Index

Page No.
1. Introduction

2. Objective of the Study

3. Hypothesis

4. Company Profile

5. Theoretical Background

18

6. Research Methodology

28

7. Data Analysis and Interpretation

30

8. Findings

34

9. Limitation of the Study

36

10. Suggestion

38

11. Conclusion

40

12. Bibliography

42

INTRODUCTION
HOME LOAN
The section 5 (b) of the Banking Regulation Act 1949 defines Banking as," Accepting for the
purpose of lending or investment of deposits of money from the public, repayable on demand
or otherwise and withdraw able by cheque, draft or otherwise. A "home loan" is a credit to a
consumer for the purchase or transformation of the private immovable property he owns or
aims to acquire secured either by a mortgage on immovable property or by a surety
commonly used in a Member State for that purpose. A home loan requires you to pledge your
home as the lenders security for repayment of your loan. The lender agrees to hold the title
or deed to your property until you have paid back your loan plus interest. In simple words a
home loan is a fund or the loan which the buyer has taken from any financial institution or
bank to purchase a new home at an agreed rate of interest specified during the contract.
Home loan is the finance borrowed from a bank or financial institution to buy or modify a
residential real estate property. Any Resident or Non-resident individual who is planning to
buy a house in India can apply for a Home loan. If you have decided to buy a property in the
near future you can even apply for aloan before you select your property.

Take a house loan and let the monthly rent (easily converted into affordable EMIs) build
dream home.

Objective

OBJECTIVE OF THE STUDY

The main objective of the study is to find out the tariff changes by other banks in.

To find out the housing finance scheme of Nationalized Banks.

To find out the housing finance scheme of Private Banks.

To compare the housing finance scheme of Nationalized Banks and Private Banks.

To compute the housing finance scheme.

A study on housing finance scheme of Banks with comparison of Nationalized Banks &
Private Sector Banks

HYPOTHESIS
Housing finance scheme provided by Nationalized Bank are more
complicated than Private Banks.
Legal formalities are very less in Private Bank as compared to Nationalized
Bank.
Housing finance scheme provided by Nationalized Bank are more secured
than Private Banks.

Company Profile

COMPANY PROFILE
HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an in principle approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994.
The bank was incorporated in August1994 in the name of 'HDFCBank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.

HDFC is India's premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC
has developed significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities.

With its experience in the financial markets, a strong market reputation, large shareholder
base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the
Indian environment.
HDFC Bank began operations in 1995 with a simple mission: to be aWorld Class Indian
Bank.We realized that only a single minded focus on product quality and service excellence
would help us get here. Today, we are proud to say that we are well on our way towards that
goal.

HISTORY
HDFC Limited founded in 1997 by Ravi Maurya and Hansmukhbhai Parekh, is an Indian
NBFS focusing on home loans. 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, UAE with service associates in Kuwait. HDFC is the largest housing
company in India for the last 27 years.

HDFC was amongst the first to receive an in principal approval from RBI to set up a bank in
the private sector, as a part of the RBIs liberalization of the Indian banking industry. It was
incorporated on 30th august 1994 in the name of HDFC Bank Limited, with its registration
office in Mumbai. HDFC began its operations as a scheduled commercial bank on 16 th
January 1995.

ABOUT THE PROMOTER

HDFC, the promoter, is Indias premier housing finance company and enjoy an impeccable
track record in India as well as in international markets.

Since its inception in 1997, HDFC has maintained a consistent growth in its operation and
profitability. Its outstanding loan portfolio covers over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segment and also
has a large corporate client base in relation to its housing related credit facilities and its
investment in portfolio.

With its tremendous brand equity, the strong reputation in the Indian and international
financial services market, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the

Indian environment HDFC (together with its fully owned subsidiary HDFC Investment
Limited) owns about 31% of the equity. They had started with a strategic alliance with the
Natwest group in UK with 20% equity, which has divested later on. The bank has also signed
a memorandum of understanding for strategic business collaboration with chase Manhattan
Bank in Feb. 2, 1999.

BUSINESS PHILOSOPHY
The mission of the HDFC Bank is to be world class Indian bank. This would imply a bank
that would meet various financial needs of its customers in a convenient and cost effective
manner at international standard of service.

10

The bank seeks to achieve the status of a preferred organization among its major
constituents- customers, shareholders, regulators, employees, suppliers etc. while
maintaining the highest level of integrity and corporate governance.

The business philosophy at HDFC bank is based on four core values: operational excellence,
customer focus, and product leadership and people competitors.

The Bank faces the strong competition in all of their principal lines of business. Their
primary competitors are large public sector banks, other private sector banks, foreign banks
and in some product areas, non-banking financial institutions.

11

STATE BANK OF INDIA

INTRODUCTION
State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic
network of over 9000 branches (approximately 14% of all bank branches) and commands
one-fifth of deposits and loans of all scheduled commercial banks in India. The State Bank
Group includes a network of eight banking subsidiaries and several non-banking subsidiaries
offering merchant banking services, fund management, factoring services, primary dealership
in government securities, credit cards and insurance. The eight banking subsidiaries are: State
Bank of Bikaner and Jaipur (SBBJ),State Bank of Hyderabad (SBH).State Bank of India
(SBI),State Bank of 13 Indore (SBIR),State Bank of Mysore (SBM),State Bank of Patiala
(SBP),State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT). Today, State
Bank of India (SBI) has spread its arms around the world and has a network of branches
spanning all time zones. SBI's International Banking Group delivers the full range of crossborder finance solutions through its four wings - the Domestic division, the Foreign Offices
division, the Foreign Department and the International Services division.

PROFILE
The SBIs powerful corporate banking formation deploys multiple channels to deliver
integrated solutions for all financial challenges faced by the corporate universe. The
Corporate Banking Group and the National Banking Group are the primary delivery channels
for corporate banking products.

The Corporate Banking Group consists of dedicated Strategic Business Units that cater
exclusively to specific client groups or specialize in particular product clusters. Foremost
among these a specialized group is the Corporate Accounts Group (CAG), focusing on the
prime corporate and institutional clients of the countrys biggest business centers. The others
are the Project Finance unit and the Leasing unit. The National Banking Group also delivers
the entire spectrum of corporate banking products to other corporate clients, on a nationwide
platform. The bank is also looking at opportunities to grow in size in India as well as
internationally. It presently has 82 foreign offices in 32 countries across the globe. It has also
7 Subsidiaries in India SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors,

12

SBI Life and SBI Cards - forming a formidable group in the Indian Banking scenario. It is in
the process of raising capital for its growth and also consolidating its various holdings.
Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and
take all employees together on this exciting road to Transformation. In a recently concluded
mass internal communication programme termed Parivartan the Bank rolled out over 3300
two day workshops across the country and covered over 130,000 employees in a period of
100 days using about 400 Trainers, to drive home the message of Change and inclusiveness.
The workshops fired the imagination of the employees with some other banks in India as
well as other Public Sector Organizations seeking to emulate the programme.

HISTORY
The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called
the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency
banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank
of India. In 1955, the controlling interest in the Imperial Bank of India was acquired by the
Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of
Parliament as successor to the Imperial Bank of India.

Today, State Bank of India (SBI) has spread its arms around the world and has a network of
branches spanning all time zones. SBI's International Banking Group delivers the full range
of cross-border finance solutions through its four wings - the Domestic division, the Foreign
Offices division, the Foreign Department and the International Services division.

13

Theoretical Background

14

THEORETICAL BACKGROUND
HDFC LOAN SCHEME PURPOSE
HDFC Limited offers loans for the following purposes:

Land purchase

Home construction/purchase

Home extension

Home improvement loans

Short-term bridge loans

Non-resident premises loans for professionals.

LOAN AMOUNT
You can avail of maximum of up to 85% of the cost of the property, including the cost of the
land.

LOAN TENURE
You can repay the loan over a maximum period of 20 years under both FRHL and ARHL.
Repayment will not ordinarily extend beyond your age of retirement (if you are employed) or
on your reaching 65 years of age, whichever is earlier. However, HDFC will endeavor to
determine the repayment period to suit your convenience.

RATE OF INTEREST
The rate of interest of HDFC is 8.75%.under the monthly rest option, interest is calculated on
monthly rests. Principal repayment is credited at the end of every month.

At HDFC you have the choice between the normal FRHL and the innovative ARHL.
Alternatively you can also avail the part of the loan under FRHL and balance under ARHL.
HDFC also offers you the option to switch between schemes for the nominal fee. Interest
rates on ARHL will be linked to HDFCs Retail Prime Lending Rate (RPLR) which currently
is 13.75% .The rate on your loan will be revised every three months from the date of first
disbursement, if there is a change in RPLR, i.e. the interest rate on your loan may change.
However, the EMI on the home loan disbursed will not change. (If the interest rate increases,

15

the interest component in an EMI will increase and the principal component will reduce,
resulting in an extension of the term of the loan, and vice versa when the interest rate
decreases).customer will be provided with an annual statement indicating the details of the
interest and principal payment made during the year.

SECURITY
Security for the loan normally is first mortgage of the property to be financed and/or such
other collateral security as may be necessary. Interim security may be required, if the
property is under construction. Collateral or interim security could be assigned to HDFC of
life insurance policies, the surrender value of which is at least equal to the loan amount,
guarantees from sound and solvent guarantors, pledge of shares and such other investments
that are acceptable to the HDFC.

Loans from HDFC are available even if you are availing a housing loan from your employer.
HDFC has already entered into arrangements with several employers enabling employees to
avail of loans both from the employer as well as HDFC for the same property. Please do
ensure that the title of the property is clear, marketable and free from encumbrance. To
elaborate there should not be any existing mortgage, loan or litigation which is likely to
affect the title to the property adversely.

DOCUMENTS/SUPPORTING DOCUMENTS TO BE ATTATCHED:

FOR ALL THE APPLICANTS:

1. Allotment letter of the o-operative society/association of the apartment owners.
2. Copy of approved drawings of proposed construction/purchase/extension.
3. Agreement for sale/sale deed/detailed cost estimate from architect/engineer for the
property to be purchased/constructed/extended/renovated.
4. If you have been in your present employment/business or profession for less than a
year, mention an a separate sheet details of the of the occupations for previous five
years, giving position held, reason for change and period of same.
5. Applicable processing fees.
6. Proof of residence: attested copy of any one of the following:

16

Ration card

Passport

Driving license

Voters identity card

Current telephone bill/electricity bill/gas bill

Proof of identity: attested copy of ay one of the following:

Passport

Driving license

Voters identity car5d identity card issued by the employer (if employed in
state/central government)

PAN card

Certificate of loan outstanding issued by the lender (for refinance cases only)

Any other information regarding your repayment capacity that is necessary and will
assist HDFC in appraising the loan proposal.

ADDITIONALLY
IF YOU ARE EMPLOYED:
1. Verification of the employment form with only part I filled in.
2. Latest original salary slip/salary certificate showing all deductions.
3. If your job is transferable, permanent address where correspondence relating to the
application can be mailed.
4. A letter from your employer agreeing to deduct the EMI towards the repayment of
the loan from your salary. This will expedite the processing of your loan
application.
5. Your updated original bank pass books or original bank statements showing salary
and saving entries for the last six months.
6. A photo-copy of your Form-16 (issued by your employer) for the last assessment
year.
IF YOU ARE SELF EMPLOYED:
1. Balance Sheets and Profit & Loss Accounts of the business/profession along with
copies of individual income tax returns for the last three years certified by the
Chartered Accountant.

17

2. A note giving information on the nature of your business/profession, form of

organization, clients, suppliers, etc.
3. Copies of individual tax chalans for the last three years
4. Copy of advance tax chalan (if any)
5. Your updated original Bank Pass Books or Original Bank Statements showing saving
entries for the last twelve months.

TAX BENEFIT
You are eligible for certain tax benefits on principal and interest components of a loan under
the Income Tax Act, 1961.

ELIGIBILITY
The repayment capacity as determined by the HDFC will help in deciding how much we can
borrow (the cost of the property or Rs.1crore whichever is lower). Repayment capacity takes
into consideration factors such as income, age, qualifications, number of dependents,
spouses income, assets, liabilities, stability and continuity of occupation and saving history.
And, of course, HDFCs main concern is to make sure you can comfortably repay the amount
you borrowed.

STEP UP REPAYMENT FACILITY

HDFC Ltd has a hitherto with you, right through. This statement HDFC proves time and
Again by developing close relationship with individual customers and by constantly
developing and marketing in the market new and innovative products that increase the
Comfort level of the customers. Along the same philosophy HDFC came up with Step Up
Repayment Facility which once again reassures customers that HDFC helps you achieve your
dream.

This facility is especially helpful to those customers who want to get a loan on an amount
that is not falling within the permissible limit of their repayment capacity. It also is in line
with HDFCs aim to provide greater degree of personalization in service and the tools. Hence
there can be the situation where in the applicant is not in the position to pay the required EMI
which is calculated by the ILPS (Individual loan processing system). HDFC in this case
offers to let the applicant use one of the two plans to repay the loan amount.

18

The EMI Chooser 1

In this plan the applicant gets the advantage from HDFC to select the amount that he wants to
pay as his fist EMI. This means that HDFC will let the applicant decidewhat amount hecan
comfortably pay to HDFC in the first term ofhis Loan Repayment Schedule. The system will
calculate the next two EMIs for the next two terms.
The customer can hence decide when he wants to repay the maximum amount of the Loan to
HDFC and when he wants to repay minimum leftover or remaining amount of the loan in the
form of still smaller EMIs.

The EMI Chooser 2

This plan is an extension of the aforementioned plan .In this plan HDFC helps the Applicant
by letting him choose two EMIs .This means that the Applicant can select the amount that he
wants two pay for both the First and the Second terms of his repayment schedule. This
translates into more help and more convenience to the applicant. However the benefits of
these plans dont stop here.

The Applicant can also allocate the term length for which he wants to pay what amount
This translates into a great advantage to the Applicant .He can now link
1.His current salary
2.The rate of average increment,
3. His existing and expected obligations,
4. His existing and expected expenses.
5. The length of the term among others.

HDFC can hence assist the Applicant in developing a much more personalized loan plan as
compared to its competitors in the Housing Loan market.

The Applicant can also save money by using these plans .This is because the total Outflow in
case of a regular plan is more as compared to these special plans. The Applicant will hence
obtain more benefit in case of Prepayment and elsewhere.
All Loans from HDFC Ltd are subject to Tax exemption and be treated as Rebate. Hence
HDFC lets the customer save their hard earned money.

19

FLEXIBLE LOAN INSTALMENT PLAN (FLIP)

Another First of its kind product from HDFC .This is also to assist the Applicant to easily
secure a loan in the following condition. FLIP is used when the applicant and co-applicant
want to jointly repay the loan. There is however a problem in the situation which would
otherwise not allow the loan to be sanctioned. There are two applicants hence two incomes.
Therefore in the joint payment they can combine their income to repay the loan .Let there be
Mr. A and B who want to take a loan for 14 years .A isthe father and B is the son of A .Now
consider the situation in which A and B want to take a loan and jointly repay it .But A is 52
years old and B is only 25 .Hence A will retire after 8 years andwill not be repaying the EMI
but B can continue to repaythe loan. In that case although there will be a problem at other
places but in HDFC this is solved by taking different incomes in the terms. Hence the income
that will be considered earlier will be the fathers income and at his retirement or at any other
selected stage of repayment we will begin to consider only the income of the son.

The advantage of FLIP in terms of the Applicant is that of joint payment, personalization,
easy repayment, and freedom from many possible problems. In the Illustration the father is
going to pay only for 105 months and after that we are to consider the sons salary only for
the next remaining 60 months.

PARI PASSU/SECOND MORTGAGE ARRANGEMENT:

HDFC has a tie-up with a large number if public sector organizations and banks which
enable us to offer loans to your employees with the flexibility of their spouse also availing a
loan from his/her own employer.

SAFE DOCUMENT STORAGE FACILITIES:

HDFC has state of art storage facilities which are theft and fire proof, at various locations
where loan and property documents are stored. In this way valuable documents are stored
safely over the period of the loan and are released almost immediately after a customer repay
his loan.

20

ELECTRONIC MAIL:

HDFC through its E-mail services can promptly respond to queries. In addition, HDFC can
promptly send its application form cum brochure and other detail on its loan products by email to interested individuals. For Non-resident Indians our interactive website offers another
means of contacting us. In our effort to reach out globally dispersed Non-resident Indians, we
will continuously enhance our website.

HOME CONVERSION LOAN:

HDFC offer the option of a home conversion loan to its existing customer who are interested
in moving to a new house. Through this scheme the customer can apply to have their existing
loan transferred towards the purchase of the new home. Customers may also apply for an
additional loan amount for the purchase of the new house. This gives the customers the
option of selling t6heir existing house if they wish to, without having to repay their old loan

APPLICATION CAN BE MADE BEFORE SELECTING THE PROPERTY:

Individuals may make an application for the loan even if the property has not been selected
or the construction has not commenced. HDFC can provide assistance in locating an
appropriate house to such customers.

HOME IMPROVEMENT LOANS:

As an exclusive offer to its existing customers HDFC offers Home Improvement Loan up to
100% of the improvement cost as compared to the home improvement loans up to 70% of the
improvement cost offered to the general public

FEE:
A processing fee of 0.5% of the loan amount applied for rs.5 per rs.1000 of the loan applied
for is payable when the application form is submitted to HDFC. This fee is in the respect of
costs incidental to the application. For example:

21

LOAN APPLIED FOR

FEES

Rs.20000

Rs.100

Rs.100000

Rs. 500

On approval of the loan, a loan offer is made to you on acceptance of the offer. You have to
pay an administrative fee of Rs.0.5% of the loan approved. You can also pay the processing
fee and administrative fee upfront i.e. 1% of the loan at the time of submission of the loan
application itself. This fee is in respect of the costs incidental to the application. Taxes as
applicable will be charged on the fees collected.

CHARGES:
For Fixed Rate Home Loan (FRHL) an early redemption charge of 2% of the amount being
prepaid is payable, if the amount being repaid is more than 25% of the opening balance.
However under Adjustable Rate Home Loan (ARHL) option early redemption charges of 2%
is payable only in case of commercial refinance. You may be required to submit the copies of
your Bank Statements or any other documents that HDFC deems necessary to verify the
source of prepayment.
You can make payment for fees and charges by cheque marked payees account only
drawn on a bank in a city where HDFC has an office or by demand draft (payable at par to
HDFC).

HOW TO APPLY
Customer can either download (in PDF format) the application form or get the application
form by E-mail. Alternately the customers can collect the application form from any of your
nearest HDFC offices. Customer need to submit it along with supporting documents and
processing fee at any HDFC office that is convenient to the customer. Customers can make
payments by the cheque marked payees account only drawn on a bank in a city where the
HDFC has an office, by demand draft (payable at part to HDFC) or by cash. Customer can
make an application at any time after they have decided to acquire a house even when the
house has not been selected or construction has not commenced.
HDFC will consider your application, make enquiries as it deems necessary and convey its
decision to you. On acceptance of the offer, you will have to pay an administrative fee for the

22

loan approved. Customer can take the disbursement of the loan after the property has been
completed and you have invested your own contribution in full (own contribution is the total
cost of the property less HDFCs loan). The loan will be disbursed in full or in suitable
installments (normally not exceeding three in number)taking into account the requirement of
the funds and the progress of the construction, as assessed by HDFC and not necessarily
according to the builders agreement.

FINANCIAL IMPLICATIONS OF AVAILING A LOAN (SMALL OR BIG)

There are several expenses involved apart from repayment of the actual loan amount:
1. Processing fees- A processing fee (PF) is charges at the time of submission of the
application form and covers expenses incurred for processing the application form. This fee
has to be paid upfront by the customer in some cases, it is non-refundable.
2. Administration fees- to meet operating expenses.
3. Pre-EMI- A simple interest calculated on the disbursement amount in case of a plot under
construction.
4. EMI- The EMI is an abbreviated form of the equated money installment and is simply
referred to as monthly installment in common parlance. And, being a self-explanatory term
that is exactly what it is. The amount you will have to pay you financier every month when
repaying your loan. Being a monthly payment, at the end of the year, you would have paid 12
EMIs.

23

SBI HOUSING LOAN

Main SBI Home Loan Schemes

SBI Realty : Purchase of plot of land
SBI Optima : Loan to existing home loan borrowers
SBI Green Home Loan : For homes that fight against the adverse climate change,
SBI offers 0.25% concession in interest rate and waiver of processing fees
SBI Flexi : Combination of floating and fixed interest rate, in a pre determined ratio
NRI Home Loans : Loans for NRIs and PIOs
SBI Freedom : Pledging other financial security than mortgaging the house
SBI Max Gain : Operate your home loan account like your SB or Current Account

Features
SBI Home Loan provides no cap on maximum loan amount for the
purchase/construction of house/flat.
There is an option to club the income of the applicant's spouse and children to
compute the eligible loan amount.
The bank provides free personal accident insurance cover.
A complimentary international ATM cum Debit card is also provided by SBI.
On the spot "in principle" approval is a special provision for the applicant.
If all the required documents are submitted by the applicant, SBI Home Loan is
sanctioned within 6 days of the date of submission.
The applicant can also consider SBI's Home Loan as a Term Loan or as an Overdraft
facility, in case he/she wants to save on interest and maximize gains.
SBI Home Loan also provides free personal accident insurance cover up to Rs 40
Lakhs.
Repayment is permitted up to 70 years of age, which is an added advantage of SBI
Home Loan.

24

SCHEMES PROVIDED BY SBI

The Most Preferred Home Loan provider SBI Bank offers a Home Loan with Attractive
Interest Rates with Latest Schemes and Benefits. SBI also provides a Housing loan with
different schemes. Schemes Are:-

1. SBI Easy Home Loan

2. SBI Advantage Home Loan
3. SBI Housing Finance Scheme
4.SBI Happy Home Loans
5.SBI Life Style Loan
6. SBI Green Home Loan
7. SBI Home Plus
8. SBI Home Line
9. SBI My Home Campaign

ELIGIBILITY
The minimum age of the applicant is 18 years, on the date of the sanction of the loan.The
maximum age limit for a Home Loan applicant is 70 years. It is the maximum age limit,
within which the loan should be fully repaid.The applicant should consist of sufficient,
regular and continuous source of income for repaying the loan.

DOCUMENTS
Completed Application Form with one Passport Size Photograph
Identity Proof - the applicant can make use of his/her PAN Card/Voter ID/
Passport/Driving License, for the purpose.
Residence Proof - the applicant can make use of his/her Recent Telephone Bill/
Electricity Bill/Property tax receipt/Passport/Voters ID
Proof of business address in respect of businesspersons/ industrialists
Sale Deed, Agreement of Sale, Letter of Allotment, Non Encumbrance Certificate,
Land/Building Tax paid receipt etc.
Copy of Approved Plan and approval from the Local Body

25

Statement of Bank Account/ Pass Book for last 6 months

INTEREST RATE (SBAR is currently 11.75%)

Year 1 - 8% fixed
Year 2 & 3 - 9% fixed
Year 4 onwards - For loans up to 50 lakhs, 9.25% floating.
For loan amount over 50 lakhs, 9.75% floating

Eligibility Criteria & Documentation required for SBI Home Loan

Salaried

Self employed

Age

21years to 60years

21years to 70years

Income

Rs.1,20,000 (p.a.)

Rs.2,00,000 (p.a.)

5,00,000 - 1,00,00000

5,00,000 - 2,00,00000

5years-20years

5years-20years

2years

3years

Loan Amount
Offered
Tenure
Current
Experience

1) Application form with

photograph
2) Identity & residence proof
Documentation

3) Last 3 months salary slip

4) Form 16
5) Last 6 months bank salaried
credit statements
6) Processing fee cheque

1) Application form with photograph

2) Identity & residence proof
3) Education qualifications certificate &
proof of business existence
4) Business profile,
5) Last 3 years profit/loss & balance
sheet
6) Last 6 months bank statements
7) Processing fee cheque

Other Products from SBI (State bank of India)

SBI Personal Loan
SBI Card
SBI Home Loan
SBI Housing Loan

26

LOAN TENURE
You can repay the loan over a maximum period of 25 years under both FRHL and ARHL in
SBI. Repayment will not ordinarily extend beyond your age of retirement (if you are
employed) or on your reaching 65 years of age, whichever is earlier.

PROCESSING FEE
FEES

RUPEES

Upto 5 lakh

Rs. 1000

5lakh-10lakh

Rs. 2000

10lakh-20lakh

Rs. 5000

20lakh-50lakh

Rs. 7000

50lakh-1crore

Rs.8000

1crore-5crore

Rs.10, 000

Above 5 crore

Rs.20, 000

PREPAYMENT CHARGES
If paid from own source- Nil,
In other cases- 2% on principal amount prepaid

LTE PAYMENT CHARGES

If paid from own source- Nil,
In other cases- 2% on principal amount prepaid

27

Research Methodology

28

RESEARCH METHODOLOGY
Research methodology is an important part of every project. Because it helps in knowing
how to select the representative sample from the world or the general population, the right
research tools and techniques to complete the research.
The study of the consumer behavior is important because he is the king. The research process
is based upon survey method, so in order we go to service provider and services user which is
the customers.
The research involves the following steps:

Define the problem and research objective: The problem and objective is to assess
the services offered by the various service providers and what the customer wants.

Developing the research plan: The second stage of the research methodology is to
develop a research plan. The research plan designed to take the decision on the data
sources, research approaches, research instruments, sampling plan and contact
methods.

Research instrument: The use of an effective research instrument is very important

because through this instrument we collect data in this project through observations
and personal interview were conducted.

Personal interview: As we were doing direct selling we interacted with my

customers and asked about their views in selecting a service and what are their wants
and expectations from a service provider.

Sampling plan: After finalizing the research approach and instruments a sampling
must be designed.

Sampling unit: Data have been collected from banks.

Sampling size: It has been collected from two banks.

Collect the information: After completing all the steps, the data are collected from
different sources.

Analyze the information: After the data is collected they are analyzed to know the
findings. The data is then tabulated to develop the frequency distribution.

Present the findings: As the last step, the findings are presented that are relevant to
the major marketing decisions.

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Data Analysis and

Interpretation

30

DATA ANALYSIS AND INTERPRETATION

The home loans provided by the banks are more or less same at the basic level. The banks
generally try to go ahead of other banks in terms of attracting number of customers to their
countries. For this they are trying to offer some unique services as per the unique
requirements of the unique important customers.

COMPARITIVE STATEMENT OF HOME LOAN

PARTICULARS
ROI(FIXED)

HDFC
14%

SBI
Year 1 - 8%
Year 2 & 3 - 9%

ROI(FLOATING)

Up to 30lakh-8.75%

Year 4 onwards -

30 lakh-50lakh-9%
Above50lakh-9.25%

up to 50 lakh-9.25%
over 50 lakhs-9.75%

PROCESSING FEE

0.5%

0.5%

PENALTY

2%

2%

TENURE

25 years

25 years

MINIMUM AGE

21

25

MAXIMUM AGE

60

55

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SWOT ANALYSIS OF HOUSING FINANCE INDUSTRY

STRENGTHS

The industry has been witnessing very fast growth rate, which is 6% growth in the
first

Quarter of 2002-2003 as against 3-5% growth recorded in the first quarter of 20012002

The market faces a high demand curve, thoroughly mismatched by a low supply
curve

Investment is based in assets that are securities & those that have historically
appreciate rapidly.

Tax benefit & other facilities provided on loan repayments.

WEEKNESSES
1. The foreclosure rules of court of law such as provision regarding the ownership of not
more than one house (in Delhi) binds the industry.
2. The healthy of an HFC depend upon its ability to mob up low cost funds.
3. AN HFC is unable to tap the rural market due to lack of proper retrieval procedures
so whilst
4. The rural market offers a higher rate of return; it has a higher risk & default rate.
5. Many legal impendent exist, deferring purchase of certain types of property beyond a
6. Certain extent thereby negatively impacting weak mortgage laws, resulting in
anincrease in risk compo ending this.

OPPORTUNITIES
1. The housing industry faces a severe shortage of houses. The total demand for houses
is Expected to touch around 19.40 million units by the year 2003 of these 12.8 million
2. Dwelling units (65-98%) would be in rural areas & 6.6 millions dwelling units
(34.02%) in urban areas.
3. While the loan facility is backed by the security of property this sector represent a low
margin But on the low margin but on the same line low risk segment. The address this

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4. Market the ones lies on the HFCS to device bold & innovative alternatives like
mortgage Based securities use of method such as door to door collection of
installments assessing the Creditworthiness of the prospective client and providing for
group securities.
5. The roles of NHB in refinancing & providing regulation of housing finance system.
6. The governments initiatives to promote the sector & its contribution in uplifting the
sector.

THREATS
The industry faces increased competition as more & more foreign backs &Housing Finance
Companies are providing loan facility.

SWOT ANALYSIS OF HDFC HOME FINANACE

STRENGTH

1)Save substantial interest.

2)Prepay whenever the customer.
3)Reduce their loan outstanding.
4)Access the surplus finds anytime.
5)Use surplus funds to invest when the right opportunities arises.

WEAKNESS

Product is very good but it is mainly suitable for higher income group & is not suitable for
the Middle income group

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Findings

34

FINDINGS
The markets for home loans have been sizzling in India. The spurt in growth in recent
years and the prospect of continued buoyancy in demand have attracted many players to the
industry which till a couple of years back had two major players- HDFC and LIC Housing
Finance. The result is cut-throat competition, which has benefited the loan seekers. The home
loan market has grown at a compounded rate of over 40% over the last four years. And from
what industry experts believe that there is a little chance that there will be any significant
decline in the growth rates going forward.
There are several reasons for the same on the demand side:

Faster rise income as compared to property prices, thus making housing more
affordable.

Decline interest rates, which have greatly reduced the cost of borrowing (both o0n
interest and capital).

Then there are factors on the supply side too which have supported this growth:-

More competition in the housing finance sector resulted in companies charging lower
interest rates, sometimes even at the cost of spread (i.e. profit margin)

The fee for getting the home loan has reduced dramatically over the last couple of
years. From over 2% of the loan amount to as long as 0.25% (some companies are
known to wave of the fee entirely). Housing Finance Companies have introduced
several new products to meet the needs of wide variety of customers. One such
scheme, the Step up Loan, where EMIs increases as the income of the individual
increases has been a big hit with the individuals just starting off with their careers.

One other factor is increasing collaboration between Housing Finance Companies and
builders. Such partnership minimizes the service and funding related issues
significantly thus making it easier to buy property.

35

Limitation of the Study

36

LIMITATION OF THE STUDY

1. I was unaware of their operation. The banking activities are very large in number
2. Financial terminology was new to me and that was a limitation to understand the
whole process.
3. I had no work experience earlier.
4. Limited time for the study.

37

Suggestion

38

SUGGESTION
The following suggestions are strongly recommended:

To broaden the customer base the vast middle income strata should be fully exploited.

Simplify the procedure, reduce service charges & demand only the basic essential
proof.

Most banks are reluctant to advance loan to the service class. E.g. law years, police
officers etc. this aspect must be exploited.

Adoption of flexible & more lenient penalty should the

Customer fails to deposit the payment on time. The penalty should be case to case
basis rather than the same for the entire customer base.

Restriction to be reduced to bare minimum for loan advances & for repayment. For
e.g. offers Long term repayment facilities & have no age restriction to choosing
repayment. The maximum age for repayment could be increase to 65-70 years of age.
Such facility will grow fast retail segment of the bank.

Offer multiple repayment loans services. Class to be exploited by offering special

reduced

Rates & linking the repayment from the source where the pay cheque to the employee
is issued. This need to undergo special contract with government organization to
ensure implementation.

39

Conclusion

40

CONCLUSION
The Indian customer has come a long way from purchasing to fulfilling their needs
from buying a house customers now grab everything that comes their way but they do their
own survey of optimum loans; same is the case with banks & housing loans. With
innumerable choices before him, the customer is needed then king. It is therefore imperative
that if the bank has to succeed in competitive world, it should be technological starry.
Customer centric progressive driven by highest standard of cooperative governance & guided
by sound ethical values & above all should have personalized customer services. There is
scope of exploiting the vast middle income group by releasing loans with special interest
rate, which would be beneficial to both parties.

41

Bibliography

42

BIBLIOGRAPHY
Web

www.bnknetindia/com/banking/finance

www.hdfcbank.com

www.hdfcbank/products/finance

http://en.wikipedia.org/wiki/bankingfinancialcompany

Bank brochures and products folders.

Books

Reserve Bank of India, 1935

Banking Regulation Act, 1949

Banking Theory and Practices by Dr. P.K. Shrivastava

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