EXECUTIVE SUMMARY

1
 EXECUTIVE SUMMARY

Title of the project

A study on factors influencing consumer durable loan for FMCD products

Objectives of the project

1. To increase the sale of Capital First for FMCD products.

2. To identify factors influencing consumer durable loan for FMCD product
3. To identify factors like low down payment, long tenure schemes, etc .
4. To learn the customer credit process.

Importance of project

1. To understand the consumer behaviour and to build strategies for the same.
2. To understand the marketing concepts and to apply those on field.
3. To better understand the loan procedure of consumer durable product at Capital First
Lending.
4. To Identify the needs of the customer and to sell the schemes accordingly

Research Methodology adopted

1. Customer survey (Questionnare method , Google forms ,etc )

2. Exploratory & descriptive research

Findings

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 1. SALES FORCE software used by capital first most of time it is out of service due to
which approval time of loan increases.
2. Most of customers experience high processing fees on digital product.
3. 75% customer perceived that 0% interest finance better than other payment mode.

Suggestion

1. Improve on its digital product financing, because processing fees on digital products is
very high (1250-2000)
2. Capital first update their existing software so that approval time can reduce.
3. Provide new down payment schemes. Because most of the customer wants low down
payment schemes.

Learnings

1. Decision making at critical situation.

2. Also understood how to calculate EMI & down payment for different schemes.
3. Doing business for company at the same time analyzing fraud customers & rejecting
them.
4. How to pitch the customer according to the needs of customer.

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INTRODUCTION

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THEORETICAL BACKGROUND

CONSUMER FINANCE:

The division of retail banking that deals with lending

The consumer finance is a win-win system in which everyone wins. For the consumers it is an
opportunity to upgrade standard of living here and now instead of waiting for years of Savings to
accumulate. For dealers it is one type of sales booting. For finance company it is profit
generation. Consumer finance has to do with the lending process that occurs between the
consumer and a lender. In some instances, the lender may be a bank or financial institution. At
other times, the lender may be a business that offers in house credit in exchange for the business
of the consumer. Consumer finance can include just about any type of lending activity that result
in the extension of credit to a consumer.

CONSUMER DURABLE FINANCE:

Consumer durable finance means to provide the finance on the consumer durable product like,
Washing machinist, TV etc. it is known as consumer durable Finance.

The consumer durable finance provide the 0% interest on durable product to the consumer, This
gives customers another compelling reason to opt for 0% interest Consumer Durables Finance
for their durables purchases. Consumer durables finance schemes are generally available at the
dealer location (point of sale) or the showroom. The beneficiaries are not just customers, lenders,
manufacturers, and retailers too benefit. Manufacturers gain from the resultant boost to sales and
increased consumer preference towards high-margin products. Financing schemes enable
customers, especially those with lower income levels, to use future income streams to buy
consumer products upfront and pay in installments over a period.

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The most popular finance scheme prevalent in the market currently is the 12/4 scheme, where the
financier collects the amount for the first four months as initial down payment from the
buyer and then disburses the full amount to the dealer. The financier then recovers the

balance amount in 8 monthly installments from the buyer. The interest and processing charges
are generally paid upfront by the manufacturer to the financier. Consumer durables financing
appears robust, continued support from manufacturers (who are effectively bearing the interest
costs currently)would be critical to sustain high growth.

ADVANTAGES OF PROJECT:

Schemes related to the consumer durable finance is always welcome by the customers.
Tracking methodology of customer is very smoothly (by using EMI card).
Provision of easy, simple and adequate credit.

DEFINITION OF BANK:

An establishment for custody of money, which it pays out on customer's order

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INDUSTRY/COMPANY OVERVIEW

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Industry overview:

India is expected to become the fifth largest consumer durables market in the world by 2025. The
consumer electronics market is expected to increase to USD 400billion by 2020. The production
is expected to reach USD 104 billion by 2016.The sector is expected to double at 14.7 per cent
compound annual growth rate(CAGR) to USD 12.5 billion in FY15 from USD 6.3billion in
FY10. Urban markets account for the major share (65 percent) of total revenues in the consumer
durables sector in the country. Demand in urban markets is expected to increase for non-essential
products such as LED TVs, laptops, split ACs and, beauty and wellness products. In rural
markets, durables like refrigerators as well as consumer electronic goods are likely to witness
growing demand in the coming years as the government plans to invest significantly in rural
electrification. The Government of India has increased liberalisation which has favoured foreign
direct investments (FDI). Also, policies such as National Electronics Mission and digitisation of
television and setting up of Electronic Hardware Technology Parks (EHTPs) is expected to boost
the growth of this sector.

The consumer durables market is anticipated to expand at a CAGR of 14.8 per cent to USD
12.5billion in FY15. Also, the demand from rural and semi-urban areas is projected to expand at
a CAGR of 25 per cent to USD 6.4 billion in FY15, with rural and semi-urban markets likely
contributing majorly to consumer durables sales.

Non-Banking Financial Companies (NBFCs)

Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian
financial system. It is a heterogeneous group of institutions ( other than commercial and co-
operative bank) performing financial intermediation in a variety of ways, like accepting deposits,

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making loans and advance, leasing hire purchase etc. They raise fund from the public, directly or
indirectly and lend them ultimate spenders. They advance loans to the various wholesale and
retail traders, small-scale industries and self-employed person. Thus, they have broadened and
diversified the range of products and services offered by a financial sector. Generally, they are
being recognized as complementary to the banking sector due to customer-oriented services,
simplified procedures, and attractive rate of return of deposits, flexibility and timeliness in
meeting the credit needs of specified sectors.

The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within
the framework of RBI Act, 1934.

As per the RBI Act a NBFCs is defined as

A financial institution which is company.

A non-banking institution which is company and which has as its principal business the
receiving of deposits under any scheme or arrangement or in any other manner or lending
in any manner.
Such other non-banking institutions or class of such institution as the bank may, with the
previous approval of the Central Government and by notification in the Official Gazette,
specify.

The type of NBFCs registered with RBI

Equipment leasing Company is any financial institution whose principal business is

that of leasing equipments or financing of such an activity.

Hire-purchase Company is any financial intermediary whose principal business is

relates to hire purchase transactions or financing of such transactions.

Loan Company - means any financial institution whose principal business is that of
providing finance, whether by making loans or advance or otherwise for any activity
other than its own.

Investment Company is any financial intermediary whose principal business is that of

buying and selling of securities.

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Now, these NBFCs have been reclassified into three categories

Asset finance company ( AFC )

AFC are financial institutions whose principal business is of financing physical assets
such as automobiles, tractors, construction equipments material handling equipment and
other machines.
E.g : Bajaj Auto Finance corp.

Investment Companies ( IC )
ICs generally are involved in the business of shares, stocks, bonds, debentures issued by
government or local authority that are marketable in nature.

Loan companies ( LC )
LC is loan giving companies which operate in the business of providing loans. These can
be housing loans, gold loans etc. E.g.: Manuapuram Gold Finance

NBFCs are different from Banks

NBFCs cannot accept demand deposits.

A NBFC cannot issue cheque, to their customers and is not a part of the payment and
settlement system
Deposit insurance facility of Deposit Insurance Credit Guarantee Corporation ( DICGC )
is not available for NBFC depositors
They cannot offer interest rates higher than the ceiling rate prescribed by RBI from time
to time
They cannot offer gifts or any other additional benefit to the depositors.
They should have minimum investment grade credit rating, from the credit rating
agencies.

GDP OF THE FINANCIAL SERVICE INDUSTRY

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TERTIARY SECTOR- When the activity involves providing intangible good like service
then this is part of the tertiary sector. Financial services, management consultancy, telephony and
IT are good example of service sector.

Sector wise Indian GDP composition in 2016 are as follows:

Real GDP growth or Gross Domestic Product (GDP) growth of India in the year 2015-16 is
estimated at 7.56 percent (the growth rate was 7.24 percent in 2014-15). India has registered
highest growth of 10.3% in 'Financial, real estate & professional services' sector

Industry (24.2%) and Services (57.9%). Total GDP of Industry sector is $495.62 billion and
world rank is 12. In Services sector, India world rank is 11 and GDP is $1185.79 billion.
Contribution of Industry and Services sector is lower than world's average 30.5% for Industry
sector and 63.5% for Services sector.

At previous methodology, composition of Industry, and Services sector was 14.16%, and
33.25%, respectively at current prices in 1950-51. Share of Services sector has improved to
57.03%. Share of Industry sector has also increased to 24.77%

THE SUCCESS FACTOR OF THE FINANCIAL SERVICE THAT WILL BE

REQUIRED TO SECCEED:

The operation of the NBFC

Team work & team management
How to handle criticism of the customers.
Relationship building at all levels in the organization
Decision Making at critical situation

Government Initiatives

Several measures have been outlined in the Union Budget 2014-15 that aim at reviving and
accelerating investment which, inter alia, include fiscal consolidation with emphasis on
expenditure reforms and continuation of fiscal reforms with rationalization of tax structure; fillip
to industry and infrastructure, fiscal incentives and concrete measures for transport, power, and

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other urban and rural infrastructure; measures for promotion of Foreign Direct Investment (FDI)
in selected sectors, including defence manufacturing and insurance; and, steps to augment low
cost long-term foreign borrowings by Indian companies. Fiscal reforms have been bolstered
further by the recent deregulation of diesel prices. The launch of Make in India global initiative
is intended to invite both domestic and foreign investors to invest in India. The aim of the
programme is to project India as an investment destination and develop, promote and market
India as a leading manufacturing destination and as a hub for design and information. The
programme further aims to radically improve the Ease of Doing Business, open FDI regime,
improve the quality of infrastructure and make India a globally competitive manufacturing
destination.

The Reserve Bank of India (RBI) has eased norms for mortgage guarantee companies (MGC)
enabling these firms to use contingency reserves to cover for the losses suffered by the mortgage
guarantee holders, without having to take approval of the apex bank. However, such a measure
can only be initiated if there is no single option left to recoup the losses.

Financial inclusion is among the topmost priorities of the Indian government. Exclusion of a
large number of people from access to financial services affects the growth of the country. Prime
Minister Mr NarendraModi launched the PradhanMantri Jan DhanYojana in August 2014. He
said that that the objective to cover 75,000,000 households with at least one account under the
Yojana will be achieved by January 26, 2015.

Retirement fund manager EPFO will launch its project to provide portable universal PF account
numbers (UAN) to its subscribers on October 16, 2014. Also, the government will launch unified
web portal LIN (Labour Identification Number) to simplify business regulations and bring in
transparency and accountability in labour inspections by agencies and bodies under the control of
the labour ministry.

The RBI has simplified the rules for credit to exporters. Now, exporters can get long-term
advance credit from banks for up to 10 years to service their contracts. The requirement is that
they have a satisfactory record of three years in order to get payments from the banks, which can
adjust the payments against future exports.

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Major Challenges for the Industry:

Heavy taxation in the country. At its present structure the total tax incidence in India
stands around 25-30 per cent, whereas the corresponding tariffs in other Asian countries
are between 7 and 17 per cent.
About 65% of the population lives in village and they are not well aware about consumer
durable 0% loan plan.
Poor infrastructure is another reason to held back the industry.
Squeezed by larger customers (principals) on delayed payment terms
Intense competition among players - leading to higher ad spends and lesser pricing
power, thereby lowering margins.
There are many fraud cases and the 3rd party risk.
Absence of adequate and timely supply of finance for working capital.
Limited Access to Equity Capital.

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 PORTERS FIVE FORCE MODEL

BARRIERS TO ENTRY: LOW

LICENSING REQUIREMENT:

The licensing requirements of RBI for NBFCs are not that stringent as compared to the banks.
There are already 12159 registered NBFCs while there are only around 180 banks in India.

BARGAINING POWER OF CONSUMERS: HIGH

MANY ALTERNATIVES:

The consumers have got many alternatives for availing credit.

Large number of NBFCs: The consumers have a large spectrum to choose from.

POTENTIAL THREAT OF SUBSTITUTES: MODERATE

1. BANKS: NBFCs were actually created by the government of India as it felt the need to
provide banking facilities to the poor and underprivileged who could not get access to banks.
Thus banks are a perfect substitute for NBFCs.
2. UNORGANIZED MONEY LENDERS: The unorganized money lenders have a strong
presence in the rural markets. They pose a big threat to the NBFCs in the rural areas.

BARGAINING POWER OF SUPPLIERS: HIGH

MANY ALTERNATIVES: The suppliers in this case are the depositors or the NBFCs
funds. The suppliers have many alternatives at their disposal to invest their money depending
on their risk appetite. E.g.: High risk: stocks, low risk: banks

INTENSITY OF RIVALRY: HIGH

1. UNDIFFERENTIATED SERVICES: The service offerings by NBFCs are almost the

same. Thus there is a low level of service differentiation.

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2. MARKETING STRATEGIES: Due to the increased rivalry among the NBFCs, there has
been use of aggressive selling & intensive marketing strategies by the companies to gain the
market share.

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 ABOUT THE COMPANY

Capital First Limited is a diversified non-banking financial company. It is engaged in the

business of financing. The Company focuses on six areas: Consumer Durable Loan, Small and
Medium Enterprises (SME) Loan, Loan against Property, Business Loan, Personal Loan and Two
Wheeler Loan. They Cross sale Insurance policy and extended warranty of Future Group& SBI
Credit Card.

Capital First Ltd. is a provider of financial service across consumer and wholesale businesses,
with aspirations to grow into a significant financial conglomerate.

Capital First Ltd. is a systemically important NBFC with record of consistent growth &
profitability. Capital First has a comprehensive product suite to meet multiple financial needs
of customers including Consumer Lending, Corporate Lending.

OVERVIEW

Capital first is a Non-Banking Finance Company listed on NSE and BSE, with a record of
consistent growth & profitability.
The company has consistently increased its MSME and Retail financing from 10% on March
31, 2010 to 84% as on March 31, 2015.
CFL has loan Asset under Management of Rs. 119.75 billion as on March 31, 2015.
CFL has a strong distribution setup across India covering customer at 222 towns with an
employee base of 1070 as on March 31, 2015.
The Capital Adequacy is 23.5% (post dividend) as on March 31, 2015.
The Gross and Net NPA of the Company stood at 0.69% and 0.17% respectively as on March
31, 2015.

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 The Companys long term credit rating (Bank Facilities, NCD and Subordinated Debt) is
rated highly at AA+ by rating agencies.

VISION:

To be a leading financial service provider, admired for high level of customer service, and
respected for our ethics, values and corporate governance.
To provide Micro, Small and Medium Enterprises in India with debt capital and services to
support the growth of the MSME sector.
To finance the growing consumption needs of the Indian consumers, which is driven by
increased affluence, growing aspirations and favorable demographics.

VALUES:

Responsibility:

We respect the fact that our investors have entrusted us with their capital, our partners with their
faith, our customers with their confidence and our employees with their aspirations. We will
measure our success by the success of our stakeholders and will work diligently to ensure that we
fulfill our fiduciary responsibility.

Integrity:

We firmly believe that the difference between a good business and a great organization is the
integrity of its people. We will conduct ourselves ethically and transparently in all our dealings,
both internal and external.

Leadership:

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We will maintain an environment which fosters creativity and encourages innovation. We believe
that this will enable us to attract, retain and nurture the best talent and develop the business and
thought leaders of tomorrow.

Mutual respect:

We will build an organization which has a positive mindset. By conducting every interaction
with respect and consideration, we will create a self-reinforcing culture of success.

Community:

We believe that it is our responsibility to contribute to the environment in which we operate. By

investing in our community, we will not only improve our surroundings today, but also provide
better opportunities for future generations.

CIBIL

Credit Information Bureau of India Ltd is a government organization which tracks the financial
transaction records of every citizen in India. CIBIL is a tool to measure the trustworthiness of
customer

Every finance institute has mandatory to inform every measure transaction of every customer.
Several guidelines are provided for the same. Credit rating of every customer is formed based on
the available transaction data. This data is shared with all financial institute to avoid the frauds in
the finance system.

Today everywhere PAN (Permanent Account Number) which given by Indian government is
necessary to link with all financial NBFCs. Recently we are also connected all these accounts
with Aadhar cards which is a Citizenship number in fact. So one kind of grid is formed which
will be useful to track every person. It was necessary for smooth working of financial institutions

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REGISTERED OFFICE & CORPORATE OFFICE

Capital First Ltd.

India Bulls Finance Centre,

Tower II, 15th floor,

Senapati Bapat Marg,

Elphinstone Road (W), Mumbai - 400 013

Board line: +91 (22) 4042 3400

PRODUCTS OFFERED BY THE COMPANY

Durable loan
Loan against property
Two wheeler loan
Business loan
Life Insurance
General Insurance
Wholesale Credit

PRODUCTS COVERED:

0% interest Consumer Durables Finance is available on a wide range of products and in over
101cities across India. Hereunder is an indicative list of products covered?

1) LED/LCD/CTV.
2) Washing Machines.
3) Microwave Ovens.

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4) Refrigerators.
5) Cameras/Camcorder.
6) Dishwashers.
7) Dryers.
8) Laptops / Desktops (Select).
9) Smart phones (Select).
10) Music Systems.
11) Air conditioners.

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 SWOT ANALYSIS

ANALYSIS OF NBFC:-

STRENGTHS:

1. Easy and fast appraisal and disbursement

2. Product innovation and superior delivery
3. Strong market penetration and increased operating efficiency
4. Collection efficiency

WEAKNESS

1. Too much of diversification from core business.

2. Increased regulatory coverage.
3. Volatile business environment.
4. Accounting norms requiring provisioning against non-performing assets.

OPPORTUNITY

1. Large untapped market both rural and urban and also geographically.
2. Tie-up with global financial sector giants.
3. New opportunities in credit cards, personal finance and home equity etc.
4. New technology to better meet their customer needs with new and improved product and
services.

THREATS

1. Competition from banks and financial institutions.

2. Restriction on deposit taking NBFCs.
3. Growing retail thrust within banks and competitions from unorganized money lenders.
4. Deterioration of asset quality and rising level of NPA.

OTHER PLAYERS (COMPETITORS)

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 Bajaj Finserv, a part of Bajaj Holdings & Investments Limited, is an Indian financial
services company focused on lending, asset management, wealth management and insurance.

The company through its joint ventures and subsidiaries employs over 20,000 employees and has
established a nationwide presence across over 1400 locations. The company is currently engaged
in consumer finance businesses, life insurance, and general insurance and has plans to expand its
business by offering a wide array of financial products and services in India.

With the 0% interest Consumer Durables Finance from Bajaj Finserv Lending, you dont
have to pay any interest whatsoever on the loan amount opted for. Simply divide the total amount
of purchase with the loan tenor opted for, pay a few installments upfront along with a nominal
processing fee and off you go with your favourite consumer durable. There are no hidden charges
whatosever.

Products Covered Under Finance Options:

LED Televisions
Refrigerators
Washing Machine
Laptops and Ultra books
Air conditioners
High End Audio and Home Theater Systems
Water purifiers
Tablets
Dishwashers
High End Camera and Lenses
Mobile Phones
Air purifiers

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 Tata Capital Limited was established in 2007 with the sole aim of providing focused and
transparent financial solutions to help people realize their dreams. Being a subsidiary of the
legendary Tata Sons Limited, we strive hard to make this happen.

Our pursuit gave birth to Tata Capital Financial Services Limited, a one-stop financial service
provider that caters to the diverse needs of retail, corporate and institutional customers across
businesses.

Registered with the Reserve Bank of India as a Systemically Important Non Deposit Accepting
Non Banking Financial Company (NBFC), the company operates across various areas of
business namely the Commercial Finance, Infrastructure Finance, Wealth Management,
Consumer Loans and distribution and marketing of Tata Cards.

Today, Tata Capital Financial Services Limited is 100 branches old and counting.

Tata Capital aims to bring the trust and expertise of the Tata Group to financial services, a
business that is both economically and socially relevant.

Products Covered Under Finance Options:

The product categories covered under our consumer durable loans are:
1. Flat screen television sets (LED/LCD/Plasma)
2. Washing Machines
3. Dryers
4. Refrigerators
5. Air Conditioners
6. Microwave Oven
7. Dishwashers
8. Laptops/Desktops (Above Rs.30,000)
9. Smart phones (Above Rs.20,000)

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 10. Music Systems

HDFC Bank is an Indian banking and financial services company headquartered

in Mumbai Maharashtra. It has about 87,555 employees. HDFC Bank is the second largest
private bank in India as measured by assets. It is the largest bank in India by market
capitalization as of February 2016. It was ranked 69th in 2016 BrandZTM Top 100 Most Valuable
Global Brands.

At HDFC Bank, we are aware of your varied needs and requirements. And so we present you
with offers that will add more luxury to your life without having a huge strain on your finances.
Upto 100% Funding
Upto 36 months Tenor for the loan
No blocking of Credit Card limits
Very Low EMI value leading to better cash flow management for customer
Great deals with complete transparency

Products Covered Under Finance Options:

LED Televisions
Refrigerators
Washing Machine
Laptops and Ultra books
Air conditioners
High End Audio and Home Theater Systems
Recliners

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 Tablets
Modular Kitchen
High End Camera and Lenses
Mobile Phones

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TASK UNDERTAKEN

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Task Undertaken
The project was to primarily focus on operations of Capital First Ltd for finance of consumer
durable products. This required a firsthand experience in understanding end to end process flow
for loans processing to payment disbursement.
Increase the market share of company by selling finance on Consumer durable to the
customer & increase the customer base for the company
Discussed about the Capital First EMI Card. Capital first lending company which is one
of the lending company they also make available EMI card option for loan.
I have worked on primary data as well as secondary data which was collected from
company annual report & internet articles.
I also have focused on the surrogates required for loan approval, which document are
necessary for approval of loan.
I was dealing with proper customer, provided them loans by completing their files and
getting the approval online from Capital First Ltd. Server called as Sales Force portal

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 APPRAISAL METHOD

THE PROCESS OF LOAN APPROVAL:-

1. Initially the documents are collected.

2. Then they have been verified through online government websites by the sales officer, if he
feels that the customer is fraud then he will not process it further.
3. Then data of such documents has been uploaded in the Portal.
4. Then software further checks the authentication of the documents.
5. Then the Software automatically get the CIBIL score of the customer from the credit
agencies or Government. If the CIBIL score is less than 650 then customer will not be able to
get the loan i.e. the application will be rejected.
6. If the customer has taken loan for the very first time then the CIBIL score will automatically
generates -1 score. Also the Loan application can be accepted or rejected on the basis of the
documents.
7. In the application form there are two process, the first process in which only basic
information of customer is required and in the second process the product details along with
scheme provided are required.
8. The scheme which has been provided in the application form can be changed but it cannot be
changed into special scheme.
9. Special Schemes are not provided to new customers. The scheme is only provided to the
customer with the consent of the dealer and sales officer.
10. After the application has been accepted. The customer is eligible for loan.
11. The customer cannot take the Product home until unless Delivery Advice has been generated
and handed over to the dealer.
12. On every Product there is a Regular Scheme of 12*4. Which means that down payment is 4
months of EMI + Extra Charges and 8 months is tenure which is deducted by ECS through
Bank Account.

FILE WORK

1. Firstly collect the carbon copy of all the original documents.

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2. Take the signature of that person who is taking the loan on the all carbon copy of original
documents for verification.
3. In file one additional application form are required

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 THE BASIC WORKFLOW OF THE LOAN APPROVAL

Customer Product Scheme

If accepted Application New

then Loan accepted / Application
approval rejected Login

Generating
Documentati Loan File
Delivery
on completion
Advice

Product Verifying
Delivery evreything

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 OVERALL PROCESS FLOW :
Customer walks into
the store to buy a
CD product

What product is the

customer
Planning to buy.

Ask customer if
N NO IF the scheme
he has a credit Ask
selected by
card customer if
customer is IF HVP
he has any
with >=1EMI
as down
YES payment
YES
Login under Normal
Programme
NO

Login under YE
Credit card
Surrogate Ask
Ask customer custom
programme Login under Debit
if he has an er for
card Surrogate
Electricity / credit
programme
Landline Bill? /debit
card

Min 1 Advance Login under Y

EMI,no 0 DP Single E
schemes Document-
Surrogate REJEC
programme
Min
Login under 20% to
CC/DC swipe
programme throug
h
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BASIC TYPES OF CREDIT:

These are types of credit which will be given in different modes. By understanding it you will be
to understand how credit will be helpful to individual to corporate world.

1. SERVICE CREDIT: Is a monthly payment for utilities such as telephone, gas,

electricity, and water. You often have to pay a deposit, and you may pay a late charge if your
payment is not on time.

2. LOANS: Loans can be for small or large amounts and for a few days or several years.
Money can be repaid in one lump sum or in several regular payments until the amount you
borrowed and the finance charges are paid in full. Loans can be secured or unsecured.

3. INSTALLMENT CREDIT: May be described as buying on time, financing through

the store or the easy payment plan. The borrower takes the goods home in exchange for a
promise to pay later. Cars, major appliances, and furniture are often purchased this way. You
usually sign a contract, make a down payment, and agree to pay the balance with a specified
number of equal payments called installments. The finance charges are included in the
payments. The item you purchase may be used as security for the Loan.

4. CREDIT CARDS: Are issued by individual retail stores, banks, or businesses. Using a
credit card can be the equivalent of an interest-free Loan- end of each month.-if you pay for
the use.

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 TYPES OF LOAN OR CREDIT:

Loans can be of two types fund base & non-fund base:

Fund Base includes:

Working Capital
Term Loan

Non-fund Base includes:

Letter of Credit
Bank Guarantee

BRIEF ABOUT THE TYPES OF LOANS:

A. FUND BASE:

WORKING CAPITAL:

The objective of running any industry is earning profits. An industry will require funds to acquire
fixed assets like land, building, plant, machinery, equipments, vehicles, tools etc., & also to
run the business i.e. its day-to-day operations.

Funds required for day to-day working will be to finance production & sales. For production,
funds are needed for purchase of raw materials/ stores/ fuel, for employment of labor, for power
charges etc. financing the sales by way of sundry debtors/ receivables.

Capital or funds required for an industry can therefore be bifurcated as fixed capital & working
capital. Working capital in this context is the excess of current assets over current liabilities. The
excess of current assets over current liabilities is treated as net, for storing finishing goods till

33
they are sold out & for working capital or liquid surplus & represents that portion of the working
capital, which has been provided from the long-Term source.

TERM LOAN:

A Term Loan is granted for a fixed T*erm of 3 years to 7 years intended normally for financing
fixed assets acquired with a repayment schedule normally not exceeding 8 years.

A Term Loan is a Loan granted for the purpose of capital assets, such as purchase of land,
construction of buildings, purchase of machinery, modernization, renovation or rationalization of
plant & repayable from out of the future earning of the enterprise in installments as per a
prearranged schedule.

From the above definition, the following differences between a Term Loan & the working capital
credit afforded by the IFCI Limited are apparent:

The purpose of the Term Loan is for acquisition of capital assets.

The Term Loan is an advance not repayable on demand but only in installments ranging over
a period of years.
The repayment of Term Loan is not out of sale proceeds of the goods & commodities,
whether given as security or not. The repayment should come out of the future cash accruals
from the activity of the unit.
The security is not the readily saleable goods & commodities but the fixed assets of the units.

It may thus be observed that the scope & operation of the Term Loans are entirely different from
those of the conventional working capital advances. IFCI limited commitment is for a long
period & the risk involved is greater. An element of risk is inherent in any type of Loan because
of the uncertainty of the repayment. Longer the duration of the credit, greater is the attendant
uncertainty of repayment & consequently the risk involved also becomes greater.

34
 However, it may be observed that Term Loans are not as lacking in liquidity as they appear to be.
These Loans are subject to a definite repayment programmed unlike short Term Loans for
working capital (especially the cash credits) which are being renewed year after year. Term
Loans would be repaid in a regular way from the anticipated income of the industry/ trade.

The repayment of a Term Loan depends on the future income of the borrowing unit. Hence, the
primary task of the bank before granting Term Loans is to assure itself that the anticipated
income from the unit would provide the necessary amount for the repayment of the Loan. This
will involve a detailed scrutiny of the scheme, its capital assets. Financial aspects, economic
aspects, technical aspects, a projection of future trends of outputs & sales & estimates of cost,
returns, flow of funds & profits.

B. NON-FUND BASE:

LETTER OF CREDIT:

The expectation of the seller of any goods or services is that he should get the payment
immediately on delivery of the same. This may not materialize if the seller & the buyer are at
different places (either within the same country or in different countries). The seller desires to
have an assurance for payment by the purchaser. At the same time the purchaser desires that the
amount should be paid only when the goods are actually received. Here arises the need of Letter
of Credit (LCs). The objective of LC is to provide a means of payment to the seller & the
delivery of goods & services to the buyer at the same time.

A Letter of Credit (LC) is an arrangement whereby a bank (the issuing bank) acting at the request
& on the instructions of the customer (the applicant) or on its own behalf.

35
 BANK GUARANTEES:

A contract of guarantee is defined as a contract to perform the promise or discharge the liability
of the third person in case of the default. The parties to the contract of guarantees are:

Applicant: The principal debtor person at whose request the guarantee is executed.
Beneficiary: Person to whom the guarantee is given & who can enforce it in case of default.
Guarantee: The person who undertakes to discharge the obligations of the applicant in case of
his default.
Thus, guarantee is a collateral contract, consequential to a main co applicant & the beneficiary.

PURPOSE OF BANK GUARANTEES

Bank Guarantees are used to for both preventive & remedial purposes. The guarantees executed
by banks comprise both performance guarantees & financial guarantees. The guarantees are
structured according to the Terms of agreement, viz., security, maturity & purpose.

Branches may issue guarantees generally for the following purposes:

a) In lieu of security deposit/earnest money deposit for participating in tenders.

b) Mobilization advance or advance money before commencement of the project by the contractor
& for money to be received in various stages like plant layout, design/drawings in project
finance.
c) In respect of raw materials supplies or for advances by the buyers.
d) In respect of due performance of specific contracts by the borrowers & for obtaining full
payment of the bills

36
 LOAN CRITERIA

No Loan if Age < 21

AGE CRITERIA years

No Loan if Age > 65

years

Minimum Funding Value

CD LOAN AMOUNT Amount Rs. 8,000
CRITERIA
Maximum Funding Value
Amount Rs. 5, 00,000

Note:

Asset cost = is the Loan Amount

Funding Value = Loan Amount Margin Money/Down Payment.

There are following things which are considered:

1. CFLs decision system works on scorecard customised for CFL by Trans Union.
2.
37
3. CFL approves CD customers for both CIBIL Hit as well as No Hit.
4. All the customers are assigned a custom TU score for decision.
5. For CIBIL No Hit customers, up to a certain custom score CFL approves without any
additional document requirement. Only for customers below a certain score band, the cases
get approved under Landline bill / Electricity bill or Debit card surrogate.

TRANS UNION PROGRAM:

All the CIBIL Hit and CIBIL No Hit Applications approved through the Normal TU
Program.
CIBIL Score and other demographic information are the underlying parameters basis which
Custom Scores are arrived at.

38
 CUSTOMER TYPE

There are basically two types of Customers:

1. CIBIL Hit.
2. CIBIL Not Hit.

CIBIL HIT Digital Products Non Digital Products

Age >= 25 years 21 years

Funding value <= Rs. 50000* Rs. 150000

RV applicable YES, RV is mandatory for all digital YES (above 1 Lakh funding value)
products. Its waived off where key
identifiers match with the CIR

* Above 50k funding value for CIBIL Hit digital, moves into CO queue. Above 1 Lakh funding
value for non-digital, hit also moves into CO queue.

CIBIL HIT Programs: Credit Card, HVP, and Trans Union.

CIBIL NOT HIT Digital Products Non Digital Products

Age >= Cannot fund Digital Products for NO25 years (21 to 25 years with debit
HIT Customers card )
Funding value <= Cannot fund Digital Products for NORs. 50,000
HIT Customers
RV applicable Cannot fund Digital Products for NONo RV, Only TVR
HIT Customers

39
CIBIL NO HIT Programs: Trans Union Program, Debit Card, Landline Surrogate, Electricity bill
Surrogate.

40
 QUALIFYING THE CUSTOMER

S.No Questions to be asked Customer Reply SO Actionable Remarks

Instant Approval
Panel above 1.5 Refer HVP
What Product are you with Higher
Q1 lacs Program Details
planning to purchase? Funding Value
Any Other Product Ask Question 2 -
Login under Credit Approval Rates
Yes
Q2 Do you have Credit Card Card Surrogate close to 99%
No Ask Question 3 -
Will be a CIBIL
Hit customer and
Login in under TU
Have you availed any Loan Yes higher chances of
Q3 Program
in the past case getting
Approved
No Ask Question 4 -
Since a No CIBIL
HIT customer,
might be approved
under Single
Document
Do you have a Landline Login in under TU
Yes Surrogate. SO
Q4 Bill, Electricity Bill or a Program
needs to capture
Debit Card?
details like PAN,
Passport ID to get
better approval
rates.
No Ask Question 4 -
Login in under TU
Is the customer above 25 Yes -
Q5 Program
yrs. of age?
No Reject -

CFL VS COMPETITORS

41
 Repayment through Cooperative Banks are allowed.
TA interest free period is for 30 days; competition offers only for 21 days.
While competitor offers Dealer Direct Funding, our TA facility is like working capital
finance, which can be used for any business purpose but in case of competitors, there is
limitation of funds being utilized only for a particular manufacturer and only for CD
purchases.
Minimum down payment under Credit Card program is only Re.1 (against a minimum of Rs.
5000 or actual DP in competition) This helps to save the charges of 2.5% on credit card
down payment, which is either borne by the dealer or passed on to the customer.
Higher funding limits for High Value Panels Funding up to Rs. 5 Lakhs.
No classification of Dealer Counters basis volume and vintage Hence a customer is eligible
for the same loan amount at any dealer outlets, unlike competition, where counters are
allotted differential funding limits basis association.
Schemes with higher tenor are available to the customer.
Customer can avail a loan at any given time (subject to only 3 active loans), unlike
competition, where the next case can be logged in only after a lead time of 3 months.
Approval is based on multi-factor based scorecard parameters (in competition, CIBIL <750 is
rejected upfront and CIBIL 0,-1 is approved subject to Deduce match and stringent checks).
DBD and Processing Fees on Vanilla Schemes are more competitive than that offered to the
customer by Competition.

42
OBJECTIVES

43
 OBJECTIVES OF PROJECT

1. To identify factors influencing consumer durable loan for FMCD

product
2. To learn the customer credit process.
3. To identify factors like low down payment, long tenure schemes,
approval time etc which influence the consumer durable loan for
FMCD products.

44
RESEARCH METHODOLOGY

45
 RESEARCH METHODOLOGY

INTRODUCTION:
The system of collecting and processing of data for project is known as methodology. The study
is made on basis of secondary data. The annual data of firm also play a vital role in collecting
necessary information. Information is collected with the help of two sources-

Data Collection Technique:

To understand the organizational body, I gathered the information through following ways: -

DATA COLLECTION

PRIMARY DATA
SECONDARY
DATA

Primary Data:

It is the information which is collected from finance department for further studies. It was mainly
through interview with concerned officer and staff.

Secondary Data:

Secondary data is published data. It is already available and save time. The main source of
secondary data is Market Survey, government publication, advertising research report etc.

46
Descriptive research

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 (what are the characteristics of the population or situation being
studied?) The characteristics used to describe the situation or population are usually some kind of
categorical scheme also known as descriptive categories.

Exploratory Research

It is research conducted for a problem that has not been clearly defined. It often occurs before
we know enough to make conceptual distinctions or to posit
an explanatory relationship. Exploratory research helps determine the best research design,
data-collection method and selection of subjects.

SAMPLING

The actual sampling is a separate and important stages in the research process. Sampling
involves procedures that use a small number of items or parts of the population to make
conclusion regarding the world population.

In my study my Sampling units were the consumers who were

interested in consumer durables loan.

Sample Size

During Summer Internship the sample size taken was 120 customers.

General information

In 60 days of my training, I worked in Vijay sales, Pune station which was one of the hot counter
for sale electronic appliances My work was to meet the customer and convert them to purchase
the financial loan. I use to sit in electronics dealership suggested by my mentor to increase the
finance and sale the product in loan not in cash.

47
USE OF SOFTWARE: - Company use one software particular to provide finance to its
customers. They use portal called Sales Force. The portal can only be accessed through the
link, which was only provided to Sales officer and Sales Manager i.e. you cannot open the portal
by searching it on any search engine and even in capital first website. The Dealer also does not
have access to the Sales Force.

With the help of Sales Force the company analyze the customer and verify
the customer documents:-

a) Customer past performance of loan payments.

b) Customer Income.
c) Customer actual Data.
d) Customer Home Address.
e) Their Active Mobile Numbers.
f) Customer Bank account Detail.

48
DATA ANALYSIS &
INTERPRETATION

49
 GENDER
A) Male
B) Female

TABLE: 1 GENDER
Particular No of observation Percentage
Male 96 80
Female 24 20

FIGURE: 1

Interpretation:
Out of 120 respondents the following observation

96 are male customers

24 are female customers

50
AGE OF RESPONDENT

A) 23-30yrs C) 40-50yrs
B) 30-40ys D) 50-64yrs

TABLE: 2 AGE OF RESPONDENT

Particular No. of Observation Percentage
23-30yrs 65 54
30-40yrs 34 29
40-50yrs 7 6
50-64yrs 14 11

Interpretation:
Out of all respondent these are the following data

1. 54.29% respondents who fall in the age of 23-30 year.

2. 28.57% respondents who fall in the age of 30-40 year
3. 11.43% respondents who fall in the age of 40-50year.
4. 5.71% respondents who fall in age of 50-65 year.

Form this pie Chart we can say that respondent age fall between 23to 40 year they prefer finance.

PROFESSION OF RESPONDENT

A) Salaried B) Employed

TABLE: 3 PROFESSION OF RESPONDENT

51
 Particulars No. of Observation Percentage
Salaried 106 89
Employed 14 11

Interpretation:
Out of all the respondents that I have provided loan during my two months training. I have found
out the following things:

1. 88.57% respondents are salaried

2. 11.43% respondents are self employed
This show that salaried people prefer taking finance as compare to self-employed people
According to my observation in store self-employed are majority from lower middle class
Some of whom do not have credit/debit card and there CIBIL score is very less.
INCOME

A) 0-1.5lakh
B) 1.5-3lakh
C) 3-5lakh

TABLE: 4 CUSTOMER INCOME ANALYSIS

Particular No of Observation Percentage
0-1.5lakh 14 11

52
 1.5-3lakh 56 47
3-5lakh 50 42

Income

11% 0-1.5
1.5-3
42% 3-5 lakh

47%

Interpretation:
Out of all the respondent that I have provided loan during my 2 months training. Three type of
income groups of customer have been found:

1. 42% of customers consist of Income having between 3.00 lakhs 5.00 lakhs.
2. 47% of customers consist of Income having between 1.5 lakhs 3.00 lakhs.
3. Only 11 % customers were there which have an income between 0.00 1.50 lakhs.

QUES 1) HOW DO TOU KNOW ABOUT CAPITAL FIRTST?

A) NEWSPAPER C) BILLBOARD
B) STAFF D) INTERNET

TABLE: 5 HOW DO YOU KNOW ABOUT CAPITAL FIRST?

Particular No. Of Respondent Percentage
Newspaper 20 17
Staff 69 57
Billboard 8 7

53
Internet 23 19

INTERPRETATION
Out of 120 consumer perceived-

57% know about Capital First through Staff.

19% know about Capital First through internet.

17% know about Capital First through newspaper.

7% know about Capital First through billboard

QUES 2) What are you preferences while availing loan?

A) Low DP E) Approval Time
B) EMI card F) Processing Fees
C) Extended Warranty G) Ease of Documentation
D) Long tenure schemes

TABLE : 6 Customer Preference

Particular No of Respondent Percentage

Low DP 112 93
EMI card 88 73
Extended Warranty 12 10
Long Tenure Schemes 70 58
Approval Time 15 12
Processing Fees 76 63

54
 Ease of Documentation 17 14

CUSTOMER PREFERENCES
120
100
80
60
40
20
0

CUSTOMER PREFERENCES

INTERPRETATION
1. 93% customer prefer low down payment schemes, 73% prefer EMI cards as a extra
benefits, 63% prefer that processing fees should be less.

2. 58% prefer attractive schemes such as long tenure schemes thats is 12 to 20 months,
14% prefer ease of documentation, 12% prefer that processing fees should be less.

QUES3) DOCUMENT NEEDED BY CAPITAL FIRST IS?

A) VERY HIGH
B) ADEQUATE
C) LESS

TABLE: 7 Documents needed by Capital First is

Particular No. Of Respondent Percentage
Very High 4 3
Adequate 112 94
Less 4 3

55
INTERPRETATION

94.29% respondents perceived that documents needed by Capital First were adequate.

2.85% respondents perceived that documents needed by Capital First were very high.

2.86%respondents perceived that documents needed by Capital First were less.

QUES4) Do you think that capital first is flexible?

A) YES
B) NO

TABLE : 8 Do you think that capital first is flexible?

Particular No. Of Respondent Percentage
Yes 75 63
No 45 37

56
 INTERPRETATION
62.86% consumers percieved that Capital First is flexible.

37.14% consumers percieved that Capital First is flexible.

QUES5) What approval time did you experience?

A) 5-10 min C) 15-20 min
B) 10-15 min D) 20-30 min

TABLE : 9 Experience of Approval Time

Particulars No. Of Respondent Percentage
5-10 min 28 23
10-15 min 24 20
15-20 min 28 23
20-30 min 40 34

57
Interpretation:

These are following observation-

1. 22.86% respondents experience 5-10 min approval time.

2. 20% respondents experience 15-20 min approval time.
3. 22.86% respondents experience 15-20 min approval time.
4. 34.29% respondents experience 20-30 min approval time.
Generally most of respondents experience 15-30 min time. Capital First system
responsiveness is not good most of time. Most of the time system is out of service.

Suggestion given by customer?

Most of the customers replied that time of processing should be less. 0% finance schemes should
be provided on maximum products. Few customers were irritated due to Non delivery of Capital
First card & they also asked that what other benefits will we get after purchase your card? Few
customers were doubtful about OTP method. Some complained about processing time &
signatures.

58
59
FINDINGS & SUGGESTION

60
 FINDING AND CONCLUSION

1. SALES FORCE software used by Capital First most of time it is out of service due to which
approval time of loan increases i.e 34.29% respondend experience 20-30 min approval time .

2. 93% customer prefer low down payment schemes, 73% prefer EMI cards as a extra
benefits, 63% prefer that processing fees should be less, 58% prefer attractive schemes such
as long tenure schemes thats is 12 to 20 months, 14% prefer ease of documentation, 12%
prefer that processing fees should be less.

3. 62.86% customer believe that capital first is flexible.

4. Most of customers experience high processing fees on digital product such as laptop
customer did not want to pay 1250-2000rs processing fees.

5. 54.29% customers who take CD loan fall in age of 23-30years and 28.57% customer fall in
the age of 30-40 years

6. 88.57% existing customers are salaried and 11.43% customers are self employed

7. 57% know about capital first through staff, 19% know about capital first through
internet,17% know about capital first through newspaper, 7% know about capital first
through billboard.

8. 75% customer perceived that 0% interest finance better than other payment mode

SUGGESTION

During my sip, I felt some of the things that CFL should do in order to achieve more growth than
its biggest competitor BAJAJ Finserv

61
1. Improve on its digital product financing, because processing fees is high in digital
products.
2. Provide new down payment schemes with less down payment charges. As 90% of
customer consist of income having between 1.5lakh-5lakh.
3. Provide attractive schemes such as long tenure schemes.
4. Capital First should promote there attractive schemes in local newspapers and online
portals
5. Capital First update their existing software so that approval time can reduce.
6. Most of customers are unclear on terms of loans. Company should deal with better
transparency

62
63
 LEARNING & CONTRIBUTIONLEARNINGS

1. Understood process of loan life cycle

2. Maintaining good relationship with customers and sales man.

3. Understood whom to finance & whom to not.

4. Basic understanding of different types of frauds happening in the financing.

5. Working for different customer types.

6. Doing business for company at the same time analyzing fraud customers & rejecting them.

7. Basic Credit appraisal process for loan financing.

8. Decision making at critical situation.

9. Also understood how to calculate EMI & down payment for different schemes.
10. Doing business for company at the same time analyzing fraud customers & rejecting them.
11. How to pitch the customer according to the needs of customer.

CONTRIBUTIONS

1. Increased productivity to double growth rate.

2. Gave suggestions to improve the business by introducing new prices for digital segments
finance.

3. Increase the database of customer for future reference of the organization.

4. Converted rival organization customer into our customer which further increases the
customer database.

64
65
ANNEXURE

66
ANNEXTURE

This Questionaire is an attempt to understand consumer satisfaction while availing loan,all

information is provided will kept confidential and will be use for project purpose only.

Name-

Age of Respondent

(a) 23-30 yrs

(b) 31-35yrs

(c) 36-45yrs

(d) 46-65yrs

Profession of Respondent

(a) Employed

(b) Self Employed

What is your annual income?

(A) Up to Rs1.5 lakh

(B) Between Rs1.5 and 3 lakh
(C) Between Rs3 and 5 lakh
(D) Above Rs5 lakh

(1) How do you know about capital first

(a) Newspaper

(b) Staff

(c)Billboard

(d)Internet

67
(2) What preference do you give to the following attributes while availing loan?

(a) Low DP

(b) EMI card

(c) Extended Warranty

(d) Long Tenure Schemes

(e) Approval time

(f) Processing fees

(g) Ease of documentation

(3) What approval time did you experience?

(a) 5-10min

(b)10-15min

(c) 15-20min

(d)20-30min

(4) According to you documents needed by Capital First is

(a)Very high

(b) Adequate

(c) Less

(5) Limit of capital EMI card is

(a) Sufficient ( b) Not sufficient

(5)Do you think that 0% interest finance have any hidden cost apart from manufacturing fees and
service tax?

(a) Yes (b) No

68
(6)Do you think that capital first is flexible?

(a) Yes (b) No

(7) Is processing fees charged by Capital First while availing loan is competitive?

(a) Yes (b) No

(8) Is 0% interest finance much better than other payment mode?

(a) Yes (b) No

69
 REFERNCES

Board member (2016), retrieved june 18 , 2016 from capital

first http://www.capfirst.com/board-members.
Capital First 2016 retrieved june 19, 2016 from money control
http://www.moneycontrol.com/india/stockpricequote/finance-
general/capitalfirst/FCH
Company facts Bajaj Finserv 2016 retrieved june 7 ,2016
money control
http://www.moneycontrol.com/india/stockpricequote/finance-
investments/bajajfinserv/BF04
History of Capital First is retrieved from Capital First website
http://www.capfirst.com/about-us
Organization structure 2016 retrieved june ,12 2016 from
Capital First http://www.capfirst.com/pdfs/investor-
relations/Capital%20First%20Corporate%20Presentation
%20Q1FY16.pdf
Annual report of Capital First
http://www.capfirst.com/pdfs/investor- relations/Capital%20First
%20Corporate%20Presentation%20Q1FY16.pdf
Referred book PHILIP KOTLER to understand various
marketing concept.

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0

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