DEMAND AND SUPPLY

INTRODUCTION
The demand and supply analysis of a company shows the products that it supplies
to the market and what products are most demanded by the consumers. HBL, being o
ne of the largest banks in Pakistan, provides various types of Loan Facilities.
Here, we look at the major loan types, the most popular loan, different conditio
ns and interest rates associated with several loan types.
MAJOR LOAN TYPES
There are many different types of loans provided by HBL, the most demanded of wh
ich are the following:
AUTO LOAN
This, as the name implies, is a type of loan consumers avail to purchase new or
used automobile vehicles. This is also the most demanded loan product from HBL.
It can be broken down into two segments, where one is the regular Car Loan and t
he other being called “HBL CarToCar.”
PERSONAL LOAN
This loan is not backed by any security. Individual customers, who are account h
olders at HBL can avail this service. HBL provides its customers with Personal L
oans of from Rupees Twenty Five Thousand (Rs. 25,000) up to Rupees Two Million (
Rs. 2,000,000) over a payback period ranging from 12 – 60 months. The loan availed
can be up to ten times the salary of the individual.
HBL has made the repayment of this loan easy. On the due date the installment am
ount is automatically deducted from the individual’s account.
EASY LOAN
This loan is a security collaborated loan. Customers can avail this facility by
depositing National Savings Certificates as Security Deposits. These National Sa
vings Certificates can be in the form of Defense Saving Certificates (DSC), Spec
ial Savings Certificates (SSC), or Regular Income Certificates (RIC). Foreign Cu
rrency can also be used as Security Deposit, where the bank freezes the amount i
n the account. This loan can be availed by customers who are not willing to cash
the National Savings Certificates or the foreign currency.
Since “Easy Loan” is a Security Collaborated Loan, financing can be up to Rs. 100 Mi
llion over a payback period of 5 years.
AUTO LOAN
Auto Loan can be defined as the loan taken from the bank to purchase a car. At H
BL, the ownership of the car is detained by the bank until all due payments are
cleared.
Since car owners are increasing day by day and HBL is providing very competitive
markup rates in the market, Auto Loan is the most popular service by HBL.
There are two categories in the Auto Loan section. One is known as Car Loan and
the other is called HBL CarToCar.
CAR LOAN
This facility is like the service most leasing companies offer. The bank purchas
es the vehicle and holds the ownership. The customer is required to pay the agre
ed upon amount by a certain date and the ownership is transferred to the custome
r at the end of the leasing period.
HBL provides very competitive markup rates of around 19%. These rates are consid
ered flat for the whole leasing term. The customer can avail to finance a maximu
m of 85% of the price of the automobile and has to pay a minimum 15% as down pay
ment.
HBL CARTOCAR
This is a special facility provided by HBL where the bank finances part of the a
utomobile price and takes the car back at the end of the leasing period. The pri
ce financed depends on the depreciation value of the vehicle and upon the leasin
g time period. This enables the customers to continuously change their cars afte
r a certain time period.
Competitive markup rate of 19% is provided for this facility also but lease inst
allments are cut down by 40% to 50% as compared to the regular car loan.
At the end of the lease agreement the customer has four options to choose from
• Upgrade: Surrender the old one and lease a new one
• Surrender the old car
• Buy the same car from the bank
• Sell the car in the market for profit and pay the bank
ELIGIBILITY CRITERIA
The eligibility criteria define who is eligible for availing various types of lo
ans. It also states the conditions that are imposed upon the customer regarding
repayment. The eligibility criteria for the three major types of loans are discu
ssed below.
AUTO LOAN
The Car Loan and HBL CarToCar share similar criteria. These are shown in the tab
le below.
Salaried Individuals Self Employed Individuals
Nationality Pakistani Pakistani
Age 22 – 60 Years 22 – 65 Years
Minimum Monthly Income Rs. 20,000 Rs. 25,000
Table 1: Eligibility Criteria for Auto Loan (HBL CarToCar)
PERSONAL LOAN
Personal Loans are Unsecured Loans. The eligibility criteria are strict and aust
erely followed. For Personal Loan, the criteria can be defined as follows:
• Customer must be an account holder at HBL
• Minimum (Net Take Home) Salary should be Rs. 12,000
• Business Individuals availing this facility must have a handsome account stateme
nt showing an average monthly maintenance of Rs. 40,000.
• The monthly due amount is automatically deducted from the customer’s bank account
a pre-announced date and penalties are charged for late payments
• Financing facility available from 12 – 60 months
• Processing time can range from 10 – 15 working days
EASY LOAN
Easy Loan is a security collaborated loan. For Easy Loan, the criteria can be de
fined as follows:
• Customer does not have to be an account holder at HBL
• National Savings Certificates are held for Security Deposits
• Financing can be up to Rs. 100 Million against National Savings Certificates or
Foreign Currency Deposits.
• Customers can avail the loan for certain percentage of the value of their securi
ty deposit
• Finance facility up to a maximum of 5 years
• Processing time can range from 20 – 25 working days
INTEREST RATES
Interest or markup rates vary from one loan to the other. These rates are set by
the Karachi Interbank Offer Rate (KIBOR).
The rates on the three major types of loans are shown in the table below.
LOAN TYPE MARK UP
Auto Loan 19 %
Personal Loan 25 %
Easy Loan 16 %
Table 2: Markup Rates for various Loan Types
LOAN FACILITY ENHANCEMENTS
There are many improvements that have been made from the bank’s and customers’ point
of view for these loan facilities.
HBL’S PERSPECTIVE
• The bank is looking to minimize bad debts
• The bank is looking Maximizing Credit Hubs to help recovery
• The bank conducts a Borrower’s Re-capacity analysis beforehand
• For Auto Loan, the bank holds the ownership until maturity of installments
• The bank provides loans after studying the previous credit history record
CUSTOMER’S PERSPECTIVE
• The bank is looking to minimize to minimize loan sanction time
• The bank has a facility of ‘Easy Time’, where loans are sanctioned within 15 days
• The bank provides Electronic Credit Bureau Report, State Bank
• The bank provides Free Accidental Insurance to all Customers