on similar subjects and

to make evaluation, Feasibility studies, Project report, Forecast, Surveys rehabilitation

packages and for the purpose to establish , maintain, provide, manage and arrange all

necessary services, facilities conveniences etc. And to do all incidental acts and things

necessary for the attainment of forging objects.

BOARD OF DIRECTORS

The first Directors of the Company are:

(1) Syed Munassir Hussain

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(2) Mridula Ladha

The Board shall have power at any time and from time to time to appoint one or more

persons as additional Directors provided the number of Directors already mentioned and the

number of additional Directors thus appointed together shall not exceed ten.

No. Of Shares in the Capital of the Company

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No. Name, Address, Occupation,

Description

No. of equity

shares

Signature witnesses with

address and occupation

Sd/-

Syed Munnasir Hussain

S/o Syed Taher Husain

16-2-54/A/1, Akber Bagh,

Malakpet, HYDERABAD. – 36

Occ. – Business

Age 27 years.

5,000

(Five thousand

only)

Sd/-

Anil Sarag

15-2-724,

304, Kartikeya Complex,

Osman Gunj,

HYDERABAD. – 12

Sd/-

Mridula Ladha

D/o R.K. Ladha

B-101, Asoka Gardenia

Adarsh Nagar, HYDERABAD.

Occ. – Business

Age 25 years

5,000

(Five thousand

only)

Total No. of shares taxes 10,000

(Ten thousand

only)

ROLE PLAYED BY MAXIM CREDITS

Since, Maxim Credit was established as a DSA of HSBC, India Limited in the

year 1999. It has played an important role as financial consultant.

However, Maxim Credits enjoys being one of the top most DSA’s of HSBC and

has high ranking among various DSA’s. Maxim Credit through its excellent customer

relations, services has lived up to the expectations of top management of HSBC.

Where as, Maxim Credit Generates Business worth of Rs. 24 crores per annum.

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PRODUCT PROFILE

HOME LOANS

PRODUCT LINE

Home loan can be arranged for the purchase of following product line under 2

categories.

1. Normal Home Loan 2. Smart Home

i. Ready Properties Only for ready properties

ii. Under Construction Properties

iii. Self construction

iv. Home-improvement (Internal)

v. Home-extensions (External)

vi. Take over loans.

ELIGIBILITY CRITERIA:1. Age of applicant/co-applicant

For Salaries Residents NRI’s

Minimum age 21 years 21 years

Maximum age 58 years 58 years

(60 years for Central Govt. Employees)

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For self employed Residents NRI’s

Minimum age 21 years 21 years

Maximum age 65years 65 years

(at the time of loans expiry)

Sourcing limits for Hyderabad1. Patancheru

2. Ghatkesar

3. Medchal

4. Shamshabad

5. Gachibowli

6. Ordinance Factory – Medak District

7. Pashmaylaram

Loan Amount (2 tire cities) Minimum Maximum

Ready properties 2,00,000 1,00,00,000

Under construction properties 2,00,000 1,00,00,000

Plot of land 2,00,000 60,00,000

Self construction 2,00,000 75,00,000

Take over 2,00,000 1,00,00,000

Loan to value limit

Loan for purchase of ready property:

85% of valuation report by a bank empanelled valuaer.

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Self-construction Loan

70% of the combined cost of land and construction

Takeover Loans

In case of takeover loans, we may extend loans up to 85% of valuation by

a bank-empanelled valuaer (the valuation report must not be older than 6 months) or the

principal outstanding whichever is lower.

Documents required for Credit Approval

1. Latest salary slip showing deductions

2. For self employed individuals

i. Computation of income for last 2 years certified by a C.A.

ii. P & L and balance sheet for the last 2 years certified by a C.A.

iii. Copies of I.T. returns for the last 2 years.

iv. Bank statement for last 6 months.

NRI SERVICES:

As a non-resident Indian NRI’s have special financial needs in India and abroad.

At HSBC, the NRI’s have a range of banking and other financial services to cater to their

needs.

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To provide financial services, in line with NRI’s needs HSBC have Network of

NRI centre overseas. The HSBC team of NRI manager can be accessed both at these

centers and at the branches in India.

NRI BENEFITS

Large number of investment options (from India as well as across the world).

Home loan amounts ranging from Rs. 200000 to Rs. 10000000 for properties in

India with attractive pre-payment options.

24 hours x 7 days banking through phone banking and Internet banking services.

Internet banking services.

International Debit card provides access to NRE, savings account for purchases

and ATM transactions.

HOME LOANS

HSBC offers loan amounts ranging from Rs. 2 lakhs to Rs. 1 crore for properties

in India with a choice of fixed and floating interest rates. Attractive pre-payment options

are also available.

DOCUMENTS FOR HOME LOAN FOR NRI APPLICANTS

1. Application form duly signed.

2. 3 signed photographs of NRI applicant and 3 signed photographs of guarantor

(signatures on the back side of photographs)

3. Passport with Visa endorsements 3 Xerox copies.

4. Overseas address proof if available, residence and office address 3 copies.

(SALARIED)

1. Copy of latest 3 months pay-slip/wage slip W2 form

2. Contract Copy/Work Permit/Work Agreement

OR

Appointment letter with terms and conditions attached. If the NRI applicant is

working for less than 1 year in a particular job then he must provide necessary

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appointment letter as well as relieving letter or at least relevant papers proving his

continuity and experience in that particular job.

3. Overseas 3 months bank statement reflecting his/her salary credits.

4. NRE/NRO bank statement of any Hyderabad based bank.

For Guarantor

(A relative who will stand an attorney to the NRI App):

1. Photo ID Proof (2 Xerox copies)

2. Age Proof (2 Xerox copies)

3. Address Proof (2 Xerox copies)

Note: NRI applicant on all his income and relevant papers submitted for loan

application must attest all the papers.

Key Features:

1. Loan amount ranging from 2 lakhs to 1 crore.

2. A choice between fixed and floating rate of interest.

3. An option to change your repayment procedure every year at no extra cost.

4. Fast processing.

5. Repayment of the loan can be done over a maximum period of 20 years.

6. No post dated cheques required but only 5 undated cheques are required.

7. A nominal processing fee. (Which is payable only when the loan is sanctioned).

8. Less documentation maximum benefits.

9. Power vintage account for Home Loans customers with no minimum balance.

10. No charges for selection of the property.

11. No Guarantor required.

12. Excellent packages for NRI’s because of Global presence of HSBC

Pre-approval:

An in-principle approval will be given for granting a specific amount of loan to a

customer (based on repayment capacity and of the qualifying criteria) where the customer

has not identified a property. It is valid for a period of 90 days. If the customer is unable

to identify a property for purchase within 90 days, the pre-approval lapses and the

customer will have to re-apply.

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For re-application sales must submit the latest salary slip in case of salaried

applicants and latest salary slip in case of salaried applicants and latest financials in case

of self-employed.

Approval

An approval is given for a specific amount of loan to a customer for purchase of

an identified property, which must be free encumbrances and should possess a clear and

marketable title. Loan approval is valid for a period of 30 days from the date of issue of

the facility acceptance letter (FAL). The RVTV is valid for a period of 90 days.

Annual Income

Minimum Net Income/PAT for:

Tier I cities INR 1,50,000/- per annum

Tier II cities INR 1,00,000/- per annum

Tier III cities INR 75,000/- per annum

Record in H.S.B.C.(In case the customer has a relationship with HSBC)

1. Maintaining minimum a/c balance, for the last 6 months.

2. No cheque returns due to insufficiency of funds in last 6 months.

3. Not a delinquent credit card.

4. Not a black listed customer – HUB/Master card.

5. No delays in repayment of other loans.

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Loan period

Minimum loan period …. 48 months

Maximum loan period…. 240 months

Age of Property

The age of the property should not exceed 50 years at the time of loan maturity.

Applications where the age of property exceeds 35 years at the time of loan

applications must satisfy the following conditions:

1. The certified residual age of the property at the time of the loan disburse! Should

be 3 times the loan amount.

2. If the certified age of the property is less than the norm, then the case should be

declined under S.L.A. (Special Lending Authority)

Documents required for Credit Approval

Salaried Self-Employed

1. Income documents: Latest months 1. Income documents ITR’s for salary slip and

latest Form 16 the last2 yrs computation of

income, P & L a/c, balance sheet

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2. Bank statement for last 6 months 2. Bank statement for last 6

months.

3. Age Proof Driving License/ 3. Age Proof Driving

Voter I.D./Passport/School License/ Voter I.D./ Passport/School

Leaving Certificate

4. Address Proof/electricity bill/ 4. Address Proof/electricity

Telephone bill/Ration card/ bill /Telephone bill/Ration card/

Passport/LIC bond Passport/LIC bond

5. 2 Passport size photos with 5. 2 Passport size photos with

self attested self attested

All the above copies are to be duly All the above Income documents

attested by the applicant. duly attested by C.A. & all

documents are to be applicant.

Eligibility Criteria

Income Eligibility

Salaried Self-employed

Minimum Salary 8,500 per month

Minimum loan 2 lakhs Same

Maximum loan 1 crore

(*According to eligibility)

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Interest rates provided by H.S.B.C.

As per the RBI guidelines PLR changes every quarterly so as the interest rates of

H.S.B.C. present PLR is about 8% where H.S.B.C. offers 8.25% for 5 years (4.11 years)

for 7 years – 7.11 years is about 9.25%. for 8 years – 20 years 9.75% (floating rate of

interest) (fixed rate of interest for 8 years – 20 years tenure is 8.99%)

EMI CALCULATION

Consider an example. Suppose a company negotiates a rs.3 crore loan for eight years

from FIs. The interest rate will be 14 percent per annum on the outstanding balance. The

principal will be repaid in eight equal year end installment. What is the payment

schedule?

The payment schedule will include both interest and principal payment.

Interest will be calculated on the outstanding balance on loan. Note that Rs.3 corer are

borrowed in the beginning of first year, therefore, the interest charged at the end of the

year will be:

0.14x 3,00,00,000=Rs.42, 00,000. The Installments of principal will be: 3,00,00,000/8 =

Rs. 37,50,000. Thus loan balance at the end of the first year will be: 3,00,00,000 –

37,50,00 = Rs. 2,62,00,000. This balance will be basis for calculating interest next year.

Calculations are shown in Table 2.

Table 2. LOAN AMORTISATION SCHEDULE (EQUAL PRINCIPAL REPAYMENT)

(Rs’000)

Year Loan in the

beginning

Principal

repayment

Interest Loan

payment

(3+4)

Loan at the

end (2-5)

(1) (2) (3) (4) (5) (6)

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1 30,000 3,750 4,200 7,950 26,250

2 26,250 3,750 3,675 7,425 22,500

3 22,500 3,750 3,150 6,900 18,750

4 18,750 3,750 2,625 6,375 15,000

5 15,000 3,750 2,100 5,850 11,250

6 11,250 3,750 1,575 5,325 7,500

7 7,500 3,750 1,050 4,800 3,750

8 3,750 3,750 525 4,275 0

An alternative way for amortising loan is to require to pay equal loan installment

both interest and principal payments. If this is done, then we find out the amount of

installment by using the concept of capital recovery (as discussed in chapter 7). In our

example, we want to find out answer to the following question: what should be the

annuity for eight years at 14 percent rate of return to obtain a present value of Rs.3,

00,00,000.

We can write in the from of following equation:

Rs. 3,00,00,000 = Annuity x present value annuity factor, 8 years 0.14%

3,00,00,000 = A x PVAF 8,0.14

A = 3,00,00,000 1

4.6389

= 3,00,00,000x .21556 = Rs. 64,67,000

From the present value table at the back of the book, we can find PVAF 8,.14 to 4.6389.

Reciprocal of this factor, .21556, is the capital recovery factor. The repayment schedule

is as given in table3.

Table 3: LOAN AMORTISATION SCHEDULE (EQUAL LOAN PAYMENT)

(Rs’000)

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Year Loan in the

beginning

Principal

repayment

Interest Loan

payment (3-

4)

Loan at the

end (2-5)

(1) (2) (3) (4) (5) (6)

1 30,000 6,467 4,200 2,267 27,733

2 27,733 6,467 3,883 2,584 25,149

3 25,149 6,467 3,521 2,946 22,203

4 22,203 6,467 3,108 3,359 18,844

5 18,844 6,467 2,638 3,829 15,015

6 15,015 6,467 2,102 4,365 10,650

7 10,650 6,467 1,491 4,976 5,674

8 5,674 6,467 794 5,673 0

OBJECTIVES

Objectives:

To take a comparative study for home loans of HSBC vis-à-vis competitors-SBI,

ICICI, HDFC.

To study home loans offered by HSBC and the process of disbursement of home

loans.

To study procedure, process, legal and technical issues involved with home loans.

Try to make an in-depth study of rate of interest, tenure, and documentation,

processing time, eligibility of H.S.B.C.

To study strategies followed by Maxim Credits for

c) Marketing Home Loans product;

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d) Getting loans approved by H.S.B.C. for potential borrowers.

To try and make suggestions in the light of conclusion emerging from the study

for the improvement in the performance of the company.

METHODOLOGY

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The information on the products home loans is gathered from two sources. They

are:

1. Primary Source

2. Secondary Source

1. PRIMARY SOURCE

Information about the steps taken by the Maxim Credit Service Pvt. Ltd.,

to get various files approved and procedures followed for file approval at HSBC

India, were collected by personal discussion with the Director of Maxim Credit

Service Pvt. Ltd. and discussions with the field staff of HSBC India.

Whereas, the information for the competitors such as SBI, ICICI, &

HDFC were gathered through personal discussions with respective departmental

heads and marketing executives of the respective banks, and also directly

interacting with existing and new customers of home loans.

2. SECONDARY SOURCE:

However, the secondary information about financial product, interest

rates, tenure, documentation etc. were collected from brochures, newspapers,

magazines and application forms from the concerned banks and as well as manual

provided by the Company Maxim Credit Service Pvt. Ltd. and also some

information was downloaded from websites.

Whereas, the information regarding “retail banking” were collected from

books such as “Modern-Banking in theory & Practice” and “ Global Banking”.

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COMPARATIVE ANALYSIS

Since, the project report is on a comparative study, a brief comparative analysis is

given ahead, from HSBC India limited, to its competitors.

The moment you decide to buy a home, a number of banks and other financial

institutions invite you to put in your application. Yes, you can apply for a loan even

before you have selected the property. The property need not even be in the same city,

where you are residing, they are various banks and other financial institutions, which

provides loans. However, some of the leading competitors to HSBC are mentioned

below:

1. STATE BANK OF INDIA

2. I.C.I.C.I

3. H.D.F.C

4. CITI BANK

5. STANDARD CHARTERED BANK (STANCHART)

6. HUDCO Niwas

7. G.I.C

8. L.I.C

9. BANK OF BARODA

10. U.T.I

11. I.D.B.I

12. PUNJAB NATIONAL BANK

13. CANFIN HOMES LIMITED

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14. BIRLA HOME FINANACE

15. WISEMEN

16. ANDHRA BANK

17. SYNDICATE BANK

18. DIWAN HOUSING FINANCE

19. STATE BANK OF HYDERABAD

From the above listed competitors, we have taken into consideration three major

banks, which are given below.

1. State Bank of India

2. Industrial Credit Investment Corporation of India

3. Housing Development & Financial Corporation.

1.State Bank of India (S.B.I) is one of the leading nationalized bank dealing in

home loan. It was formed in the year 1952 and at present has a major share in home loan

market, according to the Business-World Magazine& Times of India (newspaper).

2.Industrial Credit Investment Corporation of India (I.C.I.C.I) is one of the

leading private financial institution, which is actively growing in home loan

sector.I.C.I.C.I is the only institute in India which has grown 100% increase (i.e.,) from

200 Crores to 400 Crores disbursements, according to Business World Magazine and

Newspapers such as Economics Times and Business Standard.

3. Housing Development Financial Corporation (H.D.F.C) was set up by I.C.I.C.I.

in the year 1977 to capture home loan sector, but it has become itself a big competitor to

I.C.I.C.I. In the recent years, it was in the boom for home loans disbursements. But in the

current market, it stands next to I.C.I.C.I. in the Competition.

In the Present Comparative Analysis, comparison had been done on five major

parameters.

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1.Rate of interest

2.eligibility.

3.Market share

4.Age criteria.

5.processing time.

Rate of interest (R.O.I.)

Banks/years 0-5 years 6-10 years 11-15 years 16-20 years

HSBC 8.25 9.25 9.75 9.75

SBI 9 9 9.5 9.5

ICICI 8.75 9.25 9.75 9.75

HDFC 9 9 9.75 9.75

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According to the above trend we can say HSBC is offering very low rate of interest for

first 0-5years.

According to the above trend we can say HSBC has very much competitive rate of

interest for 6-10 years

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interest for 11-15 years.


interest for 16-20 years.

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HSBC 2.41

SBI 2.4

ICICI 2.18

HDFC 2.16

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2.Eligibility(maximumvalue to loan)

For example, let us assume that a person is earning rs.10,000 per month. Now we

will see that, how much maximum loan amount he would avail from H.S.B.C. to it’s

competitors.

1. H.S.B.C.

Rs. 10,000 –50%

=10,000-5000

=Rs.5000

=5000/2068 (EMI Code for 5 years)

=2.41 lakhs.

2. I.C.I.C.I.

Rs.10, 000- 55%

=Rs.45, 000

=Rs.45, 000/2064 (EMI Code for 5 years)

=2.18 lakhs.

3. H.D.F.C.

Rs.10,000-50%

=10,000-5000

=Rs.5000

=Rs.5000/2076 (EMI Code for 5 years)

RS.2.40 lakhs.

4. S.B.I.

Rs.10, 000-50%

=10,000-5000

=Rs.5000

=5000/2076 (EMI Code for 5 years)

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HSBC 10

SBI 23

ICICI 28

HDFC 18

=2.40 lakhs.

3. Market share (Home loan)

Year - 2001 year – 2005

a. S.B.I - 25 35 = 30

b. I.C.I.C.I- 15 35 = 25

c. H.D.F.C.- 22 18 = 20

d. H.S.B.C.- 4 16 = 10

e. Other financial

Institutions- 15 15 = 15

4. Age criteria:

Minimum Maximum

Salaried self-employed salaried self-employed

I.C.I.C.I. 21 yrs 21 yrs 60 yrs 65 yrs

H.S.B.C. 24 yrs 21 yrs 58 yrs 65 yrs

H.D.F.C. 24 yrs 21 yrs 58 yrs 65 yrs

S.B.I. 21 yrs 21 yrs 60 yrs 60 yrs

5. Processing time:

S.B.I., as it enjoy the leading commercial bank of India, it has certain extra ordinary

parameters for processing of a file. It takes enough time through study of customer back

ground as well as guaranteed before sanctioning the loan.

I.C.I.C.I., takes often a longer than its competitors for the disbursement of the loan

approval. However, the bank takes a very less time for initial formalities but it takes more

time in disbursement of the loan amount, this in turn makes the customer to go for other

banks.

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H.D.F.C., like any other development banks, takes sufficient time in loan disbursement,

once the initial formalities are over.

H.S.B.C., India limited, as it is one of the fastest growing bank and world’s leading bank,

takes a very short period in loan disbursement than its competitors, if the file is authentic

and clear.

LIMITATIONS OF THE STUDY:

i. The scope of comparative study is limited to selected banks only, not all the

private financial institutions.

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ii. Time is a major constraint. As the project study was for a limited period only the

necessary information had been taken in to consideration.

iii. The area is restricted to Hyderabad only.

iv. Lack of in–depth information from the competitor’s point of view, in order to

maintain business privacy.

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PRACTICAL CASES

1. Mr. Kamran works in USHA Air-condition; he wants a Home Loan of 8 lacks for 20

years. His designation is Sales Manager and income is as follows.

Basic 7000 GPF 2000

DA 4000 LIC 1000

HRA 3000 UPF 3000

CCA 2500 PT 1000

TA 3000

Others 4000

Gross Salary 23500 Deductions 7000

Net Salary 16500

We take UPF as also income because it is voluntary contribution.

16500 + 3000 = 19500.

Step 1 Net Income χ 50% i.e. 19500 χ 50% = 9750

Step 2 9750/949 = 10.27 lakh

He is eligible for 10.27 lakhs, but he needs 8 lakhs only.

Step 3 EMI is 8 χ 949 = 7592 p.m.

2.Mr. Sohail working in AP fire works as a driver cum operator his income is as follows.

Basic 4000 GPF 800

DA 2000 LIC 1000

HRA 900 CCS (loan) 1800

CCA 1000

Others 1000

Gross Salary 8900 Deductions 3600

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Net Salary 5300

And he wants a Rs. 5 lakh loan for 20 years.

Mr. Sohail is not eligible for Home Loan because his net income per annum

is less than 1 lakh.

Note: his profile is also low according to HSBC, & loans can be given to officer and

above cadre only.

3. Mr. Adil is a self employed Non-professional having a Kirana & General store at Rd.

No 12 Banjara Hills he is showing 3 lakhs per annum in current year and 2.5 lakhs per

annum in previous year as net and has land at new city wants loan for self construction.

What is maximum loan eligible for 15 years.

Step 1 300000 + 250000 = 550000

550000 / 24 = 22916 P.M. (24 months)

Step 2 22916 χ 50% = 11458 (50% of monthly

income)

(35% is fixed obligation and 15% is unfixed obligation)

Step 3 11458 / 1060= 10.8 lakhs (1060is the EMI per lack for

15 years)

EMI = 10.8 χ 1060 = 11448

4.Mr. Shaker is a self employed Non-professional cable network operator. He is showing

1.20 lakh net income for 2 years and has a HSBC credit card. He wants loan to purchase

ready property at Rein Bazaar in old city and recently in his bank statement there is 3

cheque bounce and 2 minimum balance charges.

Although Mr. Shaker has HSBC credit card his file has been rejected for the

following reasons.

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1. Firstly his business profile is low and his profession comes under

negative profile.

2. His bank statement shows cheque bounce if one cheque bounces

then the file will be rejected.

3. He has no minimum balance. It is on of the reason for rejection.

4. He is going for a property, which is in negative area.

5.Mr. K Srinivas is MD Radiologist at Konark Health Care and he is looking for take

over from Karnataka Bank to HSBC. His net income is 5 lakh per annum loan for 20

years balance is 1450000 at Karnataka Bank.

Step 1 500000 / 12 = 41666

Step 2 50% of 41666 is 20833

Step 3 20833 / 949 = 2195 lakhs

He wants it to be for 14.50 lakhs. Therefore it can be easily done and EMI is Rs.

13760 per month.

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He was paying Rs. 17000/- at Karnataka Bank now he needs to pay Rs. 13760/-

only. He is saving Rs. 3239/-, rate of interest was 14% fixed for 20 years at Karnataka

Bank here he gets 9.75% floating for 20 years.

KEY FINDINGS

1. Rate of interest for 5 years tenure is quite low, when compared to other loans.

2. Processing fee is also very reasonable and only 0.25% of the loan amount is to be

paid along with the application and balance-processing fee is to be paid at the

time of sanction or before disbursement.

3. In HSBC, there is no penalty option, which allows you to pre-pay up to 25% of

your loan every year, after the first six months.

4. A choice between fixed and floating interest rates, giving you the freedom to

change the way you pay after every financial year.

5. An option to change your decision every year, at no extra cost.

6. Customer satisfaction is the prime objective of HSBC.

7. HSBC offers migrate to new options.

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SUGGESTIONS

1. Many potential customers reside or possess land in negative areas. So we must

make out alternatives for them.

2. HSBC’s E.M.I. pattern for the first 5 years is good but above 5 years is need to be

adjusted as per competitors.

3. Judiciary staff other than advocates must be considered; SBI is offering a good

package for judiciary staff.

4. ICICI age criteria shows minimum age for salaried as 21 years, whereas we

consider the persons of 24 years. Age criteria should be relaxed so that many loan

seekers can avail the loan. HSBC is quite lengthy as other banks such as

5. Documentation for HSBC is quite lengthy as other banks such as ICICI &HDFC

requires less documents.

6. In my project study, I came to know that many people don’t know that HSBC is

offering financial services. Though our institution is reputed and worthy in the

market, but still awareness must be carried out.

7. Maintaining good builder tie-ups, which can be helpful in generating business.

8. The low profile maintained by HSBC has not generated much awareness

among the general public to mitigate this, advertisement, home loans

events, road shows etc is required.

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CONCLUSIONADD MORE POINT, PUT IN BULLET POINTS

Though it requires more time but home loans methodology has been thoroughly

studied in the whole project period. As our study parameters - Rate of interest, tenure

documentation, processing time and market share are suggestively analyzed in the light

of facts and figures. HSBC has done good work in short span of time in Hyderabad. From

our analysis ICICI has emerged as a strong competitor of HSBC.

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BIBLIOGRAPHY

1. Financial Institution and Markets -L.M. Bhole

2. Financial Management -Khan & Jain

3. Financial Management -I M Pandey

4. Modern Banking in Theory and Practical -Snelagh Hefferman

5. Global Banking -RoyC.Smith& Ingo

Wailer

6. World Wide Web -www.search.com

www.goz.com

Financial Services

Financial Management

Investment Management

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ABBREVATIONS

1. DSA : Direct Selling Associate

2. I.T.R : Income Tax Returns

3. S.L.A : Special Lending Agent

4. F.A.L : Facility Acceptance Letter

5. R.V.T.V : Residence Verification and Telephone Verification

6. P.L.R : Prime Lending Rate

7. P.L.C : Public Limited Company

8. M.C.N.F : Master Control Negative File

9. O.T.V : Office Telephone Verification

10. D.A : Dearness Allowance

11. H.R.A : House Rent Allowance

12. CCA : City Conveyance Allowance

13. TA : Travelling Allowance

14. LIC : Life Insurance Corporation

15. G.P.F : General Provident Fund

16. V.P.F : Voluntary Provident Fund

17. P.V.A.F : Present Value Annuity Factor

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18. F.I’s : Financial Institution

19. LRU : Local Retail Assets Processing Units

20. CRU : Central retail Assets Processing Unit at Mumbai

21. PEU : Pre-Approval Unit at CRU

22. POU : Post Approval Unit

23. ROI : Rate of Interest

24. SENP : Self-Employee Non-Professional

25. SEP : Self Employed Professional

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