cash credit system of hdfc bank

7/29/2019 Cash Credit System of HDFC Bank

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Submitted to:

Dr. Sandeep Singh Virdi

Submitted by:Loveleen Kaur Mangat

Roll no. 120426005

M.B.A 3rd semester


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COMMERCIAL BANKS are concerned with

accepting deposits of money from the public at

large, repayable on demand or otherwise andwithdraw able by cheques , drafts and employing

the deposits in the form of loans and investment

to meet the financial needs of business and other

classes of society.


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The functions of a commercial banks aredivided into two categories:

i) Primary functions, and

ii) Secondary functions


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The primary functions of a commercial bank

include:

a) accepting deposits; andb) granting loans and advances


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Issuing letters of credit, circular notes etc.

Undertaking safe custody of valuables, important documents,

and securities by providing safe deposit vaults or lockers;

Providing customers with facilities of foreign exchange.


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Standing guarantee on behalf of its customers,

for making payments for purchase of goods,

machinery, vehicles etc.

Issuing demand drafts and pay orders; and,

Providing reports on the credit worthiness of

customers.


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HDFC Bank was incorporated in August 1994

The Bank started operations as a scheduledcommercial bank in January 1995 under theRBIs liberalization policies

Registered office in Mumbai, India

HDFC Bank is one of the Big Four banks ofIndia, along with: State Bank of India, ICICIBankand Punjab National Bank.
http://en.wikipedia.org/wiki/Big_Four_(banks)http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Big_Four_(banks)http://en.wikipedia.org/wiki/Big_Four_(banks)http://en.wikipedia.org/wiki/Big_Four_(banks)http://en.wikipedia.org/wiki/Big_Four_(banks)http://en.wikipedia.org/wiki/Big_Four_(banks)


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HDFC Bank's mission is to be a World-Class IndianBank. The objective is to build sound customerfranchises across distinct businesses so as to be the

preferred provider of banking services for target

retail and wholesale customer segments, and toachieve healthy growth in profitability, consistentwith the bank's risk appetite. The bank is committedto maintain the highest level of ethical standards,

professional integrity, corporate governance andregulatory compliance. HDFC Bank's business

philosophy is based on four core values -Operational Excellence, Customer Focus, ProductLeadership and People


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HDFC Bank has always prided itself on a highlyautomated environment, be it in terms of informationtechnology or communication systems. All the branches

of the bank boast of online connectivity with the other,ensuring speedy funds transfer for the clients. At thesame time, the bank's branch network and AutomatedTeller Machines (ATMs) allow multi-branch access to

retail clients. The bank makes use of its up-to-datetechnology, along with market position and expertise, tocreate a competitive advantage and build market share.


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The borrowing capacity provided to an

individual by the banking system, in the form

of credit or a loan is known as a bank credit.The total bank credit the individual has is the

sum of the borrowing capacity each lender

bank provides to the individual.


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Bank in India provide mainly short term credit forfinancing working capital needs although, as will beseen subsequently, the term loans have increased overthe years. The various types of advances provide by

them are:

RETAIL LOANS

WORKING CAPITAL / CASH CREDIT

TERM LOANS

BILL DISCOUNTING

EXPORT FINANCE


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The banker fixes a limit for a customer, called the

cash credit limit.

This Limit is given to meet working capitalrequirements of the company on the basis on

company turnover, company financials, value of

stock having by company. This loan given against

collateral security i.e.: Residence, Industrial orCommercial Property.

A limit is given in current account where the client

can withdraw amount upto the limit sanctioned.


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Flexibility

Operative convenience

WEAKNESS OF THE CASH CREDIT

SYSTEM:

Fixation of Credit limits

Bank's inability to verify the end use of funds

Lack of proper management of funds


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Limits start from Rs. 10.00 lacs & above.

The loans are generally approved within 15

working days of submission of completedocumentation.

The interest charged only on the utilized amount.

No minimum Monthly repayment required This loan can be used for business purpose only


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Research Methodology is a way to systematically solve the

problem. It may be understood as a science of studying how

research is done scientifically.

OBJECTIVES OF STUDY:

1.To know in detail about the techniques and process of

lending credit by bank.

2.To know about the awareness of cash credit limit in public


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Research Design: - Descriptive

Descriptive research aims at describing thecharacteristics of particular individual, or group

with specific narration of facts, characteristics

and situation.

Geographical Area: Machhiwara

Sample unit: Money lenders

Sample size: 20


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Data Collection:-

Research is based on both primary &secondary data

Primary data:-

o Making enquires from the money lenders.

o Visiting bank for information regarding cash credit system.

Secondary data: -

It is taken from the companys website and the HDFC bankbrouchers.

Data Analysis and Interpretation method:-

In this tabulation method is used to analyze the data.

Tools and techniques:Various statistical tools have been applied:

percentages ,

Pie charts


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Every work has its own limitations. Limitations of thisproject are:

The project was constrained by time limit oftwo months.

Mindset of people may vary depending upon theirage, income etc.

Getting appointment from the concern person wasvery difficult.

Respondents were very busy in their schedule. So itwas very time consuming for information & positiveinteraction, them to answer all the questions

properly.


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15%

75%

10%

1.VINTAGE ( NO. OF YEARS OLD)

less than 10 years

between 10 and 30

years

more than 30 years


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35%

45%

20%

2.ANNUAL SALES

less than 3 crores

more than 3 crores but

less than 5 crores

more than 5 crores


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35%

20%10%

35%

3.BANKING PREFERENCE

oriental bank ofcommerce (OBC)

bank of india

state bank of india

bank of baroda


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100%

0%

4.ANY LIMIT OR TERM LOAN

yes

no


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100%

0%

5.AWARE OF ALL THE CHARGES LEVIEDINTO CURRENT ACCOUNT:

yes

no


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100%

0%

6.SATISFIED WITH THE BANK SERVICES

yes

no


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75%

25%

7.NUMBER OF FARMERS DOING BANKINGWITH SAME BANK AS OF YOU:

yes

no


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100%

0%

8.BANK WITH PRIVATE BANKS :

yes

no


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10%

25%

65%

9. SHIFT TO PRIVATE BANKS OF BETTERRATES AND SERVICES:

already banking

want to shift

don't want to shift


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50%

40%

10%

10.NUMBER OF FARMERS ASSOCIATEDWITH YOU:

Less Than100

More Than 100 But

Less Than 200

More Than 300


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20%

20%

25%

30%

5%

11.ASSOCIATION WITH AGENCY:

FCI

PUNGRAIN

MARKFED

WAREHOUSE

PUNJABI AGRO


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60%

40%

10. AGENCIES PAY COMMISSION:

through cheques

through rtgs


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More number of commission agents are performingbetween 10 and 30 years

Majority of commission agents have annual sale ofmore than 3 crores but less than 5 crores and othershave annual sale of less than 3 crores but only few

commission agents have annual sale of more than 5crores.

Same numbers of commission agents are banking inOBC (Oriental Bank Of Commerce) and Bank ofBaroda and others are banking with BOI (Bank of

India), SBI (State Bank of India). All commission agents have limit or term loan.

All commission agents are satisfied with their bankservices.


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All commission agents are aware of all the chargeslevied into their current account.

All commission agents also bank with private banks.

Major numbers of commission agents dont want toshift their banking with private banks of better rates andservices only few commission agents want to shift to

private banks.

Only few commission agents are associated with morethan three hundred farmers and major numbers ofcommission agents are associated with less than hundredfarmers.

Same numbers of commission agents are associated

with FCI and PUNGRAIN, whereas other commissionagents are associated with MARKFED and PUNJABIAGRO.

Majority of agencies pay commission through chequesand fewer agencies pay through RTGS.


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Banks work on capturing faith of the existing

customers. They should work on growing the

existing customers. Better cash credit software can help in growing

the existing customers, increasing the customer

base, acquiring new customers.

Banks need to implement a more effective cash

credit which shares relevant customer information

across all interface units.


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Cash credit system is the most convenient fromthe point of the borrower as this provides himthe maximum flexibility by allowing withdrawaland repayments at his convenience. Interest ischarged only on the utilized amount. However, acommitment charge is levied on the unutilizedlimits as the bank is committed to providing himfinancing when called upon.

Customize cash credit to a high degree so that

banks are able to handle a rapidly scaling callworkload without any disruption in services andallow call centre agents to have an alwaysconnected view of the database.


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Bank lending process in case of cash credit limitis very much fast after compiling with all thecriteria of bank.

It is extremely important for lender bank to

assess the risk associated with credit, therebyensure the security for fund deposited bydepositors.

In case of retail lending, bank strictly follow itscircular and fulfils all requirement of necessarydocuments required for different types of loan sothat bank do not suffer any types of loss.


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Banks need to find and implement the

implementation tools to support interactivesolutions for customer profitability analysis,

customer segmentation, customer problem solving,

and measuring cash credit performance would be

the next level of solution sought by mostenterprises.

It is on basis of credit risk level, a collateral

security to be given by borrower is determined.


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cash credit system of hdfc bank

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