RISK MGMT FINAL

8/7/2019 RISK MGMT FINAL

1/49

1. ABSTRACT

Owning a piece of land or property is a lifetime dream for every

individual. There are many home loans provider in the market tomake our dream come true. But before we opt for any home loan

provider, we need to consider certain factors related to property

that we are interested in buying and also about the salient

features offered by a home loan provider.

The Indian housing finance industry has grown by leaps and

bound in few years. Total home loans disbursements by banks

have risen which witnessed phenomenal growth from last 5 years.

There are greater numbers of borrowers of home loans. Today

many banks provide home loans whether commercial banks or

financial institutions to the people who want to have a home. The

housing sector plays an important role in the economic

development of the country.

By this study we will be finding out satisfaction level of customers

and problems faced by them in obtaining home loans. Research

methodology to be used for study will be both primary and

secondary data and based on that we will be drawing our

recommendations and conclusion.

1


2/49

2. INTRODUCTION TO HOME LOANS

Home is a dream of a person that shows the quantity of efforts,

sacrifices luxuries and above all gathering funds little by little to

afford ones dream.

Home is one of the things that everyone one wants to own. Home

is a shelter to person where he rests and feels comfortable. Today

many banks are providing home loans whether commercial banks

or financial institutions to the people who want to have a home.

Many banks are providing home loans at cheapest rate to attract

consumers towards them. The more customer friendly attitude ofthese banks, currently offer to consumers cheapest loan over

homes.

We can take different types of home loans like Home construction

Loans, Home Equity Loans, Home Extension Loans, Home

Improvement Loans, Land Purchase Loans etc. for different

schemes available in the market. There are different types of

home loans tailored to meet our needs.

The main reason for boom in home loan market is the change in

government policies. It is our governments motivation that the

2


3/49

home loan interest rates in India have fallen considerably. Lot

many banks are offering home loans and this is available at low

EMIs (Equated monthly Installments). High EMIs are now a thing

of past. Today lending rate is in the range of 7.5 to 15 %.

Today HDFC Bank and Standard chartered bank has become the

first player in this sector to announce a housing loan for a 20

years period. No doubt it will enhance the end cost people to plan

their house over longer duration now; it has been made easy for a

person to buy that dream house which he dreamt of long ago.

3. OBJECTIVES

The main objectives of the study are as follows:-

To know the ideas of customers about home loan products and

services.

To study the satisfaction level of customers about home loans.

To study the problems faced by customers in obtaining the

home loans.

To make comparative study of Disbursement of home loans by

Commercial banks.

To study the home loan schemes by different banks.

3


4/49

4. RESEARCH METHODOLOGY

The purpose of the Research methodology is to describe the

research procedure. This includes overall research design, thesampling procedure, the data collection method, and the analysis

procedures and methods.

In this COMPARATIVE STUDY & ANALYSIS OF HOME LOANS

descriptive type of research will be used for collecting the primary

data. It includes surveys, Questionnaires and fact finding

enquiries of different kinds & secondary data is collected from

secondary sources such as Internet, Books, Journals, Newspapers,

etc.

1. Primary Data:

4


5/49

Primary data is collected in the form of survey of the

public/investors based on the Questionnaires formulated & by

personal Interview.

Primary data: Questionnaires & Personal Interview

2. Secondary Data:

For secondary data collection method, the help of various

reference books, journals have been taken and data is also

collected by way of surfing through various websites.

Secondary data: Internet, Books & Journals.

3. Sample Size:

A sample size of 100 is taken for this study. Random Sampling

technique is used for the survey.

5. REVIEW OF LITERATURE

1. Bank Management Vasant Desai Himalaya Publishing

House. ( First Edition 2009)

Banks are in the forefront of economic development. They are the

heart of Indian Financial System. Banks in India have been

playing a unique role in mobilizing saving credit disbursement,

investment & providing other services. According to the latest

5


6/49

figures released by the Reserve Bank of India, commercial bank,

Deposits touched Rs 30,75,224.33cr, outstanding bank credit

amounted to Rs. 22, 72,602.73 cr, Investment touched

Rs9,86,052.21 cr on march 14, 2008. The ability of the banking

system to perform its task efficiently & in harmony with our neds

& economic goals depends in a large measure on its efficient

management. The banking system must be managed prudently ,

safely & profitably if we are to have a strong, growing &

adaptable banking system capable of meeting the demand of

society.

2. Theory & practice of banking K K Upadhyay Pearl Books

( First Publish 2008)

Although Banking is an old Activity and has its roots in

economics, finance, and commerce, the word banking

technology is of recent origin. To many people banking

technology means the use of computers and related hardware to

streamline and automate banking operations. This book attempts

to demystify the word banking technology and offers much

broader meaning and more realistic and operationally sufficient

perspective on banking technology.

3. Banking and its credit creation C.N Reddy Pearl Books

( First Publish 2008)

In earlier times, lending and borrowing was mainly between

individuals and what was meant by usury in these transactions

was commonly known and understood. In money matters, any

6


7/49

amount over and above the lent sum was defined as usury. The ill

consequences of usurious lending the ruination of individuals

and family were witnessed at the local level and therefore the

community held the practitioner in contempt. But the need for

capital and loans existed and in the absence on alternative

solutions, the usurious lenders became an indispensable

component of the society. They also exercise invisible power over

their client resources.

4. In December 2006 Fulbag Singh and Reema Sharma had

studied about the housing Finance in India. Housing, as one of the

three basic needs of life, always remains on the top priority of any

person, economy, government and society at large. In India,

majority of the population lives in slums and shabby shelters in

rural areas. From the last decade, the Government of India has

been continuously trying to strengthen the housing sector by

introducing various housing loan schemes for rural and urban

population. The first attempt in this regard was the National

Housing Policy (NHP), which was introduced in 1988. The National

Housing Bank (NHB) was set up in 1988 as an apex institution for

housing finance and a wholly-owned subsidiary of Reserve Bank

of India (RBI). The main objective of the bank is to promote and

establish the housing financial institutions in the country as wellas to provide refinance facilities to housing finance corporations

and scheduled commercial banks. The paper is based on the case

study of LIC Housing Finance Ltd., which analyzes region-wise

disbursements of individual house loans, their portfolio amounts

7


8/49

and the defaults for the last ten years, i.e., from 1995-96 to 2004-

05 by working out relevant ratios in terms of percentages and the

compound annual growth rates.

5. Sumit Agarwal, Souphala Chomsis engphet and John C. Driscoll

had studied about the Loan commitments and private firms. They

studied that, Most loans are in the form of credit lines. Empirical

studies of line demand have been complicated by their use of

data on publicly traded firms, which have a wide menu of

financing options. We avoid this problem by using a unique

proprietary data set from a large financial institution of loan

commitments made to 712 privately-held firms. Our findings are

consistent with their predictions. Firms facing higher rates and

fees have smaller credit lines. Firms with higher growth commit to

larger lines of credit and have a higher rate of line utilization.

Firms experiencing more uncertainty in their funding needs

commit to smaller credit lines. Almost all firms convert unused

credit line portions into spot loans and take out new lines.

6. In feb 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael

LaCour-Little had studied about the unique paired loan dataset

containing information on multiple conventional conformingmortgage loans of households to examine home equity extraction

decisions over the period 2000-2006. The main question

addressed is how much households borrow when refinancing their

current mortgage debt in a cash-out transaction. Results

8


9/49

contribute both to the literature on refinancing behavior and the

role of house price appreciation in providing funds that may be

used for consumer spending or other purposes.

6. INDUSTRY OVERVIEW

Indian home loans Industry:

Home loans in India have made people Buy Property in India in

spite of the skyrocketing prices. Today, we find considerable Real

Estate Investment in India, either in the field of Residential

Property in India or Commercial Properties in India. Home Loans

in India are disbursed by many Banks as Loan Banking is on of

the most important function of the Financial Services in India.

Property Dealers and Real Estate Consultants in India usually

recommend that we undertake appropriate Home Loan or

Mortgage Loan counseling so that we can Buy Apartment in India

9
http://www.indiahousing.com/real-estate-agents/http://www.indiahousing.com/real-estate-agents/


10/49

at an affordable Mortgage Rate. Purchasing the home of your

dreams is not an easy task. Especially when you plan to buy a

home on loan. Home loan means that you buy a house on

installments. In simpler terms when you want to own a home and

cant afford to pay the amount in lump sum, you can pay it in

monthly installments with an interest rate.

The interest rates of home loans are expected to go down even

further according to analysts who foresee a cut down in the rates

by the RBI in the wake of the decision taken by US Federal

Reserve to cut its rates by a significant margin.

There are number of companies offer cheap home loans at a low

interest rate. You can avail loan against existing house for

renovation or expansion etc. There are many nationalized banks

that offer finance for affordable housing. India Housing has put

together a comprehensive data to provide you with the cheapest

Home Loans available in the market. We have listed all the

important housing finance institutes and some of the top home

finance banks providing lowest interest rates.

In the last few years, housing loan scenario in India has changed

drastically. It has taken a front seat and people are looking

forward to owning their own houses. It is no more a dream that

required lifetime saving and a difficult decision to make. Today

the new home purchase loan is much easily available and is much

cheaper than what was available earlier. Banks are now

everywhere and the schemes are implemented even in villages

10
http://www.indianrealestateforum.com/f-property-finance-34.html/http://www.indianrealestateforum.com/f-property-finance-34.html/


11/49

and smaller towns. The housing loans are popular there too,

however, the activity of building flats is little slow. It would not be

wrong to say that there has been a boom in the home loan

market and with this boom; there is also a boom in the Number of

home loans mortgage brokers in India.

The main reason for this boom in home loan market is the change

in government policies. It is our governments motivation that the

home loan interest rates in India have fallen considerably. Lot

many banks are offering home loans and this is available at low

EMIs (Equated monthly Installments). High EMIs are now a thing

of past. Today lending rate is in the range of 7.5 to 15 %.

Again, there are different types of home loans available today.

The interest rate available is also of two different types. One is

the fixed rate loan and the other is the floating rate loan. In the

fixed rate loan, whatever interest is fixed on the start of loan is

carried on for the complete period. However, in the other one, the

interest rate is not fixed and as the interest rate goes up or low

the effect is directly transferred to the person who is taking the

loan. In the last few years the floating interest rate has been a

favorite among most of the people taking home loans.

There is also a trend to opt for home construction loan. This loan

is available to those who want to design their homes according to

their requirement and taste. In other words, this loan is meant for

those who themselves want to construct their new home.

11


12/49

As shared earlier, taking a loan is not a difficult task. However,

before taking a loan, one must realize that the relationship with

the bank will be for a longer period usually 15 to 20 years so one

must ensure faith and integrity in bank. Apart from low rate of

interest, the bank should also provide some value added services.

The other thing is to look into is the property that is to be

brought. Making sure that the builder has all sanctions and facility

to build a good building is very important.

Taking home loans these days has become simpler. With the RBI

regularly bring down interest rates; taking home loans have

become extremely easy. Housing loans which were 16.5% to 18%

a few years ago fell by 11.5% to 13%. With interest rates going

down, people increasingly number apply to take these loans.

Some of the leading banks offering home loans in India, including

ICICI Bank, IDBI Bank, HDFC Bank , Bank of Baroda, SBI, Standard

Chartered Bank and Axis Bank .

Indian Home loans industry is growing at a fast pace 30% per

annum, this can be seen in the stats shown below with average

ticket size (loan size) and Amount disbursed is rising every year

the opportunities have become more dominant for different

organization in India. The demand drivers are fast growing middle

class population, rise in working women workforce, bigger

aspirations of youth, Tax saving, Transparency in the real estate

market.

12


13/49

Impact of slowdown on home loan market in India:

The fear of a recession looms over the United States. And as the

clinch goes, whenever the US sneezes, the world catches a cold.

This is evident from the way the Indian markets crashed taking a

cue from a probable recession in the US and a global economic

slowdown. U.S slowdown has affected almost all sectors not only

in US but to all over the world. Indian economy has also been

affected by this slowdown because India is a growing country and

almost in all sectors various multinational companies have major

contribution. So the role of this slowdown is a major issue to be

discussed while talking about Home Loan Market in India.

Bankers who were earlier falling over each other to dole out home

loans, even for soft furnishings, have suddenly become choosy.

Banks like SBI, ICICI Bank, UTI Bank, IDBI Bank and leading

mortgage firm HDFC are now apparently making a conscious

attempt to curb their aggression in the home loan market.

Situation is like that if a customer who recently approached a

private sector bank for a home loan of about Rs 10 lakh for a

tenure of 15 years found, to his shock, that the eventual loan

disbursement was just Rs 5 lakh. Most bankers aren't willing to

confirm any slowdown in their home loan portfolio. On record,

they attribute the marginal dip in home loan disbursements to the

recent hike in interest rate.

Privately, however, they have a different story to tell. "The

slowdown in the home loan market for select players like ICICI

13


14/49


15/49

Interest and market trends in year 2009-10:

Home loan interest rates, especially on new home loan accounts,

started softening from the beginning of this year when the

Reserve Bank of India (RBI) announced sharp cuts in the repo rate

and cash reserve ratio (CRR). The RBI started slashing the key

policy rates since October last year, after taking into account the

worsening liquidity situation of banks here. The central bank has

reduced its key policy interest rates (repo and reverse repo) and

reserve ratio (CRR) four times in the last six months. The cut in

the repo rate meant commercial banks would have funds

available at a lower cost. On the other hand, the cut in the CRR

meant banks would have to keep less money with the RBI and

hence they had more money to lend. Analysts believe that

interest rates have not yet bottomed out and there will be further

cuts in borrowing rates over the next few months.

Following in State Bank of Indias (SBIs) footsteps, other state-

run banks may also come out with scheme offering home loan at

a fixed rate of 8%. The Indian Banks Association (IBA) would

review the response of borrowers towards the SBI scheme after

three weeks and if it finds that there has been a good response,

other banks will follow suit.

Last week, SBI had announced that it would offer home loans at a

flat rate of 8% to all borrowers and would freeze this rate for one

year. The chairman of one of the major banks, who asked not to

15


16/49


17/49

7. TYPES OF HOME LOANS

Housing loans offered by banks are of different types:

Home Purchase Loans

Home Construction Loans

Home Improvement Loans

Home Extension Loans

Home Conversion Loans

Land Purchase Loans

Stamp Duty Loans

Bridge Loans

Balance Transfer Loans

Refinance Loans Loans to NRIs

Home purchase loans:

This is the basic home loan for the purchase of a new home. If

you want to buy a flat in some society or some already built

house, banks and HFCs sanction you home purchase loans for this

process.

Home construction loans:

17
http://www.indianground.com/home_loans.aspxhttp://www.indianground.com/home_loans.aspx


18/49

This loan is available for the construction of a new home on a said

property. The documents that are required in such a case are

slightly different from the ones you submit for a normal Housing

Loan. If you have purchased this plot within a period of one year

before you started construction of your house, most HFCs will

include the land cost as a component, to value the total cost of

the property. In cases where the period from the date of purchase

of land to the date of application has exceeded a year, the land

cost will not be included in the total cost of property while

calculating eligibility.

Home improvement loans:

These loans are given for implementing repair works and

renovations in a home that has already been purchased, for

external works like structural repairs, waterproofing or internal

work like tiling and flooring, plumbing, electrical work, painting,

etc. One can avail of such a loan facility of a home improvement

loan, after obtaining the requisite approvals from the relevant

building authority. the following are coming under the home

improvement loans:

External repairs

Tiling and flooring

Internal and external painting

Plumbing and electrical work

Waterproofing and roofing

Grills and aluminum windows

18
http://www.indianground.com/home_loans.aspxhttp://www.indianground.com/home_loans.aspxhttp://www.indianground.com/home_loans.aspxhttp://www.indianground.com/home_loans.aspx


19/49

Waterproofing on terrace

Construction of underground/overhead water tank

Paving of compound wall (with stone/tile/etc.)

Home extension loans:

An extension loan is one which helps you to meet the expenses of

any alteration to the existing building like extension/ modification

of an existing home; for example addition of an extra room etc.

One can avail of such a loan facility of a home extension loan,

after obtaining the requisite approvals from the relevant

municipal corporation.

Home conversion loans:

This is available for those who have financed the present home

with a home loan and wish to purchase and move to another

home for which some extra funds are required. Through a homeconversion loan, the existing loan is transferred to the new home

including the extra amount required, eliminating the need for pre-

payment of the previous loan.

Land purchase loans:

This loan is available for purchase of land for both home

construction or investment purposes.

Stamp duty loans:

19
http://www.indianground.com/home_loans/homeloans_faq_indian.aspxhttp://www.indianground.com/home_loans/homeloans_faq_indian.aspx


20/49

This loan is sanctioned to pay the stamp duty amount that needs

to be paid on the purchase of property.

Bridge loans:

Bridge Loans are designed for people who wish to sell the existing

home and purchase another. The bridge loan helps finance the

new home, until a buyer is found for the old home.

Balance- transfer loans:

Balance Transfer is the transfer of the balance of an existing

home loan that you availed at a higher rate of interest (ROI) to

either the same HFC or another HFC at the current ROI a lower

rate of interest.

Refinance loans:

Refinance loans are taken in case when a loan for your house

from a HFI at a particular ROI you have taken drops over the

years and you stand to lose. In such cases you may opt to swap

your loan. This could be done from either the same HFI or another

HFI at the current rates of interest, which is lower.

NRI home loans:

This is tailored for the requirements ofNon-Resident Indians who

wish to build or buy a home or property in India. The HFCs offer

attractive housing finance plans for NRI investors with suitable

repayment options.

20
http://www.indianground.com/nri/nri_investments_in_india.aspxhttp://www.indianground.com/nri/nri_investments_in_india.aspxhttp://www.indianground.com/nri/nri_investments_in_india.aspxhttp://www.indianground.com/nri/nri_investments_in_india.aspxhttp://www.indianground.com/nri/nri_investments_in_india.aspxhttp://www.indianground.com/nri/nri_investments_in_india.aspx


21/49

On would be entitled for home loans in the range of Rs 5 lakh to a

maximum of Rs 1 crore, based on the repayment capacity,

previous credit history and the cost of the property. The bank

may provide a maximum of 85% of the cost of the property or the

cost of construction as applicable and 75% of the cost of land in

case of purchase of land. Some of the leading banks offering

home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank

State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered

Bank and Axis Bank.

8. HOME LOAN PROCEDURE IN INDIA

Submission of Application Form:

After choosing a particular home loan, the customer submits the

application form to the housing finance company (HFC) along with

other relevant documents as required by the HFC. They comprise

21


22/49

documents to establish income, age, residence, employment,

investments, etc. The customer also needs to hand over a cheque

for payment of an up front (non -refundable) processing fee of

about 0.5-1% of the loan amount to the HFC.

Validation of the Information:

In the next stage, HFCs validate the information provided by the

customer on the application form. They usually conduct checks on

the residential address of the customer, the place of employment

of the customer, and credentials of the employer. Some HFCs

may insist on a personal interview with the customer and perform

a reference check on the references provided by the customer on

the application form.

Issue of Sanction Letter:

After due appraisal of customer profile, a sanction letter is issued

which contains details such as loan amount, rate of interest,

annual / monthly reducing balance, tenor of the loan, mode of

repayment and general terms and conditions of the loan. This is

the actually the approval of the money lending procedure by the

company. However, the money is sanctioned only after the

documents and the property on behalf of which the loan is being

granted is thoroughly verified.

Submission of Documents:

22


23/49

Once the sanction letter is passed, the customer is required to

leave the entire set of original documents pertaining to the

property being purchased with the HFC as security for the loan

amount sanctioned. These documents remain in the custody of

the HFC till the time the loan is fully repaid. Once the documents

are handed over to the HFC, they send all the documents for a

thorough legal scrutiny.

Validation of Property:

Prior to disbursement, the HFC also conducts a site visit to the

customer's property to ensure that all construction norms have

been adhered to properly. Once the HFC is satisfied that the

property is legally and technically clear, they disburse the loan

amount. The disbursement from the HFI is on the basis of the

stage of construction of the property.

Payment Procedure:

Once all the above mentioned process, the borrower is entitled to

take the money from the lender party. Until such time that the

entire sanctioned amount is not drawn, the customer is supposed

to pay a simple interest on the Actual Amount drawn (without any

principal repayments). The EMI payments commences only after

the entire sanctioned loan amount is drawn

23


24/49

9. HOME LOANS INTEREST COMPARISON

The table below illustrates the comparison between the interest

rates from various Housing Finance Companies and banks.

Finance

Institution

Loan

Period

(in

years)

Fixe

d

EMI/

Lakh

(INR)

Floatin

g

EMI /

Lakh

(INR)

Bank of

Baroda

Up to 5 9.00 2076 8.00 2028

6 to 10 9.25 1230 8.25 1227

11 to 15 9.50 1044 8.25 970

16 to 20 9.50 932 8.50 868

State Bank Of

India

Up to 5 9.50 2100 8.75 2064

6 to 10 9.75 1300 9.25 1280

11 to 15 - - 9.25 1029

16 to 20 - - 9.75 949

HDFC Up to 5 11 2175 9.50 21016 to 10 11 1375 9.50 1294

11 to 15 11 1137 9.50 1045

16 to 20 11 1033 9.50 933

24
http://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/hfcs/HDFC.aspxhttp://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspxhttp://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/hfcs/HDFC.aspx


25/49


26/49

10. COMPARATIVE STUDY OF DISBURSEMENT OF

HOME LOANS BY COMMERCIAL BANKS

There are number of schemes and products, offered by

commercial banks to attract the customers. The comparisons

among different commercial banks which offer home loans in

regard of Disbursement of home loans are as:

Home loans distributed by HDFC and Commercial banks:

(Rs. in crore)

Years State

BankOf

India

HDFC

LTD

Punjab

National

Bank

CITI

Bank

ICICI

BANK

2004-

05

2005-

06

140.75

192.43

235.46

120.15

183.26

213.65

90.07

120.00

144.67

9.21

11.55

19.06

104.33

123.24

150.65

26
http://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspx


27/49

2006-

07

2007-

08

2008-

09

252.27

282.56

240.87

265.15

180.33

240.00

27.09

30.10

176.75

224.00

Total 1103.47 1023.08 775.07 97.01

778.97

Interpretation:

There is no doubt that every bank tries to maximize its home loan

disbursement. But on the basis of data it is concluded that SBI

shows high loan grants of Rs. 1103.47 crore as compared to

HDFC, ICICI, PNB & CITI bank respectively Rs.1023.08, Rs.778.97,

Rs.778.97 and Rs.97.01 crores. On this analysis the SBI are higher

loan providers as compared to other sector banks.

Recovery of Home loans: (Rs in crore)

Years State

Bank

Of

HDFC

BANK

Punjab

Nationa

l

CITI

Bank

ICICI

BANK

(Rs in

27
http://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspx


28/49

India Bank crore)

2004-05

2005-06

2006-07

2007-08

2008-09

90.05

172.23

185.30

192.75

262.56

97.28

150.00

185.86

231.07

256.05

63.05

91.20

127.31

165.90

228.12

5.27

10.16

14.35

18.68

23.91

98.12

105.00

133.46

144.65

209.16

Total 902.85 920.26 675.58 72

690.39

Interpretation:

It is evident from the table that every bank whether public or

private showed increase HDFC LTD has the greatest recovery of

home loans thereafter SBI, ICICI and Punjab national bank

recovered the sanction amount. The CITI Bank is having lowest

recovery of their granted amount as home loans.

28
http://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspxhttp://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspx


29/49

11. ANALYSIS & INTERPRETATION

Age wise classification:

Age

21%

49%

21%

9%

20

31

41

51

29


30/49

Interpretation:

From the chart above we find that 21% of the respondents fall in

the age group of 20-30 years, 49% fall in the age group of 31-40

years, 21% fall in the age group of 41-50 years and 9% fall in the

age group of 51-60.Therefore most of the respondents are

relatively between the age group of 41-50 and 9% respondents

age are 50 to above years.

Gender wise classification:

Gender

67%

33%

Male

Female

Interpretation:

From the above chart we can find that 67% are Male

respondents and 33% are Female respondents.

Therefore, most of the respondents are Male.

1. Have you taken Home loan?

30


31/49

92%

8%

Y

N

Interpretation:

From the above chart we found that majority of the

respondents have taken loan.

2. From which of the following bank have you taken loan?

0

5

1 0

1 5

2 0

2 5

3 0

PN B H DF C IC IC I S B I C IT I

B A N K

O T H E R

S e r i

Interpretation:

The analysis showed that a large number of customers prefer SBI

and HDFC LTD as compared to others. The reason is due to

specialized services in home loans, more amounts of loans, and

efficient query handling and also people consider these banks

safer as compared to others.

31


32/49

3. From where have you got information about home

loans scheme?

27%

11%

42%

17%3%

Nespaper

Hoardings

Word of mout

T.V.

Other

Interpretation:

From the above chart we found that majority of

respondents(42%) got information about home loan schemes by

word of mouth i.e. from friends, relatives, etc. 17% by Television,

27% by newspaper, 11% by hoardings and 3% by other medium.

4. While taking loan, which things attract you the most?

28%

14%

7%14%

37%Interest rate

Service provided

Pay back period

Schemes

All of the above

Interpretation:

From the above chart we found that majority of respondents

(37%) said all the above factors are important for them and 28%

32


33/49

specifically said that interest rate provided by the bank plays an

important role in making their decisions regarding home loans.

5 What is your annual income?

8%

36%

42%

14%

> 2 Lacs

2- 5 Lacs

5-8 lacs

8 lacs & ab

Interpretation:

From the fig. above it can be seen that 8% respondents annual

household income is less than 2 lacs, 36% respondents annual

household income is between 2 to 5 lacs, 42% respondents

annual household income is between 5 to 8 lacs, 14%

respondents annual household income is more than 8 lacs.

6. How much loan amount you took?

10%

36%

37%

17%

Less Than 1 La

1 - 5 Lacs

5 - 10 Lacs

More than 10 L

Interpretation:

33


34/49

From the fig. above it can be seen that 10% respondents are

took the loan amount is less than 1 lacs, 36% respondents are

took the loan amount is between 1 to 5 lacs, 37% respondents

are took the loan amount is between 5 to 10 lacs, 14%

respondents are took the loan amount is more than 10 lacs.

7. Even if the Interest rate is high for the home loans, you

will go for it?

22%

78%

Interpretation:

From the graph above it can be seen that 22% respondents are

says that even if the interest rate is high for the home loans, they

will go for it. 78 % respondents are says that if the interest rate is

high for the home loans, they will not go for it.

8. What are the reasons for taking a home loan?

34


35/49

33%

24%

43%

Non availability of funds

Reluctance to pay cash in

go

Tax Benefit

Interpretation:

To interpret the response of the questions, the figures shows that

most of the customers find the problem in availability of funds i.e.33% and very more number of customers found problem in

paying cash in one go is 23%, customers get housing loan for tax

benefits is 43%..

On the basis of study, it is concluded that most of people lack of

money in fulfilling their dreams and few of them were reluctant to

pay cash in one go and wanted to pay their home loans slowly in

installments.

9. What types of home loan you are taken?

46%

18%

21%

6%2% 7%

Home Purchase Lo

Home ConstructionHome Improvement

Home Extension Lo

Home Equity Loan

Land Purchase Loa

35


36/49

Interpretation:

From the graph above it can be seen that 46% of the respondents

are taken home purchase loan, 18% are taken Home Construction

Loan and 21% are taken Home Improvement Loan, 6% of the

respondents are taken Home Extension Loan and 2% of the

respondents are taken Home Equity Loan and 7% of the

respondents are taken Land Purchase Loan. The data shows that

most of the respondents prefer the Home purchase Loan which is

more than other types of loans.

10. What problems did you face while getting home loans?

41%

48%

11%Lack of know ledge

Procedural delays

non cooperation

Any other

Interpretation:

From the graph above it can be seen that 41% respondents does

not have proper knowledge about different home loan products

so they face problem in making a good deal. 48 % respondents

are faced problems of procedural delays, which harass the

customers lot. This will crush the curtsy of customers to avail the

home loan. as well as the attitude of bank employees some times

non cooperative and it creates a hurdle in building trust and

36


37/49

Confidence among customers about banks.11% respondents are

faced other problems while getting home loans.

11. Are you satisfied with the after home loan services

provided by your bank?

3 7

6 2

1

S ati s f

A v e r

D i s s a

Interpretation:

From the graph above it can be seen that:- 37 % respondents are

satisfied with the after home loan services provided by their bank

whereas 62 % respondents are somewhat satisfied with same.Hardly 1% respondents are not satisfied with the after home loan

services provided by their bank.

12. Does the cost of home loan is appropriate, according

to your demand?

69%

31%

Y

N

37


38/49

Interpretation:

From the graph above it can be seen that 69 % respondents

are says that the cost of home loan is appropriate,according to their demand, whereas 31 % respondents

are says that the cost is not appropriate, according to

their demand.

13. Are you satisfied by the time taken in sanctioning the

loan?

Yes

61%

No

39%

Yes No

Interpretation:

From above analysis we come to know that 61% customers are

satisfied by time taken in sanctioning the loan since; procedure

for sanctioning the loan was done in proper time period where as

39% are not satisfied the sanctioning the loan since they have to

face delay in procedure for sanctioning the loan.

14. Are you aware of all terms and conditions of home

loans?

38


39/49

Yes

83%

No

17%

Yes No

Interpretation:

From the graph above it can be seen that 83% people are aware

of terms and conditions about the home loans provided by the

respective banks as the banks are treating customers properly

where 17% are not aware of terms and conditions since some

banks are not communicating with the customers properly.

15. Which grade you want to give of home loan schemes

of your bank?

17%

26%

46%

11%

Excellent

Very Go

Good

Satisfact

Interpretation:

From the graph above it can be seen that Majority of the

respondents said that they were happy with the schemes which

their banks are providing and 46 % of the respondents gave good

39


40/49

grade to the home loan schemes and 11 % respondents are not

satisfied with the schemes provided by their banks.

FINDINGS:

1. SBI having good brand image in the minds of customers

and since it is a public sector bank people feel more secure

as compared to the private banks.

2. The analysis showed that a large number of customers

prefer SBI and HDFC LTD as compared to others. The reason

is due to specialized services in home loans, more amounts

of loans, and efficient query handling

3. Some of the customers felt that the interest rates are

some what high and they will choose the bank which offers

minimum interest rate.

4. Some of the customer does not having good faith on

private banks and they prefer public sector banks.

5. Majority of respondents said that time taken in

sanctioning the loan is very long and the procedure is very

long..

6. Most of the respondents were satisfied with the home

loan schemes.

7. Many respondents said that interest rate provided by

the bank plays an important role in making their decisions

regarding home loans.

40


41/49

12. PROBLEMS FACED BY CUSTOMERS IN AVAILING

HOME LOANS

There are everything in the world has good or bad points. No

doubt banking industry has made many efforts to enhance the

customer satisfaction but customer still faced some problems.

These are high lightened as below:

There are procedural delays, which harass the customers lot.

This will crush the curtsy of customers to avail the home loan.

The attitude of bank employees some times non cooperative

and it creates a hurdle in building trust and Confidence among

customers about banks.

The customer does not have proper knowledge about different

home loan products so they face problem in making a good

deal.

The banks do not take into account the paying capacity of

customers. So some customers are not able to get amount of

loan needed by them.

41


42/49

So above discussed are the problems which are faced by

customers while availing home loans.

13. RECOMMENDATIONS AND SUGGESTIONS

The Banks should use easy procedure, or say, less lengthy

procedure for the sanctioning of loan to the customer.

There should be less number of legal formalities, in case this

exists, then, these should be completed in less time. This will

be helpful in attracting more customers.

To increase the customers, the banks should provide

specialized services in this sector. These services can be

such as proper guidance to the Customer regarding the

processing of loans, especially for the customers who are

illiterate.

To satisfy their customers and for good dealings in future,

the banks should make prompt disbursement of loan amount

42


43/49

to the customers so that they can buy or construct their

dream home as early as possible.

Although the interest rates are on specific norms, yet

customers seek less interest rate which can lower their cost

of house. So banks should try to lower their interest rates.

Needles to say, that the bank which having lower interest

rates, have the maximum clients for loans.

The public sector banks should improve their overall services

to increase the number of customers for home loans. They

should recruit professionals to provide such services and tosatisfy the customers.

14. CONCLUSION

The Indian housing finance industry has grown by leaps and

bound in few years. Total home loans disbursements by banks

have risen which witnessed phenomenal growth from last 5 years.

There are greater numbers of borrowers of home loans. Todaymany banks provide home loans whether commercial banks or

financial institutions to the people who want to have a home. The

housing sector plays an important role in the economic

development of the country.

43


44/49

The interest rates of home loans are expected to go down even

further according to analysts who foresee a cut down in the rates

by the RBI in the wake of the decision taken by US Federal

Reserve to cut its rates by a significant margin.

By this study we have tried to find out satisfaction level of

customers and problems faced by them in obtaining home loans.

The whole research was carried out in a systematic way to reach

at exact results. The whole research and findings were based on

the objectives.

From this comparative study on home loans we conclude that

large number of customers prefers SBI and HDFC LTD as

compared to other banks for home loans. The reason is due to

specialized services in home loans, more amounts of loans, and

efficient query handling. Some of the respondents felt that the

interest rates are some what high and they will choose the bank

which offers minimum interest rate.

15. BIBLIOGRAPHY

Books:

44


45/49

Bank Management Vasant Desai Himalaya PublishingHouse. ( First Edition 2009)

Theory & practice of banking K K Upadhyay PearlBooks ( First Publish 2008)

Banking and its credit creation C.N Reddy PearlBooks ( First Publish 2008)

Websites:

www.hdfcbank.com

www.pnbindia.com

www.pnbhfl.com

www.google.com

www.economywatch.com

http://ideas.repec.org/a/icf/icfjfe/v04y2006i4p63-74.html-

Reema Sharm

http://ideas.repec.org/a/jre/issued/v32n12010p23-46.html-

Vincent W. Yao and Eric Rosenblatt

http://papers.ssrn.com/sol3/papers.cfm?

abstract_id=593862- Sumit Agarwal

45
http://www.hdfcbank.com/http://www.pnbindia.com/http://www.pnbhfl.com/http://www.google.com/http://www.economywatch.com/http://ideas.repec.org/a/icf/icfjfe/v04y2006i4p63-74.html-http://ideas.repec.org/a/jre/issued/v32n12010p23-46.html-http://papers.ssrn.com/sol3/papers.cfm?abstract_id=593862-http://papers.ssrn.com/sol3/papers.cfm?abstract_id=593862-http://www.hdfcbank.com/http://www.pnbindia.com/http://www.pnbhfl.com/http://www.google.com/http://www.economywatch.com/http://ideas.repec.org/a/icf/icfjfe/v04y2006i4p63-74.html-http://ideas.repec.org/a/jre/issued/v32n12010p23-46.html-http://papers.ssrn.com/sol3/papers.cfm?abstract_id=593862-http://papers.ssrn.com/sol3/papers.cfm?abstract_id=593862-


46/49

QUESTIONNAIRE

Dear Respondents,

I am a student of PADMASHREE DR DY PATIL DEPARTMENT

OF BUSNESS MANAGEMENT in Belapur. As a part of my

study, I am conducting a study on COMPARATIVE STUDY &

ANALYSIS OF HOME LOANS. It would be great help if you

please spare some of your time to fill this questionnaire. The

responses would be kept strictly confidential and will be used for

data analysis.

Age:-______

Gender: Male/Female

1. Have you taken home loan?

(A) Yes (B) No

2. From which of the following bank have you taken loan?

B. Punjab national Bank

C. HDFC

D. ICICI

E. SBI

46


47/49

F. CITY BANK

G. Other(Please Specify) ______________

3. From where have you got information about home loans

scheme?

A). Newspaper B). Hoarding/banners

C). Word of mouth D). Television

E). Any Other ____________

4. While taking loan, which things attract you the most?

A). Interest rates B). Service Provided

C). Pay back period D). Schemes

E). All of the above

5. What is your annual income?

A) >2 lacks B) 2-5 lacks

C) 5-8 lacks D) 8 lacks and above

6. How much loan amount you took?

A). Less than 1 lacks B).1-5 lacks

C). 5-10 lacks D). More than 10 lacks

7. Even if the Interest rate is high for the home loans, you will go

for it?

(a) Yes (b) No

47


48/49

8. What are the reasons for taking a home loan?

A. Non availability of funds

B. Reluctance to pay cash in on go

C. Tax benefit

9. What types of home loan you are taken?

A). Home purchase loan

B). Home construction loan

C). Home improvement loan

D). Home extension loan

E). Home equity loan

F). Land purchase loan

10. What problems did you face while getting home loans?

a. Lack of knowledge

b. Procedural delays and non cooperation

c. Any other (please specify)

11. Are you satisfied with the after home loan services provided

by your bank?

A). Satisfied B). Average C). Dissatisfied

12. Does the cost of home loan is appropriate, according to your

demand?

(A) Yes (B) No

48


49/49

13. Are you satisfied by the time taken in sanctioning the loan?

(A) Yes (B) No

14. Are you aware of all terms and conditions of home loans?

(A) Yes (B) No

115. Which grade you want to give of home loan schemes of your

bank?

Excellent Very Good Good Satisfactory

16. What suggestions do you want to give for improvements in

home loans Scheme?

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________