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wlLhouL whom Lhls pro[ecL would have been a
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HDFC' - a househoId name that Indians proudIy reckon
with!
Housing Development Finance Corporation Limited (HDFC
Ltd.) was established in 1977 with the primary objective of
meeting a social need of encouraging home ownership by
providing long-term finance to households. Over the last three
decades, HDFC has turned the concept of housing finance for
the growing middle class in ndia into a world-class enterprise
with excellent reputation for professionalism, integrity and
impeccable service.
A pioneer and leader in housing finance in ndia, since
inception, HDFC has assisted more than 38 Lakh customers
to own a home of their own, through cumulative housing loan
approvals of over Rs. 3.73 trillion and disbursements of over
Rs. 3.02 trillion as at March 31, 2011.
HDFC has a wide network of offices (which includes 76
offices of HDFC's wholly owned distribution company HDFC
Sales Private Limited) catering to over 2,400 towns & cities
spread across the country. t also has offices in Dubai,
London and Singapore and service associates in the Middle
East region, to provide housing loans and property advisory
services to Non-Resident ndians (NRs) and Persons of
ndian Origin (POs).
HDFC's unrelenting focus on Corporate Governance, high
standards of ethics and clarity of vision, percolate through the
organization. Trust, ntegrity, Transparency and Professional
Service are the important pillars of the brand HDFC and most
importantly, people - both employees and customers - are its
brand ambassadors.
Customer satisfaction is the hallmark of all HDFC offerings.
The first touch of HDFC's personalised service begins as
soon as a customer approaches HDFC, and over time it
progresses into a long and meaningful relationship. State-of-
the-art information systems supported by strong in-house
training programmes conducted at its specialized training
centre in Lonavla, have equipped HDFC to respond swiftly to
the ever-changing customer needs and thereby empower
customers in making the right home buying decision. This is
what sets apart HDFC's customer service philosophy - 'With
You, Right Through'.
HDFC's specialist team of over 1,600 trained and
experienced professionals follows a 'single-window concept'
for providing smooth and value added services at all stages.
The team guides the customers right through the entire
process of property purchase - be it property search
assistance, technical support prior to finalising the property,
legal advice on property related documentation,
personalised home loan counseling or providing tailor-made
repayment options to suit the customer's specific
requirements.
HDFC's wide product range includes loans for purchase and
construction of a residential unit, purchase of land, home
improvement loans, home extension loans, non-residential
premises loans for professionals and loan against property,
while its flexible repayment options include Step Up
Repayment Facility (SURF) and Flexible Loan nstallment
Plan (FLP).
HDFC also has a robust deposits mobilisation programme.
HDFC has been able to mobilise deposits from over 10 lac
depositors. Outstanding deposits grew from Rs. 1,458 crores
in March 1994 to Rs ,6 crores in March 2011. n
addition, HDFC has received 'AAA' rating for its Deposit
products for highest safety from both CRSL and CRA for
seventeen consecutive years.
Cver Lhe years PulC has emerged as a flnanclal conglomeraLe wlLh lLs presence ln
Lhe enLlre gamuL of flnanclal servlces lncludlng banklng lnsurance (llfe and nonllfe)
asseL managemenL real esLaLe venLure caplLal and more recenLly educaLlon loans
Today, HDFC is recognised as one of the Best Managed
Companies in ndia and is a model housing finance company
for developing countries with nascent housing finance
markets. HDFC has undertaken several consultancy
assignments in various countries across 8ia, 1rica and Ea89
Europe to support and establish their housing finance
institutions.
At HDFC, 'Corporate Social Responsibility' has always been
an evolving concept, akin to its 'learning by doing' philosophy.
As part of its social objectives, HDFC has always
endeavoured to contribute to economic development and
social upliftment of the weaker sections of society and has
professionally nurtured each of its social initiative as an
investment. HDFC has undertaken development oriented
work and supported several social initiatives in the areas of
education, child welfare, medical research, welfare for the
elderly and the handicapped among several others.
HDFC is how millions of ndian families spell the word 'Home'
as the brand not only offers Housing Finance, but also To9al
Hou8ing Solu9ion8.
%he HDFC Advantage
Pioneers of Housing Finance in ndia with over 34 years of
lending experience.
Widest range of home loan & deposit products.
Vast network of over interconnected offices which
includes 3 international offices.
Most experienced and empowered personnel to ensure
smooth & easy processing.
Online loan application facility at www.hdfc.com and across-
the-counter services for new deposits, renewals &
repayments.
Counseling and advisory services for acquiring a property.
Flexible loan repayment options
Free & safe document storage.


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WHigh demand growth driven by:
Improved AffordabiIity
WRising disposabIe income
W%ax incentives (interest and principaI repayments deductibIe)
WAffordabIe interest rates
MARKE% SCENARIO
Mortgage Market in India
10
Increasing Urbanisation
WCurrentIy onIy of Indian popuIation is urban
FavorabIe Demographics
W60 of India's popuIation is beIow 30 years of age
WRapid rise in new househoIds
WHousing shortage estimated at 7 miIIion units
RuraI:11 miIIion units, Urban:106 miIIion units (Census Report)
Macroeconomic Overview
During the year under review, the Indian economy continued to be resiIient with
an estimated GDP growth rate of 6%his growth has been on the back of
an above normaI monsoon and a robust services sector that continued to be the
bedrock of the Indian economy As at March 31, 011, year-on-year bank
credit growth was strong at 1 whiIe year-on-year deposit growth was Iower
at 16 In FY 010-11, foreign institutionaI investor (FII) infIows
remained buoyant at USD 30 biIIion InfIation continued to be one of the key
concerns for the economy, particuIarIy food infIation, which remained in the
doubIe digit range during the year %he rising price of crude oiI prices and other
commodities aIso contributed to higher infIation During FY 010-11, India's
centraI bank, the Reserve Bank of India, increased the repo rate by 17 basis
points to 67 and the reverse repo by basis points to 7 to anchor
infIationary expectations

Strong economic growth and rising consumer confidence during the year
had a positive impact on the housing sector Despite the increase in interest
rates on home Ioans during the year, the demand for housing remained
strong across the country However, residentiaI reaI estate prices in a few
pockets of the country had risen to unreaIistic IeveIs, resuIting in a sIight
sIowdown in the voIume of saIes in these Iocations
%here has been a pick-up in commerciaI reaI estate as compared to the previous
year, with demand coming particuIarIy from the professionaI services industry,
financiaI services, teIecom and I% & I%ES which have absorbed Iarge spaces %he
commerciaI rentaI market aIso saw pick-up in demand, resuIting in an
increase in commerciaI rents Measures on the housing sector in the
Union Budget 011-1 predominantIy focused on enhancing affordabIe
housing %he 1 Interest Subvention Scheme was further IiberaIised wherein
housing Ioans up to Rs 1 Iakhs with property cost up to Rs Iakhs wouId
quaIify under the scheme %here was aIso a commitment to create a Mortgage
Risk Guarantee Fund under Rajiv Awas Yojana to enhance credit worthiness of
housing Ioans given to the economicaIIy weaker sections and Iow income group



%AX INCEN%IVES HAVE LOWERED %HE
EFFEC%IVE RA%E OF MOR%GAGES



011 00 000
Loan amount
(Rs)
1,00,000 1,00,000 1,00,000
NominaI
Interest
Rate()
107 13
Max
deduction for
interest
aIIowed
10,000 10,000 7,000
Deduction on
principaI
100,000 0,000 0,000
%ax rate
appIicabIe
300 310 30
%enor (years) 1 1 1
%otaI amount
paid per year
30,000 , ,36
Interest
component

0,000 0,0 1,70
PrincipaI
repaid
100,000 1,33 0,6
%ax amount
saved
77,0 3,0 3,77








Effective
interest paid
on home Ioan
131,70 10,700 1,7
Effective
interest on
home Ioan
6 7 11
LOW PENE%RA%ION IMPLIES ROOM FOR
GROW%H MOR%GAGES AS A OF GDP


INDIA
%HAILAND 17
CHINA 0
KOREA 6
MALAYSIA
SINGAPORE 3
GERMANY 6
USA 1
UK
DENMARK 10







KEY FAVOURABLE
FAC%ORS AND
UNFAVOURABLE
FAC%ORS OF
SEC%OR AND HDFC

Drivers Of Growth
High demand growth driven by:
- Improved AffordabiIity
Rising disposabIe income
Lower interest rates
%ax incentives (interest and principaI
repayments deductibIe)
- Increasing Urbanisation
CurrentIy onIy of the Indian
popuIation is urban
- FavorabIe Demographics
60 of India's popuIation is beIow 30
years of age
Rapid rise in new househoIds


Key pIayers in the mortgage market

Banks Key PIayers Housing Finance
Companies
Reserve Bank of India
(RBI)
ReguIator NationaI Housing Bank
(100 subsidiary of RBI)
Access to Iow cost funds
via current / saving
accounts

Extensive branch network
Advantages Dedicated pIayers, better
customer service
Lower operating costs
High operating costs
Mandated direct Iending,
high Iiquidity ratios
Disadvantages Higher funding costs
Higher capitaI adequacy
ratio


Market features

Home Loan
Features

Customer ProfiIe
MainIy pIain, vaniIIa home Ioans SaIaried cIass
Predominance of fIoating rates First time home buyer
Repayment:amortising Ioans Average age : 37 years
Primary Security: mortgage of
property financed
Average Ioan US $37000
Prepayment charges Average Ioan tenor at
origination : 13 years
MinimaI specuIative/investor
demand
Maximum Ioan to vaIue
ratio:(at origination)


Marketing and Distribution

EarIier marketing scenario
W Walk-in customers
W Passive marketing, belief that word of
mouth from a satisfied customer was the
best form of advertising

Current marketing scenario
W With increased competition, buyers'
became more demanding
W Customers want door-step service
W Use of direct selling agents (third party
distribution channels)
W Captive distribution company
W Property fairs and exhibitions

W Cross selling products and services

Key Funding Sources
W Banks
Savings and current accounts
Loan assignment through nter Bank Participation
Certificates
Refinance from NHB
W Housing Finance Companies
Commercial banks
Bonds and Debentures
nternational/multilateral funding
Refinance from NHB
Term Deposits (HFCs not allowed to have checking and
savings accounts)
Loan assignment
Mortgage Backed Securitisation




Indian Securitisation
Market
W Over 500 issuances amounting to NR 900 billion
till date
W First ABS in ndia in 1992 - Citibank transaction
W First MBS in ndia in 2000 - NHB Pilot Project -
Originators -
HDFC/LC HF
W Growth of ABS on the back of retail boom in ndia
W Penetration of MBS low - direct assignment
preferred due to
regulations/ liquidity issues
W Lack of a secondary market
W Cross-border issuances not currently allowed by
the regulator

FNANCAL
STATEMENT
ANALYSS





























































In terms of the prudentiaI norms as stipuIated by NHB, HDFC is required
to carry a provision in respect of nonperforming assets and a generaI
provision on outstanding standard nonhousing Ioans In addition, during the
year, NHB further stipuIated a generaI provision of 00 on standard assets
under housing Ioans to non-individuaIs and a provision on standard assets
in respect of housing Ioans granted under the DuaI Rate Home Loan scheme
%his requirement has been
partIy met by utiIisation of ` crores (net) from AdditionaI Reserve
under Section C of the NationaI Housing Bank Act, 17 Based on the
aforesaid as per NHB norms, the Corporation is required to carry a totaI
provision of ` 133 crores





























































































Prospects and
ChaIIenges
W ncreasing reliance on data from the credit bureau
Proposed introduction of a mortgage repository
W Government focusing on urban infrastructure,
including housing
Funds released subject to states undertaking
urban reforms
W Need access to long-term funding such as pension
funds
W Deepening the secondary mortgage market
W Access to mortgage insurance
W Need for a real estate regulator
Consumer protection
Serve as a single window for overseeing the
affordable housing agenda
Promote real estate reforms
-ncrease transparency