Sonal Project

A Summer Training Project Report On
The Comparative Study of Home Loans of Bank of Baroda with other Banks.
Submitted for the partial fulfilment of the requirement for the award of Master of Business Administration (MBA) at Amity University
UNDER THE GUIDANCE OF: Mr. Rakesh Verma SUBMITTED BY: Sonal Aggarwal MBA - III Semester Roll No: Session: 2009-2011
TO WHOM IT MAY CONCERN
This is to certify that Miss. Sonal Aggarwal, Roll No. A2828410025 is a student of MBA III Sem has successfully completed her project on The Comparative Study Of Home Loans Of Bank Of Baroda With Other Banks
Date
HOD
DECLARATION
I hereby declare that this submission is my own work & to the best of my knowledge & belief, it contains no material previously published or written by another person nor material which to a substantial extent has been accepted for the award of any other degree or diploma of the university or other institute of higher learning except where due acknowledge has been made in the text.
Date
Name of Student
Sonal Aggarwal
ACKNOWLEDGEMENT Expressing gratitude is not just an exercise or formality, rather doing so evokes the memories of the association with these people. Although it would be difficult to thank all those who contributed towards completion of my project report, yet I would like to thank a few people. The experience of training in Bank of Baroda has marked an epoch in life. I would like to thank the management for providing me such opportunity of undergoing training in their esteemed organization. I express my sincere gratitude to my project guide, Bank Of Baroda , Mss. Depika Sharma (Marketting Manager, RLF), who gave me a wonderful opportunity to work on this project and provided an enlightened perspective and conductive environment during this project. I also acknowledge my deepest thanks to Mr. Suri, Chief Manager, RLF, Bank of Baroda for helping me from time to time and for correcting my mistakes and providing me the immense amount of knowledge. Without his time-to-time support this project would not have been possible.I am highly grateful to my faculty guide Mr. Rakesh Verma of Amity University, for his valuable critiques, assistance and encouragement, which enabled me to carry on the project successfully. His time-to-time guidance and incessant support helped me to broaden my outlook on the project. I am highly obliged for her support throughout the internship. I would also like to thank all other staff members, who also co-operated with me and shared their valuable time for me to know the various functions of the Finance Department. Last, but not the least I would like to express my sincere regards and profound sense of
gratitude to my parents & friends whose continuous support in all manner had made me capable to complete this project
Sonal Aggarwal
TABLE OF CONTENTS
Chapter Declaration Certificate Acknowledgement Abstract Table of content 1.0 Objective of the study 2.0 Introduction 2.1 Company profile 2.2 Company overview 2.3 Retail banking 3.0 Literature Review 4.0 Research Methodology 4.1 Data analysis and interpretation 5.0 Conclusion & findings 6.0 Recommendation 7.0 Limitations Bibliography Annexure Page No. ii iii iv v vii 8 9 11 15 18 22 24 26 94 95 96 97
Chapter 1 Objective of the Study

Home loan is one of the major products of Bank of Baroda in mortgage products and a great contributor in its success. With the increasing interest of people in this product, and the cutthroat competition, it has become the necessity to be updated about the needs and demands of the customers. To be the market leaders in the field of home loans, the bank is now interested in knowing the customer preferences of home loans. Considering all these aspects this study is being conducted with the following objectives: 1) To study the Home loans schemes of various banks. 2) To compare the home loan schemes of various banks with that of Bank of Baroda to find which Bank provides better Schemes. 3) To study the Customer Preferences of customers of different banks in the Home Loan markets. 4) To find the areas of improvement in Home Loan Scheme of Bank of Baroda after completion of the study.
Chapter 2 Introduction
Indian banking sector: An Introduction. Banking in India has a long and elaborate history of more than 200 years. The beginning of this industry can be traced back to 1786, when the countrys first bank, Bank of Bengal, was established. But the industry changed rapidly and drastically, after the nationalization of banks in 1969. As a result, the public sector banks began experiencing numerous positive changes and enormous growth. Then came the muchtalked-about liberalization and economic reforms that allowed banks to explore new business opportunities and not just remain constrained to generating revenues from mere borrowing and lending. This provided the Indian banking scenario a remarkable facelift that only continues to get better with time. However, even today, despite the foray of foreign banks in the country, nationalized banks continue to be biggest lenders in the country. This is primarily due to the size of the banks and the penetration of the networks. The Indian banking system can be classified into nationalized banks, private banks and specialized banking institutions. The industry is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. The Reserve Bank of India is the foremost monitoring body in the Indian Financial sector. It is a centralized body that monitors discrepancies and shortcomings in the system. Industry estimates indicate that out of 274 commercial banks operating in the country, 223 banks are in the public sector and 51 are in the private sector. These private sector banks include 24 foreign banks that have begun their operations here. The specialized banking institutions that include cooperatives, rural banks, etc. form a part of the nationalized bank category. Major players in India
The major players in banking sector in India are: 1. State Bank of India. 2. Punjab National Bank of India. 3. Bank of Baroda. 4. Canara Bank 5. Bank of India. 6. United Bank of India. 7. Union Bank of India. 8. Centurion bank 9. Allahabad Bank 10. Oriental Bank of Commerce 11. Dena Bank. The private banks are: 1. ICICI Bank 2. HDFC Bank 3.HSBC Bank. 4. Axis Bank.
Chapter 2.1 Company Profile Bank of Baroda is one of the leading commercial banks in India. As on March 31, 2010, it has around 3500 branches in India spread across the country. The bank also has a network of 46 international branches along with 4 representative offices and 21 overseas subsidiary branches, making the presence of the bank felt in the 25 countries across the globe. Bank of Baroda was established in the year 1908 in Baroda as private Bank. The bank was founded by Maharaja Sayajirao Gaekwad III (also known as Shrimant Gopalrao Gaekwad), the then Maharaja of Baroda on 20th of July 1908 with a paid capital of Rs. 10 Lacs. From its introduction in a small building of Baroda, the bank has come a long way to achieve its current position as one of the most important banks in India. In 1969 the bank nationalized and became a wholly owned government bank. The head office of the bank is in Baroda and the corporate office is in Mumbai. The business of the banks involves six main business areas. They are: corporate financial services; international operations; retail financial services; business financial services; global treasury; and rural financial services. The bank provides a wide range of corporate financial services. The bank provides commercial banking products and services to corporate customers including mid sized and small business and government entities. The products of the bank include various deposits, term loans and advances for acquisitions, construction or improvement of assets. 2.1.1 New Initiatives During the financial year 2009-2010 the bank maintained its focus on introducing the new business, customer and technology initiatives to further strengthen its operations and leverage its considerable domestic footprints. Moving towards the development in business the bank launched a new business process reengineering and organizational restructuring project Navnirmaan- Baroda next on 22nd June 2009. The project includes the redesigning and streamlining of existing processes and structure including revamp of the branch
architecture for better services and sales, higher revenue growth and improved efficiency. The project is primarily designed to optimize on available resources to maximize business and profits and to build a next step for bank of Baroda that is Baroda Next. The bank achieved 100.0% core banking solution for all its domestic branches reflecting the fastest ever roll out of such solutions in the Indian banking industry. By 31 st march 2010, the banks ATM network expanded to 1315. Moreover, Base 24 has been made fully operational for all domestic ATMs and for ATMs in the banks seven overseas territories. Today the banks customers enjoy multiple service channels like Baroda connes, phone banking, Baroda cash management services, NRI services, depositery services etc. 2.1.2 Business & financial performance The bank has reported a healthy growth in its business and profits with improvement in all key parameters during FY 2010, The banks global business touched a new milestone of Rs. 4,16,080 crore in FY 2010 reflecting a growth of 24%. Both its domestic deposits and advances increased at the above industry pace of 22.4% and 21.3% respectively. The bank recorded a growth of 44% in SME credit and 24% in retail Credit. The growth in profits was led by healthy topline growth, prudent management of deposits costs and better efficiency. The banks Net profit at Rs. 3,058.33 crore for FY10 reflected a robust year on year growth of 37.3%. Bank of Baroda is one of the largest retail banks in India in terms of its customer base. The bank is now emphasizing on retail banking. It has a wide network of branches in India. This make the bank well positioned to offer retail customers convenient and accessible banking services. The banks international operations have a considerable history with the first overseas branch in Mombasa, Kenya established in 1953. The bank delivers its products & services through its extensive branch network, extension counters, ATMs, Phone banking and the Internet. Adapting the changing scenario, and understanding the need of the customers, the bank has rolled out Core Banking Services in its 1718 Branches. On 20th July 2008, the bank completed its Centenary year. For bank of Baroda, it has been a long and eventful journey over 100 years and across 25 countries. After undergoing a massive transformation by changing its logo in June 2005, the bank won many industry level awards for its marketing and business initiatives and strived to optimize its competitive edge in the banking space. The Baroda brand positioning was entrenched in the consumer mind as Indias International Bank, balancing its time tested values over its 100 years of existence with the contemporary challenges of being market sensitive and responsive as it marches
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tirelessly towards its next century.
Table 2.1.1: Table showing the global presence of Bank of Baroda. S.N o. 1 2 3 4 5 6 7 8 9 10 11 12 13 Name Of The Country
Australia Bahamas Bahrain Belgium Botswana China Fiji Islands Ghana Guyana Hong Kong Kenya Seychelles South Africa
S.No Name Of The Country . 14 15 16 17 18 19 20 21 22 23 24 25

Singapore Sultanate of Oman Tanzania Thailand Trinidad & Tobago Uganda UAE United Kingdom USA Zambia Mauritius Malaysia
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Table 2.1.2: table showing total number of branches and offices of Bank of Baroda.
Corporate Offices Head Office Suraj Plaza 1, Sayaji Ganj, Baroda 390005 Ph: (0265) 2361852(10lines) Fax: (0265) 2362395, 2361824, 2361806 Corporate Centre Bank Of Baroda Baroda Corporate Centre, Plot No. C-26, Block G, Bandra Kurla Complex, Bandra (East), Mumbai 400051 Branch Network (as of 1/1/2010) Area Metro Urban Semi-Urban Rural Total (Indian) Foreign (Overseas) Total (Global) Controlling Offices No. of Branches 555 627 684 1216 3082 70 3152
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Zonal Offices Regional Offices
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Chapter 2.2 Company Overview
Bank of Baroda (BSE: 532134) (BoB) is the third largest Public Sector bank in India, after State Bank of India and Punjab National Bank. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, credit cards and asset management. Maharajah of Baroda Sir Sayajirao Gaekwad III founded the bank on July 20, 1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalized on 19 July 1969, by the Government of India.
A saga of vision and mission of enterprise

Vision: It has been a long and eventful journey of almost a century across 25 countries. Starting in 1908 from a small building in Baroda to its new hirise and hi-tech Baroda Corporate Centre in Mumbai is a saga of vision, enterprise, financial prudence and corporate governance. It all started with a visionary Maharaja's uncanny foresight into the future of trade and enterprising in his country. On 20th July 1908, under the Companies Act of 1897, and with a paid up capital of Rs 10 Lacs started the legend that has now translated into a strong, trustworthy financial body, THE BANK OF BARODA. It has been a wisely orchestrated growth, involving corporate
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wisdom, social pride and the vision of helping others grow, and growing itself in turn. The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a bank of this nature will prove a beneficial agency for lending, transmission, and deposit of money and will be a powerful factor in the development of art, industries and commerce of the State and adjoining territories." It is a story scripted in corporate wisdom and social pride. It is a story crafted in private capital, princely patronage and state ownership. It is a story of ordinary bankers and their extraordinary contribution in the ascent of Bank of Baroda to the formidable heights of corporate glory. It is a story that needs to be shared with all those millions of people customers, stakeholders, employees & the public at large - who in ample measure, have contributed to the making of an institution. Mission: To be a top ranking National Bank of International Standards committed to augmenting stakeholders' value through concern, care and competence.
BOB Logo
The new logo is a unique representation of a universal symbol. It comprises dual B letterforms that hold the rays of the rising sun. the Bank call this the Baroda Sun. The sun is an excellent representation of what this bank stands for. It is the single most powerful source of light and energy its far-reaching rays dispel darkness to illuminate everything they touch. At Bank of Baroda, the organization seeks to be the sources that will help all the stakeholders realize their goals. To the customers, bank seeks to be onestop, reliable partners who will help them address different financial needs. To the employees, bank offer rewarding careers and to the investors and business partners, maximum return on their investment.
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The single-color, compelling vermillion palette has been carefully chosen, for its distinctiveness as it stands for hope and energy. The management also recognizes that the bank is characterized by diversity. Their network of branches spans geographical and cultural boundaries and rural-urban divides. The customer comes from a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting face for our brand because it is a universal symbol of dynamism and optimism it is meaningful for many audiences and easily decoded by all. Banks new corporate brand identity is much more than a cosmetic change. It is a signal that bank recognize and are prepared for new business paradigms in a globalised world. At the same time, the bank will always stay in touch with the heritage and enduring relationships on which the bank wass founded. By adopting a symbol as simple and powerful as the Baroda Sun, the bank hope to communicate both.
BOB Ethics
Between 1913 and 1917, as many as 87 banks failed in India. Bank of Baroda survived the crisis, mainly due to its honest and prudent leadership. This financial integrity, business prudence, caution and an abiding care and concern for the hard earned savings of hard working people, were to become the central philosophy around which business decisions would be effected. This cardinal philosophy was over the 94 years of its existence, to become its biggest asset. It ensured that the Bank survived the Great War years. It ensured survival during the Great Depression. Even while big names were dragged into the Stock Market scam and the Capital Market scam, the Bank of Baroda continued its triumphant march along the best ethical practices
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Chapter 2.3 Retail Banking Retail is one of the fastest growing sectors in India today. Banking as a whole is undergoing a change to satisfy the demands of the retailers, and are becoming a part of this promising sector. The economic slowdown faced by the world during 2008-2009 gave the banks a better know-how of the retail business, which in turn led them to treat the retail sector with seriousness. Retail banking refers to the services offered by the banking institutes to its customers. The customers include both, consumers in general and the retailers as well. The retailers take loan to be able to market their product to its customers, whereas, customers take loan to be able to purchase these products. Retail banking has evolved as a consumer - centered industry. Indian public sector banks account for about 70% presence in the retail sector. However, the retail sector was largely a private sector domain until recently. But with the changing era, things are changing as well. Public sector banks have plans underway to give a big stimulus to retailers in the form of retail loans. With the advent of economic reforms in the country, retail lending has
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emerged as one of the key thrust areas of banking. Almost all banks and more importantly the new generation private sector banks have positioned themselves as retail banks. 2.3.1. Urban Retail Loan Factory In the recent years, Bank of Baroda recognized the huge opportunity in the retail sector. The bank recognized that the Indian consumer has changed with the passage of time. The savings have been changed in to the expenses with the increase in number of choices and availability of various products. Thus, the rising annual disposable income among the individuals, growing awareness and changing lifestyle of the consumers worked as a catalyst in the growth of the retail-banking sector. In line with this approach, bank of Baroda carved out a separate Retail Banking Department in October 2002. By the virtue of large amount per account & relatively higher demand, housing loans have grown speedily and their proportion in the retail loans has been over 50%. However, the bank observed it the growth of retail loans and particularly that of housing loans came down substantially owing to variety of reasons. One such reason was the inability of the branches to handle all aspects of retail loans and servicing it thereafter. With multifarious functions, handling large number of accounts became difficult to the branches and often resulted in longer turnaround time of proposals that irritates the customer and ultimately resulted in the loss of business to the bank. It is in this context that the concept of urban Retail Loan Factory (URLF) was evolved in the year 2002. It was expected that the operations of URLF should help the branches in improving customer turnaround time from 15-20 days at present 4-7 days. It was expected that the URLF would help in establishing standardized appraisal and evaluation techniques and adoption of risk management practices. Speedy delivery will automatically enhance customer satisfaction and customer services standards. It will also be a prelude to the core banking services. The retail loan factory continued to be the thrust area for achieving business growth during the year 2009-2010. For achieving sustained growth on both liabilities and asset side the bank initiated various customer centric measures besides launching special products. Retail loans outstanding as on 31st march 2010 were Rs. 24,247.71 crore as against the level of Rs. 19627.55 crore as on March 2009. A growth rate of 23.45% was registered during the financial year 2010 as against the growth rate of 16.19%posted during the year 2009. The prime objective of the bank was to build a healthy retail loan portfolio. There are total 32 URLFs working in the metropolitan cities and the big cities of the country. The Retail loan factory deals in the mortgaged products only. The products of the
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URLF include Baroda Home Loans, Baroda Mortgage Loan, Baroda Ashray (Reverse Mortgage Loan), Baroda Traders Loan, Baroda Education Loan, Baroda Auto Loan, Baroda personal Loan, and Baroda loan to doctors. Housing Loan is one of the most important and a major product of retail loan factory. Housing loan constitutes 44% of the retail loan portfolio of the banks and work out to 9% of the total loans and the advances of the banking system as of March 2009. Statistical estimate indicate that 1% increase in GDP growth is associated with 3% increase in housing loan and 5% increase in education loan. There is an estimated shortfall of 19.4 million housing units in India. The per capita income is expected to rise from the present level of 50 million to 583 million in the next 18 years and urbanization in India is expected to catch up further.
Table 2.3.1: Table reflecting the banks commitment to improve retail loan portfolio during FY11 End Parameters March 09 (In crore) Total Retail Credit Home Loans Education Loan Car Loan Other Retail Loans 19628 8263 1216 889 9260 End March 10 (In crore) 24450 10400 1500 1550 11000 Variation % 24.57 25.86 23.35 74.35 18.79 End March 11 Projected (In crore) 31000 13200 1900 2000 13900 Variation % 26.79 26.92 26.67 29.03 26.36
Going by such upward estimates in GDP/ per capita income in the coming years, there could be exponential spurt in demand for housing and education loan which banks should be able to tap and build on the opportunities.
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Initiatives in retail banking during FY 2009-2010 New product launched: 1. An exercise on realignment of assets was carried out on 28th march 2009 for reducing the total number of retail assets products from 26 to 9. This came into force on 1st April 2009. 2. the bank at the instance of ministry of finance, launched a scheme on October 10,2009 under banks home loan scheme styled as interest subsidy scheme for housing the urban poor Business initiatives 1. A Home Loan Campaign was launched from 15.06.09 to 14.08.09 with special emphasis on take-over of Home Loan accounts. A 100.0% waiver of Documentation and processing charges was offered for Home loans and Auto loans. The campaign period was extended up to 31.08.09. An additional business of Rs 1,156 crore by way of fresh sanctions was generated during the campaign as against a target of Rs 750 crore. 2. Another Retail Loan Festival Campaign was launched on 01.09.09 to encash the business potential of the festive season during September and October 2009. A fresh business of Rs 1,680 crore was mobilized during the campaign period as against the target of Rs 2,000 crore set for the campaign. One more Retail Loan campaign, launched on 15.01.10, generated additional business of Rs 772 crore. 3. Six new Retail Loan Factories (RLFs) have been opened during FY10 at Chandigarh, Gamdevi (MMSR), Patna, Coimbatore, Ranchi and Allahabad. The total number of operational RLFs is now 30.
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Chapter 3 Literature Review
Various studies and research have been conducted to find the preferences of the consumer in the home loan markets. This is due to the increasing interest of people in the mortgaged loans. A study by W. Boyd et al (1994), suggests that the reputation of the bank, tha rate of interest charged on the loans by the bank are considered to be more important factors by the customers than other criteria such as friendliness and courtesy of employees. Harrison (1994) concluded in his study that the traditional segmentation variables of age, stage in the family life cycle and social class have provided little insight into the financial services customer behavior. In order to take full advantage of the factors which could affect take up and usage of financial services, he gave a model. His study suggested four customer segments for financial services on the basis of customers own perceived knowledge, confidence and interest in financial maturity, defined by the type and complexity of financial services currently in use. Each of the four segments is distinct in terms of financial objectives exhibited, motivations for financial services usage and attitudes and behavior towards
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financial services. In the paper by Clarkson et al (1990), the results of the study reveal that the characteristics & financial services requirements of the consumers vary with their age. These differences are useful for identifying and developing new marketing strategies for such services. Lee & Marlowe (2003) did a research on how consumers choose a financial institution. He came to the conclusion that although most of the consumers value convenience as one of the most important decision making criteria, their definitions of convenience vary across consumers. Talaga & Buch (1998) explored in their study the process by which the consumers choose among the financial institutions for obtaining the mortgage. Their study control for rate of interest and tested on five variables: number of points, additional fees, reputation of lender, type of mortgage and terms in year of mortgage. It was found that most important variable was additional cost and the second most important variable was the number of points. Both the mortgage holder & non-mortgage holder hold similar views. Devlin (2002) studied the relative importance of choice criteria according to consumers and also analyzed differences in the importance of choice criteria with respect to the demographic and related factors. The results of the study show that choosing a home loan institution on the basis of professional advice is the most frequently cited choice criterion closely followed by interest rates. Differences in the importance of choice criteria with respect to gender, class, household income, educational qualifications, ethnicity & financial soundness are apparent. Mylonakis (2007) conducted a research to study the customer preferences in the home loan markets. From the research he concluded that besides the elements that include the cost i.e. interest rat e, and the prepayment penalty, other factors emerged as important part of the preferences. These factors included various offers by the banks, the banks reputation, the cooperative behavior of the bank and the staff of the bank as well. He also found that physical appearance of the bank branches was also an important factor for a consumer selecting a financial institution. He said the existence of the bank branches has an impact on the feeling of security that derives from the personal contacts.
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Chapter 4 Research Methodology

Research Research is a method to establish findings to ensure fast paced logical interpretations and thus reaching conclusions. In marketing surroundings Business Research is defined as a methodological inquiry with objectives of production of information to solve out managerial problem. Types of Research. Descriptive Research Descriptive research is a fact- finding procedure with adequate interpretation and suggestions. It is the easiest way of research. It is more specific than an explanatory study, as it has focus on particular aspect of the problem. It is designed to find the descriptive information and provide information for formulating more sophisticated studies. Using one or more appropriate methods, like as observation and questionnaire collects data. Data collection The following data has been used in the research: Primary Data Primary Data is self acquired information that a researcher collects. It helps in collecting
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useful and most accurate information that is needed for the fulfillment of the research process undertaking. The primary data gives one of the latest information about any study as it is collected during the time proximities of the experiments or the research program. Sources of Primary Data i. Questionnaires Secondary Data Secondary data is the type of data researcher collects from different informational sources like as previously done work or research on similar topics It helps in generating elaborative information about the topic or the research subjects .It also lead to understand different perspectives about the given topics and varied findings Sources of Secondary Data 1. Internet 2. Journals 3. Magazines 4. Articles 5. Newspapers Sample Size During the entire course of the research, 110 questionnaires were filled. However, only 100 questionnaires have been used for the analysis as the remaining 10 questionnaires were found to be full of errors. For example, few of them were not complete whereas some of the questionnaires were not filled correctly. Research instrument The research instrument used in this research work was the Structured Questionnaire. Sampling design: the sampling design of this market research is as follows: i) Sample unit: The sample unit included the residents of various colonies of the New Delhi city, who have availed home loans from various banks of the New Delhi city. ii) Sample size: the sample size of the research for the analysis is of 100 respondents. iii) Sampling technique: During the entire Research process, simple convenient sampling will be used. iv) Sampling Area: the sampling area for the research will be the city in New Delhi. Target Group/ Population The research in the dissertation required accessibility to the customers of different banks who have availed the home loans.
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Tools for Data collection: the tool used in the data collection is a structured questionnaire. The statistical tools used in the analysis of the data are: 1. Frequency distribution. 2. Pie charts 3. Correlation
Chapter 4.1 Data Analysis and Interpretation The first objective of this study has been to study the home loan schemes of various Banks and to compare them to find which bank provides better home loan schemes to the customers. In this section, firstly the study of various home loan schemes has been done and then they have been compared on various parameters to find the best of all. After the completion of the study research analysis has been done on the data collected to study the customer preferences in the home loan market. The statistical tools used are: 1. Frequency distribution. 2. Pie charts 3. Correlation 1. State Bank of India The state bank of India was established on 1 July 1955. The state bank group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Since its establishments, it offers various services, which include merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurances. State bank of India is nations oldest bank. Tracing its roots back some 200 years to the British east India Company. The bank perform its operations with the help of 1500 branches
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within India. The bank has more then 80 offices in around 35 countries. The reserve bank of India owns about 60% of state bank of India. 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 Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)
Products And Services

Personal Banking

SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan SBI Car Loan Rent Plus Scheme SBI Educational Loan Medi-Plus Scheme
Other Services

Agriculture/Rural Banking NRI Services ATM Services Demat Services Corporate Banking Internet Banking Mobile Banking International Banking.
Features of SBI home Loans
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A. Eligibility i) Minimum age: Minimum age for availing the home loan facility from the state bank of India should be at least 18 years as on the date of sanction. ii) Maximum age: the maximum age limit for a home loan borrower is fixed at 70 years, i.e. the age by which the loan should be fully repaid, subject to the availability of sufficient, regular and continuous sources of income for serving the loan repayment. B. Extent of Loan amount: the actual loan amount is determined taking into consideration the following factors: i) Applicants income ii) Age of the applicant. iii) Assets and the liability of the applicant/s iv) Cost of the proposed house/flat. But the bank provides the provision through which the applicant can enhance the loan eligibility. C. Repayment period Maximum 25 years or up to the age of 70 years of the borrower, whichever is early. D. Security: The bank demands for the securities before sanctioning the loan amount. These securities include: i) Equitable mortgage of the property. ii) Other tangible security of adequate value like NSCs, Life Insurance Policies etc. E. Margin: The bank does not sanction the total accost incurred in the construction of the house. The
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bank has to maintain the margin of some percentage depending upon the amount of loan. The margin to be maintained is as follows: Table 4.1.1: Table showing the margin on loan amount Loan Amount Up to Rs. 75 Lacs Above Rs. 75 Lacs Margin (Min) 20% 25%
F. Processing fee: The revised processing fee structure (including service tax) from 9th November 2009 is as under. Table 4.1.2: table showing the processing fee charged by SBI on various loan amounts. Loan Amount Up to Rs. 5 Lac Rs. 5 Lac-Rs. 10 Lacs Rs. 10 Lacs-Rs. 20 Lacs Rs. 20 Lacs- Rs. 50 Lacs Rs. 50 Lacs- Rs. 1 Cr Rs. 1 Cr- Rs. 5 Cr Above Rs. 5 Cr Note: There are some charges that are payable by the customer in addition to the processing fee. These charges are as follows: i) Advocates fees for the property search and the title investigation report. ii) Valuers fee for the valuation report. iii) Stamp duty payable for loan agreement & mortgage. Processing Fee Rs. 1000 Rs. 2000 Rs. 5000 Rs. 7000 Rs. 8000 Rs. 10,000 Rs. 20,000
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iv) Property insurance premium. G. Pre closure Penalty: No penalty is charged if the loan is preclosed from own savings/ windfall gains for which the customer produces documentary evidence. 2. Punjab National Bank. Punjab national bank is the second largest public sector bank in India. Punjab National Bank (PNB) (BSE: 532461), was registered on May 19, 1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore. Today, the Bank is the second largest governmentowned commercial bank in India with about 5000 branches across 764 cities. It serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by the Bankers Almanac, London. The bank's total assets for financial year 2007 were about US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai. Punjab National Bank (the Bank) is an India-based bank. The Bank offers banking products, and also operates credit card and debit card business, bullion business, life and non-life insurance business, and gold coins and asset management business. During the fiscal year ended March 31, 2009, the Bank opened 168 branches, out of which 90 were new branches and 78 branches were added through up gradation of extension counters. With 4665 offices, including 238 extension counters, the Bank has a network of nationalized banks, including 124 specialized branches, i.e. 50 branches for micro, small and medium enterprises; 11 international banking branches; 12 asset recovery management branches; 10 mid-corporate branches; seven large corporate branches; eight trade finance branches; five high-value branches; four retail lending branches; 12 agriculture finance branches; two personal banking branches; two capital market services branches, and one international service branch Housing Loan The Punjab national bank provides home loans, for the following: i) Construction of house/ flat. ii) Purchase of a readymade house/ flat.
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iii) For repairs and renovation of the house. The Punjab national bank provides easy home loans. We shall study them in detail. Features of PNB Home Loans A. Extent of Loan: For construction/ purchase of house/flat: 75% of the total cost of construction of house or purchase of flat can be sanctioned as the loan amount. B. Security: The Punjab national bank asks for the following securities before sanctioning the loan. These securities are as follows. i) Mortgage of the property for which loan is being given. ii) In case the immediate mortgage is not possible, a tripartite agreement shall be executed. iii) In case of purchase of flat/ house on first power of attorney, additional securities equal to 125% of the loan amount by way of mortgage of some other property or pledge of banks FDR/ LIC policy/ Govt securities etc. has to be provided. C. Rate of Interest Table 4.1.3: Table showing the rate of interest charged by Punjab National Bank Repayment Period Upto Rs. 30 Lac BR Upto 5 yrs 5-10 yrs 10-20 yrs 20-25 yrs Repayment Period 8.00 8.00 8.00 8.00 Spread 0.75 1.50 2.00 2.25 TP 0.50 0.50 0.50 0.50 LR 9.25% 10.00% 10.50% 10.75% BR 8.00 8.00 8.00 8.00 Base Rate System Fixed Option for loans Above Rs. 30 Lac Spread 1.50 1.75 2.25 2.50 TP 0.50 0.50 0.50 0.50 LR 10.00% 10.25% 10.75% 11.00%
Floating Option for Loans
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Upto Rs. 30 Lac BR Upto 5 yrs 5-10 yrs 10-20 yrs 20-25 yrs 8.00 8.00 8.00 8.00 Spread 0.75 1.00 1.25 1.50 TP 0 0 0 0 LR 8.75% 9.00% 9.25% 9.50% BR 8.00 8.00 8.00 8.00
Above Rs. 30 Lac Spread 1.50 1.50 1.75 2.00 TP 0 0 0 0 LR 9.50% 9.50% 9.75% 10.00%
D. Upfront fee: The upfront fee charged by the bank is as follows: i) For loans up to Rs 300 lacs = 0.50% of the loan amount with a cap of Rs. 20,000/ii) For loans above Rs. 300 lacs = 0.90% of the loan amount. E. Documentation charges: The documentation charges for any loan amount are Rs. 1,350 in addition with service tax and education cess. F. Repayment period: The loan is to be repaid in equated monthly installments within a period of 25 years or before the borrower attains the age of 65 years. G. Pre payment charges: In cases where the loans are prepaid by the borrower from their own sources, the bank do not charge any pre payment penalty. However 2% is charged in the cases where the account is taken over by some other Bank/financial institution. 3. ICICI Bank ICICI bank started in 1994 as a wholly owned subsidiary of ICICI limited, which is an Indian
30
financial institution. ICICI bank has a wide network across the globe. In India itself the bank operates through 1420 branches and about 4664 ATMs. Along with India ICICI bank has made its presence felt in 18 countries like US, Singapore, Bahrain, Hong Kong etc. The products and services of the Bank are as follows:
Products & Services

Personal Banking

Deposits Loans Cards Investments Insurance Demat Services Wealth Management
NRI Banking

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans
Business Banking

Corporate Net Banking Cash Management Trade Services
31
FXOnline SME Services Online Taxes Custodial Services
ICICI Home Loans Features of ICICI Home loans A. Eligibility Home Loans can be availed by Resident Indian whether Salaried or Self-Employed and also by Non- Resident Indian who are Salaried. For resident Indians the following are the eligibility norms: i. You must be at least 21 years of age when the loan is sanctioned. ii. The loan must terminate before or when you turn 65 years of age or before whichever is earlier. iii. You must be employed or self-employed with a regular source of income. B. Extent of loan: The home loan depends on the repaying capacity of the borrower and is restricted to a maximum of 80% of the cost of the property or the cost of construction as applicable. The extent of the loan amount to be sanctioned depends on the various factors. They are as follows: i) Income of the applicant. ii) Age of the borrower. iii) Qualification of the borrower. iv) Number of dependents. v) Assets and liabilities. retirement,
32
C. Repayment Period: The loan is to be repaid through equated monthly installments in maximum 20 years or before the borrower attains the age of 65 years.
D. Margin: The margin to be maintained depends on the amount of loan. The maximum margin to be maintained is of 20%. E. Processing Fee: The processing charges of the bank are 0.50% of the loan amount in addition with the following: i) Advocates fees for the property search and the title investigation report. ii) Valuers fee for the valuation report. iii) Stamp duty payable for loan agreement & mortgage. F. Prepayment charges: If 25% of the outstanding amount is paid every year till 3 years then no penalty is charged otherwise 2% of the outstanding amount is charged. 4. Bank Of Baroda Bank of Baroda is the third largest public sector bank in India. Bank of Baroda is an Indiabased company. The Company's solutions includes personal banking, which includes deposits, retail loans, credit cards, debit card, lockers and other services; business banking, which includes deposits, loans and advances, services and lockers; corporate banking, which includes wholesale banking, deposits, appraisals and merchant banking, and cash management and remittances; international business, which includes non-resident Indian
33
(NRI) services, offshore banking, export finance, import finance, correspondent banking, trade finance and international treasury; treasury banking, which includes domestic operations and forex operations, and rural banking, which includes deposits, loans, priority sector advances, services and lockers. As of March 31, 2009, the Company had deposits totaled approximately 1, 92, 396.95 crore. The Companys international operations cover 25 countries through its 74 branches/offices. The bank of Baroda provides home loan under the name Baroda Home Loan. They constitute an important part of the retail business of bank of Baroda. Features of Baroda home loan A. Eligibility: Minimum age: the minimum age of the borrower must be atleast 21 years and of coborrower must be 18 years. Maximum age: the maximum age limit for a home loan borrower is fixed at 65 years (60 years in case of salaried people), i.e. the age by which the loan should be fully repaid, subject to the availability of sufficient, regular and continuous sources of income for serving the loan repayment.
B. Extent of loan: The actual quantum of loan is arrived at after considering the income criteria & the repaying capacity of the borrower and is restricted to a maximum of 80% of the cost of the property or the cost of construction as applicable. C. Rate of interest Table 4.1.4: table showing the rate of interest charged by Bank of Baroda Repayment Period Fixed Rate Option Up to Rs. 30 lacs Not available Above Rs. 30 lacs Not available
34
Floating Rate Option Up to 5 years Over 5 years & upto 15 years Over 15 years & upto 25 years 8.00%+0.50% i.e 8.50% 8.00%+0.75% i.e. 8.75% 8.00%+1.00% i.e. 9.00% 8.00%+1.25% i.e 9.25% 8.00%+1.50% i.e. 9.50% 8.00%+1.75% i.e. 9.75%
D. Repayment: 1. Maximum 25 years. 2. The age of the borrower plus the repayment period should not exceed retirement age in case of salaried person and 65 in case of others. E. Security: The bank demands the security before sanctioning the loan. This includes: i) Mortgage of the property being constructed/ purchased. ii) Other tangible security of adequate value like NSCs, Life Insurance Policies etc. (if required) iii) Personal guarantee of a person who has a stable source of income and a good code of conduct. F. Margin: The margin criteria are different for the salaried people and others. It is as follows: Table 4.1.5: table showing the margin for salaried and other people. Monthly Income Up to Rs.20,000 Purpose Purchase of plot (Including registration charges) Margin 20%
35
House/ flat constructed from own sources Purchase of plot including registration charges House/ flat constructed from own sources
25% 20% 20%
Above 20,000
i) For Salaried persons: ii) For others: a) For purchase of plot: 20% b) For house/ flat already constructed from own sources: 20% of the total cost of construction. c) For all other cases: 15% G. Processing fee: Table 4.1.6: table showing processing fee charged by the Bank of Baroda on various loan amounts. Loan amount Loan up to Rs. 20 Lacs Loan above Rs.20 Lacs Processing fee 0.35% of loan amount + service tax O.40% of loan amount + service tax
H. Pre closure charges: 1. No pre closure charges for part/ full payment from own sources. 5. HDFC Bank HDFC Bank Limited (the Bank) is an India-based banking company. The Bank is engaged in
36
providing a range of banking and financial services, including commercial banking and treasury operations. The Bank has three primary business segments: banking, wholesale banking and treasury. The retail-banking segment serves retail customers through a branch network and other delivery channels. This segment raises deposits from customers and makes loans and provides other services with the help of specialist product groups to such customers. The wholesale banking segment provides loans, non-fund facilities and transaction services to corporate, public sector units, government bodies, financial institutions and medium-scale enterprises. Features of HDFC Home loans A. Eligibility Home Loans can be availed by Resident Indian whether salaried or Self-Employed and also by Non- Resident Indian who are Salaried. For resident Indians the following are the eligibility norms: i. You must be at least 21 years of age when the loan is sanctioned. ii. The loan must terminate before or when you turn 65 years of age or before whichever is earlier. iii. You must be employed or self-employed with a regular source of income. B. Extent of loan: The home loan depends on the repaying capacity of the borrower and is restricted to a maximum of 85% of the cost of the property or the cost of construction as applicable. The extent of the loan amount to be sanctioned depends on the various factors. They are as follows: i) Income of the applicant. ii) Age of the borrower. iii) Qualification of the borrower. iv) Number of dependents. v) Assets and liabilities. retirement,
37
C. Repayment Period: The loan is to be repaid through equated monthly installments in maximum 20 years or before the borrower attains the age of 65 years.
D. Margin: The margin to be maintained depends on the amount of loan. The minimum margin to be maintained is of 15%. E. Processing Fee: Rs.10,000 or 0.5% of loan amount (whichever is lesser) in addition with the following: i) Advocates fees for the property search and the title investigation report. ii) Valuers fee for the valuation report. iii) Stamp duty payable for loan agreement & mortgage. F. Prepayment charges: If 25% of the outstanding amount is paid every year till 3 years then no penalty is charged otherwise 2% of the outstanding amount is charged. A. Comparative study of home loan schemes. The comparative study of the home loan scheme is being carried out between five banks, which include 3 nationalized banks and 2 private banks. The nationalized banks included in the study are as follows: 1. Bank of Baroda. 2. State Bank of India. 3. Punjab National Bank. The private banks included in the study are:
38
1. HDFC Bank 2. ICICI Bank. The home loan schemes are being compared on the following parameters: 1. Interest rate of the bank. 2. Processing fees. 3. Prepayment charges. The loan amounts and the payback periods used in the comparison are as follows: Table 4.1.7: table showing various loan amounts and payback periods. Loan amount Pay back periods Up to 5 years 5 years - 10 years 10 years - 15 years 15 years 20 years 20years - 25 years Up to 5 years 5 years - 10 years 10 years - 15 years 15 years - 20 years 20years - 25 years Up to 5 years 5 years - 10 years 10 years - 15 years 15 years - 20 years 20years - 25 years Up to 5 years 5 years - 10 years 10 years - 15 years 15 years - 20 years 20years - 25 years
Up to Rs. 20 lacs
Rs. 20 Lacs Rs. 30 Lacs
Rs. 30 Lacs Rs75Lacs
Rs. 75Lacs and above
39
The comparison is as follows: Table 4.1.8: For loan amount up to Rs. 20 lacs for Up to 5 years. Floating rate of interest 8.50% 8.25% HDFC bank 9.25% 9%
Bank name Bank of Baroda
Processing fee Not applicable Rs. 10,000 or 0.5% of loan amount (whichever is lesser) + service tax 0.50% of loan amount up to Rs. 1crore 0.75 % of loan amount
Prepayment charges No charges if repaid from own sources
If 25% of outstanding amount is paid every year till 3 years-No Penalty else 2% of o/s amount.
ICICI bank
8.75%
Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty
Punjab National Bank
8.75%
(from Rs. 1015 lacs) 0.5% of loan amount (above 15 lacs) 0.5% of the loan amount with maximum of Rs. 10,000 + service tax
No Charges if 20% of the outstanding amount is paid in a single year after that 2%
8%(1st year) State Bank of India 9%(2 and 3 year)

nd rd
Not applicable
10%(after 3rd year)
40
Table 4.1.9: For loan amount up to Rs. 20 lacs for 5 10 years Banks name Bank of Baroda HDFC Bank ICICI Bank Floating rate of interest 8.75 8.25% 9.25% 9% 8.75% Not applicable Rs. 10,000 or 0.50% of loan amount (whichever is lesser)+service tax 0.50% of loan amount up to Rs. 1crore No charges if repaid from own sources If 25% outstanding amount is paid every year till 3 years-no penalty else 2% of o/s amount Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Punjab National Bank (Rs. 10-15lacs) 0.5% of loan amount (above Rs. 15 lacs) 0.5% of the loan amount with maximum of Rs. 10,000+service tax 9.0% 0.75 % of loan amount Penalty No Charges if 20% of the outstanding amount pay in a single year after that 2% Processing fee Prepayment charges
State Bank of India
8%(1 yr) 9%(2nd & 3rd year) 10%(after 3rd year)
st
Not applicable
41
Table 4.1.10: For loan amount up to Rs. 20 lacs For 10 15 years Banks name Bank of Baroda Floating rate of interest 8.75% Not applicable Not applicable Processing fee Prepayment charges
HDFC Bank ICICI Bank
8.25% 9.25% 9% 8.75%
Rs.10,000 or 0.50% of loan amount (whichever is lesser)+service tax 0.50% percent of loan amount up to Rs. 1crore
If 25% outstanding amount is paid every year till 3 years-no penalty,else 2% of o/s amount Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty No Charges if 20% of the outstanding amount is paid in a single year after that 2%
9.25%
0.75 % of loan amount (from Rs.10-15lacs) 0.5% of loan amount (above 15 lacs) 0.5% of the loan amount with maximum of Rs. 10,000+service tax
State Bank of India
8%(1st year) 9%(2nd & 3rd year) 10%(after 3rd year)
Not applicable
Table 4.1.11: For loan amount up to Rs. 20 lacs for 15 20 years
42
Banks name Bank of Baroda
Floating rate of interest 9.00%
Processing fee
Prepayment charges
Not applicable
Not applicable
HDFC Bank ICICI Bank
8.25% 9.25% 9% 8.75%
If 25% of outstanding amount is paid every year till 3 years-no penalty, else 2% of o/s amount Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty No Charges if 20% of the outstanding amount pay in a single year after that 2%.
9.25%
0.75 % of loan amount (from Rs.10-15lacs) 0.50% of loan amount (Above Rs. 15 lacs) 0.50% of the loan amount with maximum of Rs. 10,000+service tax
State Bank of India
8%(1 year) 9%(2nd year) 10%(after 3rd year)
st
Not applicable
Table 4.1.12: For loan amount up to Rs. 20 lacs For 20 25 years
43
Banks name Bank of Baroda
Floating rate of interest 9.0%
Processing fee
Prepayment charges
Not applicable
Not applicable
HDFC Bank ICICI Bank Punjab National Bank
8.5% 9.25% 9.0% Not Available for 25 years 9.50%
10,000 or 0.5% of loan amount (whichever is lesser)+service tax Not Available for 25 years
If 25% of outstanding amount is paid every year till 3 years-no penalty, else 2% of o/s amount Not Available for 25 years
0.75 % of loan amount (from Rs.10-15lacs) 0.5% of loan amount (above 15 lacs) 0.50% of the loan amount with maximum of Rs. 10,000+service tax
No Charges if 20% of the outstanding amount pay in a single year after that 2%
State Bank of India
8%(1 year) 9%(2nd & 3rd year) 10%(after 3rd year)
st
Not applicable
Table 4.1.13: For loan amount between 20 lacs-30 lacs For up to 5 years Bank name Floating rate of interest Processing fee Prepayment charges
44
Bank of Baroda
8.50%
Not applicable
No charges if repaid from own sources
HDFC bank ICICI bank
8.25% 9.25% 9% 8.75%
If 25% of outstanding amount is paid every year till 3 years-no penalt, else 2% of o/s amount. Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty No Charges if 20% of the outstanding amount pay in a single year after that 2%
9.50%
0.75 % of loan amount (from Rs. 10-15lacs)
0.5% of loan amount (Above 15 lacs) State Bank of India 8%(Ist year) 9% (2nd & 3 year) 10% (after 3rd year)
rd
0.5% of the loan amount with maximum of Rs. 10,000+service tax
Not applicable
Table 4.1.14: For loan amount between 20 lacs-30 lacs For 5-10 years Bank name Floating rate of interest Processing fee Prepayment charges
45
Bank of Baroda HDFC bank
8.75%
Not applicable
No charges if repaid from own sources
8.25% 9.25% 9%
If 25% of outstanding amount is paid every year till 3 years-no penalty, else 2% of o/s amount. Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty
ICICI bank
8.75%
0.75 % of loan amount (from Rs.10-15lacs) Punjab National Bank 8%(Ist year) 9%(2nd & 3rd State Bank of India year) 10%(after 3rd year) 9.50% 0.5% of loan amount (above Rs. 15 lacs) 0.5% of the loan amount with maximum of Rs. 10,000+service tax
Not applicable
Table 4.1.15: For loan amount between 20 lacs-30 lacs For 10-15 years Bank name Floating rate of Bank of Baroda interest 8.75.% Not applicable Not applicable Processing fee Prepayment charges
46
HDFC bank
8.25% 9.25% 9%
Rs. 10,000 or 0.50% of loan amount (whichever is lesser)+service tax 0.50% of loan amount up to Rs. 1crore
If 25% of outstanding amount is paid every year till 3 years-no penalty, else 2% of o/s amount. Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty No Charges if 20% of the outstanding amount pay in a single year after that 2%
ICICI bank Punjab National Bank
8.75% 0.75 % of loan amount (from Rs.10-15lacs) 0.5% of loan amount (above Rs. 15 lacs) 0.50% of the loan amount with maximum of Rs. 10,000+service tax
9.25% 8%(Ist year) 9%(2nd & 3rd State Bank of India year) 10%(after 3rd year)
Not applicable
Table 4.1.16: For loan amount between 20 lacs-30 lacs For 15-20 years Bank name Floating rate of Bank of Baroda HDFC 8.25% 10,000 or 0.5% of loan If 25% of outstanding amount is interest 9.0% Not applicable Not applicable Processing fee Prepayment charges
47
bank
9.25% 9%
amount (whichever is lesser)+service tax 0.50% of loan amount up to Rs. 1crore
paid every year till 3 years-no penalty, else 2% of o/s amount. Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty
ICICI bank Punjab National Bank
8.75%
0.75 % of loan amount (from Rs.10-15lacs) 9.75% 0.5% of loan amount (above Rs.15 lacs)
State Bank of India
8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year)
Not applicable
Table 4.1.17: For loan amount between 20 lacs-30 lacs For Up to 20-25 years Bank name Floating rate of Bank of Baroda interest 9.0% Not applicable Not applicable Processing fee Prepayment charges
48
HDFC bank ICICI bank
8.25% 9.25% 9% 8.75% 9% 9%
If 25% of outstanding amount is paid every year till 3 years-no penalty else 2% of o/s amount. If 25% outstanding amount is paid every year till 3 years-no penalty else 2% of o/s amount.
Punjab National Bank 10.0 %
0.75 % of loan amount (from Rs.10-15lacs)
0.5% of loan amount (above Rs.15 lacs) State Bank of India 8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax Not applicable
Table 4.1.18: For loan amount from 30 lacs - 75 lacs for Up to 5 years Bank name Floating rate of Bank of Baroda interest 9.25% Not applicable No charges if repaid from own sources Processing fee Prepayment charges
HDFC
8.25%
Rs.10,000 or 0.50% of loan
If 25% of outstanding amount is
49
bank ICICI bank
9.25% 9.25% 9% (upto Rs.50 Lacs ) 9.50%
amount (whichever is lesser)+service tax 0.50% of loan amount up to Rs. 1crore
paid every year till 3 years-no penalty, else 2% of o/s amount. Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty
0.50% of loan amount (above Rs.15 lacs) State Bank of India 8% (Ist year) 9% (2nd & 3 year) 10% (after 3rd year)
rd
Not applicable
Table 4.1.19: For loan amount from 30 lacs -75lacs for 5-10 years Bank name Floating rate of Bank of Baroda interest 9.50% Not applicable No charges if repaid from own sources Processing fee Prepayment charges
HDFC bank
8.25% 9.25%
Rs.10,000 or 0.50% of loan amount (whichever is
If 25% of outstanding amount is paid every year till 3 years-no
50
9.25% ICICI bank 9.00% ( upto Rs.50 Lacs) 9.50%
lesser)+service tax 0.50% of loan amount up to Rs. 1crore
penalty, else 2% of o/s amount. Rs.10,000/- above 1 crore If Full Payment - 2% of outstanding amount If Part Payment - No Penalty
0.50% of loan amount (above Rs.15 lacs) State Bank of India 8% (Ist year) 9% (2nd & 3 year) 10% (after 3rd year )
rd
Not applicable
Table 4.1.20: For loan amount from 30 lacs - 75 lacs for 10-15 years Bank name Floating rate of Bank of Baroda interest 9.50% Not applicable Not applicable Processing fee Prepayment charges
HDFC bank
8.25% 9.25% 9.25%
Rs.10,000 or 0.50% of loan amount (whichever is lesser)+service tax
If 25% of outstanding amount is paid every year till 3 years-no penalty, else 2% of o/s amount.
51
ICICI bank
9% ( upto Rs.50 Lacs)
0.50% of loan amount up to Rs. 1crore
9.25% Punjab National Bank 9.75 % 0.50% of loan amount (above Rs.15 lacs) State Bank of India 8%(Ist year) 9% (2nd & 3rd year) 10% (after 3rd year ) 0.50% of the loan amount with maximum of Rs. 10,000+service tax (from Rs.10-15lacs) 0.75 % of loan amount
Not applicable
Table 4.1.21: For loan amount from 30 lacs - 75 lacs 15-20 years Bank name Floating rate of Bank of Baroda interest 9.75% Not applicable Not applicable Processing fee Prepayment charges
HDFC bank
8.25% 9.25% 9.25%
52
ICICI bank
9%( up to Rs.50 lacs)
9.50% Punjab National Bank 9.75 % 0.50% of loan amount (above Rs.15 lacs) State Bank of India 8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax (upto Rs.10-15lacs) 0.75 % of loan amount
Not applicable
Table 4.1.22: For loan amount from 30 lacs - 75 lacs 20-25 years Bank name Floating rate of Bank of Baroda interest 9.75% Not applicable Not applicable Processing fee Prepayment charges
HDFC bank
8.25% 9.25% 9.25%
53
ICICI bank
9% 9% 9.50%
0.50% percent of loan amount up to Rs. 1crore
If 25% outstanding amount is paid every year till 3 years-no penalty else 2% of o/s amount.
0.75 % of loan amount (upto Rs.10-15lacs)
0.50% of loan amount (above Rs. 15 lacs) State Bank of India 8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax Not applicable
Table 4.1.23: For loan amount 75 lacs and above for up to 5 years Bank name Floating rate of Bank of Baroda interest 9.25% Not applicable No charges if repaid from own sources Processing fee Prepayment charges
HDFC bank
8.25% 9.25% 9.25%
54
ICICI bank
9.50%
0.50% percent of loan amount up to Rs. 1crore
0.50% of loan amount (above Rs. 15 lacs) State Bank of India 8%(Ist year ) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax Not applicable
Table 4.1.24: For loan amount 75 lacs and above for 5-10 years Bank name Floating rate of Bank of Baroda interest 9.50% Not applicable No charges if repaid from own sources Processing fee Prepayment charges
HDFC bank
8.25% 9.25% 9.25%
55
ICICI bank
9.50%
0.50% of loan amount (above Rs. 15 lacs) State Bank of India 8%(Ist year ) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax Not applicable
Table 4.1.25: For loan amount 75 lacs and above for 10-15 years Bank name Floating rate of Bank of Baroda interest 9.50% Not applicable Not applicable Processing fee Prepayment charges
HDFC bank
8.25% 9.25% 9.25%
56
ICICI bank
9.50%
0.50% of loan amount (above Rs. 15 lacs) State Bank of India 8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax Not applicable
HDFC bank
8.25% 9.25% 9.25%
57
ICICI bank
9.50%
0.50% of loan amount (above Rs.15 lacs) State Bank of India 8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year) 0.50% of the loan amount with maximum of Rs. 10,000+service tax Not applicable
HDFC bank
8.25% 9.25% 9.25%
58
ICICI bank
8.75% 9% 9.50%
Punjab National Bank Bank name Bank of Baroda HDFC bank
0.75 % of loan amount (upto Rs.10-15lacs) Up to 5 years 10.0 % 8.50% 5-10 10-15 years years 0.50% of loan amount 8.75 8.75%
No Charges if 20% of the outstanding amount pay in a single year after that 2% 15-20 20-25 years years 9.00% 9.0%
(above Rs.15 lacs) 8.25% 8.25% 8.25% 9.25% 9.25% 9.25% st State Bank 8%(I year) 9% 0.50% of the loan amount9% 9% 9%(2 3rd ICICI bank nd &8.75% 8.75% 8.75% of India with maximum of Rs. year) 10,000+service tax 10%(after 3rd Punjab 8.75% 9.0% 9.25% National Bank State Bank of India 2nd & 3rd yr 9% 2nd & 3rd yr 9% 2nd & 3rd yr 9% year) Ist yr 8% Ist yr 8% Ist yr 8%
8.25% 8.25% 9.25% 9.25% Not applicable 9% 9% 8.75% Not Available 9.25% for 25 years 9.50%
Ist yr 8% 2nd & 3rd yr 9%
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10%
After studying the home loan schemes of various banks it is found that the processing charges and the prepayment penalty are almost same of all the banks. The basic difference lies in the interest rate of the banks. Let us study and compare the interest rates of these banks. Table 4.1.28: For loan amount Up to 20 lacs
59
Table 4.1.29: For loan amount 20 lacs 30 lacs
Bank name Bank of Baroda HDFC bank ICICI bank Punjab National Bank State Bank of India
Upto 5 years 8.50% 8.25% 9.25% 9.00 % 8.75% 9.50%
5-10 years 8.75% 8.25% 9.25% 9.00% 8.75% 9.50%
10-15 years 8.75.% 8.25% 9.25% 9.00% 8.75% 9.75%
15-20 years 9.0% 8.25% 9.25% 9.00% 8.75% 9.75%
20-25 years 9.0% 8.25% 9.25% 9.00% Not Available for 25 years 10.0 %
Ist yr 8%
Ist yr 8%
Ist yr 8%
Ist yr 8%
Ist yr 8%
2nd & 3rd yr 9%
2nd & 3rd yr 9%
2nd & 3rd yr9%
2nd & 3rd yr 9%
2nd & 3rd yr 9%
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10 %
60
Table 4.1.30: For loan amount 30 lacs to 75 lacs
Bank name Bank of Baroda HDFC bank ICICI bank
Upto 5 years 9.25% 8.25% 9.25% 9.25% 9% upto50lacs 9.50% 9.5 %
5-10 years 9.50% 8.25% 9.25% 9.25% 9% upto50lacs 9.50% 9.50 %
10-15 years 9.50% 8.25% 9.25% 9.25% 9% upto50lacs 9.50% 9.75 %
15-20 years 9.75% 8.25% 9.25% 9.25% 9% upto50lacs 9.50% 9.75 %
20-25 years 9.75% 8.25% 9.25% 9.25% Not Available for 25 years
Punjab National Bank State Bank of India
10.0 %
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10%
61
Table 4.1.31: For loan amount 75 lacs and above
Bank name Bank of Baroda HDFC bank ICICI bank
Upto 5 years 9.25% 8.25% 9.25% 9.25% 9.50%
5-10 years 9.50% 8.25% 9.25% 9.25% 9.50%
10-15 years 9.50% 8.25% 9.25% 9.25% 9.50%
15-20 years 9.75% 8.25% 9.25% 9.25% 9.50%
20-25 years 9.75% 8.25% 9.25% 9.25% Not Available for 25 years
Punjab National Bank State Bank of India
9.5 %
9.50 %
9.75 %
9.75 %
10.0 %
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards10%
4th year onwards- 10%
Let us compare the rate of interests of the banks by taking an illustration.
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Illustration: Say loan amount is Rs. 30 lacs for up to 20 years. Bank Name Bank of Baroda EMI Rs. 26992 Rs. 25831 Rs. 26630 HDFC Bank ICICI Bank Punjab National Bank Rs. 28456 State Bank of India Rs. 25834 Weighted Processing fee 12000 + service tax 15000 + additional charges + service tax Conclusion: From the above study of home loan schemes and the comparison study we come to the following results: 1. HDFC and ICICI bank are having Low rate of interest and thus the less Equated Monthly Installments (EMI) but their processing charges and additional charges are more then bank of Baroda and state bank of India. Moreover, these banks keep changing their interest rates soon. Like their present rate of interest of 8.25%, 9%, 9.25%(HDFC) and 8.75% (ICICI) are under a special scheme, which is for a short period of time, till June 30, and is launched to compete against the low rate of interest of nationalized banks. Also, their documentation charges, service charges and other charges are much higher then PSU Banks. 2. The Punjab national bank has been found to offer the highest rate of interest under all loan amounts and loan tenures. But still it enjoys good loan Business, because of its nationalization and the reputation in the market. 3. The state bank of India offers a different interest rate system to its customers, like frozen interest for 1st year then for next two years and then floating. People often think that the low rate of interest in the first year in comparison to other banks results in low interest, but in the long run the total interest paid is almost equal to other Banks. 4. From the above table we can say that the loan schemes of all the banks are almost similar, with benefits of different kinds. Like for loan amounts up to Rs. 20 Lacs, Bank Of Baroda provides less interest rate. On the other hand State Bank provides less rate of interest on big 15000 + additional charges + service tax 15000 + service tax average EMI 10000 + service tax
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loan amounts, as calculated in the table. The cutthroat competition in the market has forced the banks to offer similar kind of services and the product mix to the customers. B. The Study of the customer preferences in the home loan market. The study was conducted in the New Delhi city among 100 people who claim to be the home loan borrowers from different Banks. The main objective of the bank was to find what are the factors that influence the choices of the customers when he avails the home loans. The study has been supported with the help of two statistical tools, frequency distribution and the chi square test. The frequency distribution has been used to find the preferences of the customers. Whereas chi square test has been used to find the goodness of fit. Frequency distribution. This has been used on all the factors, which were asked in the questionnaire and are important to know the customers preferences. Let us first apply the distribution on the gender, educational qualification and the employment type. By this we will come to the percentage of females and males who answered the questionnaire, the different percentages of the kind of employment they have, and the kind of education qualification they possess, and their annual incomes. This will help in interpreting the results easily and effectively.
The results of the statistical tool applied on the different factors are as
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follows. The first analysis has been done on the gender.
Gender Frequency Valid Male Female Total 75 25 100 Percent 75.0 25.0 100.0 Valid Percent 75.0 25.0 100.0 Cumulative Percent 75.0 100.0
Fig 1: the pie chart showing the percentage of male and females who responded the questionnaire.
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Educational Qualification Frequency Valid Under graduate Graduate Post graduate Professional Total 1 38 47 14 100 Percent 1.0 38.0 47.0 14.0 100.0 Valid Percent 1.0 38.0 47.0 14.0 100.0 Cumulative Percent 1.0 39.0 86.0 100.0
Fig 2: the pie chart showing the educational qualification of the respondents.
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Employment
Frequency Percent Salaried Valid Others Total 59 41 100 59 41 100
Valid Percent 59 41 100
Cumulative Percent 59 100
Fig 3: the pie chart showing the kind of employment of the respondents.
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Annual Income Frequency Valid Below 2,40,000 2,40,000-12,00,000 above 12,00,000 Total 29 65 6 100 Percent 29.0 65.0 6.0 100.0 Valid Percent 29.0 65.0 6.0 100.0 Cumulative Percent 29.0 94.0 100.0
Fig 4: pie chart showing the annual income of the respondents
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Rate of Interest Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 4.00 5.00 Total 1 19 80 100 Percent 1.0 19.0 80.0 100.0 Valid Percent 1.0 19.0 80.0 100.0 Cumulative Percent 1.0 20.0 100.0
Fig 5: Pie chart showing the frequency of the answers given by the respondents about the importance of rate of interest. It is clear from the figure that rate of interest is very important for the customers In the home loan market. Out of 100 % respondents 80% respondents say that rate of interest is very
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important for them while availing the home loans, whereas other 19% respondents say that rate of interest is rather important to them. Both of these answers prove that rate of interest is very important for the customers.
Payback period
70
Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 3.00 4.00 5.00 Total 1 2 28 69 100 Percent 1.0 2.0 28.0 69.0 100.0 Valid Percent 1.0 2.0 28.0 69.0 100.0 Cumulative Percent 1.0 3.0 31.0 100.0
The payback period does not appear to occupy the mind of customers to a great extent. Only 69% responded that is a very important factor influencing the selection of the financial institution. However, 28% respondents agreed that payback period is rather important to them. The figure shows the pictorial representation of the frequency distribution.
Fig 6: pie chart showing the importance of the payback period to the customers in selection of the financial institution.
Flexibility in granting Loans
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Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 2.00 3.00 4.00 5.00 Total 4 2 7 39 48 100 Percent 4.0 2.0 7.0 39.0 48.0 100.0 Valid Percent 4.0 2.0 7.0 39.0 48.0 100.0 Cumulative Percent 4.0 6.0 13.0 52.0 100.0
The flexibility of loans for granting loans is also considered to be an important factor for selecting the bank. 48% responded that it is very important for them, whereas 39% said it is rather important. Only 13 person people sound indifferent.
Fig 7: the pie chart showing the importance of flexibility in granting loans by the bank, to the customers.
Prepayment penalty
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The prepayment penalty seems to be the very important factor for consumers while selecting the bank. The table shows that 67% respondents agree that it is very important for them, and 25% respondents agree that it is rather important for them while selecting a bank.
Fig 8: the pie chart showing the importance of prepayment penalty in selecting the bank for availing the home loans.
Processing charges
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The processing charges have a different importance for different people. For 56% people it is very important factor, whereas 28 people said that it is important but not as much as interest rate, payback period. This is because processing charges are one time expense and a customer is ready to pay it if he finds other factors of his choices.
Fig 9: the pie chart showing the responses of the respondents on processing charges. Disbursement Time
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Disbursement time is considered to be an important factor for the customers. Out of 100% respondents 86% people agree that disbursement time is important for selecting the banking institution.
Fig 10: the pie chart showing the various responses of the respondents on the importance of disbursement time.
Insurance Services
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The provision of insurance by the banking institution seems to greatly affect the selection of customers while availing the home loan. For 59%people it is vary important factor whereas for 30% people it is an important one. This may be because with the changing time people like being secure with their assets. Moreover, buying a home is a life time investment.
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Fig 11: the pie chart showing the various responses of the respondents on the importance of insurance service provided by the banks. Behavior of employees Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 3.00 4.00 5.00 Total 2 4 8 86 100 Percent 2.0 4.0 8.0 86.0 100.0 Valid Percent 2.0 4.0 8.0 86.0 100.0 Cumulative Percent 2.0 6.0 14.0 100.0
Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5
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Fig 12: the pie chart showing the various responses of the respondents on the importance of the good behavior of the staff while availing loan.
Reputation of Bank Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 2.00 4.00 5.00 Total 4 2 9 85 100 Percent 4.0 2.0 9.0 85.0 100.0 Valid Percent 4.0 2.0 9.0 85.0 100.0 Cumulative Percent 4.0 6.0 15.0 100.0
The table shows that the Reputation of the bank is an important factor for the customer while selecting the bank for availing the loan. From the table it is clear that for 85% people reputation of the bank from which they are availing the home loan is very important. The pictorial representation of the bank is as shown.
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Fig 13 : the pie chart showing the various responses of the respondents on the importance of the reputation of the bank. Co-Operation of the staff Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 2.00 3.00 4.00 5.00 Total 4 2 1 13 80 100 Percent 4.0 2.0 1.0 13.0 80.0 100.0 Valid Percent 4.0 2.0 1.0 13.0 80.0 100.0 Cumulative Percent 4.0 6.0 7.0 20.0 100.0
The table shows that majority of the customers give importance to the co-operation of the staff.
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Fig 14: the pie chart showing the various responses of the respondents on the importance of co-operation provided by the bank and the staff. Employee Courtesy Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 2.00 3.00 4.00 5.00 Total 3 2 7 27 61 100 Percent 3.0 2.0 7.0 27.0 61.0 100.0 Valid Percent 3.0 2.0 7.0 27.0 61.0 100.0 Cumulative Percent 3.0 5.0 12.0 39.0 100.0
Due to the particular nature of the banking services and the major role of the employees in the delivery of services, the majority states that their decision is influenced by the attitudes of the employees.
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Fig 15: the pie chart showing the various responses of the respondents on the importance of employee courtesy. Physical appearance of Branches Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Cumulative Percent 6.0 10.0 38.0 100.0
Frequency Valid 1.00 3.00 4.00 5.00 Total 6 4 28 62 100
Percent 6.0 4.0 28.0 62.0 100.0
Valid Percent 6.0 4.0 28.0 62.0 100.0
The appearance of the bank branches is also an important factor (90%) for the selection of the bank. This is because this provides the convenience to the customers.
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Fig 16: the pie of the branches. Trained Staff Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 4.00 5.00 Total 25 75 100 Percent 25.0 75.0 100.0 Valid Percent 25.0 75.0 100.0
chart
showing the various responses of the respondents on the importance of physical appearances
Cumulative Percent 25.0 100.0
The importance of the trained staff can be understood from the fact 100% respondents are of the opinion that trained staff is very important. This is because of the fact that trained staff increases the efficiency of the bank.
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Fig 17: the pie chart showing the various responses of the respondents on the importance of trained staff in the banks.
Nationalization of the Bank
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The table shows the importance of nationalization of the banks. It is found in the study that even today in the era of privatization customers still trust nationalized banks more then private banks. This may be because they feel more safe and secure with the PSU banks.
Fig 18: the pie chart showing the various responses of the respondents on the importance of nationalization of the banks. Existing Relationship with the bank
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Existing relationship with the bank is very important to the customers due to their prior experiences with the bank, its services, staff and the working conditions. 81% people say that existing relationship is important.
Fig 19: the pie chart showing the various responses of the respondents on the importance of existing relationship of the customers with the banks. TV promotions
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The table shows that TV promotions influence only 45% people in their decision of selecting the bank for availing home loan. Whereas 54% people say that TV promotions do not affect their decisions.
Fig 20: the pie chart showing the various responses of the respondents on the importance of TV advertising and promotions done by bank for promoting their products. Print Advertising
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Here also table shows that the newspaper and magazine advertising done by the bank whereas 53% say that it does not influence their decision influence only 45%. This fact shows that though the promotions and advertising have become an important part of the marketing today, but even today people do not easily get influenced by promotions in case of availing loans.
Fig 21: the pie chart showing the various responses of the respondents on the importance of print advertisements and promotions done by bank for promoting their products Internet Promotions
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The table shows that internet promotions are not important for the people while selecting the bank for availing loans. 60% people say that it does not affect their decision.
Fig 22: the pie chart showing the various responses of the respondents on the importance of internet promotions done by bank for promoting their products References
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Not Important=1, Rather Not important=2, NEUTRAL=3, Rather Important=4, Very Important=5 Frequency Valid 1.00 3.00 4.00 5.00 Total 2 13 29 56 100 Percent 2.0 13.0 29.0 56.0 100.0 Valid Percent 2.0 13.0 29.0 56.0 100.0 Cumulative Percent 2.0 15.0 44.0 100.0
References are very important for the people while selecting the financial institution. These references include references from friends, relatives, and the social circle. This proves that the word of mouth is the most effective kind of marketing that can be practiced by any organization.
Fig 23: the pie chart showing the various responses of the respondents on the importance of references from the peer group and relatives for the customers. Correlation analysis
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Statistical analysis has not provided any significant correlations for all variables. In this part, we will present the statistically significant correlations that exist among the various factors examined in this research. Today due to the security reasons and policies of the banks, banks give priority to the existing customers of their banks in giving the home loans. Moreover the eligibility criteria also give 1st privilege to the existing customers. The correlation analysis is done on the following factors: 1) The existing relationship between the customer and the banking institution, the reputation of the bank, staff courtesy, the good behavior of the staff, co-operation of the bank, processing charges, and the insurance services. The importance paid by the clients to existing relationship with the banking institution when selecting a product or service can be seen in this section The table shows the correlation between the existing relationship and the importance of cooperation of the bank. The Pearson correlation coefficient is .697 (approx 0.70) i.e 70%. Which means there is a close relationship between the existing relationship between bank and customer and the importance of the co-operation of the bank with the customer. Older the relation is between the bank and the customer; more important is the co-operation of the bank while availing the home loan. This factor influences the decision of the customer while choosing the financial institution. Table: Table showing Pearson correlation between existing relationship and the importance of co-operation of the bank to the customer while selecting the financial institution.
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Correlation Existing Relationship Existing Relationship Pearson Correlation Sig. (2-tailed) N Co-Operation of the bank Pearson Correlation Sig. (2-tailed) N 100 .697 .000 100 100 1 Co-Operation of the bank .697 .000 100 1
The table below shows the correlation between the existing relationship and the reputation of the bank. The Pearson correlation is 0.684 (68.4%). The relationship is quite strong. This shows that reputation of the bank affects the relation between the bank and the customer. The good reputation of the bank results in the long relationships between the bank and the customer. Better is the reputation of the bank longer is the relationship. This reputation of the bank and the existing relationship influences the decision of the customer while selecting the financial institution. Table: Table showing Pearson correlation between existing relationship and the importance of reputation of the bank to the customer while selecting the financial institution.
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Correlation Existing Relationship Existing Relationship Pearson Correlation Sig. (2-tailed) N Reputation of bank Pearson Correlation Sig. (2-tailed) N 100 .684 .000 100 100 1 Reputation of bank .684 .000 100 1
Chapter 5 Conclusion
This project has examined the preferences of customers in the field of home loans. There has been a rapid change in the banking sector in last few years. Due to these changes banks are now more inclined towards the sale of mortgage loans, because more profit in this field as compared to others. Home loans are a part of mortgage services. Competition is particularly intense and for this reason, a more attentive marketing approach is required in all sectors. In order to design a new marketing approach it is important to locate those factors that present the greatest interest in term of bank profitability. The research was carried out among 100 bank customers who are home loan holders, by using a structured questionnaire. The conclusions that emerge from the research are as follows. It has been found in the research that besides the features of the loan product like interest rate, pay back period, disbursement time etc, other important factors emerge, such as reputation of the bank, existing relationship with the bank, and the bank staff as well. The customers are of the view that the co-operative behavior of the bank staff is very important to
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them. These elements are particularly important for bank executives, as they need to primarily refer to the customer themselves. Another factor that emerged as important is the physical appearance of the bank branches. This is justified by the complexity of the product. Taking a home loan is a long term investment. It becomes difficult for the customers t take the decisions. For this a customer requires information of various kinds. For this reason, bank branches play an important role, as it is the place where client can discuss with the staff and obtain information. The existence of branches also has an impact on the feeling of security that derives from personal contact and the factor of convenience also gets fulfilled. It has also been found that even today word of mouth is the best way of marketing. Most of the people still believe in the references of their friends and family members. Lastly, it has been found that customers today prefer trained staff in the banks as this increases the efficiency level and are more helpful then untrained staff.
Chapter 6 Recommendation
The conclusions that have been drawn from the research, suggest the following recommendations: 1. The bank should pay special attention on staff training. The training should be provided to increase the knowledge base of the staff about the products, so that they get expertise in their field of work. This will increase the efficiency level of the employees. The training should be provided to new as well as the old employees. 2. This kind of training will also help the bank in reducing their disbursement time, since the efficiency level will increase. 3. The staff should also be trained to be more customer friendly, and more customer oriented. The training sessions should be held to teach them to be good and courteous with the customers. This is because in todays time customer is the king. It is the organization that needs the customers to run the business, as the customer has various options available in the
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market. Moreover, the private banks are much ahead in providing customer oriented services. To compete with them it is important for the staff of the bank to be more customer oriented. 4. Lastly, the bank should open the centers in the city, which deals only in providing the information about various kinds of loans to the customers, as the physical presence has found to be very important factor in the study conducted. This should be done to reduce the work load of branches, as they already have so much other jobs to do, that they are not able to provide much attention to this job. The bank took an initiative by opening retail loan factories, but then a single retail loan factory in a city does not solves the purpose completely. Moreover it increases the pressure on the employees who are involved In the processing of loans Therefore the separate marketing offices should be opened at different easily approachable places to reduce the interaction between the processing department and the customers. The loan leads should be picked from the market with the help of these offices rather than branches.
Chapter 7 Limitations of the study

1. The filling up of questionnaire was a tough job, as it was quite difficult to convenience the customers. They were not ready to reveal some of their details. 2. The home loan schemes of the other banks have been taken from their websites, as they were not ready to provide the information. Some of the information were not updated and so those information have been used as it is. 3. The home loan interest rates of HDFC bank and ICICI bank were not able on their websites and they have been obtained from other websites. This might result in some variations.
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Bibliography
The following studies have been studied before preparing the synopsis and have proved to be very helpful. 1) Harrison, T. S. (1994), Mapping Customer Segments for Personal Financial Services, International Journal of Marketing, Vol. 12, No. 8, pp. 17-25. 2) Lee. J., and Marlove, J., (2003), How Consumers Choose a financial Institution: Decision making criteria and heuristics, International Journal of bank Marketing, 21/2, pp.53-71. 3) Mylonakis, J., (2007) A Research Study of Customer Preferences in the Home Loans Market: The Mortgage Experience of Greek Bank Customers. International Research Journal of Finance and Economics, vol. 10, pp. 153-167. 4) Bank of Baroda Annual report 2009-2010 5) leveraging technology for augmenting business growth and profitability: Business Policy Guidelines Indian Operations, Bank of Baroda. Internet websites: 1) www.bankofbaroda.com
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2) www.hdfcbank.com 3) www.icicibank.com 4) www.statebankofindia.com 5) www.punjabnationalbank.com 6) www.deals4loan.com 7) www.apnapaisa.com 8) www.wikipedia.com
Annexure
Questionnaire Note: This questionnaire is for an academic purpose. The details provided by you will be kept completely confidential. 1. Age Years. 2. Gender: a) Male b) Female.
3. What is your Qualification? a) Under Graduate b) Graduate c) Post Graduate d) Professional
4. What kind of employment do you have? a) Salaried b) Others.
5) What is your annual income? a) Up to Rs. 2,40,000 b) 2,40,000-12,00,000 c) 12,00,000 & above.
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6) What is the frequency of your use of Mortgage Loans? a) Never b) Rarely c) Often
7) From which of the following Banks, have you availed the Home loan? a) Bank of Baroda d) HDFC Bank b) Punjab National Bank e) ICICI Bank. c) State Bank of India
8) How important are the following to you while availing the home loans? (Please tick the correct option) Not at all important Interest rates Charged by the Bank Pay back period of loans Flexibility for granting loans Pre payment penalty Processing charges Disbursement time Insurance services Good Treatment and Cooperative behavior of the staff Rather not Important Neutral Rather important Very Important
9) How important are the following to you? (Please tick the correct option) Not at all important Reputation of the Bank Rather not Important Neutral Rather important Very Important
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The Co-operation of the Bank while availing the loan. Courtesy and the attention paid by the Bank employees The appearance of the bank branches Trained Staff in the Bank. Nationalization of the Bank Existing relationship with the bank Promotion & Advertising through televisions Promotion & advertising through Print media Promotion & advertising through internet References from your friends, family and colleagues.
11) Any kind of suggestion to the Bank from which you have availed the home loan?
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. Thank You!
Name:.. Occupation: . Ph. No.
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A Summer Training Project Report On

TO WHOM IT MAY CONCERN

Chapter 1 Objective of the Study

tirelessly towards its next century.

S.No Name Of The Country . 14 15 16 17 18 19 20 21 22 23 24 25

Zonal Offices Regional Offices

Chapter 2.2 Company Overview

A saga of vision and mission of enterprise

Chapter 3 Literature Review

Chapter 4 Research Methodology

Products And Services

Features of SBI home Loans

Floating Option for Loans

Products & Services

Deposits Loans Cards Investments Insurance Demat Services Wealth Management

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans

Corporate Net Banking Cash Management Trade Services

FXOnline SME Services Online Taxes Custodial Services

25% 20% 20%

Rs. 20 Lacs Rs. 30 Lacs

Rs. 30 Lacs Rs75Lacs

Rs. 75Lacs and above

Bank name Bank of Baroda

Prepayment charges No charges if repaid from own sources

Punjab National Bank

8%(1st year) State Bank of India 9%(2 and 3 year)

10%(after 3rd year)

State Bank of India

8%(1 yr) 9%(2nd & 3rd year) 10%(after 3rd year)

HDFC Bank ICICI Bank

8.25% 9.25% 9% 8.75%

Punjab National Bank

State Bank of India

8%(1st year) 9%(2nd & 3rd year) 10%(after 3rd year)

Table 4.1.11: For loan amount up to Rs. 20 lacs for 15 20 years

Banks name Bank of Baroda

Floating rate of interest 9.00%

HDFC Bank ICICI Bank

8.25% 9.25% 9% 8.75%

Punjab National Bank

State Bank of India

8%(1 year) 9%(2nd year) 10%(after 3rd year)

Table 4.1.12: For loan amount up to Rs. 20 lacs For 20 25 years

Banks name Bank of Baroda

Floating rate of interest 9.0%

HDFC Bank ICICI Bank Punjab National Bank

8.5% 9.25% 9.0% Not Available for 25 years 9.50%

State Bank of India

8%(1 year) 9%(2nd & 3rd year) 10%(after 3rd year)

No charges if repaid from own sources

HDFC bank ICICI bank

8.25% 9.25% 9% 8.75%

Punjab National Bank

0.75 % of loan amount (from Rs. 10-15lacs)

0.5% of the loan amount with maximum of Rs. 10,000+service tax

Bank of Baroda HDFC bank

No charges if repaid from own sources

ICICI bank Punjab National Bank

amount (whichever is lesser)+service tax 0.50% of loan amount up to Rs. 1crore

ICICI bank Punjab National Bank

State Bank of India

8%(Ist year) 9%(2nd & 3rd year) 10%(after 3rd year)

0.50% of the loan amount with maximum of Rs. 10,000+service tax