AMITY BUSINESS SCHOOL, NOIDA MBA-GENERAL (2010-12) 2nd SEMESTER SECTION-B MANAGEMENT INFORMATION SYSTEM PROJECT TOPIC: MIS

AT HDFC COMMODITIE LOAN DIVISION

SUBMITTED TO: Ms ANITA VENAIK

SUBMITTED BY: VRIBHA GUPTA , B01 SANJNA KAUL , B02 PRIYANKA GOYAL , B03 AANCHAL WALIA , B04 ANKITA SHARMA , B14

1.1 ORIGIN OF THE ORGANIZATION The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. 1.2 GROWTH AND DEVELOPMENT OF THE ORGANIZATION HDFC Bank is head quartered in Mumbai. The Bank at present has an enviable network of over 684 branches spread over 316 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centers where the NSE/ BSE have a strong and active member base. The Bank also has a network of about over 4000 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and

international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. 1.3 HDFC BANK - Products at a glance: I . PERSONAL BANKING 1. Accounts and Deposits i) Savings Accounts ii) Current Accounts iii) Fixed Accounts iv) Recurring Deposits v) Demat Account vi) Safe Deposit Lockers 2. Loans i) Personal Loans ii) SmartDraft iii) Home Loans iv) Two Wheeler Loans v) New Car Loans vi) Used Car Loans vii) Cash Back Loans viii) Car N Cash Loans ix) Loan against gold x) Educational Loan

xi) Loan against securities xii) Loan against property xiii) Loan against rental receivables xiv) Health Care Finance xv) Retail Agri Loans xvi) Tractor Loans xvii) Commercial Vehicle Finance xviii) Construction Equipment Finance xix) Warehouse Receipt Loans xx) Government Sponsored Programs 3. Cards i) Credit Cards ii) Debit Cards iii) Prepaid Cards 4. Investments and Insurance i) Wealth Advisory Services ii) Mutual Funds iii) Tax Planning iv) Insurance v) General Insurance vi) Health Insurance vii) Bonds viii) Knowledge Centre ix) Equities & Derivatives x) Mudra Gold Bar xi) Mudra Silver Bar xii) IPO Application through ASBA 5. Forex and Trade Services i) Foreign Exchange and Trade Services The following are different methods of transacting in Foreign Exchange and remitting money.

-Travellers Cheques -Foreign Currency Cash -ForexPlus card -ForexPlus Chip card -Foreign Currency Drafts -Cheque Deposits -Remittances -Cash to Master -Trade Services -Forex Services Branch Locator

6.Payment Services i) Verified by Visa (VBV)/ MasterCard SecureCode ii) NetSafe iii) Merchant Services iv) Prepaid Mobile Refill v) ngpay vi) BillPay vii) Visa BillPay viii) PayNow ix) Register&Pay x) InstaPay xi) DirectPay xii) Visa CardPay xiii) e-Monies National Electronic Funds Transfer xiv) Online Payment of Excise & Service Tax xv) Online Payment of Direct Tax xvi) Online payment of DVAT and CST xvii) Online payment of GVAT xviii) Religious Offerings xix) Donate to Charity

xx) RTGS Funds Transfer 7. Imperia/ Preferred/ Classic i) HDFC Bank Imperia Banking ii) HDFC Bank Preferred Banking iii) HDFC Bank Classic Banking 8. Private Banking i) Advisory Services ii) Research Reports 9. Access Your Bank i) NetBanking ii) Credit Cards Online iii) PhoneBanking iv) InstaAlerts v) MobileBanking vi) ATM vii) OneView viii) Email Statements ix) Branch Network II. NRI BANKING III. WHOLESALE BANKING 1.4 HDFC LOAN DIVISION IN DETAIL I. Personal Loan Features & Benefits : - Borrow up to Rs 15,00,000 for any purpose depending on your requirements. - Flexible Repayment options, ranging from 12 to 60 months. - Repay with easy EMIs. - One of the lowest interest rates. - Hassle free loans - No guarantor/security/collateral required. - Speedy loan approval. - Convenience of service at your doorstep.

- Customer privileges II. Home Loan Home loans for individuals to purchase (fresh / resale) or construct houses. Application can be made individually or jointly. HDFC finances up to 80% of the cost of the property (including the cost of the land) based on the repayment capacity of the customer. -Home Improvement Loan -Home Extension Loan -Land Purchase Loan -Loan cover Term Assurance Plan -Automated Repayment of Home loan EMI III.Two Wheeler loan: Flexible repayment options, ranging from 12 to 48 months available even at the point of purchase. Repay through post-dated cheques with easy EMIs. Calculate your EMI. Hassle free loans - No guarantor required. Speedy loan approval. Available for almost all models at attractive interest rates. Free gifts from time to time on approval of your Two Wheeler Loan. (Watch this space for more details on the free gift promotion). Special Schemes to suit your needs IV. New Car Loan: Features & Benefits : Avail 100% finance on your favorite car. Flexible repayment options, ranging from 12 to 84 months. Borrow up to 3 times your annual salary (for salaried professionals) and 6 times your annual income (for self employed professionals).

Speedy processing - within 48 hours. Repay with easy EMIs. Attractive car loan plans - To Fastrack your loan, just choose the plan that is right for you. Attractive Interest rates Hassle-free documentation. Customer Privileges

If you have had a Preferred Account or a Corporate Salary Account with HDFC Bank for more than six months, you can get fast approvals on your loans with minimal documentation.

V. Used Car Loan Features & Benefits Choose any car manufactured in India within a certain age*. Borrow up to 80% of the value of the car. Flexible repayment options, ranging from 12 to 60 months. Borrow up to 3 times your annual salary (for salaried professionals) and 6 times your annual income (for self employed professionals)**. Available for almost all car models at attractive interest rates. Repay with easy EMIs. Attractive car loan plans - To Fastrack your loan, just choose the plan that is right for you. VI. Cash Back Loan: Features & Benefits Borrow up to 85% of the final invoice value of the car purchased without a loan Receive funding on most vehicles

Repay over a period of up to 60 months Attractive interest rate of 13.50% Disbursement will be made in favour of the car owner (as is reflected in RC copy and invoice)

VII.

Car N Cash

is an additional cash loan on your existing car (similar to Top Up). If you own a car with a clear repayment track record for 9 months minimum, then you can get an additional loan to the extent of your original loan amount, at attractive rate of interest.

Features Borrow up to 100% of the original loan value of the car. Valuation is not mandatory. No Income documents are required. Wide range of approved models/variants and manufacturers are considered. Disbursals are quick and hassle-free.

VIII. Gold Loan . Features & Benefits Avail Loan upto Rs.10,00,000 & upto 90% of value. Safety & Security of your Gold Jewellery ATL - Anytime Liquidity No EMI, Service only Interest and enjoy the Loan facility Lower Interest Rates - Your savings can be Invested in several Investment Avenues IX. Student education loans Loan for Indian Educaton: Student Loans Upto Rs. 15 Lakhs for education In India

Unsecured Lending Upto INR 7.5 Lakhs No Collateral Or Third Party Guarantee** Wider Range Of Collateral For Loans Above INR 7.5 Lakhs Residential Property HDFC Bank Fixed Deposit LIC/NSC/KVP Loan available upto tenure of 7 years including moratorium period Repayment to start 1 year after course completion / 6 months after obtaining employment (whichever is earlier) Loans available for short duration/ job oriented courses also Avail the tax rebate, offered under section 80-E of the Income Tax Act 1961* for the entire interest amount paid towards your education loan. Click here to view the income tax circular. E-mail loansupport@hdfcbank.com to receive interest certificate for FY 09-10. Loans available for other course related expenses also! From Bank's approved list of institutes. Third Party Guarantee required for loans between Rs 4 lakhs to 7.5 lakhs. Special privileges Service At Your Door Step Loans disbursed directly to the educational institution as Per the Fee Schdule. Insurance Protection from HDFC ERGO Gateway To Other Banking Products And Services. Savings Account Insurance Protection from HDFC ERGO General Insurance Company Ltd Features & Benefits

Loan for Foreign Education: Education Abroad Student Loans Upto Rs. 20 Lakhs for education Abroad# Unsecured Lending Upto INR 7.5 Lakhs

No Collateral Or Third Party Guarantee ** Wider Range Of Collateral For Loans Above INR 7.5 Lakhs Residential Property HDFC Bank Fixed Deposit LIC/NSC/KVP Loan available upto tenure of 7 years including moratorium period # Repayment to start 1 year after course completion / 6 months after obtaining employment (whichever is earlier) Avail the tax rebate, offered under section 80-E of the Income Tax Act 1961* for the entire interest amount paid towards your education loan. Click here to view the income tax circular. E-mail loansupport@hdfcbank.com to receive interest certificate for FY 09-10. Pls check with your CA. From Bank's approved list of institutes. Third Party Guarantee required for loans between Rs 4 lakhs to 7.5 lakhs.

X. Loan Against Securities: Features & Benefits No EMIs No Post Dated cheques No Pre-payment charges Interest charged only on utilised amount. Exhaustive number of approved securities Upto 80% Loan Simple and speedy processing Term Loan facility also available against select securities Overdraft facility can be availed against pledge of: Equity Shares- Demat Shares up to 50% of the value.

Mutual Fund units* - Mutual Funds up to 50% of NAV (Net Asset Value). See approved Mutual Fund Schemes. Gold ETF NABARD's Bhavishya Nirman Bonds RBI Bonds (8% Savings Bonds 2003 (Taxable)) Life Insurance Policies issued by LIC & Select Private Insurance Companies See approved Life Insurance Policies. National Savings Certificate (NSC) Kisan Vikas Patra(KVP) Gold Deposit Certificates (GDC) Non Convertible Debentures

XI. Loan Against Property (LAP) Features & Benefits XII. Loans to expand your business or to meet any personal need Residential & Commercial properties accepted Maximum Loan to value* Flexible product offerings - EMI based loan / Overdraft facility available. High tenure loans for ease of repayment. Attractive interest rates. Specially designed products for Self Employed.

Loan against Rent Receivables (LARR )

Features & Benefits Higher eligibility on net rentals. Attractive interest rates. Extended loan tenure available. Customized product to suit your needs and structured specially for you.

Simple documentation and fast processing.

XIII. Tractor Loans: Features & Benefits Covers a wide range of tractors manufactured in India. Covers customer segments, using tractors for agricultural as well as commercial purposes. Avail finance up to 85 % on your favorite tractor. Flexible repayment options ranging from 12 - 84 months. Speedy processing. Repay with easy PDC's or by way of cash collection. Attractive interest rates. Hassle Free documentation.

XIV. Retail Agri loan: Features & Benefits The Kisan Gold Card is aimed at meeting the production and investment needs of the farming community. Production needs broadly cover crop production requirements, including funds for all related inputs to grow a crop. We also meet Post Harvest and Domestic consumption requirements. The Card caters to investment needs such as purchase of agricultural related equipment/implements, irrigation requirements, construction of farm related buildings, and investment in agriculture related activities such as Dairy, Piggery, Beekeeping and the like. 1.4 MAJOR CHALLENGES On close scrutiny , we find 4 key issues of corporate governance, risk appetite, financial inclusion and healthy profitability being consistently reflected across the overall processes, operations, product, practices and consequently in the information flow of the

banks commodities operations. Thus, major challenges to be addressed by the process flow and subsequent information flow are the following: 1. To acquire a major chunk of Indias expanding banking and financial services industry through a disciplined growth strategy focusing on quality and not on quantity and delivering high quality customer service. 2. Leveraging the technology platform to reduce operating costs while delivering more products to more customers. 3. Disciplined credit risk management leading to healthy profitability. 4. Developing innovative products and services in tandem with the customers needs and demands. 5. Understanding trade cycle, business cycle and working capital cycle of the clients and crop seasonality and matching the same to the product norms and bank norms.

1.5 HDFC BANK MIS (IT INFRASTRUCTURE AND THE SYSTEMS) HDFC Bank uses a customized MIS by the name of Finware which has different sections to address the needs of its different departments and products. For security, the bank has employed 128-bit Secure Socket Layer (SSL) technology which is the highest level of security commercially available. HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the banks branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines.

 The Bank has made substantial efforts and investments in acquiring the best technology , made available internationally to build the infrastructure for a world-class bank. The banks business is supported by scalable and robust systems which ensure the delivery of the finest services to the customers consistently. Engagement of internet and latest technology has been one of the key priorities of the bank and already it has made significant progress by web enabling its core businesses.

1.6 PROCESS FLOW It is imperative to understand the product and its target customers , various actors within the bank before getting down to the process flow. The commodities business group of the bank offers two loan products, viz. Service Provider (SP) Loan and Term Cash Credit (TCC) which can be customized as per the requirements of the client . The only difference between them is the nature of the collateral offered and, accordingly , there is a difference in the disbursement procedure of the two. The product that we are going to take up is the SP loan. The purpose of this loan is to cater to short-term working capital requirement of farmers/ agricultural commodities processors like ginners and oil mill owners, etc., given against the stocks of commodities which the borrower has in the warehouse but cannot convert it into cash as the price parity is not there. Thus, the key activities herein are assessment of the creditworthiness of the borrower, decision on credit limit as per the case, valuation of the stock and warehouse management/ collateral management , disbursement of the loan amount and release of the stock.

Some Algorithms showing the process flow:

Process Flowchart for warehouse Receipt Financing

Borrower Loan Request (CWC/SWC)

Borrower Loan Request (CWC/SWC)

MIS AT HDFC: Management Information system is supposed to include Decision Support Systems, resource and people management applications,project management and database retrieval

applications.But for this product the focus is on decision support system and data maintenance and retrieval. There are two types of report being generated by MIS in use: 1.Exception Report: 1.Borrower Approval report. 2.Outstanding Report. 3.Closure report. 4.Deferral tracking Report. 2.Normal Report. 1.CAM Dattabase, 2.Price Margin3.Cap Margin 4.Disbursement Report, 5.RM Database 6.SP Database 7.SP Collateral Security Database The following are the key performance areas of MIS: 1. SALES: There is a need to keep a track of the sales of the loan with respect to the performance of the individual RMs and SPs.CAM database ,Borrower approval report,Disbursement report capture the relevant data for the same.Deferral tracking report,outstanding report and closure report capture data for the performance mapping of an SP from other things. 2. SERVICING: RM database,SP database and Deferral tracking reports are ,meant to capture data on the service component of the product and facilitate the bank to the concerned person so that unnecessary delay and inconvenience to the customer can be avoided while complying with the norms. 3. RISK MITIGATION: SP collateral security database, Price cap and margin along with Disbursement report, Outstanding Report and Closure Report are meant to capture data related to risk assessment of the client to ensure that at no point of time their financials move into a high risk category.

4. MONITORING: Disbursement report, outstanding report ,Closure report, Deferral tracking report are generated to ensure proper monitoring of the clients credit behavior and flow of funds. 5. PRODUCT DESIGN: This is one area which is not given ample attention by the existing MIS,despite banks objectives clearly listing it as apriority area.There should be a provision of generating a report by collating the credit needs of different categories of clients so that it can be used by the product team to come up with new loan products keeping in mind the banks norms and guidelines as well as the customers needs. IMPROVEMENTS PROPOSED: The nature of the credit need over here is such that there is a special requirement of the timely processing and disbursement of the loan. The completion in the banking and financial services industry is ,apart from other things ,time based competition. But the process of exception reporting while examining and verifying the application documents is not automated. It is done through emails and telephonic conversations which account for unnecessary delays in processing of the applications and in some cases it results not only in loss of customer but also creates bad vibes in the market. It is therefore ,proposed that the process of exception reporting during various stages of the application processing be automated so that reports are automatically generated and mailed to the applicant, concerned RMs and SPs for timely rectification/ explanation. This automation should also have a timeline for the processing of the application and once the timeline has elapsed ,a report should be generated mentioning the pending cases and sent to the persons concerned for speedy dispensation on a high priority. At the same time the reports of outstanding liabilities and deferrals like renewal of insurance ,etc should be mailed to the customer as well, once they have been generated mentioning the pending cases and sent to the persons concerned for speedy dispensation on a high priority . At the same time the reports of outstanding liabilities and deferrals like renewal of insurance etc should be mailed to the customer as well, once they have been generated by the system which is not being done so far. Customers are being informed by bank

officials after they receive the report and , and sometimes they do not get enough time to make the necessary arrangements. LIMITATIONS: 1.The nature of documents involved is such that there is a need to involve different departments having the necessary expertise and experience for verification /checking of different documents making it difficult to go for the complete automation of the process. 2.Banks tie up with insurance companies also poses a serious limitation to the automatic emailing and SMS alerts ,as done in retail banking by the name of INSTALERT,to the customer in case of deferrals and insurance lapses.The reason for this is that if the customer receives the automatic alerts then he may get his stock insurance renewed through some insurance player ,other than the one with which bank has a tie up.Perhaps ,he gets some monetary gain in terms of a lower premium or has a relatively high comfort level with the insurance agent in terms of service but bank has its own parameters and standards which the insurer must be aware of and follow strictly.For the same reason the bank would rather prefer to keep the insurance issue in its own hands and ensure that the insurance service provider with whom it has a tie up manages it. TEMPLATES: Following are the templates for the reports generated by the MIS for the SP loan: Price cap and margin: Serial Number Commodity Price cap Margin(%) Final date o repayment

CAM database: Serial Number Customer Id Clients name

Product Party entity RM name Zone CAM Number CAM expiry date CAM exten date

Disbursement Report: User ref Number Customer ID Value date Maturity Customer Name Insurance maturity date Finance account Number Amount REMARKS Outstanding Normal Interest Rate Personal Interest Rate SP ID SP Name Warehouse Code Commodity Code WHR no WHR amount WHR maturity Processing fee + service tax

Net loan amount Margin % Priority Code Product Code

Outstanding Report: Ref Number Customer ID Customer Name Value Date Maturity Date Status(PDO,Normal) Insurance Maturity Date Amount Remarks Outstanding Amount Normal and penal interest rate SP ID SP Name Warehouse Code Commodity Priority And Product Code

Closure Report: Ref Number Customer Customer Name Value Date Maturity Date ID

Remarks Component Normal And penal interest rate Liquidation Rate Priority and Product code SP ID SP Name Liquidation Amount

Reports: RM Database: RM name RM zone RM Contact No RM email Address SP Sanctioned Commodities SP Region SP state RM name ROI Processing Fee SP commission %

SP Database Serial Number SP name SP Contact Number SP address

SP code Amount Deferral Compliance date Deferral approved By RM name RM zone

Deferral Tracking Report Serial number SP name SP code Borrowers Name Deferral Taken Deferral Date

CONCLUSION: Thus would not be wrong to say that MIS is lifeblood of any organization enabling it to perform effectively and ensuring profitability. In case of a bank or a financial institution, it assumes a relatively higher importance because of compliance issues ,convenience of anytime and anywhere and the wide range of risks involved as more and more transactions and [processes become online. At the same time, with the way we do business which is undergoing a rapid change ,it is really a tough and challenging job to automate and structure the entire process flow especially in a product like credit facility which needs to be customized for different customers even if it is designed for the same purpose. Inspite of this automation of the information and process flow can reduce the risk and cost of credit to a great extent and catalyze the overall development of society. REFERENCES: Managing information systems- laudon and laudon Managing Information systems- Brian

Hdfcbank.com Internet Journals

_______________________________________________________________________