Suryadatta Education Foundation’s Suryadatta Institute of

Management & Mass Communication (SIMMC- MBA) Suryadatta

Institute of Business Management

SUMMER INTERNSHIP PROJECT REPORT

On

“A STUDY ON PRACTICES AND RISK ANALYSIS IN

HOUSING LOAN AT BANKS AND NBFC’S”

For
“VIBGYOR ADVICORP.PVT.LTD, ANDHERI, MUMBAI”

By
“DHUMAL SAHIL”

Under the guidance of

“PROF.BHUSARE SHITAL”

Submitted to
“SAVITRIBAI PHULE PUNE UNIVERSITY”
In partial fulfilment of the requirement for the award of the degree
of Master of Business Administration (MBA) 2022-
2023

Through
Suryadatta Education Foundation’s
Suryadatta Institute of Management & Mass Communication
(SIMMC) Pune – 411021

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 DECLARATION

I hereby declare that the Summer Internship project report entitled “A study on
practices and risk analysis in housing loan at Banks and NBFC’s for Vibgyor Advicorp Pvt.
Ltd” is an authentic record of my own work as requirements of 8 weeks summer internship
under the guidance of Prof. Shital Bhusare. I assert that the statements made and
conclusions drawn are an outcome of the project work.
I further declare that to the best of my knowledge and belief that the project report does
not contain any part of any work which is submitted for the award of any other
degree/diploma/certificate in the university or any other university.

Date: 7th November 2022

Signature
Sahil Maruti Dhumal

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 ACKNOWLEDGEMENT

“Gratitude is not a thing of expression; it is more matter of feeling.”

There is always a sense of gratitude which one express towards others for their help
and supervision in achieving the goals. This formal piece of acknowledgement is an attempt
to express the feeling of gratitude towards people who helpful me in successfully completing
of my project.

I would like to express my special gratitude and thanks to my faculties and course
co-ordinator Prof. Shital Bhusare (Asst. Prof. Finance SIMMC) for his vital support and
encouragement.

Special thanks to Mr. Sachin Neema (CEO and Director of Vibgyor Advisors), Mrs.
Dhanashree Waingankar (Head of Loans Department), Mr. Vishal Yadav (Operational co-
ordinator) and all the employees of vibgyor advicorp.pvt.ltd for giving me their valuable
time and attention.

My thanks and appreciations also go to my friends and family who gave me the
physical and moral support in completing this training. I am also thankful to all the
respondents whose cooperation and support has helped me a lot in collecting necessary
information.

Thanking You!
Sahil Maruti Dhumal

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 PREFACE

The Master of Business Administration is a well-structured and integrated course with

specialization of Finance.

The main objective of the 2 month SIP training is to develop skills in students by
supplementing the theoretical and practical knowledge of financial services, retail banking
and corporate banking in general. Internship/Training helps to gain real life knowledge
about the industrial environment and business practices.

The SIP program provides student with a fundamental knowledge in financial services
organization functions and activities as well as an exposure to strategic thinking of
management.

In every professional course, training is as important factor. Our mentors and professors
give us theoretical knowledge of various subjects in college but we are practically exposed
to such subjects when we get the training in the organization. It is only the training through
which we came to know that what an industry is and how it works. We can learn about
various departmental operations being performed in the industry, which would, in return,
help us in the future when we will enter in the practical field.

During the whole training I got a lot of experience and came to know about the
management practices in real and how it differs from theoretical knowledge.

In today’s globalized world, where cut throat competition is prevailing in the market,
theoretical knowledge, which would help an individual in his/her carrier activities and it is
true that, “Experience is the best teacher”.

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 INDEX

Chapter
Title Page No
no

Executive Summary

1 Introduction

2 Literature Review

3 Industry & Company Profile

4 Research Methodology / Tasks Carried out

5 Data Analysis & Findings OR Key findings / observations & learning’s

from the tasks carried out
6 Conclusions

7 Recommendations & Suggestions

8 Key contributions to the organization

9 Limitations of the study & Scope for further research / work

10 Annexures

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 EXECUTIVE SUMMARY

As a part of curriculum of the Master of Business Administration of Savitribai

Phule Pune University, Students are required to do a project work or internship in any reputed
organization for practical knowledge of organization. It gives me great pleasure to present
this report on practices in housing loan at banks and nbfc’s. The main objective of the report
is to analyse various types of housing loan products and finding the best solutions towards the
client perspective.
My project title is “A study on practices and risk analysis in housing loans at Banks
and NBFC’s”. This project was conducted by housing loan department at vibgyor
advicorp.pvt.ltd with the help of bankers during the period of internship. The objective is to
know and aware the housing loan scenario as well as the current market practices that are
practiced and which will help in doing comparative credit analysis as per current need.

A home represents the largest asset that typically people have and this is why home
loans have such a huge impact in the loan market today. Home Loan is a secured loan which
is taken for purchasing or constructing a home or for making improvements in the residential
property. is offered by the lending institution against the security of the house/property.
Every person has a dream to build up his own houses and it is the third basic need of human
being. We are living in a world where almost all resources are limited in nature. In our
country the density of population is high and most of the people are willing to live in urban
areas and for this reason they need a shelter in urban area. The middle-income people are the
large customer base of housing finance industry and housing finance industry help to fulfil
their dream by providing housing loans for building construction, apartment purchase and
renovation purposes.
A house loan or home loan simply means a sum of money borrowed from a
financial institution or bank to purchase a house. Home loans consist of an adjustable or
fixed interest rate and payment terms.
People generally take a home loan for either buying a house/flat or a plot of land for
construction of a house, or renovation, extension and repairs to the existing house.
The property is mortgaged to the lender as a security till the repayment of the loan.
The bank or financial institution will hold the title or deed to the property till the loan has
been paid back with the interest due for it. The interest rates for home loans can be fixed or
floating, or partly fixed and or partly floating, suiting the needs of the borrower.

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PURPOSE OF PROJECT WORK:
The main purpose of the project work is getting the knowledge and update the firm
about the processing system of home loan. The employees of firm get the awareness about
the following things:
• This project covers the history of home loan, affordable housing, home loan
market, recent trends of home loans and procedures in India, different types of
home loans and interest rates provided by financial institution like banks, HFC
(Housing finance company) and top players in home loan market. This project
includes the overall study of home loan in prospective of India and focusing on
providing best solution to the housing loan client with the way of work in vibgyor
advicorp.pvt.ltd.
• This project is quantitative approach to know the eligibility calculation as per the
guidelines by banks and nbfc’s which helps to know the loan amount that can be
connoted to the customers and the EMI has to be paid by the customers depending
on their income and other factors.
• In this project by analysing the market of home loan the result which is shown
that there is comparative difference between NBFC’s and other financial
institutions, difference lies between approaching the customers till the way of
providing the credit to them.

METHODOLOGY OF STUDY:
In methodology the project is based on exploratory as well as descriptive study. The
sample size for the project is 50 and the data is collected from the various sources that are:
• Primary data: It had been collected through personal interaction with the industry
people and structured questionnaire filled by the bankers (respondent) to know
their requirement in availing the loan facility.
• Secondary data: It had been collected from different sources like- websites,
research papers, newspapers etc.

FINDINGS OF STUDY:
The study is oriented towards housing loan scenario, market analysis, practices in
housing loan and credit appraisal process (eligibility calculation) in banks and nbfc’s for the
period of 2 months all integrated throughout the network.

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 CHAPTER 1: INTRODUCTION

In terms of development and maturity, the Indian financial sector has recently
exhibited an encouraging trend. The amount of outstanding housing loans has increased by a
healthy 16 per cent over the past 5 fiscal years. Rising disposable income, strong demand,
and an increase in new competitors joining the market have been the main drivers of this
trend. The sector of home loans is anticipated to grow further during the following five years.
The sector will expand as a result of increased accessibility, greater openness, rising
urbanisation, and government incentives.
Housing demand has increased across the country as a result of changing lifestyles,
societal perspectives, and expanding labour mobility. Future forecasts show that these
patterns will persist. Moving into larger residences is more likely as income grows. Younger
borrowers of housing loans, increased need for independent homes, government programmes
to provide cheap housing, and interest concessions under the Pradhan Mantri Awas Yojana
should all contribute to rising housing financing demand.

1. MORTGAGE:

Mortgage is a legal agreement that conveys the conditional right of ownership on

an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as a security
for a loan.

A home buyer or builder can obtain financing (a loan) either to purchase or

secure against the property from a financial institution, such as a bank or credit union, either
directly or indirectly through intermediaries. Mortgages are used by individuals and
businesses to make large purchases of real estate without paying the entire value of the
purchase up front. Features of mortgage loans such as the size of the loan, maturity of the
loan, interest rate, method of paying off the loan, and other characteristics can vary
considerably.

2. HOUSING LOAN:

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 Housing Loan is a stepping stone in realizing your dream home. In my study, I
have used the terms 'home loan', 'housing loan' and 'housing finance' interchangeably. A
Housing Loan is a secured loan which is taken for purchasing or constructing a home or for
making improvements in the residential property. It is offered by the lending institution
against the security of the house/property. It means, if the borrower will default in repayment
of loan, the lender will be allowed to retrieve the lent money by selling the property. One can
apply for a housing loan from banks and registered housing finance companies. There are
certain features which should be considered while going for home loan.

FEATURES:

• Loans can be availed by salaried, self-employed and Non Resident Indians (NRIs).
• One can apply for loan for flats, under construction properties and residential plot.
• The housing loan comes along with a flexible repayment option, varying from 1year
to 30 years.
• Loan repayment can be done with easy Equated Monthly Instalments (EMI).
• Loan transfer facility is available, if you intend to change your lender.
• Prepayment of loan is available in case one is interested in repaying their whole loan
amount, as there will be no penalty charged for it as per the guidelines of RBI in
March 2022.

ADVANTAGE OF HOUSING LOAN:

The benefits that help people to have their dream home are -
• Attractive interest rates –
The various banks offer attractive interest rate to boost and help their customers.
Many banks provide loans on fixed or floating rates or both to facilitate consumers as
per their need.

• Tax Shield –
The Income Tax Act offers incentives to attract people to invest in housing property.
Section 24 of the Income Tax Act makes one eligible for deduction on interest paid
on a housing loan. The interest is allowed as a deduction on an accrual basis, i.e., on
due basis, even if it is not actually paid in cash during the year.
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 • Help in owning a home –
The home availed by a person with the help of banks, because they provide technical
and financial assistance to customers for owning their dream home.

• Door step services –

Door to step services are provided from enquiry stage to the final disbursement takes
place such services are beneficial for customers in their present busy life.

• Loan period –
There are many financial institutions which provide maximum loan tenure based on
the loan amount and credibility of customers. This gives relief to the customers in the
repayment of the loan amount.

DISADVANTAGES OF HOUSING LOAN:

The hurdles for people in their dream home are -

• Delays in processing –
Many times, there are huge delays in processing of providing home loans because
various formulation to be fulfilled in this process. Due to these delays customers feel
mentally as well as financially weak.

• Fluctuating interest rates -

Some financial institutions give home loans at floating rates, which fluctuate at
different interval due some reasons. These changes sometimes, may lead to increase
in interest rates which will increase the cost of home loans to the customers.

• High cost -
Some financial institutions charge high processing cost for home loan's sanctioning.
They are forced to pay huge charges at various stages to fulfil the requirement. The
people who are not able to pay these charges could not avail the benefits home loan
schemes.

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❖ PRODUCT SOLUTIONS FOR HOUSING LOANS:

The majority of individuals may only realise their ambition of owning a

home thanks to a home loan. This is due to the escalating cost of real estate in India.
Lenders in India now provide a variety of housing finance solutions to better satisfy the
demands of the borrowers. People now have a wide range of expectations for a house
loan nowadays. Several banks provide particularly designed house loans for women,
agriculturalists, and loans just for the acquisition of land, to name a few.

Let’s discuss about the type of home loans available and deeper understand their use in
the Indian context.

➢ Loan for purchasing a piece of land:

Buyers can complete a flexible transaction with the aid of a loaned piece of
land. As soon as the buyer has enough money, land can be utilised for a variety of
purposes or used to build a house. A number of institutions provide financing for land
purchases up to 80% to 85% of the plot’s cost. Banks or NBFCs both provide these loans.

➢ Loan for constructing a house:

This financing is specifically intended for persons who would like to build a
home from its foundation rather than purchase one that has already been built. This sort
of loan has a distinct approval procedure since it also considers the plot cost along with
the cost of the house. A preliminary estimation of the building costs is used to determine
the loan amount; before intending the loan, the buyer must purchase the plot as well. The
money may be given out entirely at once or in several payments. Popular house building
financing programmes include those provided by Canara Bank, UCO Bank, and Bank of
Baroda.

➢ Loan for purchasing a house:

Many banks are providing loans for 85% of the entire amount in this instance
as well. Most individuals choose this form of financing because it is simpler to buy a
ready-to-move-in property and renovate or decorate it than to build a house from the
ground up.

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 ➢ Loan for extension of property:
This is a straightforward loan that allows homeowners to borrow money if they
wish to expand their current property. You could wish to build a garage or add an
additional bedroom to the house, for instance. Since they provide building loans and
assist you in modifying your present structure, Bank of Baroda and HDFC Home
Extension Loan are well-liked options in this area.

➢ Loans for improvement of houses:

Homeowners who want to improve their homes might also get a loan for it.
Your home will appear better after remodelling and repair projects include painting,
interior and exterior repair, the building of an above water tank, and electrical work.
Banks like Union Bank of India and Vijaya Bank, however, provide specialist home
improvement loans if you lack the funds for repairs and renovations.

➢ Loans for conversion of homes:

Property conversion loans allow people who have previously taken out a
mortgage but wish to move into a new home to transfer their existing loan to the new
home. Borrowers are not required to pay off their old mortgage when they finance the
purchase of a new house.

➢ Loans against the property:

The term Loan against Property refers to a situation in which the borrower
takes a loan from a bank or financial institution where the security for the loan is a
property that is owned by the borrower.

People may have to choose personal loans or other loans owing to current
circumstances. The majority of the time, people borrow money against their property in
order to get the cash they need. It is classified as a secured loan and is disbursed against
the security or guarantee of the borrower’s legally owned property, sometimes known as
a mortgage loan.

➢ Loans for NRIs:

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 NRI loans are often a part of the home loan portfolio offered by the majority of
commercial and public sector banks. Housing is one of the most important essentials in
life, as we’ve already mentioned. Indians generally spend their entire savings on a home.
It is best to choose the loan that can be repaid promptly and painlessly after giving it great
thought.

3. REFINANCING:

Refinancing your home loan is the same as a home loan balance transfer. It
simply refers to the ability to move to a different lender with a reduced home loan interest
rate. You can transfer your home loan balance from one housing finance firm to another
utilising a home loan balance transfer. When the entire unpaid main loan amount is
transferred to another home loan finance firm for a reduced home loan interest rate or to
receive a top-up on the original loan amount, this is known as a home loan transfer.

The Advantages of Refinancing

▪ Lower Interest Rates:
One of the main motives for borrowers to change lenders for their home
loans is to obtain a better interest rate. A borrower may be recommended to apply for
a new loan if they are currently paying a higher interest rate on their existing home
loan than another lender.

▪ Get a second loan –

You may be eligible for a second loan in addition to a mortgage with a
lower interest rate for purposes like enlargement, remodelling, or registration. Only
when lower rates outweigh the risks should a top-up loan be taken into consideration.

4. SECURITIZATION:

Securitization, as a new instrument for structured financing on favourable terms

that allow for the issuance and selling of asset-backed securities, becomes immensely
essential in this setting.

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 The market becomes more liquid and the risk is decreased when a bank pools
several illiquid assets and creates a security that can be bought or sold on the financial
markets. This is known as securitization.
The securitization is carried out through a trust arrangement, and the
underlying assets are sold to a trustee in India. A trustee has the authority to own a
property that is distinct from his own or other trust holdings, even if a trust is not a
legally recognized entity.
Recent years have seen substantial developments in securitization and direct
assignments, which have been supported by commercially astute rules and regulations,
such as the IBC, stamp duty reductions, and intermittent changes to the RBI’s guidelines.

5. CO-LENDING MODEL (CLM):

The rise of the co-lending model (CLM) in housing finance is another positive
development. This approach was approved by the RBI in November 2020, enabling banks
and HFCs to provide joint loans to end borrowers through co-lending agreements at a low
cost. In the co-lending arrangement, both parties can take advantage of one another’s
advantages to produce profitable results that benefit both parties.
The RBI has published guidelines on the co-lending model for HFCs/NBFCs and
banks for Priority Sector Lending in order to increase the flow of credit to the unserved
and underserved sectors of the economy and make money accessible to borrowers at a
reasonable price (PSL). India, however, continues to face significant challenges with the
lack of affordable housing, especially for the economically weaker segment (EWS) and
the informal portions of the population. The co-lending approach attempts to give the
borrower the best interest rate and better reach.

6. AFFORDABLE HOUSING:

It is a term we use for residential units in India's urban areas which are affordably
priced with respect to households that fall within a specific limited income range. There
is no single set of parameters to define what an affordable housing unit should cost in
India. This is because the pricing and feasibility to developers of affordable housing is a

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 function of the city, location within the city, and type of project being built and also the
construction technology employed.

Affordable housing has to be defined on the basis of four criteria –

• Minimum volume of habitation –

As pressure on urban land increases, architecture of all forms, is it commercial or
residential, are going vertical. Whilst most definitions adopt an area standard, we have an
additional volume standard. This provides flexibility to architects to work on vertical
planning of a dwelling unit as well.

• Provision of basic amenities –

Whilst most definitions dwell on minimum area and cost considerations, provision
of basic amenities such as sanitation, adequate water supply and power to the dwelling
unit is crucial. Also, provision of community spaces and amenities such as parks, schools
and healthcare facilities, either within the project or in the neighbourhood, are desirable
depending upon the size and location of the housing project.

• Cost of the house -

Whilst assessing affordability of the buyer, the cost of the house should consider
not only the purchase costs but also the maintenance costs of the dwelling unit. Lower
operational and maintenance costs using sustainable features is key to any affordable
housing project. While LIG (Lower Income Group) and EWS (Economically Weaker
Section) are likely to get public and private subsidies at the time of buying a house, high
operational costs might lead them again to squatter settlements and slums.

• Location of the House –

An affordable housing project should be located within reasonable distances from
workplaces and should be connected adequately through public transport. If housing is
developed very far away from major workplace hubs in a city or entails expensive
transport costs to the city, whilst price of the residential units might be low due to lower
land costs, the Housing Transportation (H+T). Affordability is greatly affected. In the
case of affordable housing, key industrial nodes can also serve as workplace hubs.

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MAJOR HOUSING FINANCE BANKS AND NBFC’S IN INDIA:

Founded in 1977, The Housing Development Finance Corporation Limited (HDFC) is one of
the largest providers of housing finance in India. The company was founded with the aim of
solving the housing shortage in the country. Over the years the company has expanded to set
up 675 offices throughout the country. Internationally they have set up 3 offices in Dubai,
London, and Singapore with the aim of providing loans to NRI’s and Persons of Indian
Origin. Recently, RBI approved the proposed merger of the HDFC Bank with the parent
HDFC. Post the merger, HDFC will hold 41% stake in HDFC Bank and all the subsidiaries
of the housing company will be part of HDFC Bank.

Founded in 1989, LIC Housing Finance is among the pioneers of housing finance and also
among the largest housing finance companies in India. Here individuals can avail of loans for
home purchase, construction, extension, repair, plot purchase, etc. The company boasts a
presence across the country with 282 marketing offices. Over the years they have served over
2.5 million families since inception. The company currently has over Rs. 2.5 lakh crore in
housing loans.

Aditya Birla Housing Finance Home Loans are available at attractive interest rates for
maximum tenure of up to 30 years. The application process is quick & transparent to ensure
customer satisfaction and ease. The borrowers can apply online or offline according to their
preference. The NBFC has a strong pan India branch network. There is no prepayment charge

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on floating rate Home Loans for individuals. Affordable balance transfer options are also
available for eligible customers. The lender also offers door step services to the borrowers.

The company has grown to have over 130 branches throughout the country. In addition to
this, they also have an office in Dubai and own the majority stake in Oak North Bank in
London. The company however found itself in trouble for asset liabilities mismatch. This was
because the company had used short-term credit to lend long-term loans.

Founded in 1988, PNB Housing Finance Limited (PNB Housing) is a housing finance
company promoted by the Punjab National Bank (PNB). PNB Housing Finance is a
deposittaking housing finance company. This way they extend financial services both loans
and deposits in their area of operation. PNB Housing Finance has come a long way over the
last 3 decades. They crossed Rs. 50,000 crores in Assets under management in 2017 with
deposits crossing Rs. 10,000 crores the same year. The company has a strong presence across
the country with more than 113 branches.

State Bank of India is another major player in Indian Housing Finance market with 17% of
the market share same as HDFC’s share. The SBI Housing Loan schemes are specially
designed to meet the varied requirements of the customers. It offers homes loans for various
purposes including new house, purchase of land, renovation/alteration/extension of existing
home.

Founded in 1970, the Housing and Urban Development Corporation Limited (HUDCO) is a
housing finance company owned by the government. The company is controlled by the
Ministry of Housing and Urban Affairs. The government currently holds 89.81% of the
company. Apart from providing housing finance the company also finances several
infrastructure projects too. HUDCO was awarded the Mini-Ratna status in 2004.

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Tata Capital Housing Finance Limited (TCHFL) is a wholly owned subsidiary of Tata
Capital Limited and is registered with the National Housing Bank as a Housing Finance
Company, offering long-term funds for housing purposes. TCHFL’s wide product range includes
loans for purchase and construction of a residential unit, purchase of land, home improvement
loans, home extension loans, project finance loans to developers etc.

GIC Housing Finance Limited, was incorporated as ‘GIC Grih Vitta Limited’ on 12th
December 1989. The name was changed to its present name vide a fresh Certificate of
Incorporation issued on 16th November 1993. The primary business of GICHFL is granting
housing loans to individuals and to persons/entities engaged in construction of houses/flats
for residential purposes. GICHFL has 75 offices across the country with a strong marketing
team which is further assisted by Sales Associates (SAs). It has tie-ups with builders to
provide finance to individual borrowers.

ICICI housing loan is a one stop Home Loan destination for all types of home buyers.
Whether you are a salaried individual or a self-employed borrower, you can apply for a
hassle free housing finance at ICICI Home Finance. The loan can be applied for Rs 3 Lakh to
Rs 5 crore of loan amount. The online application to ICICI HFL can be completed within 10
minutes and the HFC claims that it will not take more than 72 hours to disburse the amount.
Both Indian residents and non-resident Indians can apply.

Piramal Capital & Housing Finance Limited (PCHFL), wholly owned subsidiary of Piramal
Enterprises Limited, is registered as a housing finance company with National Housing Bank
(NHB) and engaged in various financial services. In real estate, the platform provides
housing finance and other financing solutions across the entire capital stack such as

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structured debt, construction finance, flexi lease rental discounting etc. PCHFL also offers
customised financing solutions to the hospitality sector.

OBJECTIVES OF STUDY:

The main objective is to know the Housing Loan scenario in Mumbai as well as the
current market practices that are practiced. To achieve this objective there are several other
objectives need to be done, they are as follows -
• To study the home loan market for having idea of how it actually works.
• To study the procedures and documentation that are followed by the financial
institutions while granting the home loan.
• To learn need assessment of customers for availing the home loan service.
• To identify types of risk the Banks and NBFC’s experienced relating to housing loans
and to know the reasons behind risk involved in housing loans.

NEED OF STUDY:

The study is to attain the knowledge of the processing system of home loans. Some of
the main reasons for the study are as follows
• To understand the home loan market with its current practices.
• To know the details about home loan products and services.
• To study the problem faced by the bankers in disbursement and recovery of housing
loans.

SCOPE OF STUDY:

The study would be helpful for the all the financial institutions like - Banks, NBFCs
(Non-Banking Financial Company). It would be beneficial for the marketer, developers to
make their future strategies in a more informed and updated manner. The study can reveal the
comparative difference between financial institutions which can help them to take necessary
actions at the time of need.

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 CHAPTER 2: LITERATURE REVIEW

Choubey M. (2009) in “Housing Finance in India – Problems and Prospectus”

States that according to his study, it was revealed that the customers of home
loans selected to take loan due to low interest rate firstly, easy instalment schemes secondly,
simple procedure thirdly and so on. About 92% of the Home Loan customers opted for
floating rate of interest whereas about 60% of the total home loan customers opted for more
than 15 years and about 70% accepted that the approval and disbursement of loan is generally
delayed as per its time schedule. It was also suggested that the details of the loan accounts of
the customers must be available online for more transparency in dealing and EMIs should be
available not only monthly but also quarterly and half yearly.

Srinivas K.T. (2014) in “A study on Financial Performance of National Housing Banks

(NHB) in India”,

States that the primary objective of National Housing Banks is to work as an apex
institution to promote the housing finance through financial and other aid to the financial
institutions. He also states that there is sound and commendable financial performance of the
National Housing Banks.

Ghosh S. (2014) in “A study on Housing Finance Policies and Appraisal Process of

Home Loan in India”

States that one of the biggest ambitions in a person’s life is to own a house. For the
fulfilment of this dream home, one has to go for the Home Loan for which he has to pass
through the Credit Appraisal Process of the Bank. On the other hand, the Banks/ HFCs come
up with numerous financial and non-financial tools and techniques to assess the
creditworthiness of the applicant. In this paper the author has primarily emphasized on the
guidelines followed by the Banks/ HFCs in India while going through the Credit Appraisal

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Process. He has concluded that the one of the major contributor to the Economic
Development of India id Housing Sector.

CHAPTER 3: INDUSTRY AND COMPANY PROFILE

FINANCIAL SERVICES

The economy is made up of many different segments called sectors. These sectors are
comprised of different businesses that provide goods and services to consumers. The variety
of services offered by lending institutions, brokerage firms, and other businesses are
collectively referred to as the financial services sector.

The financial services sector is comprised of banking, mortgages, credit cards, payment
services, tax preparation and planning, accounting, and investing. Financial services are often

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limited to the activity of firms and professionals, while financial products are the financial
instruments these professionals provide to their clients.
India benefits from a large cross-utilisation of channels to expand reach of financial
services. Rising income is driving the demand for financial services across income brackets.
Credit, insurance and investment penetration is rising in rural areas.

• WHAT IS FINANCIAL SERVICE SECTOR?

The financial services sector provides financial services to people and

corporations. This segment of the economy is made up of a variety of financial firms
including banks, investment houses, lenders, finance companies, real estate brokers, and
insurance companies.

As noted above, the financial services industry is probably the most important sector
of the economy, leading the world in terms of earnings and equity market capitalization.
Large conglomerates dominate this sector, but it also includes a diverse range of smaller
companies.

According to the finance and development department of the International Monetary

Fund (IMF), financial services are the processes by which consumers or businesses acquire
financial goods.1 For example, a payment system provider offers a financial service when it
accepts and transfers funds between payers and recipients. This includes accounts settled
through credit and debit cards, checks, and electronic funds transfers.

Companies in the financial services industry manage money. For instance, a financial
advisor manages assets and offers advice on behalf of a client. The advisor does not directly
provide investments or any other product, rather, they facilitate the movement of funds
between savers and the issuers of securities and other instruments. This service is a
temporary task rather than a tangible asset.

Financial goods, on the other hand, are not tasks. They are things. A mortgage loan
may seem like a service, but it's actually a product that lasts beyond the initial provision.
Stocks, bonds, loans, commodity assets, real estate, and insurance policies are examples of
financial goods.

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 ➢ THE IMPORTANCE OF THE FINANCIAL SERVICES SECTOR -

The financial services sector is the primary driver of a nation's economy. It provides the
free flow of capital and liquidity in the marketplace. When the sector is strong, the economy
grows, and companies in this industry are better able to manage risk.

The strength of the financial services sector is also important to the prosperity of a
country's population. When the sector and economy are strong, consumers generally earn
more. This boosts their confidence and purchasing power. When they need access to credit
for large purchases, they turn to the financial services sector to borrow.

A strong financial services sector can lead to economic growth, while a failing
system can drag down a nation's economy.
If the financial services sector fails, though, it can drag a country's economy down.
This can lead to a recession. When the financial system starts to break down, the economy
starts to suffer. Capital begins to dry up as lenders tighten the reins on lending.
Unemployment rises, and wages may even drop, leading consumers to stop spending.

In order to compensate, central banks lower interest rates to try to boost economic
growth. This is primarily what happened during the financial crisis that led to the Great
Recession.

1. BANKING SERVICES -

The banking industry is the foundation of the financial services group. It is most concerned
with direct saving and lending, while the financial services sector incorporates investments,
insurance, the redistribution of risk, and other financial activities. Banking services are
provided by large commercial banks, community banks, credit unions, and other entities.

Banks earn revenue primarily on the difference in the interest rates charged for credit
accounts and the rates paid to depositors. Financial services like these primarily earn
revenue through fees, commissions, and other methods like the spread on interest rates
between loans and deposits.

2. BANKING SEGMENTS -
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Banking is made up of several segments—retail banking, commercial banking, and
investment banking. Also known as consumer or personal banking, retail banking serves
consumers rather than corporations. These banks offer financial services tailored to
individuals, including checking and savings accounts, mortgages, loans, and credit cards, as
well as certain investment services.

Corporate, commercial, or business banking, on the other hand, deals with small businesses
and large corporations. Like retail banking, it provides account services and credit products
that are tailored to the specific needs of businesses.

An investment bank typically only works with deal makers and high-net-worth individuals
(HNWIs)—not the general public. These banks underwrite deals, secure access to capital
markets, offer wealth management and tax advice, advise companies on mergers and
acquisitions (M&A), and facilitate the buying and selling of stocks and bonds. Financial
advisors and discount brokerages also occupy this niche.

3. INVESTMENT SERVICES -

Individuals may access financial markets like stocks and bonds through investment services.
Brokers—either human or self-directed online services—facilitate the buying and selling of
securities, taking a commission for their efforts. Financial advisors may charge an annual fee
based on assets under management (AUM) and direct several trades in the pursuit of
constructing and managing a well-diversified portfolio.

Robo-advisors are the latest incarnation of financial advice and portfolio management, with
fully automated algorithmic portfolio allocations and trade executions.

Hedge funds, mutual funds, and investment partnerships invest money in the financial
markets and collect management fees in the process. These organizations require custody
services for trading and servicing their portfolios, as well as legal, compliance, and marketing
advice. There are also software vendors that cater to the investment fund community by
developing software applications for portfolio management, client reporting, and other back-
office services.
Private equity funds, venture capital providers, and angel investors supply investment capital
to companies in exchange for ownership stakes or profit participation. Venture capital was

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especially important to technology firms in the 1990s. Much of what goes on behind the
scenes in the making of big deals is attributed to this group.

4. INSURANCE SERVICES –

Insurance is another important subsector of the financial services industry. Insurance services
are available for protection against death or injury (e.g., life insurance, disability income
insurance, health insurance), against property loss or damage (e.g., homeowners insurance,
car insurance), or against liability or lawsuit.

In the United States, an insurance agent differs from a broker. The former is a representative
of the insurance carrier, while the latter represents the insured and shops around for
insurance policies. This is also the realm of the underwriter, who assesses the risk of insuring
clients and also advises investment bankers on loan risk.

Reinsurers are in the business of selling insurance to the insurers themselves to help protect
them from catastrophic losses.

5. TAX AND ACCOUNTING SERVICES -

The sector also includes accountants and tax filing services, currency exchange and wire
transfer services, and credit card machine services and networks. It also includes debt
resolution services and global payment providers such as Visa and Mastercard, as well as
exchanges that facilitate stock, derivatives, and commodity trades.
Accountants ensure all financial records and statements—the balance sheet, income and loss
statement, cash-flow statement, and tax return—are in line with federal laws and regulations
and generally accepted accounting principles (GAAP). Accountants also compile the

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information needed to prepare entries to company accounts such as the general ledger, and
they document business financial transactions over time. This information is used to prepare
weekly, monthly, quarterly, or annual closing statements and cost accounting reports.

EVOLUTION OF FINANCIAL SERVICES SECTOR (GLOBALLY):

It's difficult to know the precise size of the global financial service sector. This is a large
group of industries related to banking, lending, and the management of wealth and funds.
However, there are few comprehensive metrics for the size of the entire sector. The World
Bank itself only collects data from 189 countries and estimates the rest. Meanwhile, the
definition and scope of industries that fall within the financial services sector are not
consistent among data sources.

• The financial sector involves a large group of industries associated with banking,
lending, insurance, investment, and other business activities related to the allocation
of wealth and money.
• There are few comprehensive metrics on the global finance sector, and the only way
to measure its size is through estimation.
• Financial services are a bedrock for many other industries that rely on loans and credit
in order to operate.
• There are several different metrics for estimating the size of the finance sector, such
as by Assets under Management (AUM), the market capitalization of financial
companies, or the size of the market.
• Although results vary, most estimates place the financial services sector at around 20-
25% of the world economy.

EVOLUTION OF FINANCIAL SERVICES SECTOR IN DOMESTIC MARKET:

The financial services in India are witnessing a rapid expansion of a diversified financial
sector, both in terms of the strong growth of existing financial services firm and the entry of
new finance companies into the industry. Financial services in India are made up of
components of financial system such as commercial banks, insurance companies, nonbanking
financial corporations, cooperatives, pension funds, mutual funds and other smaller financial
institutions.

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The banking regulator has recently allowed new finance companies and other entities to be
formed, such as payment banks, thereby adding to the form of entities operating in the sector.
However, the sector of financial services in India is primarily the banking sector, and
nonbanking finance companies, with commercial banks responsible for more than 64% of the
total assets held by the financial system.

Several reforms have been initiated by the Government of India to liberalize, control and
develop the different types of financial markets in India. Many steps have been taken by the
Government and the Reserve Bank of India (RBI) to promote easy access to Micro, Small and
Medium Enterprise (MSME) finance. These initiatives of government backed financial
management and financial services in India include the introduction of the MSME Credit
Guarantee Fund Scheme, the issuance of guidelines to banks on collateral criteria, and the
establishment of a Production and Refinance Agency for Micro Units (MUDRA).

The Way Forward - Financial Services in India -

By 2028, India is expected to be the fourth largest global private wealth sector. On the back
of strong banking and insurance industries, India is today one of the most dynamic global
economies and a leading player in delivering financial services in India and abroad alike.

With many finance companies announcing financial management plans to increase their
stakes in joint ventures with Indian companies, the relaxation of foreign investment rules has
received a positive response from the insurance sector of the financial services in India. There
may be a series of joint venture deals between global insurance companies and local players
over the coming quarters.

THE MAIN PLAYERS IN FINANCIAL SERVICES SECTOR -

India has a diversified financial sector undergoing rapid expansion, both in terms of strong
growth of existing financial services firms and new entities entering the market. The sector
comprises commercial banks, insurance companies, non-banking financial companies,
cooperatives, pension funds, mutual funds and other smaller financial entities. The banking
regulator has allowed new entities such as payment banks to be created recently, thereby
adding to the type of entities operating in the sector. However, the financial sector in India is
predominantly a banking sector with commercial banks accounting for more than 64% of the
total assets held by the financial system.

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GROWING DEMAND -

• Rising income is driving the demand for financial services across income brackets.
• Financial inclusion drive from the Reserve Bank of India (RBI) has expanded the
target market to semi-urban and rural areas.
• Investment corpus in Indian insurance sector might rise to US$ 1 trillion by 2025.
• With >2,100 fintech’s operating currently, India is positioned to become one of the
largest digital markets with rapid expansion of mobile and internet.
• India benefits from a large cross-utilisation of channels to expand reach of financial
services.
• In September 2021, eight Indian banks announced that they are rolling out—or about
to roll out—a system called ‘Account Aggregator’ to enable consumers to
consolidate all their financial data in one place.

GROWTH DRIVER –

Indian banking sector driving growth in the

financial services sector.

As of August 17, 2022, the number of bank

accounts opened under the government’s ‘Pradhan
Mantri Jan Dhan Yojana (PMJDY)’ scheme
reached 46.3 crore and deposits in Jan Dhan bank
accounts totalled Rs. 1.72 lakh crore (US$ 21.73
billion).

GOVERNMENT INITIATIVES –

• The government has approved 100% FDI for insurance intermediaries and increased
FDI limit in the insurance sector to 74% from 49% under the Union Budget 2021-22.
• International Financial Services Centres Authority (Banking) Regulations, 2020, are
expected to drive and facilitate the constituent operations in the IFSC and help the
sector reach its potential.

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 • The Cabinet Committee on Economic Affairs has given its approval for continuation
of the process of recapitalization of Regional Rural Banks (RRBs) by providing
minimum regulatory capital to RRBs for another year beyond 2019-20.

CURRENT SCENARIO IN INDIAN FINANCIAL SERVICES SECTOR –

The ongoing pandemic has forced all sub-sectors within the banking and financial services
industry to innovate. The true potential kicked off with digital transformation. Today, every
Indian owns a smartphone and can digitally apply for a loan, complete e-KYC, open a bank
account, order food, groceries and other essentials.

The Indian financial sector currently comprises several segments: commercial banks, newage
fintech start-ups, non-banking financial companies (NBFCs), co-operatives, pension funds,
mutual funds, small and medium financial entities and recently established payment banks.
These varied financial services provide solutions to a wide range of customers based on their
requirements and accessibility. These customers can be individuals, public organizations or
private enterprises.

Here’s an overview of how the Indian financial service industry will look like in 2022 –

• Commercial Banks - The lion’s share of the Indian financial industry in India belongs
to the banking sector with commercial banks accounting for more than 64% of the
total assets held by the financial system.
Earlier, under-represented populations living in rural areas were deprived of banking
facilities. Today, banks are expanding their coverage towards the rural heartland of
the country. Also, the measures taken by the Government of India to help SMEs and
MSMEs tackle the pandemic crisis has swayed banks to focus on previously
underserved demographics and regions.

• Fintech Start-ups - The most exciting thing about fintech is that even when every
other sector was going through financial bumps, it continued to thrive. This was
predominantly due to Covid-led restrictions and government-imposed physical
movement barriers.

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 • Insurance Companies - Needless to say, digitalization played a pivotal role in
strengthening the growth of the insurance ecosystem. As the country reported a vast
number of deaths every day, there was fear and anxiety among people as they were
uncertain if deaths caused by Covid-19 would be covered under their life insurance
policy. But, setting a monumental example, the IRDAI clarified that these deaths
would be classified under general deaths, given the diagnosis was made after the
policy was issued. Furthermore, to ease customer approval, the IRDAI also adopted
eKYC and video-KYC instead of physical documentation.

• Non-Banking Financial Companies (NBFC’s) - NBFCs are also proving crucial for
small and medium enterprises (SMEs), which are the backbone of the Indian
economy. Due to their diverse and broader client base, NBFC credit growth is
comparatively more significant than traditional banks and lending institutions. A large
chunk of the Indian population finds it difficult to get loan approval from banks due to
low credit scores or incomplete documentation. NBFCs have emerged as a
quintessential financial solution for more people to have access to financial services.
As we move into the next year, NBFCs can continue to become prime loan facilitators
apart from traditional lending institutions.

• Co-operatives - Cooperative societies are offering much-needed strategic inputs and

value to aid the growth of the agricultural sector. India is an agricultural economy and
72% of the total population who live in rural areas depend on agriculture for their
livelihood. Consumer cooperative societies are trying to meet consumption
requirements at concessional prices. And finally, marketing societies are aiding
farmers to achieve fair rates. In addition, these societies also play a pivotal role in
assisting irrigation facilities, fulfilling electricity requirements, and transportation
mediums.

• Pension Funds - The primary objective of pension funds is to ensure that an individual
saves a portion of their income in a systematic manner so that they can have a regular
post-retirement income. There are various pension schemes like National Pension
Scheme, deferred annuity, immediate annuity, guaranteed period annuity, life annuity,
and annuity certain.

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 • Mutual Funds and other smaller financial entities - Over the last few decades, the
mutual funds industry has witnessed many developments and transformations. It has
allowed users to make seamless investment decisions quickly and easily with
technology and platforms provided by many companies.

• Bottom Line - According to the India Brand Equity Foundation (IBEF), by 2028,
India is expected to be the fourth largest private wealth market globally. Furthermore,
the leading financial service institution, the Association of Mutual Funds in India
(AMFI), targets three-fold growth in the number of investor accounts, reaching up to
130 million by 2025.
To cater to the ever growing demands of the steadily increasing population, the
government also took steps and designed strategies to simplify payments, banking,
insurance and other financial services. The industry has demonstrated resilience and
adaptability and the effects are very positive.
The Indian financial industry is expected to evolve rapidly in 2022 helped by the
financial innovation has taken centre stage and opportunities for consumers to invest,
save and grow their wealth are set to soar.

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 VIBGYOR ADVIORP.PVT.LTD

COMPANY OVERVIEW:

Your One-Stop for All Financial Solutions

Vibgyor Advisors is a first-generation firm focusing on financial services. It works

across various segments, providing a wide range of financial services to its esteemed clients.
It advises individuals as well as corporates on their various requirements with a clientcentric
approach.

Vibgyor advisors is a financial consulting service provider. They work with your
vision and are passionate about your success and skilled at objectively assessing and
strengthening your financial situation. Vibgyor advisors Pvt. Ltd has rapidly grown over the
period in terms of depth & breadth of services offered, the number of satisfied clients, the
extent of interfacing with institutions/banks, building-up of a team of committed
professionals and creation of infrastructure. They have witnessed continuous growth,
notwithstanding turmoil that the financial markets have witnessed. With their extensive
domain knowledge in project financing sectors, they have achieved a milestone by having the
most satisfied client base in the industry and created a benchmark for their competitors.

They provide value-based services in the domain of Fund Raising Advisory,

Transaction Advisory. They believe in providing cutting edge services to their clients in a
holistic manner. The unique blend of analytical, insightful and a motivated team provides an
unbeatable advantage to us in executing assignments effectively and efficiently. They are
determined to proactively measure the fast-changing needs of the industry so that they can
deliver tailor-made solutions for their client.

Why choose vibgyor advisors?

At vibgyor advisors, they follow their passions backed by expertise and experience.
They started their journey of spreading financial awareness at all levels of society and
making our clients’ lives safe, secured and wealthy from inception. During this long tenure

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they expanded their bouquet of services keeping in mind client’s needs and benefits.
Extensive and unbiased research before they recommend any product to their clients and best
in the class after-sales-service – are always our pillars of priority in everything they do.

ABOUT FOUNDER AND CEO -

MR. SACHIN NEEMA

Founded by Mr. Sachin Neema who is a management graduate

from JBIMS, Mumbai and a mechanical engineer from VJTI,
Mumbai. With 22 years of experience in equity markets and
having worked as Analyst, Head of Research and Fund
Manager, he has been instrumental in running business
segments for some of the leading companies in the industry
like HDFC Sec, IIFL and Tata.

HISTORY –

Vibgyor Advicorp Private Limited is an unlisted private company incorporated on 05

December, 2016. It is classified as a private limited company and is located in Mumbai City,
Maharashtra. It is authorized share capital is INR 1.00 lac and the total paid-up capital is INR
1.00 lac.

Vibgyor Advicorp Private Limited's operating revenues range is Under INR 1 CR for the financial
year ending on 31 March, 2020. It's EBITDA has decreased by -2,508.80 % over the previous year.
At the same time, its book net worth has decreased by -1,071.15 %.

The current status of Vibgyor Advicorp Private Limited is - Active.

The last reported AGM (Annual General Meeting) of Vibgyor Advicorp Private Limited, per our
records, was held on 30 November, 2021. Also, as per our records, its last balance sheet was prepared
for the period ending on 31 March, 2021. Vibgyor Advicorp Private Limited has two directors -
Sachin Motilal Neema and Deepali Sachin Neema.

REGISTERED DETAILS –

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VISION –
To build most admired customer centric financial distribution company through continuous
innovation, reliable quality services, best product range and to offer customers world class
cost effective services.

Create a client centric and solution based approach.

MISSION –

• To build integrity and trust among the clients.

• To analyse the cases with full creativity and dedication.

VALUES –

• Integrity –
▪ Fairness, transparency, and honesty in our conduct
▪ Upholding the highest of ethical standards in our deals.
• Creativity –
▪ We create an environment where employees can think big and have
fun.
▪ With our minds afresh, our work brings out new and innovative
solutions.
• Trust –
▪ Our loyalty towards our clients is paramount and our honesty and
dedication knows no bounds.

• Dedication –
▪ Our passion for work helps us to put in consistent efforts.
▪ Our dedicated efforts bring the best solutions.
• Solution Based Approach –

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 ▪ We understand our client’s requirements and direct our efforts in
fulfilling them.
▪ We assure to find the best possible solution
• Client Centric Approach –
▪ Our clients are our top-most priority. Always!

GEOGRAPHICAL PRESENCE ACROSS INDIA –

➢ Main branch was located in Andheri, Mumbai.

SERVICE PORTFOLIO ACROSS INDIA –

➢ RETAIL –
o Loans - Loans are advanced for a number of reasons including major purchases,
investing, renovations, debt consolidation, and business ventures. Loans also
help existing companies expand their operations. Loans allow for growth in
the overall money supply in an economy and open up competition by lending
to new businesses. The interest and fees from loans are a primary source of
revenue for many banks, as well as some retailers through the use of credit
facilities and credit cards.

Types of Loan Services we provide –

▪ Housing Loan
▪ Personal Loan
▪ Business Loan

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 ▪ Loan against Property
▪ Loan against Security

o Insurance – We mainly deals 2 types of insurance services.

▪ Vehicle Insurance
▪ Health Insurance o Equity Subscription – Vibgyor equity
specializes in finding some of the best opportunities available in the market to
create wealth with a risk-managed, realistic and systematic approach.

Trading services –

➢ Intraday Calls – Day calls squared off the same day. It aims to benefit
from the volatility and the trends of the market.
➢ Swing Calls – Buy and hold strategy depending on changes. It tries to
capture short to medium gains in stock.
➢ Sectorial Calls – Calls based on market cycle generating high alpha
return.

Investment services –

➢ Short term calls – Calls based on broader market setup, holdings less
than a year.
➢ Long term calls – Calls based on following business cycles with
holding period more than a year.

Plan validity for all the services –

➢ 1 months @ Rs.6000
➢ 3 months @ Rs.15000
➢ 6 months @ Rs.27000
➢ 12 months @ Rs.50000
➢ NON – RETAIL – o Investment Banking

• Start-ups
• Fund raising
• Corporate advisory
• Asset sale

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 • Brand acquisition
• Project Advisory
o Portfolio Management
• Portfolio Management
• Portfolio Construction
o Real Estate

• Project Funding
• Direct and client Investments
• Agency Business
• Special Projects
o Wealth Management
• Equity advisory services
• Portfolio construction
• Research and industry analysis
• Debt Investment and lending

CLOSEST COMPETITORS –

TARGETED AUDIENCE –

➢ People who fix their lives are those who are motivated by a desire to change their
current circumstances and are most likely proactive in seeking out new opportunities.
➢ People who have survived some type of loss or hardship in their lives want to protect
their assets and rebuild their lives after the storm.
➢ Individuals who are risk-averse and want to protect their money from potential
financial risks are referred to as protectors.
➢ When it comes to financial planning and investments, each of these clients’ needs and
desires differ. Our goal is to provide their clients with the best possible advice and
investment products by understanding and targeting their specific needs.
➢ For lead generation our most important channel partners are chartered accountants,
RTO agents and Builders or the employees in real estate

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CURRENT FINANCIALS –

Here is a summary of financial information of VIBGYOR ADVICORP PRIVATE LIMITED

for the financial year ending on 31 March, 2021.

• Revenue / turnover of vibgyor advicorp private limited is under INR 1 cr

• Net worth of the company has decreased by -1,071.15 %
• EBITDA of the company has decreased by -2,508.80 %
• Total assets of the company has increased by 635.80 %
• Liabilities of the company has increased by 123.80 %

The company has 2 directors and no reported key management personnel.

The longest serving director currently on board is Sachin Motilal Neema who was appointed
on 05 December, 2016. Sachin Motilal Neema has been on the board for more than 5 years.
The most recently appointed director is Deepali Sachin Neema, who was appointed on 04
July, 2020.

Sachin Motilal Neema has the largest number of other directorships with a seat at a total of 2
companies. In total, the company is connected to 1 other company through its directors.

APPS BY VIBGYOR ADVICORP PRIVATE. LIMITED –

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SWOT ANALYSIS –

• Strength - Our core strength lies in the power of our team; our workforce. We have a
team that can go all the way to give our clients value for their money. We are well
positioned and we know we will attract loads of clients from the first day we open our
doors for business.
• Weakness - As a new business consulting firm, it might take some time for our
organization to break into the market; that is perhaps our major weakness.
• Opportunities - The opportunities in the consulting industry are massive and we are
ready to take advantage of any opportunity that comes our way.
• Threat - Some of the threats that we are likely going to face as a consulting firm
operating in the India are unfavourable government policies, the arrival of a
competitor within our location of operations and global economic downturn which
usually affects purchasing power. There is hardly anything we could do as regards
these threats other than to be optimistic that things will continue to work for our good.

CHAPTER 4: TASK CARRIED OUT / RESEARCH METHODOLOGY

RESEARCH METHODOLOGY –

Descriptive research is used to describe characteristics of a population or phenomenon being

studied. It does not answer questions about how/when/why the characteristics occurred.
Rather it addresses the "what" question. Descriptive research refers to the methods that
describe the characteristics of the variables under study. This methodology focuses on
answering questions relating to the “what” than the “why” of the research subject. The
primary focus of this research is to simply describe the nature of the demographics
understudy instead of focusing on the “why”.

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METHOD OF DATA COLLECTION –

The process to be used to collect information and data for the purpose of making business
decisions. The methodology may include publication research, interviews, surveys and other
research techniques and could include both present and historical information. It is based on
primary and secondary data.

PRIMARY DATA – Interviews, Trainings, Surveys, Discussions SECONDARY

DATA – Websites, Books etc.

TYPE OF RESEARCH – Descriptive Study

SAMPLING TECHNIQUE – Random Sampling Method

POPULATION – Employees of Banks and NBFC’s

POPULATION – 30

TASK CARRIED OUT AT VIBGYOR ADVICORP PVT.LTD –

I learnt the process of calculating the eligibility of any client for sanctioning the loans as well
as the complete process followed by the Banks and NBFC’s in housing loan department.
There will training and discussion session organised by the employees of the
Banks and NBFC’s which gives an information about updates or changes in their current
policies.

Following is the process which we should follow for disbursement of any case in better
manner –

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Run Loan Pricing – It is the method where we have to add customers details with the amount
of loan and the type of loan which is required. After entering the details, it shows the sorting
of Banks and NBFC’s which are able to process the loan.

WORK STRUCTURE AT VIBGYOR ADVICORP PVT. LTD –

• Contact Clients regarding documentation

• Document Verification
• Eligibility Calculation
• Follow up by Banks and NBFC’s regarding current process of loans
• Case discussion with the employees of Banks and NBFC’s
• Providing Solution if there will be any problem arises in sanctioning the loan
• Meeting and Training by Bankers
• Discussions on Updated Policies
• Training by Bankers to get Products Knowledge
• Field work to study Legal and Technical Valuation in Housing Loans
• Creation of invoices
ELIGIBILITY CALCULATION AT VIBGYOR ADVICORP PVT. LTD –

For knowing the eligibility of the applicant vibgyor has to go through certain steps so that
expected amount of loan that can be sanctioned and EMI’s that can be paid by the applicant
are known.

Following are the steps –

STEP 1: Identification of customer type - Firstly, the credit analyst has to identify the type
of customer i.e., whether he she is Self-employed professional (SEP) or Self-employed
nonprofessional (SENP) or Salaried.

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STEP 2: Calculate the monthly income of the applicant - After knowing the customer
calculate their monthly income, if the customer is salaried then their monthly salary and other
allowances is taken and if he she is SENP SEP then their net profit is taken from the
financials provided by them.

STEP 3: Calculate PAT (Profit after tax)- After calculating the net profit or EBIT (Earnings
before interest and tax) analyst has to deduct the monthly tax paid by the customer which will
give PAT.

STEP 4: Deduction of non-cash items (If any)- non-cash items are those items where there
are no cash inflows or outflows like- depreciation on fixed assets, interest on unsecured loan,
salary of director etc... These are deducted from PAT to know the Actual cash profit when
the customer is SENP or SEP else for Salaried PAT is the Actual cash profit.

STEP 5: State the FOIR (Fixed obligation to income ratio) - FOIR is the ratio of all the
obligations to the income. It is used to determine eligibility of the customer and it varies from
different lenders. In Reliance Home Finance Ltd. 60% is taken as income of SENP/SEP
customer and for salaried FOIR varies depending on customer's income on the basis of which
customer credit ability is measured and remaining is taken as customer's personal expense.

STEP 6: Deduct other obligations (if any) - From actual cash profit calculate the FOIR of
income and then deduct the other obligation like other interest on loans (if any) to know the
Real Income.

STEP 7: Calculate assumed EMI - For assumed EMI, minimum amount of loan that can be
taken is assumed as 1 lakh for the required tenure with rate of interest varies between
10.75%- 11.75% depending on customers profile. For calculation excel sheet is used, and the
formula is EMI per lag EMI Factor PMT (Rate 12, Tenure (months) -1 lakh). Using this
formula assumed EMI will be known which is considered to be the minimum.

STEP 8: Calculate amount of loan that can be sanctioned - To know the amount of loan that
can be granted to the customer. Real income has to be divided by EMI Factor. Formula is -
Real Income/EMI Factor Using this formula amount of loan that can be sanctioned is
known based on which actual EMI is calculated.

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STEP 9: Calculate actual EMI - After knowing the amours of loan that can be granted analyst
has to calculate actual EMI based on that amount of loan, and this has to be paid by the
customer. Using the same formula of EMI Factor, it can be calculated only assumed amount
of loan of lakh has to be replaced by the actual calculated amount of loan. Formula that can
be used is EMI per lag EMI Factor PMT (Rate 12. Tenure (months), actual amount of
loan).

STEP 10: Knowing the customer eligibility - Knowing the amount of loan that can be
granted by Reliance and EMI that has to be paid by the customer, credit analyst knows the
customer eligibility based on which further procedure are done.

Thus, these are the steps which know the customer credit worthiness and sometimes there are
other criteria also which helps in knowing the eligibility like field investigation, personal
discussion based on which it is analysed that whether the customer is in a position to take
housing loan and pay the EMI.

For understand it better an example in form of case is taken, which will give the idea how
eligibility is calculated on excel sheet.

ELIGIBILITY (SALARIED)
NAME MANGESH CHAVAN
MANGESH CHAVAN Sep-22 Eligibility Eligible income
Basic 10,400 100% 10,400
HRA 5,200 100% 5,200
DA 19,125 100% 19,125
CA 1,250 100% 1,250
LTA 1,000 100% 1,000
TA 550 100% 550

DEDUCTION
PF -1,248 100% -1,248
PROFESSION TAX -200 100% -200

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 TOTAL 36,077
Appraised Monthly income 36,077
Appraised Obligations
Max FOIR (For a combined LTV) 55
Max EMI 19842.35
TENURE (in months) 360
Rate of interest 9.20%
EMI factor 819
Eligibility (In Lacs) 2422753.358

RECOMMENDATION
TENURE (in months) 360
Rate of interest 9.20%
Loan Amount (in lacs) 24
EMI 19,657
Actual FOIR 54.48623777
MAX LTV as per policy (in %) 80

CONDITIONS (if any)

DEVIATION

NOTES

Authorized Signature Designation

PROCESS FOLLOWED BY US IN PROCUREMENT OF HOUSING LOANS -

With the increasing competition in the market for offering housing loans, the otherwise
tedious process of availing loans has gone a tremendous change in the recent years. However,
there is still some process involved in the procurement of housing loan. It is advisable for one
to first look at the different stages required for obtaining a housing Loan. The followings are
the step by step procedure of getting housing loan -

STEP 1: Application Form - The first step involved in applying for home loan is the
procurement of application form from the HFC of one's choice. The Performa of application
every of HFC (Housing Finance Companies) is different from the other but about 80%
information required to be furnished is the same. Along with the application form necessary

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documents like address proof, age proof, proof of income, bank balance etc. are also to be
attached with the application form before it is submitted to the HFC. Along with all these
documents HFC's also ask for processing fee of the home loan that varies 0.25% to 0.50% of
the total loan amount.

STEP 2: Personal Discussion - After successfully filling the application form and submitting
it to the authority the next step is face to face with bank or HFC where one has applied for the
home loan. The bank HFC first evaluates the papers submitted and summons the applicant
for the personal discussion regarding the home loan applied for. It is advisable that one
should carry all its original documents which were submitted with the application form.

STEP 3: Bank's/HFC's Field Investigation - The next step is the field investigation done by
the HFC or banks. They sent their representatives to the existing residence of the applicants
or their offices for the validation of the documents submitted. This is the essential part for the
banks HFC to establish the trust with the applicants.

STEP 4: Credit Appraisal by The Bank/HFC and Loan Sanction - This is the make or break
stage of the process. The bank or HFC will establishes repayment capacity based on one's
income, age, qualifications, experience, employer, nature of business etc. to access their
credential. The bank can refuse the loan application if any discrepancy is found at this stage.
But if everything goes according to the conditions negotiated by the parties, then the bank or
HFC sanction the loan that may be unconditional or with some conditions levied.
STEP 5: Offer Letter - After the sanction of the Home Loan, the applicant gets offer letter
from the bank or HFC with the following details: Loan amount Rate of Interest Fixed or
variable ROI Tenure of the loan Mode of repayment General terms and conditions of the loan
Special conditions, if any If the terms and conditions are agreed the applicant has to sign the
duplicate copy of the offer letter and that is to be submitted to the Bank HFC.

STEP 6: Submission of Legal Documents and Legal Check - The bank or the HFC now asks
for the legal documents of the property involved for applying home loan. All the legal
documents of the property involved have to be submitted. The bank does all the legal checks
on the property. The documents remain with the bank until the repayment of the housing.

STEP 7: Technical Valuation Check - The Banks or HFC then go about the technical
valuation of the property. The experts of the bank visit the site that has to be purchased and
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value it as per the existing rules and regulations. The valuation of the property is the most
important aspect that the bank/HFC considers before financing any property.

STEP 8: Registration of Property Documents - After the legal and technical valuation of the
property the draft documents has to be cleared by the lawyer and stamping and registration of
the documents is needed.

STEP 9: Signing of Agreements and Submitting the Post-dated cheques - Now it is time of
signing the final agreement of the home loan. After the signing of the agreement a bunch of
Post-dated cheques are to be submitted as agreed on the agreement paper.

STEP 10: Disbursement - It is time for the final Disbursement of the Housing Loan. After
the bank or HFC ensures financing the property is involves no risk they pay the final amount
that is agreed upon. The mode of payment varies from full to part payment. In the case of
under construction property the mode is part payment and in the case of ready possession
properties disbursement is full and final.

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 CHAPTER 5: DATA ANALYSIS

1. Showing awareness about the risk involved in housing loans.

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 ANALYSIS

From the above table we can recognize that 96% of bankers are aware about the risk
involved in housing loans.

INTREPRETATION

It shows that after sanctioning home loan, it is difficult to recover in case of default
where the bank should follow legal procedure to recover from defaulters. So by
sanctioning home loan to the customer the bank has to face major risk in recovering
the sanctioned loan amount from the customer for some extent.

2. Showing reasons behind sanctioning housing loans.

ANALYSIS

The above table states that 53% of bankers are preferred for high interest rates, 25% of
bankers are preferred for safety and 21% of bankers are preferred for easy to recover.

INTREPRETATION

This shows that NBFC’s providing more housing loan as it earns more interest compared to
other types of loans. Keeping in view some respondents are preferred for safety and easy to
recover, state that borrower deposits their asset documents to the bank, helps them to recover
the loan amount in case of default.

3. Showing from which type of customer the banks and NBFC has experienced
more risk

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 ANALYIS

It is observed from the above table that bank and nbfc has experienced more risk from
professionals is 50%, from businessman’s is 39%, from salaried employee is 11%

INTREPRETATION

It is viewed that bankers are facing risk from sanctioning of housing loan because it
depends upon the borrowers default; most of them fail in proper utilization, prompt
payment of EMI. So the bankers must are about the risk and take action on such
defaulters.
4. Showing the main reasons involved in the accumulation of risk for non-payment
of housing loan by customers.

ANALYSIS

The above table states the reasons for the non-repayment of loan by borrower. It
seems that 43% of bankers reasoned for misuitilisation of funds and 11% for

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 noncompletion of construction and finally 46% of bankers reasoned for lack of
income due to economy slowdown.

INTERPRETATION

The above table and graph states the reasons for the non-repayment of loan by
borrower it seems that 43% of customer reasoned for misuitilisation of funds and 11%
non-completion of construction where in many in cases borrower utilise loan amount
to their personal commitment. Finally 46% of customer reasoned for lack of income
due to economy slow down. Hence the bankers should give proper advice to the
customer about loan utilisation to ensure prompt payment at the time of sanctioning
home loan otherwise it leads to fall in the growth of the company.

5. Whether the banker follow differential home rate for different customer.

ANALYSIS

From, the above table we came to know that bank and NBFC’s not following different
interest rates. They are following guidelines given by RBI.

INTREPRETATION

Bankers sanctioning the housing loan at same rate for different customers.

6. Showing where the bankers are the main cause for the problems in housing loans.

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 INTERPRETATION

The above graph shows that bankers are the main reasons for the risk where 36%
prefer for lack of proper action to dispose the defaulters, 32% prefer for lack of proper
advice to borrowers and 32% prefer to lack of good recovery procedure. This states
that bankers requires good advisor to guide the borrowers about the utilisation of loan
and must have proper recovery procedure in order to avoid risk in future.

7. Showing whether the bankers take action against the defaulters to recover the
housing loan.

ANALYSIS

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 The above chart shows that bankers take action against the defaulters to recover the
housing loans.

INTERPRETATION

It notified that bank and nbfc has appointed authorized officer and assistant authorized
officer to take action on such defaulters by involving SARFAESI act2002
(securitization and reconstruction of financial asset and enforcement of security act
2002) means amendment stipulates payment of 50% amount interest of 75%
originally enacted. This came into existence to bank and nbfc from 28-02-2003.

8. Showing whether the bank can recover the entire loan amount with interest and
charges during auction.

ANALYSIS

From the above table it is analysed that 65% of bankers says that bank and nbfc
recovers entire loan amount along with interest and other charges but 35% of bankers
said that they do no recovers.

INTERPRETATION

From the above graph we can observe that bankers recover loan along with interest
from defaulters but, some of the banks are also facing risk in recovering the loan
amount from the borrowers. In order to reduce risk, banks should follow effective
recovery procedure.

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 9. Showing the precautions and strategies followed by the bankers to reduce the risk
involved in housing loans.

ANALYSIS

From the above it is noticed that most of the bakers prefer for asset verification and
follow up of recovery activity.

INTERPRETATION

From the above chart it analysed that bankers are giving more preference towards
asset verification because to avoid risk in future.

10. Showing the rating given by the bankers to their recovery process and risk
management.

ANALYSIS

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 From the above table it is analysed that only 25% bankers rated their recovery
procedure as excellent. But there will be 61% bankers rated their process as good and
14% bankers rated as neutral.

INTERPRETATION

From the above chart it analysed that bankers are rated their process as good and
neutral, they have to work effectively to make their process excellent which helps in
risk management.

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 •
CHAPTER 6: FINDINGS AND OBSERVATIONS

After completing the study I came to know that there are differences in the working
manner of Banks and NBFC’s because of which approach to customers are also
different.
• Housing finance companies are giving high priority for housing loans than other loan
where it seems that banker’s earnings high interest from housing loans which leads to
the growth of the housing finance companies and to make profit.
• Break down in groups operating can negatively impact housing repayment
performance.
• Most of the bankers are not recovering the entire loan amount along with interest and
other charges during auctions.
• From the bank officials knows that the bankers are collecting sufficient
documentation before sanctioning the loan and giving proper follow up.
• The bankers are collecting all the related documents like registration deed, collateral
securities, house mortgage and appropriate guarantors documents for the safety
purpose.
• Housing finance companies has experienced risk in documents verification at the
time of sanctioning housing loan. This may lead to non-recovery of loan and increase
in NPA’s.
• As per the observations, 80% of the bankers are accepting and 20% not accepting the
housing loan processing fee and documentation fee.
• It was found that loan for renovation and extension of property has not become
popular. The most important purpose for which housing loan is opted was for
purchase of site and construction.

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 CHAPTER 7: CONCLUSION

The housing sector is one of the booming sectors which are beneficial for every related
financial institution. In India housing like Affordable housing is very helpful for bottom of
pyramid people. While making the report there were many factors which are influencing the
housing loan market and which affects the credit appraisal process.

The study would be helpful for the all the financial institutions like –Banks, NBFCs
(NonBanking Financial Company). It would be beneficial for the marketer, developers to
make their future strategies in a more informed and updated manner. The study can reveal the
comparative difference between financial institutions which can help them to take necessary
actions at the time of need.

Also risk management place a very important role which effect on financial performance of
the Banks and NBFC’s for long term growth of them. The bankers want to concentrate on the
risk assessment reducing the risk involves in loan lending. If the risk level increases the
profitability and value of housing finance companies will increase. So they have mainly
concentrate on reducing NPA.

From the above findings and observations it is concluded that, the bankers has to give more
preference towards the other loans and the bank or nbfc should take effective legal action
against defaulters by involving SARFAESI Act. Otherwise this may lead the NPA which will
not be good for them.

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 •

CHAPTER 8: RECOMMENDATIONS AND SUGGESTIONS

Firm had to provide proper training to the employees of regarding eligibility

calculation and document verification which helps to bankers to reduce the TAT
period.
• Housing finance companies should increase the number of branches to other cities
for future growth and to extend their customer.
• Develop, manage and maintain housing information system.
• Before taking a decision on housing loans, employees should consider other factors
such as tricky EMI calculations, unfair collateral demands, prepayment penalties
and hidden costs as per the point of view of client.
• Key decisions on housing loans viz., type of interest rate and mode of interest
calculations should be given serious through the discussion with clients.
• The employees should verify the documents correctly at the time of sanctioning
housing loans because some customers provide duplicate documents and will
misuse loan funds.
• Firm may honour best channel partners of the firm and organising channel partners
met which will help them maintain relationship and future growth.
• New technologies for speeding process should be implemented; having competitive
interest rate and easy and quick processing of loan will helps to firm becoming a
more client centric.
• Loan sanction period should be reduced to attract more borrowers.
• In order to reducing the risk in NPA, the bankers should maintain the follow-ups
and good relationship with clients.
• My project will helpful for the both bankers and the employees of the firm to
improve the current process of the firm.
• It will help in maintain relationship with clients and bankers.

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 •
CHAPTER 9: LIMITATIONS

As there was the relationship with the bankers was not maintained by the previous
employees, that’s why it will take time to convince bankers.
• As there was less computers available as per the number of employees, we get
less chance to do documentation.
• Because of technical issues in CRM of the firm, we are not able resolve cases in
better manner.
• Some of the bankers are not ready to respond because of previous employee’s
behaviour.
• Some documents were confidential for project use.

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 •

CHAPTER 10: BIBLIOGRAPHY

https://vibgyoradvisors.com/
• https://www.tofler.in/vibgyoradvicorpprivatelimited/company/U93090MH2016PTC2
88153
• https://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=9851

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