study of functioning and operations of loan department of hdfc bank_(100)_2012

7/29/2019 Study of Functioning and Operations of Loan Department of Hdfc Bank_(100)_2012

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SUMMER TRAINING PROJECT REPORT

ON

STUDY OF FUNCTIONING AND OPERATIONS OF

LOAN DEPARTMENT OF HDFC BANK

SUBMITTED IN PARTIAL FULFILLMENT OF MASTER OF

BUSINESS ADMINISTRATION PROGRAMME: 2011-2013

OF

GBTU LUCKNOW

Submitted to Submitted ByYeshu Jaiswal Ankur Agarwal

MBA-IIIrd Sem.

MAHARAJA AGRASEN MAHAVIDHYALAYA

INSTITUTE OF MANAGEMENT

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ACKNOWLEDGEMENT

Words are inadequate to express deep sense of gratitude towards the

management of STUDY OF FUNCTIONING AND OPERATIONS OF LOAN

DEPARTMENT OF HDFC BANK who accepted me as summer trainee in their

esteem organization. It's my great privilege to express my regard towards Mr.

Vibhoor Kumar Gupta DDCIA and summer training officer and project guide,

who made my work possible through his inspiring guidance and constructive

criticism throughout the period of training. I am highly thankful to Miss Yeshu

Jaiswal, for giving his valuable time, supervision and inspiration. His expert

guidance made my study an extensive and comprehensive one.

This project has been made possible through the direct or indirect

motivation of all my family members, relatives and friends who inspired me to

work with full devotion and consistency.

( ANKUR AGARWAL )

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CONTENTS

INTRODUCTION

COMPANY PROFILE

OBJECTIVES OF THE STUDY

SCOPE OF THE STUDY

RESEARCH & METHODOLOGY

REVIEW OF LITERATURE

COMPARATIVE STUDY

ANALYSIS & INTERPRETATION

FINDINGS

RECOMMENDATION & SUGGESTIONS

CONCLUSION

REFERENCE

QUESTIONNAIRE

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EXECUTIVE SUMMARY

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 feel

comfortable. Many banks providing home loans whether commercial banks or financial

institutions to the people who want to had a home. The housing sector plays an important

role in the economic development of the country.

My project title is A STUDY ON HOME LOANS. I selected this topic because

The Indian housing finance industry has grown by leaps and bound in few years. Total

home loans disbursements by banks has risen which witnesses phenomenal growth from

last 5 years. There are greater number of borrowers of home loans so by this study we can

find out satisfaction level of customers and problems faced by them in obtaining home

loans.

My objectives of study are-

To make comparative study of Disbursement of home loans by commercial banks.

To study the satisfaction level of customers about home loans.

To study the problems faced by customers in obtaining the home loans.

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And problems face by customers in obtaining home loans are

The customer does not had proper knowledge about different Home loan products

so they face problem in making a good deal.

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.

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LIST OF ABBREVIATIONS

ABBREVIATIONS EXPANSION

ROVR RECOMMENDATION OVER

NRI NON RESIDENT INDIAN

RBI RESERVE BANK OF INDIA

PNB PUNJAB NATIONAL BANK

SBI STATE BANK OF INDIA

IIR INCOME TO INSTALLMENT RATIO

FLIP FLEXIBLE LOAN INSTALMENT PLAN

DSAs DIRECT SELLING AGENTS

BSAs BUSINESS SELLING AGENTS

DCOVR DOUBLE CHECKING OVER

RPLR RETAIL PRIME LENDING RATE

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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 feel comfortable. Many banks providing home loans whether

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

HDFC-(Housing Development And Finance Corporation) Home Loan, India have

been serving the people for around three decades and providing various housing loan

according to their varied needs at attractive & reasonable interest rates. Owing to their wide

network of financing, HDFC Housing Loans provides services at your doorstep and helps

you find a home as per your requirements.

Many banks are providing home loans at cheapest rate to attract consumers towards

them. The more customer friendly attitude of these banks, currently offer to consumers

cheapest loan over homes.

With the RBI reducing bank rate, the home loan market rates nose-diving by 50

basis points. The HDFC Bank and Standard chartered bank has become the first player in

this sector to announce a housing loan for a 20 years period.

HDFC also provides with Home Improvement Loan for internal and external repairs

and other structural improvements like painting, waterproofing, plumbing and electric

works, tiling and flooring, grills and aluminum windows. HDFC finances up to 85% of the

cost of renovation (100% for existing customers).

Current status is that HDFC reduced home loan rates by 50 basis points for all its

existing floating rate customers.

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1.1 ADVANTAGES OF HOME LOAN:-

Attractive interest rate:-

The various banks offer attractive interest rates to boost and help their customers.

Many banks provide loans on fixed or floating rates to facilitate consumers as per their

needs.

Help in owning a home:-

The home availed by a person with the help of banks, because they provide

technical and financial assistance to customers for owning their dream home.

No requirement of guarantor:-

The commercial banks now a day, liberalize their laws regarding home loans. Some

of banks dont even require the guarantor to grant loan to their consumers. They also make

consumers free by reliving him to find a guarantor to complete the proceedings of availing

loan.

Door-Step Services:-

These door to step services are provided from enquiry stage to the final disbursement

takes place such services are beneficial for customers in present busy life. Banks like ICICI

bank and standard chartered bank provide door to step services to customers to borrow

loan.

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Loan period:-

There are many banks which provide maximum loan tenures upto 15-20 years based on

the loan amount and the creatibility of customers. This relieves the customers to repay loan

amount till a long period.

For accidental death insurance:-

Some banks provide free accidental death insurance with housing loan which is also

beneficial for the customers.

These benefits or advantages of home loans are responsible for making than so

popular among customer that a person who dont have their home and want to buy, they do

it with home loan. Home loans help such persons in making their dream home.

1.2 DISADVANTAGES OF HOME LOANS:-

The main disadvantages of home loans are high lightened as below:

(i) Delays in processing :-

Many times, there are huge delays in processing of providing home loans because

various formulations to be fulfilled in this process. Due to these delays customers feel

mentally as well as financially weak.

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(ii) Fluctuating interest rates:-

Some banks give home loans at floating rates, which fluctuate at Different intervals due to

some reasons. These changes sometimes, may lead to increase in interest rate which will

increase the cost of home loans to the customers

(iii) High Cost:-

The public sector banks charge high processing cost for home loans sanctioning.

They are forced to pay serious charges at various stages to fulfill the requirements. Some

consumers are not able to pay such charges so such people could not avail the benefits of

home loan schemes.

(iii) Problems in disbursement:-

There are many problems in disbursement of home loan amount. There are some

delay in disbursement of loan amount to the customers due to legal formalities. This causes

problems to the customers.

These are limitations or disadvantages of home loans. But sometimes some banks

charges high installments to repay loan amount. Such also causes problem to customers.

These limitations can be removed by providing good and promote services to the

customers.

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1.3 DISBURSEMENT OF HOME LOANS:-

Terms & conditions:-

a) Rate of interest = 8.25% - 9.50% ( R.B.I )

b) Time period = 15 20 years

c) Limit = minimum 5 lacks.

Maximum 500 cr. Or above

Some questions asked by the customers:-

d) Location = Bareilly

e) Registry

f)Passing map

g) Marketing value of property

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Conditions regarding co-applicants: -

All Housing Finance Institutions lay down conditions on who can be co-applicants.

all co-owners to the property. need to be co-applicants to the loan necessarily. These

institutions do not permit minors to join in as either co owner or as co-applicants because

a minor is not eligible to enter into a contact as per law. They do not permit even friends

or relatives who are not blood relatives to take a property jointly. However, Income of

co-applicants can be clubbed together to get higher loan eligibility. Given below is a

Table that throw light on acceptable relationship of a co-applicant for clubbing of

income.

Income Clubbing of Co-applicants:- It is as follows:-Combination Income Clubbing: -

Husband-Wife: - Income of husband-wife can be clubbed.

Parent - son: - It can be clubbed if only son is there but not if any male sibling exists.

Brother-Brother: - If they are currently staying together and intend to stay together in

the new property, then only, their income-can be clubbed for above purposes.

Brother-Sister: - No clubbing-is possible.

Sister-Sister : - No clubbing is possible.

Parent-Minor- Child: - No clubbing is possible in this case also.

a) The income of the salaried individual is considered in the following manner:-

Gross monthly income as it appears on the salary slip

Less:- Any non regular variable income appearing on the salary slip (including overtime,etc.)

Add : - 50 per cent of the average variable income of the last six months.

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Add: - Any fixed cash/voucher payments for which proof can be submitted.

Add: - 50 per cent of the average variable cash/voucher payments with proof like travelingreimbursement etc.

Add:- HRA receivable if not being received already in the salary slip.

Average of the net profits of last 2 years as it appears in the profit and loss account(Returns need to be filed for the same. They should be filed regularly before the due date isover).

Less: - Any income, which is unusual and non-recurring in nature like sale of some asset,etc which affects profits substantially,Add: - Any expense that is unusual and non-recurring in nature like repairs andmaintenance that has not been capitalized and effect profit adversely.

Add: - 50 per cent of the average depreciation of the last two years. The above income iscalculated for the calculation of eligibility using IIR and FOIR norms.

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CUSTOMERPROFILE

Documents:-

If customer is self employed:-

A) I.D PROOF:-

-pan card-driving license-voter Id card

B) ADDRESSPROOF:-

-pass book-Electricity bill

-telephone bill (landline/ postpaid)-rashan card-rent agreement (if customer are live in rent)

C) BUSINESSPROOF:-

-visiting card-company profile-letter head

D) BANK STATEMENT:-

-LAST 6 MNTHBANKSTATEMENTS (UPDATE)

-COMPUTATIONP&LA/C, BALANCESHEET

E) INCOMETAXRETURN:-

- LAST 3 YRS. SALARYSLIP

2 PHOTO / PROPERTYCHAINPAPER

IFCUSTOMER ARESALARYBASED:-

A) I.DPROOF:-

-PANCARD

-DRIVINGLICENSE

-3YRS. SALARYSLIP

-JOININGLETTER

- OFFERLETTER+ RELEVANTLETTER

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B) ADDRESSPROOF:-

-pass book-Electricity bill

-telephone bill (landline/ postpaid)-rashan card-rent agreement (if customer are live in rent)

C) BANKSTATEMENT:-

-LAST 6 MNTHBANKSTATEMENTS (UPDATE)

-COMPUTATIONP&LA/C, BALANCESHEET

D) INCOMEPROOF :-

- SALARY SLIP- FORM 16

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COMPANY PROFILE

OF

HDFC HOSING DEVELOPMENT FINANCECORPORATION LTD

6.1 INTRODUCTION:-

Housing Development Finance Corporation Limited , founded 1977 by Ravi

Maurya and Hasmukhbhai Parekh, is an IndianNBFC, focusing on home mortgages.

HDFC's distribution network spans 243 outlets that include 49 offices of HDFC's

distribution company, HDFC Sales Private Limited. In addition, HDFC covers over 90

locations through its outreach programmes. HDFC's marketing efforts continue to be

concentrated on developing a stronger distribution network. Home loans are also Sharcket

through HDFC Sales, HDFC Bank Limited and other third party Direct Selling Agents

(DSA).

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since

emerged as the largest residential mortgage finance institution in the country. The

corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross

premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new

business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000

lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its

corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai,

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http://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/NBFChttp://en.wikipedia.org/wiki/Mortgageshttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/NBFChttp://en.wikipedia.org/wiki/Mortgageshttp://en.wikipedia.org/wiki/HDFC_Bank


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UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing

company in India for the last 27 years.

SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and retail

investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial

conglomerate with holdings In:

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CHART:- 6.2

HDFC Standard Life insurance Company- HDFC holds 72.26 %.

HDFC Asset Management Company HDFC holds 60%

HDFC Bank- HDFC holds 23.26%.

Intelenet Global (Business Process Outsourcing) HDFC holds 50%.

HDFC Chubb General Insurance Company HDFC holds 74%.

HDFC

LTD

72.26%

HDFC

STANDARD

LIFE

60%

HDFC

ASSET

MANAGEMENT

23.26%

HDFC

BANK (inclusive

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SNAPSHOT-II

Loan Approvals Rs. 805 billion.

(Up to Dec 2007) (US $ 18.30 bn.)

Loan Disbursements Rs.669 billion

(Up to Dec. 2007) (US $ 15.20 bn)

Housing Units financed 2.5 million.

Distribution

Offices 181

Outreach Programs 90

HDFC Limited

Type Public (BSE: 500010)

Founded 1977

Headquarters Mumbai,India

Key peopleRavi Maurya

Hasmukhbhai Parekh

Industry Housing Finance

Revenue US$ 1.49 billion (2008)

Employees 1,029

Website www.hdfc.com

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http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500010http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_Dollarhttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.hdfc.com/http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500010http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_Dollarhttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.hdfc.com/


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KEY EXECUTIVE HDFC HOUSING DEVELOPMENT FINANCE CORP LTD :-

Mr. Deepak S Parekh: - serves as Executive Chairman and Chief Executive Officer of the

Board of Housing Development Finance Corp. Ltd., (HDFC). He joined HDFC Limited in

a senior management position in 1978. He was inducted as a whole-time director of HDFC

Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief

Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered

Accountants (England & Wales).

Mr. K.m mistry: - The Managing Director of the Corporation. He has been employed with

the Corporation since 1981 and was the executive director of the Corporation since 1993.

He was appointed as the deputy managing director in 1999 and the Managing Director in

2000. He is also a member of the Investors Grievance Committee of Directors.

Ms. Renu S. Karnad: - The Executive Director of the Corporation. She has been

employed with the Corporation since 1978 and was appointed as the Executive Director of

the Corporation in 2000. She is responsible for overseeing all aspects of lending operations

of HDFC.New Delhi.

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BOARD OF DIRECTORS:-

Mr. D S Parekh - Chairman Mr. D N Ghosh

Mr. Keshub Mahindra - Vice Chairman Dr. S A Dave

Ms. Renu S. Karnad - Executive Director Mr. S Venkitaramanan

Mr. K M Mistry - Managing Director Dr. Ram S Tarneja

Mr. Shirish B Patel Mr. N M Munjee

Mr. B S Mehta Mr. D M Satwalekar

GROUP COMPANIES:-

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

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6.3 JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to

be granted license by the IRDA to operate in life insurance sector. Reach of the JV player

is highly rated and been conferred with many awards. HDFC is rated AAA by both

CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard

and Poors. These reflect the efficiency with which HDFC and Standard Life manage their

asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August

2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and

Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life

Insurance Companies, which offers a range of individual and group insurance solutions. It

is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.) Indias leading housing finance institution and the Standard Life Assurance

Company, a leading provider of financial services from the United Kingdom. Both the

promoters are will known for their ethical dealings and financial strength and are thus

committed to being a long-term player in the life insurance industry- all important factors

to consider when choosing your insurer.

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Business Growth:-

The company commands a market share of over 60% in the housing finance sector.

Leveraging on its brand equity HDFC has also entered the Indian Mutual Fund scene quite

recently. HDFC was the only applicant to be given clearance by the government, to enter

the Rs 250 bn life insurance business. This in itself speaks volumes about the

managements professional reputation.

Financial year 2000 proved to be a boon for housing finance companies, as the tax

benefits announced in the budget, coupled with the low real estate prices and rising

disposable incomes, spurred housing demand. As a result, demand for housing finance too

has registered high rates of growth. The housing sector has now been recognized as an

engine of economic growth and HDFC is well placed to capitalise on this surge in demand.

Against this backdrop, HDFC logged in an excellent performance. The companys

approvals and disbursements during the first half of financial year 2001 witnessed a year on

year growth of 33% and 32% respectively. The robust growth in itself is a conclusion that

HDFCs business is far less susceptible to any economy downturn.

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(TABLE:-6.2) Financial Snapshot

Growth ratios FY98 FY99 FY00 1HFY01

Operating income 13.7% 21.6% 15.2% 21.1%

Other income 331.7% -24.6% -54.0% 346.8%

Net profits 18.3% 13.8% 20.4% 19.8%

Approvals 28.9% 25.2% 30.3% 33.4%

Disbursements 31.1% 24.4% 31.2% 31.5%

% change compared to corresponding previous period The entry of new players has not in

any way significantly reduced HDFCs domination in terms of volume. However, the

increased competition has led to a decline in interest spread (the difference between interest

income earned and interest paid). Over the last couple of years HDFCs spread has shrunk

from 2.1% in financial year 1997 to 1.8% in financial year 2000. When it comes to

containing risk, the companys track record is among the best in the financial sector.

During the financial year 2000, HDFC has reduced the quantum of loans where payment

was in arrears to just 0.9% of its portfolio. This is because individuals account for nearly

70% of its total outstanding loans. The high level of an individual investors personal

contribution in a house makes the possibility of default less likely.

In keeping with its tradition of playing safe, HDFC is diversifying its business. The

company has chosen the acquisition route to increase its assets and customer base in its

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core business of housing finance. Its recent acquisition of Home Trust Housing Finance

and Gruh Finance will not only increase its size but will also bring the economies of scale.

GRAPH:-6.4

BUSINESS OBJECTIVES:- The primary objective of HDFC is to enhance residential

housing stock in the country through the provision of housing finance in a systematic and

professional manner, and to promote home ownership.

Another objective is to increase the flow of resources to the housing sector by integrating

the housing finance sector with the overall domestic financial markets.

ORGANISATIONAL GOALS:- HDFC's main goals are to :-

a) develop close relationships with individual households,

b) maintain its position as the premier housing finance institution in the country,

c) transform ideas into viable and creative solutions,

d) provide consistently high returns to shareholders, and

e) to grow through diversification by leveraging off existing client base.

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In addition to home building loans, HDFC also offers home extension, home improvement and home

conversion loans. It also helps to identify and value properties. HDFC also offers depository services in form

of term deposits.

TABLE:-6.5

CONSOLIDATED EARNINGS:-

(As at March 31, 2008)

HDFC consolidated

Return on Equity 27.8% 28.2%

Return on Average Assets 2.7% 2.7%

Earnings per share (Rs) 85 95

Profit after Tax (Rs in billion) 24.36 27.13

Total Assets (Rs in billion) 810.99 925.83

DISTRIBUTION NETWORK: - HDFCs distribution network spans 254 outlets that

include 54 offices of HDFCs distribution company, HDFC Sales Private Limited (HSPL).

In addition, HDFC covers over 90 locations through its outreach programmes. Distribution

channels form an integral part of the distribution network with home loans being

distributed through HSPL, HDFC Bank Limited and other third party direct selling

associates.

To cater to non-resident Indians, HDFC has offices in London and Dubai and service

associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Al Khobar, Jeddah and Riyadh

in Saudi Arabia.

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HDFC HOME LOAN ADVANTAGE :-

Home loan counselling sharing over 30 years of home loan experience

Door step service

Helps in finding Dream home

Wide Product Range

Multiple Repayment Option

Wide Network of financing

Post disbursement service

Loan repayment option

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OBJECTIVES OF STUDY

There is no strongest foundation for your dream home, than a cheap loan. Home loans have

become that stronger foundations for people who want to own a home. The main objectives

of the study are as follows :-

1) The main objective of this study is to know the Customers perceptions about home

loans of HDFC housing development finance corporation LTD.

2) Assessing the satisfaction level of consumer within the service of HDFC bank.

3) Identifying the preferences of customer of Home loans.

4) Identifying the reason opting for home loan.

5) Assessing the problem in home loan.

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PURPOSE OF THE STUDY

The main purpose of this study is to attain the knowledge of the processing system of homeloans. the main purpose of the study are as follows :-

To know the ideas of customers about home loan products and services.



To learn about various aspect of HDFC home loan ltd.To learn about various aspect of HDFC home loan ltd.

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SCOPE OF STUDY

The Indian housing finance industry has grown by leaps and bound in few years. total

home loans disbursements by banks has risen which witnesses phenomenal growth from

last 5 years. There are greater number of borrowers of home loans. so by this study we can

find out satisfaction level of customers and problems faced by them in obtaining home.

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RESEARCH METHODOLOGY:-

Research methodology is a way to systematically show the research problem. It

may be understood as a science of studying how research is done scientifically. It is

necessary for the researcher to know not only the research methods but also the

methodology.

This Section includes the methodology which includes. The research design, objectives of

study, scope of study along with research methodology and limitations of study etc.

To know the Customers perceptions about home loans of HDFC housing

development finance corporation LTD.



To make comparative study of disbursement of home loans by commercial banks,

the study shall be conducted in the manner enumerated below-

3.1- RESEARCH DESIGN:-

This project is based on exploratory study as well descriptive study. It was an

exploratory study when the customer satisfaction level was studied to suggest new methods

to improve the services of HDFC LTD in providing home loans and it was descriptive

study when detailed study was made for comparison of disbursement of home loans by

commercial banks.

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3.2 SOURCES OF DATA :-

To fulfill the information need of the study. The data is collected from primary aswell as secondary sources-

A - PRIMARY SOURCE:-

I decided primary data collection method because our study nature does not permit

to apply observational method.

In survey approach we had selected a questionnaire method for taking a customer view

because it is feasible from the point of view of our subject & survey purpose. We

conducted 200 sample of survey in our project to judge the satisfaction level of customers

which took home loans.

Sample size;-

For the questionnaire I have taken the sample size of 200 customers of HDFC LTD.

B SECONDARY SOURCE:-

It was collected from internal sources. The secondary data was collected on the

basis of organizational file, official records, news papers, magazines, management books,

preserved information in the companys database and website of the company.

3.3- SAMPLING :-

Sampling refers to the method of selecting a sample from a given universe with a

view to draw conclusions about that universe. A sample is a representative of the universe

selected for study.

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3.4 SAMPLE SIZE :-

Large sample gives reliable result than small sample. However, it is not feasible to target

entire population or even a substantial portion to achieve a reliable result. So, in this aspect

selecting the sample to study is known as sample size. Hence, for my project my sample

size was 100.

The Sample Size consists of both the Professional and Business class people. IT

peoples, Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample.

3.5 SAMPLING TECHNIQUE:-

Random sampling technique was used in the survey conducted.

3.6 TOOLS OF ANALYSIS:-

Data has been presented with the help of bar graph, pie charts, line graphs etc.

3.7 PLAN OF ANALYSIS:-

Tables were used for the analysis of the collected data. The data is also neatly presented

with the help of statistical tools such as graphs and pie charts. Percentages and averages

have also been used to represent data clearly and effectively.

3.8 DATA COLLECTION INSTRUMENT DEVELOPMENT :-

The mode of collection of data will be based on Survey Method and Field Activity.

Primary data collection will base on personal interview. I have prepared the questionnaire

according to the necessity of the data to be collected.

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3.9 LIMITATIONS OF THE STUDY:-

This study also includes some limitations which have been discussed as follows:

i) The sample size of 100 customers and 4 banks might prove a limitation because of

difficulty in generalization of results.

ii) To collect the data from various banks was quite difficult due to non- cooperation of

some banks. This proved to be major limitation of the study.

iii) To access such a large number of customers was difficult because of non-cooperative

attitude of respondents.

iv) Lack of data was also the other limitation of the study as some of banks do not have

proper data on topic.

v) There was limitation of time to conduct such a big survey in limited available time.

vi) Ignorance and reluctant attitude of customers was also a major limitation in this study.

Thus above all were the limitations in this research study. The maximum efforts

were made to overcome these limitations in the study.

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REVIEW OF LITERATURE

4.1 SUMMARY:-

After going through pervious studies of Home loans I came to conclude that-

There is growth of home loans after 2001.

Home loans have an inverse relation with interest rates i.e. when interest rate lowthe demand of home loans increase. (Ojha 1987)

People are going more towards home loans than private mortgage insurance.(Berstain 2008)

Government taking various steps to encourage people to go toward home loans.(Haavio, Kauppi 2000)

Growth of home loans are due to increase of living standard of people, shiftingfrom joint family to nuclear family .(Lacourr, Micheal 2007)

There are some problems also attach with these home loans such as time i.e.filling of application of loan to closing ,people have their own specified needs from thesehome loans which are not fulfilling. (Lacour Micheal 2006).

SBI provide a very low interest rate on home loans as compared to other banks.(SBI May 2000)

4.2 Now after this conclusion the details of reviews are below-

Berstain David (2009) examined in his study taken from 2001 to 2008 that in this

period there is increase use of home loans as compared to private mortgage insurance

(PMI).he have divided his study into four sections. Section 1 describes why people are

going more for home loans than PMI. the main reason for this that now home loans market

provide Piggybank loans for those people who dont have 20% of down payment. Section 2

tells the factors responsible for the growth of home loans and the risks on shifting toward

home equity market without any PMI coverage. PMI can protect lenders from most losses

up to 80% of LTV and the absence of PMI will result in considerable losses in an

environment.

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INTRODUCTION TO THE INDUSTRY PROFILE

5.1 THE HISTORY OF INDIAN HOME LOANS:-

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 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.

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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 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 %.

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5.2 INTEREST RATES PROVIDED BY VARIOUS BANKS

Finance InstitutionLoan Period

(in years)Fixed

EMI / Lakh

(INR)Floating

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 102916 to 20 - - 9.75 949

HDFC

Up to 5 11 2175 9.50 2101

6 to 10 11 1375 9.50 1294

11 to 15 11 1137 9.50 1045

16 to 20 11 1033 9.50 933

ICICI Bank

Up to 5 10.75 2162 9.50 2101

6 to 10 10.75 1364 9.50 1294

11 to 15 10.75 721 9.50 1045

16 to 20 10.75 1016 9.50 933

LIC Housing Finance

Up to 5 10.50 2149 9.50 2100

6 to 10 11 1373 9.50 1294

11 to 15 11 1137 9.50 1044

16 to 20 11 1032 9.50 932

PNB Housing Finance

Up to 5 9.00 2076 10.50 2150

6 to 10 9.00 1267 10.50 1350

11 to 15 9.25 1030 10.50 1106

16 to 20 9.50 933 10.50 999

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16 to 20 11 1032 9.50 932

PNBHousing Finance

Up to 5 9.00 2076 10.50 2150

6 to 10 9.00 1267 10.50 1350

11 to 15 9.25 1030 10.50 110616 to 20 9.50 933 10.50 999

The above table illustrates the comparison between the interest rates from variousHousing Finance Companies and banks. It can be seen that if one wishes to go for floatingloans, the bank which gives the best deal as far as the interest rate is concerned is HDFCfollowed by PNB Housing Finance with the lower rates.

GRAPH :- 5.3

5.4 Indian home loans Industry:-

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.

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GRAPH:-

Still in comparison to other nations India has a long way to go, The figures shown

below shows that even the GDP/mortgage ratio is low which indicates that credit is not

well sought as figure below shows the average percentage of mortgage to GDP

.

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GRAPH:-5.4

Comparison with other nations India fall behind in terms of Mortgage Penetration which

directly demonstrates the potential in Indian market for Housing mortgage finance

companies

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GRAPH:- 5.5

Real Estate is currently sought of as a great means of Investment, the prices of

residents have shot up very high which is clearly shown in the figure below, the major

cities have witnesses lot of development and price appreciation which demonstrates the

growing demand . more and more people are migrating to cities for work / business. More

and more jobs are created and price index rise becomes inevitable.

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Price Index: FIG-5.6

The above figure shows the rise in prices of space per sq feet in different major

cities.

Housing shortage in India: - The below figure shows the ever-increasing demand for

houses in India and also mentioned here is the Rural and urban requirement. Banks are

driving new strategies to tap both the markets in a different way Rural/Urban. There are

categories with Indian loan demand, which is shown in this figure

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FIG:- 5.7

Recent trends of home loan in India:-

In order to understand the recent trends we need to know or understand various factors.

These factors play vital role in Indian home loan market. These include interest rate on

which banks provide home loan, tax rebate on home loan and its impact. Apart from this to

understand the recent trend we need to compare the trends of home loan of different years.

Here we have compared the interest and other market trends of year 2009 with 2007-08.

This kind of comparison gives the result which helps us to understand the trends of market

of any industry. Apart from the impact of present and past economic ups and down also

affect the trends. Today the US slowdown is the major issue which has affected almost all

the industry. So we have also discussed this issue in terms to define trend of home loan

market in India.

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5.8 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:-

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.

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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

Waterproofing on terrace

Construction of underground/overhead water tank

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

Borewell.

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.

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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 home conversion 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 investmentpurposes.

Stamp duty loans:-This loan is sanctioned to pay the stamp duty amount that needs to be paid on thepurchase of property.

Bridge loans:-

Bridge Loans are designed for people who wish to sell the existing home andpurchase another. The bridge loan helps finance the new home, until a buyer is found forthe 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.

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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 forNRI

investors with suitable repayment options.

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. The repayment

capacity is calculated taking into account factors such as:

Age

Income/Salary

Qualifications

Dependant/(s)

Assets/Liabilities

Credit History

Stability / continuity of your employment/business

Income of co-applicant/(s)

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

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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.

HDFC Home Loan:-

Highlights:-

HDFC markets its parent HDFC's home loan products.

Finances up to 85% of the cost of the property (Agreement value + Stamp duty +

Registration charges).

Home improvement loan, which facilitates internal and external repairs and other

structural improvements like painting, waterproofing, plumbing and electric works,

tiling and flooring, grills and aluminum windows. Finances up to 85% of the cost of

renovation (100% for existing customers).

Home extension loan for extension of an existing dwelling unit under the same

terms as applicable to home loan.

Land Purchase Loan to purchase land for constructing house. Finances up to 70% of

the cost of the land. Repayment over a maximum period of 10 years.

Fixed Rate, Floating Rate and options to structure loan as partly fixed or partly

floating.

Flexible repayment options to suit individual needs.

Insurance cover under Term Assurance Plan

Offer in-house scrutiny of property documents.

Eligibility; - HDFC home loans are available for:

Purchase of flat, row house, bungalow from developers

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Purchase of existing freehold properties

Purchase of properties in an existing or proposed co-operative housing society or

apartment owner's association

Purchase of first Power of Attorney purchases in Delhi for DDA flats allotted

before 1992.

Construction of own house

HDFC home loans can be applied for either individually or jointly. Proposed owners of the

property will have to be co-applicants. However, the co-applicants need not be co-owners.

Maximum tenure is 20 years subject to retirement age.

Loan Amount: - 85% of the cost of the property (including the cost of the land) and based

on the repayment capacity of the customer.

Rate of Interest :- The current applicable fixed rate of interest in respect of the total loan

approved is as follows:

For loans up to Rs.2, 00,000:-

Term of Loan

(No. of Years)

Rate Per Annum

(%p.a)

Up to 5

6 - 1011 - 15

10.00

10.7511.00

For loans greater than Rs.2, 00,000

Term of Loan Rate Per Annum

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(No. of Years) (%p.a)

5

1015

10.00

11.0011.25

All loans on annual rest basis. You repay the loan in Equated Monthly instalments

(EMIs) comprising principal and inertest.EMI per Rs 1,00,000 (for loan up to Rs.2,

00,000)

Term of Loan

(No. of Years)Rupees

51015

219914011159

EMI per Rs.1, 00,000 (for loan greater than Rs.2, 00,000)

Term of Loan

(No. of Years)Rupees

51015

219914161175

5.9 Documents Required :-

Salaried Customers Self Employed Professionals Self Employed Businessman

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Application formwith photograph

Application form with photograph Application form with photograph

Latest Salary-slipEducation Qualifications Certificateand Proof of business existence

Education Qualifications Certificateand Proof of business existence

Form 16Last 3 years Income Tax returns(self and business)

Business profile

Last 6 months bankstatements

Last 3 years Profit /Loss andBalance Sheet

Last 3 years Income Tax returns(self and business)Last 3 years Profit /Loss andBalance Sheet

Processing feecheque

Last 6 months bank statementsProcessing fee cheque

Last 6 months bank statements (selfand business)

Processing fee cheque

The Credit Appraisal is an important step in sanctioning loan applications .Hence the

Credit Appraiser needs to have certain important documents to compute the credit

worthiness of the applicant .In the case of salaried person these include the following :-

1)SALARY SLIPS (3 MONTHS CURRENT) :- The salary slip is usually a printed sheet

of paper that contains 2 components

Income/Earnings column: - It contains an exhaustive list of the various components that

are added to the persons salary. They contain various components like Basic pay, HRA etc.

Deductions: - It contains an exhaustive list of various components that are deducted from

the persons Earnings. They contain various components like Income tax, Provident fund,

Employee Loans etc.

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2) BANK STATEMENTS(6 MONTHS CURRENT) ;- The bank statement contains the

various transactions that the applicant performs in his bank account. It has 3 components

Date

Descriptions;- It contains the brief and standardized description of the activity or

the account related to the transaction .Eg. Clearing cheque 166129, Transfer

deposit.

Deposits: - It contains the amounts that were credited to the account

Withdrawal ;- It contains the amounts that were debited to the account. This is

carefully studied to find out about any regular withdrawals or a series of checks so

that any existing loans may be revealed and there can be a correct estimate of the

repayment capacity.

Balance :- It shows effect of transaction on the pre existing account balance

Special feature :- HDFC will not consider any loan s with out standing EMI of or

below 6 months.

3) FORM 16:- It is form given by Employer which states the income earned from that

company during the full financial year ,and gives the details of Tax deducted at source.

4) COPY OF INCOME TAX RETURN(SARAL) :- The SARAL tax return form

reveals the structure of incomes and/or the various earnings of the tax returnee .It also

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shows the various deductions that will not be included and it also contains the Rebates on

which he earns tax benefit.

5) RESIDENCE PROOF: - The residence proof includes the Electricity bill, Telephonebill, Ration Card, Passport.

6) PHOTO ID PROOF: - The photo proof includes the Pan card, Voter ID card,Employee ID card, Passport etc.

7) AGE PROOF: - The age proof includes the Pan card, Passport, Photo ID.

8) LOAN APPLICATION FORM DULY FILLED: - It can also be downloaded fromHDFCs user friendly web based portal.

9) CHARGES FOR PROCESSING FEES :- This is a standard and nominal fees to bepaid at the time of applying for loan

Fees structure. 0.5% of loan amount+Service tax of 12%(Less)Education Less of 3%

OR 5618/-HDFC takes from applicant whichever is less. This is applicable time to time.

10) PHOTOCOPIES OF PROPERTY PAPERS.

5.10 STAGES OF HOME LOAN

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Login Scanning

DataEntry

Application


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The representation shown above is not a perfect copy of the actual process. This is because

these stages are taking place simultaneously and one application is being taken care for by

the experienced employees of both HDFC Ltd service centre and HDFC Ltd HUB (also

called the back end office).Also the applicant may be asked to send information or may be

asked questions regarding his requirement and/or his documents for his own convenience

Hence the loan application may or may not shuttle through different stages.

APPLICATION STAGE :- This is the stage where the Application Form first

reaches the concerned Service Centre Here all the documents in the application are

reviewed by the experienced staff present at the service centre The HDFC Ltd employee

who reviews the file checks to see whether all documents are present and in their proper

place .He checks if the documents are duly filled, not fake, attested by authority in question

and present in order. In case any document is missing the applicant is contacted

electronically or by mail .The applicant is contacted by telephone and requested for the

document until he denies it being with him. This exercise is called FOLLOW UP. the credit

appraisal of the loan application starts at this stage. The service centre employees compute

the gross salary, IIR, FOIR, Loan Eligibility ratio etc. The credit worthiness of the

applicant is calculated here.

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RecommendationOver(ROVR)Double Checking

Over (DCOVR)Fixed

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It is also at this stage that the QUICK DATA ENTRY of the loan application is

done to create a serial no. of the application. after that another page appears and more data

is entered .It is now that a special and unique LOAN A/C NO. is created under which all

the loan processes will be carried out. The number that has been generated is

communicated to the applicant by means of a letter and/or electronic communication the

system of electronically recording the data helps to create ready reference, a proof ,helps in

quick and easy processing of the data. It also helps to very easily and quickly share data

with other employees of HDFC.

The next and important processing performed at the service centre is that of filling

up a document known as the INTERVIEW SHEET. for processing individual loans

(salaried cases) .It contains various simple entries like :-

1. Name of borrower

2. Name of co-borrower

3. Income details:-Family background and permanent address etc.

It also contains various important entries like.

5. Gross Salary

6. Rental

7. Other incomes

8. Obligations: - The various other loans that the applicant is entitled to pay ,their amount,

their remaining terms ,source etc.

9. Remarks;- This column contains the various findings that the employee has found out

after thorough review of the applicants documents such as bank statement, salary slip etc.

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Hence the interview sheet contains the important findings which the employee has

collected after careful review of the various documents .The interview sheet helps to cut

corners and helps save time by not having other employees to go through the documents

again and again .It hence acts as a source of quick reference.

After all this has been performed well enough the loan application will be arranged

in a file and all it will be given its loan a/c no which also acts as its file no. the file is now

ready to be sent to the HUB where further processing will take place.

SCANNING: - In this stage the various important documents of the applicant are scanned.

this helps to create their electronic copy which acts as a ready reference, a proof, and can

also be shared and utilized by other employees of HDFC Ltd.

DATA ENTRY :- The file has been sent to the back end office or the HUB .At HUB there

are many experts with their own specializations . these officials review the various parts of

the filae again and perform many specialized tasks Data entry is also one of these tasks .this

entry is much more different and complex as compared to the earlier performed Quick Data

Entry. An exhaustive amount and type of information has to be entered into the ILPS

system ranging from Personal Details, Employment Details to Property Rate History and

Customer Interactions.

RECOMMENDATION OVER (ROVR) :- The Recommendation OVER is also referred

to as the First Appraisal at this stage certain specially appointed persons have been given

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the responsibility of recommending a loan. These people have to take special care of

reviewing every document, and all the small details that need to be considered before

considering the loan application to be valid. After this the file is sent to another specially

appointed person as explained below. At this stage if any correction or mistake is present it

can be sent back to the Service Centre.

DOUBLE CHECKING OVER :- As the name suggests at this stage a specially

appointed person will double check all the past proceedings .He will examine the Loan file

for any discrepancies ,any missing and /or misplaced documents, the Credit Appraisal

results, etc. this is a very important stage and must be handled with exceptional care. This

is because a mistake at this stage can cause a great loss to the company. The Double

checker is responsible for the ultimate sanctioning of the loan .If any mistake is done at this

stage there is no going back and hence no protection. HDFC takes great care while

appointing double checkers .They should have completed a select number of years with the

company and should have shown exemplary performance and must posses experience.

SANCTIONING :- An authorized sanctioning authority within HDFC itself will review

the remarks of Double Checker and Sanctioning authority .If it considers the loan suitable

to be Sanctioned it gives its approval .After it has given its approval stamp the ILPS system

will automatically send a letter to the Applicant that his loan has been sanctioned.

After this approval the Applicant can go to whichever Service Centre which he selects to

get his loan disbursed.

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SPECIAL CASE :- A special case can arise if the applicant has not mentioned the

property for which he wants to take a loan .In that case the applicant can let the case be

remain pending . this means that the Applicants loan request will be considered to be

complete even though he has not decided the property. However the Applicant is expected

to finalize the property in a short time.

A Property Address is necessary to

1. get the loan disbursed

2. Process the Legal and Technical Appraisal of the property and its Papers.

DISBURSEMENT: - The last and final stage in the Home Loan process is that of

disbursement. after the sanctioning has taken place the applicant becomes a registered

customer of HDFC Ltd .

He can now take the disbursement of the loan from any of the various service centre of

HDFC .The loan shall be disbursed in one Lump sum or in suitable installments to be

decided by HDFC with reference to the need and/or progress of construction (which

decision shall be final and binding on the borrower).The borrower hereby acknowledges

the receipt of the loan disbursed as indicated in the receipt.

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COMPARATIVE STUDY OF DISBURSEMENT OF HOME

LOANS BY COMMERCIAL BANKS

8.1 - Disbursement of Home loans by different banks:-

HDFC LTD :-

Years No. of Homeloan

account

holders.

Home loan Disbursed(in crore Rs.)

Distributed Recovered Balance

2004-05

2005-06

2006-07

2007-08

2008-09

700

950

1130

1435

1594

90.07

120.00

144.67

180.33

240.00

63.05

91.20

127.31

165.90

228.12

27.02

28.8

17.36

14.43

11.88

Interpretation:-

On the above table, it is evident that there are increase in No. of account holders

from 700 to 1594 in the year 2008-09. The loan amount distributed among home loan

account holder has also increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in 2008-

09. The recovery procedure for home loans is also strengthening due to increment in

recovered amount, i.e. Rs.63.05 crore to Rs.288.12 crore. So it nut shall there are upward

trend in number of accountholders and disbursement of home loans.

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Punjab National Bank:-

Years No. of Homeloan account

holders.

Home loan Disbursed(in crores Rs.)


2004-05

2005-06

2006-07

2007-08

2008-09

810

950

1120

1433

1500

120.15

183.26

213.65

240.87

265.15

97.28

150.00

185.86

231.07

265.05

22.87

33.26

28.05

9.80

9.10

Interpretation:-

The Punjab National Bank is Public sector Bank. It comes second after State Bank

of India in its branch location and expansion. From the Table, the figures show that there

are increasing trend in customer base from 810 in the year 2004-05 to 1500 in the year

2008-09. The bank also show enhancement in loan amount up to Rs.265.15 crore in the

year 2008-09. The recovery process of loans in past is slow but now it is increasing.

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Standard Chartered Bank :-

Years No. of Homeloan

accountholders



2004-05

2005-06

2006-07

2007-08

2008-09

106

130

154

180

260

6.21

11.55

17.06

20.09

24.10

5.27

10.16

14.35

18.68

23.91

0.94

1.38

2.70

1.41

0.48

Interpretation:-

The standard chartered bank is a private sector bank. It has also upgraded its

position in banking sector in DEHRADUN. The figures shown in table reveal that there is

upward shift in customer base of Bank from 106 customers to 260 customers. The bank has

also increased its share in housing finance by distributing Rs. 24.10 crores in 2008-09. The

recovery procedure of Home loan is very sound.

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ICICI BANK:-

Years No. of Home

loan accountholders



2004-05

2005-06

2006-07

2007-08

2008-09

650

853

1019

1132

1434

104.33

123.24

150.65

176.75

224.00

98.12

105.00

133.46

144.65

209.16

6.21

18.24

17.19

32.10

14.84

Interpretation :

The amount reveal that there is tremendous increase in Home loan accountholders. The

amount distributed as home loan is also increased from Rs. 104.33 in 2004-05 to

Rs.224crore in 2008-2009. But the recovery mechanism of the Bank is not so good thats

why the outstanding amount shows fluctuating trend.

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ANALYSIS & INTERPRETATION

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE-9.1

Sr. No. Category No. of Respondents Percentage

1 Married 70 70%

2 Unmarried 30 30%

Total 100 100%

Base 100 respondents

CHART-9.1

Interpretation

From the table and graph above it can be seen that

70% respondents are married.

30% respondents are unmarried.

Educational qualification of respondents

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TABLE-9.2


1 Under graduate 25 25%

2 Graduate 40 40%

3 Post graduate 35 35%Total 100 100%


CHART-9.2

Interpretation


25% respondents are under graduate.

40% respondents are Graduate.

35% respondents are Post graduate.

Number Of years Are You in Bareilly?

TABLE-9.3

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1 Less than five years 39 39%

2 More than five years 61 61%

Total 100 100%


CHART-9.3

Staying years in Bareilly

Interpretation


39% respondents are in Bareilly is less than five years.

61% respondents are in Bareilly is more than five years.

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 9.4

Customer profile No. of respondents

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Student 7

Housewife 5

Working Professional 38

Business 20

Self Employed 10Government service employee 20

Chart-9.4

Interpretation

From the table and graph above it can be seen that:-38% of the respondents are working

professionals, 20% are into business and 10% are self-employed, 20% of the respondents

are government service employee and 7% of the respondents are student and 5% of the

respondents are house-wife.

ANNUAL HOUSE HOLD INCOME?

TABLE-9.5


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1 Less than 2 lacs 98 49%

2 Between 2 to 5 lacs 62 31%

3 Between 5to 8lacs 30 15%

4 More than 8 lacs 10 5%

Total 200 100%


CHART-9.5

Interpretation


49% respondents annual household income is less than 2 lacs.

31% respondents annual household income is between 2 to 5 lacs.

15% respondents annual household income is between 5 to 8 lacs.

5% respondents annual household income is more than 8 lacs.

Do you know about HDFC housing development finance corporation LTD?

TABLE 9.6

Category No. of Respondents

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Yes 91

No 9

CHART:-9.6

Awareness about HDFC LTD

Interpretation:-


91% respondents are known about HDFC LTD

9% respondents are not known about HDFC LTD

Table 9.7

Reasons for getting the home financed

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Sr.No. Number of Reasons Percentage

a. Non-availability of funds 36

b. Reluctancy to pay cash in one go 35

c. Tax benefit 24

d. Any other 5

GRAPH:- 9.7

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. 36% and very less number of

customers found problem in paying cash in one go is 35%, customers get housing loan for

tax benefits is 24%. This was the expected response because a large number of people find

a problem of availability of funds which works as an obstacle in owning a dream home.

In today's life, people hardly earn both means and ends of life and they don't have

much of money to buy a home or a land to construct house because of cost of property. So,

they take the advantage of home loans provided by different banks at different terms

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feasible to the customers. There are very less number of people, who don't own home even

when they have sufficient funds and they take the advantage of home loans because they

don't want to pay huge cash in one go.On the basis of study, it is concluded that most of

people lack of money in fulfiling their dreams and few of them were reluctant to pay cash

in one go and wanted to pay their home loans slowly in installments.

Table-9.8

From where you have got your home financed

Name of Banks / company Percentage of customers

HDFC LTD 55

Punjab National Bank 15

Standard Chartered Bank 07

ICICI BANK 20

Any other 03

To understand the response more effective and closely, it has been showeddiagrammatically as follows :-

GRAPH:- 9.8

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From where you have got your home financed

Interpretation:-

The analysis showed that a large number of customers prefer HDFC LTD as

compared to others. The data shows that 7% of customers took loan from Standard

Chartered Bank, 20% of customers from ICICI BANK, 15% Customers took loan from

Punjab National Bank, 55% of customers took loan from HDFC LTD and a 3% of

customers fall under the category of 'Any other' which included State Bank of India,

Canara Bank, Punjab and Sind Bank, etc.

The data shows that most of people prefer HDFC LTD compared to public sector

banks and other private banks. This is because of the extra services provided by HDFC

LTD. However, there is less difference in figures of ICICI Bank and Punjab National Bank.

But there is considerable difference in figures of the two private sector banks i.e. ICICI

bank and Standard Chartered Bank. As ICICI is the market leader in the home loans sector.

This may be the reason for such difference in Standard Chartered Bank's percentage and

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ICICI Bank's percentage. Another reason for specialized services in home loans, more

amounts of loans, and efficient query handling.

However, the analysis showed that the people prefer HDFC LTD for home loan

because of their services and excessive feat compared to other banks.

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Table-9.9Sources of information about Home Loans Scheme

Sources of information Percentage of customers

Newspapers 49

Magazines 16

Banners/Hoardings/Pamphlets 11

Word of mouth 20

Any other source 04

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CHART:-9.9 percentage of source of information about home loans scheme

Sources of information about Home Loans Scheme

Interpretation:-

The data shows that around 20% of customers got information from source of

'Word of Mouth' which includes information from friends, relatives, colleagues etc. 49% of

customers got information from newspapers, only 16% of customers from magazines and

4% of customers got information about home loans schemes under 'Any other source' and

11% through Banners/ Hoardings/Pamphlets .

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Table-9.10

Opinion about the services of HDFC LTD

Services of HDFC LTD Percentage of customers agreeing

Strongly

Agree

Agree Neutral Disagree Strongly

disagree

a. Professionallymanaged

86% 10% 4% - -

b. Reliable &transparent

67% 33% - - -

c. Socially responsible 75% 10% 15% 4% -

d. Customer care 20% 68% 8% - -

e. Query handling 20% 76% 4% - -

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GRAPH-9.10

Opinion of customers about HDFC LTD

Interpretation:-

Customers from HDFC LTD are quite satisfied from their services like query

handling and customers social responsibility of banks towards customers and

professionally managed services. They don't give so good response to reliability and

transparency services of banks. So, customer's satisfaction level toward HDFC LTD

services is lightly satisfied.

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Table-9.11

Opinion of customers about home loan schemes

HDFC LTD :-

Services of HDFC

LTD

Percentage of customers agreeing

Strongly

Agree

Agree Neutral Disagree Strongly

disagree

a. Amount of loan 60% 35% 5% - -

b. Legal formalities 42% 45% 14% - -

c. Interest rates 32% 56% 12% - -

d. Repayment options 26% 64% 10% - -

e. Security demanded 20% 32% 48% - -

f. Installments 55% 40% 5% - -

g. Services 45% 30% 18% 6% 1%

h. Processing forsanction of loan

55% 24% 18% 3% -

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GRAPH:- 9.11

Percentage of satisfaction level of customers of HDFC LTD

Interpretation:-

The analysis shows that the customers of HDFC LTD gave 60 percent of amount of

loan and legal proceedings, 56% to interest rates, 45% to proceedings and services, 55% to

installments. So, customer of HDFC LTD didn't give response regarding the services of the

bank / company except to the amount of loan and legal formalities.

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