1.

ABSTRACT

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

individual. There are many home loans provider in the market to
make our dream come true. But before we opt for any home loan
provider, we need to consider certain factors related to property
that we are interested in buying and also about the salient
features offered by a home loan provider.

The Indian housing finance industry has grown by leaps and

bound in few years. Total home loans disbursements by banks
have risen which witnessed phenomenal growth from last 5 years.
There are greater numbers of borrowers of home loans. Today
many banks provide home loans whether commercial banks or
financial institutions to the people who want to have a home. The
housing sector plays an important role in the economic
development of the country.

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

and problems faced by them in obtaining home loans. Research
methodology to be used for study will be both primary and
secondary data and based on that we will be drawing our
recommendations and conclusion.

1
 2. 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 one’s dream.

Home is one of the things that everyone one wants to own. Home
is a shelter to person where he rests and feels comfortable. Today
many banks are providing home loans whether commercial banks
or financial institutions to the people who want to have a home.

Many banks are providing home loans at cheapest rate to attract

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

We can take different types of home loans like Home construction

Loans, Home Equity Loans, Home Extension Loans, Home
Improvement Loans, Land Purchase Loans etc. for different
schemes available in the market. There are different types of
home loans tailored to meet our needs.

The main reason for boom in home loan market is the change in
government policies. It is our government’s motivation that the

2
home loan interest rates in India have fallen considerably. Lot
many banks are offering home loans and this is available at low
EMIs (Equated monthly Installments). High EMIs are now a thing
of past. Today lending rate is in the range of 7.5 to 15 %.

Today HDFC Bank and Standard chartered bank has become the
first player in this sector to announce a housing loan for a 20
years period. No doubt it will enhance the end cost people to plan
their house over longer duration now; it has been made easy for a
person to buy that dream house which he dreamt of long ago.

3. OBJECTIVES

The main objectives of the study are as follows:-

• To know the ideas of customers about home loan products and

services.
• To study the satisfaction level of customers about home loans.
• To study the problems faced by customers in obtaining the
home loans.
• To make comparative study of Disbursement of home loans by
Commercial banks.

• To study the home loan schemes by different banks.

3
 4. RESEARCH METHODOLOGY

The purpose of the Research methodology is to describe the

research procedure. This includes overall research design, the
sampling procedure, the data collection method, and the analysis
procedures and methods.

In this COMPARATIVE STUDY & ANALYSIS OF HOME LOANS

descriptive type of research will be used for collecting the primary
data. It includes surveys, Questionnaires and fact finding
enquiries of different kinds & secondary data is collected from
secondary sources such as Internet, Books, Journals, Newspapers,
etc.

1. Primary Data:

4
Primary data is collected in the form of survey of the
public/investors based on the Questionnaires formulated & by
personal Interview.

Primary data: Questionnaires & Personal Interview

2. Secondary Data:

For secondary data collection method, the help of various

reference books, journals have been taken and data is also
collected by way of surfing through various websites.
Secondary data: Internet, Books & Journals.

3. Sample Size:
A sample size of 100 is taken for this study. Random Sampling
technique is used for the survey.

5. REVIEW OF LITERATURE

1. Bank Management – Vasant Desai – Himalaya Publishing

House. ( First Edition 2009)

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

heart of Indian Financial System. Banks in India have been
playing a unique role in mobilizing saving credit disbursement,
investment & providing other services. According to the latest

5
figures released by the Reserve Bank of India, commercial bank,
Deposits touched Rs 30,75,224.33cr, outstanding bank credit
amounted to Rs. 22, 72,602.73 cr, Investment touched
Rs9,86,052.21 cr on march 14, 2008. The ability of the banking
system to perform its task efficiently & in harmony with our neds
& economic goals depends in a large measure on its efficient
management. The banking system must be managed prudently ,
safely & profitably if we are to have a strong, growing &
adaptable banking system capable of meeting the demand of
society.

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

( First Publish – 2008)

Although ‘Banking’ is an old Activity and has its roots in

economics, finance, and commerce, the word ‘banking
technology’ is of recent origin. To many people ‘banking
technology’ means the use of computers and related hardware to
streamline and automate banking operations. This book attempts
to demystify the word ‘banking technology’ and offers much
broader meaning and more realistic and operationally sufficient
perspective on ‘banking technology’.

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

( First Publish – 2008)

In earlier times, lending and borrowing was mainly between

individuals and what was meant by usury in these transactions
was commonly known and understood. In money matters, any

6
amount over and above the lent sum was defined as usury. The ill
consequences of usurious lending – the ruination of individuals
and family – were witnessed at the local level and therefore the
community held the practitioner in contempt. But the need for
capital and loans existed and in the absence on alternative
solutions, the usurious lenders became an indispensable
component of the society. They also exercise invisible power over
their client resources.

4. In December 2006 Fulbag Singh and Reema Sharma had

studied about the housing Finance in India. Housing, as one of the
three basic needs of life, always remains on the top priority of any
person, economy, government and society at large. In India,
majority of the population lives in slums and shabby shelters in
rural areas. From the last decade, the Government of India has
been continuously trying to strengthen the housing sector by
introducing various housing loan schemes for rural and urban
population. The first attempt in this regard was the National
Housing Policy (NHP), which was introduced in 1988. The National
Housing Bank (NHB) was set up in 1988 as an apex institution for
housing finance and a wholly-owned subsidiary of Reserve Bank
of India (RBI). The main objective of the bank is to promote and
establish the housing financial institutions in the country as well
as to provide refinance facilities to housing finance corporations
and scheduled commercial banks. The paper is based on the case
study of LIC Housing Finance Ltd., which analyzes region-wise
disbursements of individual house loans, their portfolio amounts

7
and the defaults for the last ten years, i.e., from 1995-96 to 2004-
05 by working out relevant ratios in terms of percentages and the
compound annual growth rates.

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

had studied about the Loan commitments and private firms. They
studied that, Most loans are in the form of credit lines. Empirical
studies of line demand have been complicated by their use of
data on publicly traded firms, which have a wide menu of
financing options. We avoid this problem by using a unique
proprietary data set from a large financial institution of loan
commitments made to 712 privately-held firms. Our findings are
consistent with their predictions. Firms facing higher rates and
fees have smaller credit lines. Firms with higher growth commit to
larger lines of credit and have a higher rate of line utilization.
Firms experiencing more uncertainty in their funding needs
commit to smaller credit lines. Almost all firms convert unused
credit line portions into spot loans and take out new lines.

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

LaCour-Little had studied about the unique paired loan dataset
containing information on multiple conventional conforming
mortgage loans of households to examine home equity extraction
decisions over the period 2000-2006. The main question
addressed is how much households borrow when refinancing their
current mortgage debt in a cash-out transaction. Results

8
contribute both to the literature on refinancing behavior and the
role of house price appreciation in providing funds that may be
used for consumer spending or other purposes.

6. INDUSTRY OVERVIEW

Indian home loans Industry:

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

spite of the skyrocketing prices. Today, we find considerable Real
Estate Investment in India, either in the field of Residential
Property in India or Commercial Properties in India. Home Loans
in India are disbursed by many Banks as Loan Banking is on of
the most important function of the Financial Services in India.
Property Dealers and Real Estate Consultants in India usually
recommend that we undertake appropriate Home Loan or
Mortgage Loan counseling so that we can Buy Apartment in India

9
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
can’t afford to pay the amount in lump sum, you can pay it in
monthly installments with an interest rate.

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

further according to analysts who foresee a cut down in the rates
by the RBI in the wake of the decision taken by US Federal
Reserve to cut its rates by a significant margin.

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

interest rate. You can avail loan against existing house for
renovation or expansion etc. There are many nationalized banks
that offer finance for affordable housing. India Housing has put
together a comprehensive data to provide you with the cheapest
Home Loans available in the market. We have listed all the
important housing finance institutes and some of the top home
finance banks providing lowest interest rates.

In the last few years, housing loan scenario in India has changed
drastically. It has taken a front seat and people are looking
forward to owning their own houses. It is no more a dream that
required lifetime saving and a difficult decision to make. Today
the new home purchase loan is much easily available and is much
cheaper than what was available earlier. Banks are now
everywhere and the schemes are implemented even in villages

10
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 government’s motivation that the
home loan interest rates in India have fallen considerably. Lot
many banks are offering home loans and this is available at low
EMIs (Equated monthly Installments). High EMIs are now a thing
of past. Today lending rate is in the range of 7.5 to 15 %.

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

The interest rate available is also of two different types. One is
the fixed rate loan and the other is the floating rate loan. In the
fixed rate loan, whatever interest is fixed on the start of loan is
carried on for the complete period. However, in the other one, the
interest rate is not fixed and as the interest rate goes up or low
the effect is directly transferred to the person who is taking the
loan. In the last few years the floating interest rate has been a
favorite among most of the people taking home loans.

There is also a trend to opt for home construction loan. This loan
is available to those who want to design their homes according to
their requirement and taste. In other words, this loan is meant for
those who themselves want to construct their new home.

11
As shared earlier, taking a loan is not a difficult task. However,
before taking a loan, one must realize that the relationship with
the bank will be for a longer period usually 15 to 20 years so one
must ensure faith and integrity in bank. Apart from low rate of
interest, the bank should also provide some value added services.
The other thing is to look into is the property that is to be
brought. Making sure that the builder has all sanctions and facility
to build a good building is very important.

Taking home loans these days has become simpler. With the RBI
regularly bring down interest rates; taking home loans have
become extremely easy. Housing loans which were 16.5% to 18%
a few years ago fell by 11.5% to 13%. With interest rates going
down, people increasingly number apply to take these loans.
Some of the leading banks offering home loans in India, including
ICICI Bank, IDBI Bank, HDFC Bank , Bank of Baroda, SBI, Standard
Chartered Bank and Axis Bank .

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

annum, this can be seen in the stats shown below with average
ticket size (loan size) and Amount disbursed is rising every year
the opportunities have become more dominant for different
organization in India. The demand drivers are fast growing middle
class population, rise in working women workforce, bigger
aspirations of youth, Tax saving, Transparency in the real estate
market.

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Impact of slowdown on home loan market in India:

The fear of a recession looms over the United States. And as the
clinch goes, whenever the US sneezes, the world catches a cold.
This is evident from the way the Indian markets crashed taking a
cue from a probable recession in the US and a global economic
slowdown. U.S slowdown has affected almost all sectors not only
in US but to all over the world. Indian economy has also been
affected by this slowdown because India is a growing country and
almost in all sectors various multinational companies have major
contribution. So the role of this slowdown is a major issue to be
discussed while talking about Home Loan Market in India.

Bankers who were earlier falling over each other to dole out home
loans, even for soft furnishings, have suddenly become choosy.
Banks like SBI, ICICI Bank, UTI Bank, IDBI Bank and leading
mortgage firm HDFC are now apparently making a conscious
attempt to curb their aggression in the home loan market.
Situation is like that if a customer who recently approached a
private sector bank for a home loan of about Rs 10 lakh for a
tenure of 15 years found, to his shock, that the eventual loan
disbursement was just Rs 5 lakh. Most bankers aren't willing to
confirm any slowdown in their home loan portfolio. On record,
they attribute the marginal dip in home loan disbursements to the
recent hike in interest rate.

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

slowdown in the home loan market for select players like ICICI

13
Bank was evident from January. ICICI Bank's average home loan
disbursement in a month is around Rs 2,500 crore in a month,
which has come down to almost Rs 2,000 crore in March," said a
private sector banker. ICICI Bank officials denied any slowdown in
their home loan portfolio and they say that the recent dip in
interest rates has had some impact on disbursals. However, in
absolute terms, it is still low. Even this slowdown the deposit
growth for the sector as a whole is around 17%, while credit is
growing at almost 28%, forcing banks to become selective.
Institutions now charge a floating rate of 8 to 8.25 per cent on
home loans above Rs 20 lakh. Initial estimates by bankers
suggest that the increase in rate for home loans and other
segments would be around 25-50 basis points (0.25% to 0.5%).
Even as the provisioning requirement has gone up around 60
basis points, the hike in interest rates may be lower as the impact
would be felt for the first year. It would also depend on how well
capitalized the banks are as the rise in provisioning and risk
weightage would affect the return on equity for banks. Weaker
banks and banks with a large portfolio of these loans are likely to
be more affected and may hike rates first.

Home loan growths of disbursals were at 20 per cent in 2007-08

according to a study by the credit rating agency CRISIL, a
Standard & Poor’s company. This rate is lower than the 30 per
cent annual increase seen in the past three years, but in absolute
terms represents a substantial expansion. The slower growth
reflects the impact of rising property prices and interest.

14
Interest and market trends in year 2009-10:

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

started softening from the beginning of this year when the
Reserve Bank of India (RBI) announced sharp cuts in the repo rate
and cash reserve ratio (CRR). The RBI started slashing the key
policy rates since October last year, after taking into account the
worsening liquidity situation of banks here. The central bank has
reduced its key policy interest rates (repo and reverse repo) and
reserve ratio (CRR) four times in the last six months. The cut in
the repo rate meant commercial banks would have funds
available at a lower cost. On the other hand, the cut in the CRR
meant banks would have to keep less money with the RBI and
hence they had more money to lend. Analysts believe that
interest rates have not yet bottomed out and there will be further
cuts in borrowing rates over the next few months.

Following in State Bank of India’s (SBI’s) footsteps, other state-

run banks may also come out with scheme offering home loan at
a fixed rate of 8%. The Indian Banks’ Association (IBA) would
review the response of borrowers towards the SBI scheme after
three weeks and if it finds that there has been a good response,
other banks will follow suit.

Last week, SBI had announced that it would offer home loans at a
flat rate of 8% to all borrowers and would freeze this rate for one
year. The chairman of one of the major banks, who asked not to

15
be named, said SBI can afford to lend at such cheap rate as it has
one of the best current and savings account (CASA) deposit ratio.
CASA deposits are the cheapest source of funds for a bank and a
high CASA deposit ratio brings down their average cost of funds.
This in turn helps the bank in offering cheaper credit while
maintaining their net interest margin (NIM). NIM is the difference
between the rates at which banks borrow and lend.
State-owned banks started cutting their home loan rates after
country's largest lender; State Bank of India froze its new home
loan rates at eight per cent for one year recently.

16
 7. TYPES OF HOME LOANS

Housing loans offered by banks are of different types:

• Home Purchase Loans

• Home Construction Loans
• Home Improvement Loans
• Home Extension Loans
• Home Conversion Loans
• Land Purchase Loans
• Stamp Duty Loans
• Bridge Loans
• Balance Transfer Loans
• Refinance Loans
• Loans to NRIs

Home purchase loans:

This is the basic home loan for the purchase of a new home. If
you want to buy a flat in some society or some already built
house, banks and HFCs sanction you home purchase loans for this
process.

Home construction loans:

17
This loan is available for the construction of a new home on a said
property. The documents that are required in such a case are
slightly different from the ones you submit for a normal Housing
Loan. If you have purchased this plot within a period of one year
before you started construction of your house, most HFCs will
include the land cost as a component, to value the total cost of
the property. In cases where the period from the date of purchase
of land to the date of application has exceeded a year, the land
cost will not be included in the total cost of property while
calculating eligibility.

Home improvement loans:

These loans are given for implementing repair works and

renovations in a home that has already been purchased, for
external works like structural repairs, waterproofing or internal
work like tiling and flooring, plumbing, electrical work, painting,
etc. One can avail of such a loan facility of a home improvement
loan, after obtaining the requisite approvals from the relevant
building authority. the following are coming under the home
improvement loans:

• External repairs
• Tiling and flooring
• Internal and external painting
• Plumbing and electrical work
• Waterproofing and roofing
• Grills and aluminum windows

18
 • Waterproofing on terrace
• Construction of underground/overhead water tank
• Paving of compound wall (with stone/tile/etc.)

Home extension loans:

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

any alteration to the existing building like extension/ modification
of an existing home; for example addition of an extra room etc.
One can avail of such a loan facility of a home extension loan,
after obtaining the requisite approvals from the relevant
municipal corporation.

Home conversion loans:

This is available for those who have financed the present home
with a home loan and wish to purchase and move to another
home for which some extra funds are required. Through a 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 investment purposes.

Stamp duty loans:

19
This loan is sanctioned to pay the stamp duty amount that needs
to be paid on the purchase of property.

Bridge loans:

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

Balance- transfer loans:

Balance Transfer is the transfer of the balance of an existing

home loan that you availed at a higher rate of interest (ROI) to
either the same HFC or another HFC at the current ROI a lower
rate of interest.

Refinance loans:

Refinance loans are taken in case when a loan for your house
from a HFI at a particular ROI you have taken drops over the
years and you stand to lose. In such cases you may opt to swap
your loan. This could be done from either the same HFI or another
HFI at the current rates of interest, which is lower.

NRI home loans:

This is tailored for the requirements of Non-Resident Indians who

wish to build or buy a home or property in India. The HFCs offer
attractive housing finance plans for NRI investors with suitable
repayment options.

20
On would be entitled for home loans in the range of Rs 5 lakh to a
maximum of Rs 1 crore, based on the repayment capacity,
previous credit history and the cost of the property. The bank
may provide a maximum of 85% of the cost of the property or the
cost of construction as applicable and 75% of the cost of land in
case of purchase of land. Some of the leading banks offering
home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank
State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered
Bank and Axis Bank.

8. HOME LOAN PROCEDURE IN INDIA

Submission of Application Form:

After choosing a particular home loan, the customer submits the

application form to the housing finance company (HFC) along with
other relevant documents as required by the HFC. They comprise

21
documents to establish income, age, residence, employment,
investments, etc. The customer also needs to hand over a cheque
for payment of an up front (non -refundable) processing fee of
about 0.5-1% of the loan amount to the HFC.

Validation of the Information:

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

customer on the application form. They usually conduct checks on
the residential address of the customer, the place of employment
of the customer, and credentials of the employer. Some HFCs
may insist on a personal interview with the customer and perform
a reference check on the references provided by the customer on
the application form.

Issue of Sanction Letter:

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

which contains details such as loan amount, rate of interest,
annual / monthly reducing balance, tenor of the loan, mode of
repayment and general terms and conditions of the loan. This is
the actually the approval of the money lending procedure by the
company. However, the money is sanctioned only after the
documents and the property on behalf of which the loan is being
granted is thoroughly verified.

Submission of Documents:

22
Once the sanction letter is passed, the customer is required to
leave the entire set of original documents pertaining to the
property being purchased with the HFC as security for the loan
amount sanctioned. These documents remain in the custody of
the HFC till the time the loan is fully repaid. Once the documents
are handed over to the HFC, they send all the documents for a
thorough legal scrutiny.

Validation of Property:

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

customer's property to ensure that all construction norms have
been adhered to properly. Once the HFC is satisfied that the
property is legally and technically clear, they disburse the loan
amount. The disbursement from the HFI is on the basis of the
stage of construction of the property.

Payment Procedure:

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

take the money from the lender party. Until such time that the
entire sanctioned amount is not drawn, the customer is supposed
to pay a simple interest on the Actual Amount drawn (without any
principal repayments). The EMI payments commences only after
the entire sanctioned loan amount is drawn

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 9. HOME LOANS INTEREST COMPARISON

The table below illustrates the comparison between the interest

rates from various Housing Finance Companies and banks.

Finance Loan Fixe EMI/ Floatin EMI /

Institution Period d Lakh g Lakh
(in (INR) (INR)
years)
Bank of Up to 5 9.00 2076 8.00 2028
Baroda 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 Up to 5 9.50 2100 8.75 2064
India 6 to 10 9.75 1300 9.25 1280
11 to 15 - - 9.25 1029
16 to 20 - - 9.75 949
HDFC Up to 5 11 2175 9.50 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

24
ICICI Bank Up to 5 10.7 2162 9.50 2101
5
6 to 10 10.7 1364 9.50 1294
5
11 to 15 10.7 721 9.50 1045
5
16 to 20 10.7 1016 9.50 933
5
LIC Housing Up to 5 10.5 2149 9.50 2100
Finance 0
6 to 10 11 1373 9.50 1294
11 to 15 11 1137 9.50 1044
16 to 20 11 1032 9.50 932
Up to 5 9.00 2076 10.50 2150
6 to 10 9.00 1267 10.50 1350
PNB Housing
Finance 11 to 15 9.25 1030 10.50 1106
16 to 20 9.50 933 10.50 999

It can be seen that if one wishes to go for floating loans, the bank
which gives the best deal as far as the interest rate is concerned
is HDFC followed by PNB Housing Finance and SBI with the lower
rates.

25
 10. COMPARATIVE STUDY OF DISBURSEMENT OF
HOME LOANS BY COMMERCIAL BANKS

There are number of schemes and products, offered by

commercial banks to attract the customers. The comparisons
among different commercial banks which offer home loans in
regard of Disbursement of home loans are as:

Home loans distributed by HDFC and Commercial banks:

(Rs. in crore)

Years State HDFC Punjab CITI ICICI

Bank LTD Bank BANK
National
Of
India Bank

2004- 140.75 120.15 90.07 9.21 104.33

05

192.43 183.26 120.00 11.55 123.24

2005-
06
235.46 213.65 144.67 19.06 150.65

26
 2006- 252.27 240.87 180.33 27.09 176.75
07

282.56 265.15 240.00 30.10 224.00

2007-
08

2008-
09
Total 1103.47 1023.08 775.07 97.01
778.97

Interpretation:

There is no doubt that every bank tries to maximize its home loan
disbursement. But on the basis of data it is concluded that SBI
shows high loan grants of Rs. 1103.47 crore as compared to
HDFC, ICICI, PNB & CITI bank respectively Rs.1023.08, Rs.778.97,
Rs.778.97 and Rs.97.01 crores. On this analysis the SBI are higher
loan providers as compared to other sector banks.

Recovery of Home loans: (Rs in crore)

Years State HDFC Punjab CITI ICICI

Bank BANK Bank BANK
Nationa
Of (Rs in
l

27
 India Bank crore)

2004-05 90.05 97.28 63.05 5.27 98.12

2005-06 172.23 150.00 91.20 10.16 105.00

2006-07 185.30 185.86 127.31 14.35 133.46

2007-08 192.75 231.07 165.90 18.68 144.65

2008-09 262.56 256.05 228.12 23.91 209.16

Total 902.85 920.26 675.58 72.37
690.39

Interpretation:

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

private showed increase HDFC LTD has the greatest recovery of
home loans thereafter SBI, ICICI and Punjab national bank
recovered the sanction amount. The CITI Bank is having lowest
recovery of their granted amount as home loans.

28
 11. ANALYSIS & INTERPRETATION

Age wise classification:

Age

9%
21%

21%
20-30
31-40
41-50
51-50

49%

29
Interpretation:

From the chart above we find that 21% of the respondents fall in
the age group of 20-30 years, 49% fall in the age group of 31-40
years, 21% fall in the age group of 41-50 years and 9% fall in the
age group of 51-60.Therefore most of the respondents are
relatively between the age group of 41-50 and 9% respondent’s
age are 50 to above years.

Gender wise classification:

Gender

33%

Male
Female

67%

Interpretation:

From the above chart we can find that 67% are Male
respondents and 33% are Female respondents.
Therefore, most of the respondents are Male.

1. Have you taken Home loan?

30
 8%

Yes
No

92%

Interpretation:

From the above chart we found that majority of the

respondents have taken loan.

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

30
25
20
15
10 S e r ie s 1
5
0
PNB H DF C IC IC I SBI C ITI O T H ER
B A NK

Interpretation:
The analysis showed that a large number of customers prefer SBI
and HDFC LTD as compared to others. The reason is due to
specialized services in home loans, more amounts of loans, and
efficient query handling and also people consider these banks
safer as compared to others.

31
3. From where have you got information about home
loans scheme?

3%
17% 27%
Nespaper
Hoardings
Word of mouth
T.V.
11% Other
42%

Interpretation:

From the above chart we found that majority of

respondents(42%) got information about home loan schemes by
word of mouth i.e. from friends, relatives, etc. 17% by Television,
27% by newspaper, 11% by hoardings and 3% by other medium.

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

28% Interest rate

37%
Serviceprovided
Paybackperiod
Schemes
14% All of theabove
14% 7%

Interpretation:

From the above chart we found that majority of respondents

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

32
specifically said that interest rate provided by the bank plays an
important role in making their decisions regarding home loans.

5 What is your annual income?

14% 8%

> 2 Lacs
2- 5 Lacs
36% 5-8 lacs
8 lacs & above
42%

Interpretation:

From the fig. above it can be seen that 8% respondent’s annual

household income is less than 2 lacs, 36% respondent’s annual
household income is between 2 to 5 lacs, 42% respondent’s
annual household income is between 5 to 8 lacs, 14%
respondent’s annual household income is more than 8 lacs.

6. How much loan amount you took?

17% 10%

Less Than 1 Lacs

1 - 5 Lacs
5 - 10 Lacs
36% More than 10 Lacs

37%

Interpretation:

33
From the fig. above it can be seen that 10% respondent’s are
took the loan amount is less than 1 lacs, 36% respondent’s are
took the loan amount is between 1 to 5 lacs, 37% respondent’s
are took the loan amount is between 5 to 10 lacs, 14%
respondent’s are took the loan amount is more than 10 lacs.

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

22%

Yes
No

78%

Interpretation:

From the graph above it can be seen that 22% respondents are
says that even if the interest rate is high for the home loans, they
will go for it. 78 % respondents are says that if the interest rate is
high for the home loans, they will not go for it.

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

34
 33% Non availability of funds
43%
Reluctance to pay cash in on
go
Tax Benefit

24%

Interpretation:

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

most of the customers find the problem in availability of funds i.e.
33% and very more number of customers found problem in
paying cash in one go is 23%, customers get housing loan for tax
benefits is 43%..

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

money in fulfilling their dreams and few of them were reluctant to
pay cash in one go and wanted to pay their home loans slowly in
installments.

9. What types of home loan you are taken?

7%
6% 2% Home Purchase Loan
Home Construction Loan
46%
Home Improvement Loan
Home Extension Loan
21%
Home Equity Loan
Land Purchase Loan
18%

35
Interpretation:

From the graph above it can be seen that 46% of the respondents
are taken home purchase loan, 18% are taken Home Construction
Loan and 21% are taken Home Improvement Loan, 6% of the
respondent’s are taken Home Extension Loan and 2% of the
respondents are taken Home Equity Loan and 7% of the
respondents are taken Land Purchase Loan. The data shows that
most of the respondents prefer the Home purchase Loan which is
more than other types of loans.

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

11%
Lack of know ledge

41%
Procedural delays and
non cooperation

48% A ny other

Interpretation:

From the graph above it can be seen that 41% respondents does
not have proper knowledge about different home loan products
so they face problem in making a good deal. 48 % respondents
are faced problems of procedural delays, which harass the
customers lot. This will crush the curtsy of customers to avail the
home loan. as well as the attitude of bank employees some times
non cooperative and it creates a hurdle in building trust and

36
Confidence among customers about banks. 11% respondents are
faced other problems while getting home loans.

11. Are you satisfied with the after home loan services
provided by your bank?

1%

37%
Sati s f ie d
A v er age
D i s s a ti s f i e d
62%

Interpretation:

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

satisfied with the after home loan services provided by their bank
whereas 62 % respondents are somewhat satisfied with same.
Hardly 1% respondents are not satisfied with the after home loan
services provided by their bank.

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

to your demand?

31%

Yes
No

69%

37
Interpretation:

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

are says that the cost of home loan is appropriate,
according to their demand, whereas 31 % respondents
are says that the cost is not appropriate, according to
their demand.

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

loan?

No
39%

Yes
61%

Yes No

Interpretation:

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

satisfied by time taken in sanctioning the loan since; procedure
for sanctioning the loan was done in proper time period where as
39% are not satisfied the sanctioning the loan since they have to
face delay in procedure for sanctioning the loan.

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

loans?

38
 Yes No

No
17%

Yes
83%

Interpretation:

From the graph above it can be seen that 83% people are aware
of terms and conditions about the home loans provided by the
respective banks as the banks are treating customers properly
where 17% are not aware of terms and conditions since some
banks are not communicating with the customers properly.

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

of your bank?

11% 17%

Excellent
Very Good
Good
26% Satisfactory
46%

Interpretation:

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

respondents said that they were happy with the schemes which
their banks are providing and 46 % of the respondents gave good

39
grade to the home loan schemes and 11 % respondents are not
satisfied with the schemes provided by their banks.

FINDINGS:

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

and since it is a public sector bank people feel more secure
as compared to the private banks.
2. The analysis showed that a large number of customers
prefer SBI and HDFC LTD as compared to others. The reason
is due to specialized services in home loans, more amounts
of loans, and efficient query handling
3. Some of the customer’s felt that the interest rates are
some what high and they will choose the bank which offers
minimum interest rate.
4. Some of the customer does not having good faith on
private banks and they prefer public sector banks.
5. Majority of respondents said that time taken in
sanctioning the loan is very long and the procedure is very
long..
6. Most of the respondents were satisfied with the home
loan schemes.
7. Many respondents said that interest rate provided by
the bank plays an important role in making their decisions
regarding home loans.

40
12. PROBLEMS FACED BY CUSTOMERS IN AVAILING
HOME LOANS

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

doubt banking industry has made many efforts to enhance the
customer satisfaction but customer still faced some problems.
These are high lightened as below:

• There are procedural delays, which harass the customers lot.

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

• The attitude of bank employees some times non cooperative

and it creates a hurdle in building trust and Confidence among
customers about banks.

• The customer does not have proper knowledge about different

home loan products so they face problem in making a good
deal.

• The banks do not take into account the paying capacity of

customers. So some customers are not able to get amount of
loan needed by them.

41
So above discussed are the problems which are faced by
customers while availing home loans.

13. RECOMMENDATIONS AND SUGGESTIONS

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

procedure for the sanctioning of loan to the customer.
• There should be less number of legal formalities, in case this
exists, then, these should be completed in less time. This will
be helpful in attracting more customers.
• To increase the customers, the banks should provide
specialized services in this sector. These services can be
such as proper guidance to the Customer regarding the
processing of loans, especially for the customers who are
illiterate.
• To satisfy their customers and for good dealings in future,
the banks should make prompt disbursement of loan amount

42
 to the customers so that they can buy or construct their
dream home as early as possible.
• Although the interest rates are on specific norms, yet
customers seek less interest rate which can lower their cost
of house. So banks should try to lower their interest rates.
Needles to say, that the bank which having lower interest
rates, have the maximum clients for loans.
• The public sector banks should improve their overall services
to increase the number of customers for home loans. They
should recruit professionals to provide such services and to
satisfy the customers.

14. CONCLUSION

The Indian housing finance industry has grown by leaps and

bound in few years. Total home loans disbursements by banks
have risen which witnessed phenomenal growth from last 5 years.
There are greater numbers of borrowers of home loans. Today
many banks provide home loans whether commercial banks or
financial institutions to the people who want to have a home. The
housing sector plays an important role in the economic
development of the country.

43
The interest rates of home loans are expected to go down even
further according to analysts who foresee a cut down in the rates
by the RBI in the wake of the decision taken by US Federal
Reserve to cut its rates by a significant margin.

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

customers and problems faced by them in obtaining home loans.
The whole research was carried out in a systematic way to reach
at exact results. The whole research and findings were based on
the objectives.

From this comparative study on home loans we conclude that

large number of customers prefers SBI and HDFC LTD as
compared to other banks for home loans. The reason is due to
specialized services in home loans, more amounts of loans, and
efficient query handling. Some of the respondents felt that the
interest rates are some what high and they will choose the bank
which offers minimum interest rate.

15. BIBLIOGRAPHY

Books:

44
• Bank Management – Vasant Desai – Himalaya Publishing
House. ( First Edition 2009)
• Theory & practice of banking – K K Upadhyay – Pearl
Books ( First Publish – 2008)
• Banking and its credit creation – C.N Reddy – Pearl
Books ( First Publish – 2008)
Websites:
• www.hdfcbank.com

• www.pnbindia.com

• www.pnbhfl.com

• www.google.com

• www.economywatch.com

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

• http://ideas.repec.org/a/jre/issued/v32n12010p23-46.html-
Vincent W. Yao and Eric Rosenblatt

• http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=593862- Sumit Agarwal

45
 QUESTIONNAIRE

Dear Respondents,

I am a student of PADMASHREE DR DY PATIL DEPARTMENT

OF BUSNESS MANAGEMENT in Belapur. As a part of my
study, I am conducting a study on “COMPARATIVE STUDY &
ANALYSIS OF HOME LOANS”. It would be great help if you
please spare some of your time to fill this questionnaire. The
responses would be kept strictly confidential and will be used for
data analysis.

Age:-______
Gender: Male/Female

1. Have you taken home loan?

(A) Yes (B) No

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

B. Punjab national Bank
C. HDFC
D. ICICI
E. SBI

46
 F. CITY BANK
G. Other(Please Specify) ______________
3. From where have you got information about home loans
scheme?
A). Newspaper B). Hoarding/banners

C). Word of mouth D). Television

E). Any Other ____________

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

A). Interest rates B). Service Provided

C). Pay back period D). Schemes

E). All of the above

5. What is your annual income?

A) >2 lacks B) 2-5 lacks

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

6. How much loan amount you took?

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

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

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

(a) Yes (b) No

47
8. What are the reasons for taking a home loan?

A. Non availability of funds

B. Reluctance to pay cash in on go
C. Tax benefit
9. What types of home loan you are taken?
A). Home purchase loan

B). Home construction loan

C). Home improvement loan

D). Home extension loan

E). Home equity loan

F). Land purchase loan

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

a. Lack of knowledge

b. Procedural delays and non cooperation

c. Any other (please specify)

11. Are you satisfied with the after home loan services provided
by your bank?
A). Satisfied B). Average C). Dissatisfied

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

demand?
(A) Yes (B) No

48
13. Are you satisfied by the time taken in sanctioning the loan?
(A) Yes (B) No

14. Are you aware of all terms and conditions of home loans?
(A) Yes (B) No

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

Excellent  Very Good  Good  Satisfactory 

16. What suggestions do you want to give for improvements in
home loans Scheme?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

49