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Internship Interim Report

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Gairik Chakraborty
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24 views

Internship Interim Report

Uploaded by

Gairik Chakraborty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Summer Internship Interim Report

Title: Case Study on Retail Products Understanding

Submitted By:

Gairik Chakraborty
ROLL NO.: E064
DIVISION: E
SAP ID: 80512301262

Date: 30th April, 2024

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Retail Assets – Business Loans

HDFC’s retail assets portfolio consists of both secured and unsecured lending products such as
auto loans, personal loans, gold loans, loans against property and other retail loans.

HDFC Bank has attractive


business loan products up to
Rs. 50,00,000 which help the
Corporate or the SME
sector to start a new
business or to upgrade or
expand the operations of the
existing business. It provides
easy and access to secured and unsecured business loans to the borrowers at attractive rates
and minimal documentation that enable the organization to get timely loans for their businesses
and thereby safeguard their operations as well as enhance their position in the market.

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Factors affecting BL Interest Rates:

• Nature of Business: The business loan is


categorized depending on the nature of the
business namely non-priority sector and priority
sector.
• Years of Existence of the Business: Lenders
usually levy interest rates based on the sustenance
of the business. So, the longer the business has
been in existence, the higher your chances of
obtaining lower interest rates.
• Business Turnover: Lenders analyze the
profitability of the business before sanctioning a
business loan. The more profitable the business is,
the lender will have greater trust in your repayment
capacity.
• Credit Score: The credit score reflects how well
past loans have been paid back, and it affects the
business loan interest rate. A credit score of 700
and more is considered good.
• Collateral/Security: The more valuable the
collateral, the lower the business loan interest rate.
Real estate, equipment, machinery, deposits, and
home equity are all collateral.
• Type of Lender: Business loan interest rates
offered by public and private sector banks are
lower than those offered by NBFCs, SFBs, MFIs etc.

Credit Risk Assessment:

• Credit risk is the probability of a financial loss resulting from a borrower's failure to
repay a loan which results in an interruption of cash flows and increased costs for

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collection. Lenders can mitigate credit risk by analyzing factors about a borrower's
creditworthiness, such as their current debt load and income.

• Credit risks are calculated based on the borrower's overall ability to repay a loan
according to its original terms. To assess credit risk on a consumer loan, lenders often
look at the five C’s of credit: credit history, capacity to repay, capital, the loan's
conditions, and associated collateral.

• To estimate the cost of risk, lenders employ a multitude of information from the
borrower, the lender, and external parties such as credit agencies. Some measures,
such as credit scores and credit risk analysis models, are tools that allow lenders to
estimate their expected loss (EL) via the probability of default (PD), loss-given
default (LGD), and exposure at default (EAD).

Credit Bureaus:

A credit bureau collects and maintains a wide range of credit-related information on individuals
and businesses. It gathers data such as credit card usage, loans taken, overdraft facilities etc.
from various financial institutions like lending companies, data-collection agencies and
generates credit reports and scores, which reflect an individual or business’ creditworthiness,
including their repayment behaviour, default history, and debt-to-income ratio. Additionally,
information such as income tax records, timely payment of utility bills etc. may also be included.
In India, they are RBI authorized under Credit Information Companies (Regulation) Act, 2015.

Classification of Customers based on Credit Score:

• 851-900 (Excellent): Indicates a borrower with no payment defaults, considered low-


risk.
• 751-850 (Good): Favourable score showing strong credit history with timely payments.
• 651-750 (Average): Represents a balanced credit history with fair credit management.
• 501-650 (Poor): Indicates a higher risk level, potentially due to missed payments or high
credit utilization.
• 300-500 (Very poor): Reflects a bad credit history with defaults and difficulties in
obtaining credit.

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