A STUDY ON HOME LOANS (RAJNI) (MBA-3RD SEM -FINANCE)(COL-RDIAS) DELHI

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STUDENT DECLARATION This is to certify that I have completed the Project titled “A STUDY ON HOME LOANS” under the guidance of “Mr. Amit Kumar Gupta” in the partial fulfillment of the requirement for the award of the degree of “Masters in Business Administration” from “Rukmini Devi Institute Of Advanced Studies, New Delhi.” This is an original work and I have not submitted it earlier elsewhere.

RAJNI

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CERTIFICATE This is to certify that the project titled “A STUDY ON HOME LOANS” is an academic work done by “RAJNI” submitted in the partial fulfillment of the requirement for the award of the degree of “Masters in Business Administration” from “Rukmini Devi Institute Of Advanced Studies, New Delhi.” under my guidance and direction. To the best of my knowledge and belief the data and information presented by him in the project has not been submitted earlier elsewhere.

Mr. Amit Kumar Gupta (Project Guide) RDIAS

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ACKNOWLEDGEMENT "Gratitude is not a thing of expression; it is more matter of feeling." There is always a sense of gratitude which one express towards others for their help and supervision in achieving the goals. This formal piece of acknowledgement is an attempt to express the feeling of gratitude towards people who helpful me in successfully completing of my training. I would like to express my deep gratitude to Mr.Amit Khanna my training coordinator for their constant co-operation. He was always there with his competent guidance and valuable suggestion through out the pursuance of this research project. Special thanks to Mr.Amit Kumar Gupta who guided me to work honestly and to give valuable suggestion for improving my work Last but not least I would also like to place of appreciation to all the respondents whose responses were of utmost importance for the project. Above all no words can express my feelings to my parents, friends all those persons who supported me during my project. I am also thankful to all the respondents whose cooperation & support has helped me a lot in collecting necessary information. I would also like to thank almighty God for his blessings showered on me during the completion of project report.

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EXECUTIVE SUMMARY Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above all gathering funds little by little to afford one’s dream. Home is one of the things that everyone one wants to own. Home is a shelter to person where he rests and feel comfortable. Many banks providing home loans whether commercial banks or financial institutions to the people who want to had a home. The housing sector plays an important role in the economic development of the country. My project title is “A STUDY ON HOME LOANS”. I selected this topic because The Indian housing finance industry has grown by leaps and bound in few years.Total home loans disbursements by banks has risen which witnesses phenomenal growth from last 5 years. There are greater number of borrowers of home loans.so by this study we can find out satisfaction level of customers and problems faced by them in obtaining home loans. My objectives of study are• To make comparative study of Disbursement of home loans by commercial banks. • To study the satisfaction level of customers about home loans. • To study the problems faced by customers in obtaining the home loans. For this I had taken four commercial Banks in Dehradun city namely HDFC Bank, PNB, standard chartered Bank, SBI. It includes two public sector banks and two private sector banks. The period of study is five years commencing from 2004-2008. In the research methodology I had taken both primary data as well as secondary data , in the primary data I had make a questionnaire to check the satisfaction level of customers about home loans . In the secondary data I had studied the annual reports of RBI, commercial banks & broachers of these banks. For the first objective I had collected the information about the number of account holders of specified banks, no of disbursement of home loans and recovery of these loans. After analysis I came to following findings In the comparative study of specified banks it’s found that  Punjab National Bank is having large number of customer base with high loan disbursement and recovery of loans. 

The standard chartered bank showed less outstanding balance which presented in percentage form in the diagram.

In case of second objective i.e. customer satisfaction level it is found that  On the basis of data the HDFC is emerging at higher position a Compare to Standard chartered bank and other public sector banks on Ground of professionally managed services, reliable & transparent System, easy query handling etc. And problems face by customers in obtaining home loans are •

The customer does not had proper knowledge about different Home loan products so they face problem in making a good deal.

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•

There are procedural delays, which harass the customers lot this will crush the curtsy of customers to avail the home loan. The attitude of bank employees some times non cooperative and it creates a hurdle in building trust and Confidence among customers about banks. The banks do not take into account the paying capacity of customers. So some customers are not able to get amount of Loan needed by them.

• •

Finally the whole research was carried out in a systematic way to reach at exact results. The whole research and findings were based on the objectives some of the limitation faced in collecting the data were Lack of time, lack of data, non-response, reluctant attitude and illiteracy of respondents, which posed problems in carrying out the research. Some of the suggestions are • To increase their customers, the banks should provide specialized services in this sector. These services can be such as proper guidance to the Customer regarding the processing of loans, especially for the customers who are illiterate. • To satisfy their customers and for good dealings in future, the banks should make prompt disbursement of loan amount to the customers so that they can buy or construct their dream home as early as possible. •

The Banks should use easy procedure, or say, less lengthy procedure for the sanctioning of loan to the customer. There should be less number of legal formalities, in case this exists, then, these should be completed in less time. This will be helpful in attracting more customers.

•

Although the interest rates on specific norms, yet customers seek less interest rate which can lower their cost of house. So banks should try to lower their interest rates. Needles to say, that the bank which having lower interest rates, have the maximum clients for loans.

•

The public sector banks should improve their overall services to increase the number of customers for home loans. They should recruit professionals to provide such services and to satisfy the customers.

.

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TABLE OF CONTENTS

Student Declaration …………………………………………………….. i Certificate from Company/ Organization …………………………. … ii Certificate from guide…………………………………………………… iii Acknowledgement..………………………………………………….......

iv

Executive Summary………………………………………………………..v Chapter Scheme………………………………………………………….. vi List of Tables………………………………………………………………vii List of graphs………………………………………………………………viii List of charts……………………………………………………………….ix List of Abbreviations……………………………………………………... x CHAPTER 1: INTRODUCTION1.1 Introduction to home loans…………………………............... 1 1.2 Advantages of home loans…………………………………… 1 1.3 Disadvantages of home loans………………………………... 2 1.4 Disbursement of home loans………………………………… 3 CHAPTER 2: OBJECTIVES OF THE STUDY………………………... 13 2.1 Purpose of the Study………………………………………......14 2.2 Scope of the Study…………………………………………......14 CHAPTER 3: RESEARCH METHODOLOGY……………………….. 16 3.1 Research Design………………………………………………. 16 3.2 Data collection……………………………………………….... 16 3.3 Sample size……………………………………………………..17 3.4 Sampling Technique…………………………………………. 17 3.5Liminations……………………………………………………. 18 CHAPTER 4: REVIEW OF LITERATURE…………………………… 20 CHAPTER 5: INDUSTRY PROFILE………………………………….. 22 5.1 The History of Indian home Loans………………………….. 22 5.2 Home Loan procedure in India……………………………….23 5.3 Interest rate provided by banks………………………………24 5.4 Indian Market for Home loans is more than Rs.500,000 cr... 27 5.5 Indian home loans Industry………………………………….. 28 5.6 Recent trends oh home loans in India………………………...31

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5.7 Impact of slowdown on home loan market in India…………31 5.8 Interest and market trends in year 2009……………………..33 5.9 Types of home loans…………………………………………... 35 5.10 HDFC home loan……………………………………………..37 CHAPTER 6: COMPANY PROFILE……………………………………48 CHAPTER 7: DISBURSEMENT OF HOME LOANS BY HDFC …….62 CHAPTER 8: COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS ………………………………………….. 66 CHAPTER 9: ANALYSIS & INTERPRETATION …………………… 80 CHAPTER 10: FINDINGS……………………………………………….97 CHAPTER 11: RECOMMENDATIONS AND SUGGESTIONS…….. 98 CHAPTER 12: CONCLUSION………………………………………….100 BIBLIOGRAPHY ……………………………………………………….. 101 ANNEXURES…………………………………………………………… 103

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TABLE NO.

LIST OF TABLES TITLE

5.2

Financial Snapshot

5.3

Interest rates provided by various banks

5.4

CONSOLIDATED EARNINGS (As at March 31, 2008)

7.2

HDFC: 4Q09 Summary

8.1

Disbursement of home loans by different banks

8.2

No. of Home loan account holders

8.3

Home loans distributed by HDFC and commercial banks

8.4

Recovery of Home loans:-

8.5

Outstanding balance

9.1

Age group of surveyed respondents

9.2

Gender classification of surveyed respondents

9.3

Education qualification of respondent’s

9.4

No .of years are you in Dehradun

9.5

Customer profile of surveyed respondents

9.6

Annual household income

9.7

Do you know about HDFC LTD

9.8

Reasons for getting Home financed

9.9

PAGE NO.

From where you have got your Home financed

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9.10

Source of information home loans scheme

9.11

Opinion about the services of HDFC LTD

9.12

Opinion of customers about Home loan scheme

9.13

Data gives preferences of respondents of Home loans companies and banks

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LIST OF GRAPHS GRAPH NO

TITLE

PAGE NO

5.1

Indian Market for Home loans is more than Rs.500,000 crore:-

28

5.2

Indian Home loans Industry

29

5.3

30

5.4

Indian Market for Housing mortgage finance companies The prices of residents have shot up very high

5.5

Residential prices in India

31

5.6

Housing shortage in India

32

5.7

HDFC yielding ground

34

6.3

HDFC Up, up and away

55

7.1

HDFC housing loan spreads

62

8.2

Home loans holders of HDFC and commercial banks

70

8.3

Home loans distributed by HDFC and commercial banks

72

8.4

Recovery of home loans

75

8.5

77

9.8

Balance due on home loans by HDFC and commercial banks Reasons for getting the home financed

9.9

From where you have got your home financed

88

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86

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9.11

Opinion about the services of HDFC LTD

91

9.12

Percentage of satisfaction level of customers of HDFC LTD

93

9.13

Data gives preference of respondents home loans companies and banks

94

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CHART NO

LIST OF CHARTS TITLE

PAGE NO

6.1

Snapshot of HDFC LTD

50

9.1

Age group of surveyed respondents

79

9.2

Gender classification of surveyed respondents

80

9.3

Educational qualification of respondents

81

9.4

Staying years in Dehradun

82

9.5

Customers profile of surveyed respondents

83

9.6

Annual house hold Income

84

9.7

Awareness about HDFC LTD

85

9.10

Percentage of source of information about home loans scheme

89

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LIST OF ABBREVIATIONS ABBREVIATIONS

EXPANSION

ROVR

RECOMMENDATION OVER

NRI

NON RESIDENT INDIAN

RBI

RESERVE BANK OF INDIA

PNB

PUNJAB NATIONAL BANK

SBI

STATE BANK OF INDIA

IIR

INCOME TO INSTALLMENT RATIO

FLIP

FLEXIBLE LOAN INSTALMENT PLAN

DSAs

DIRECT SELLING AGENTS

BSAs

BUSINESS SELLING AGENTS

DCOVR

DOUBLE CHECKING OVER

RPLR

RETAIL PRIME LENDING RATE

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CHAPTER- 1

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CHAPTER – 1 INTRODUCTION 1.1 INTRODUCTION TO HOME LOANS Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above all gathering funds little by little to afford one’s dream. Home is one of the things that everyone one wants to own. Home is a shelter to person where he rests and feel comfortable. Many banks providing home loans whether commercial banks or financial institutions to the people who want to have a home. HDFC-(Housing Development And Finance Corporation) Home Loan, India have been serving the people for around three decades and providing various housing loan according to their varied needs at attractive & reasonable interest rates. Owing to their wide network of financing, HDFC Housing Loans provides services at your doorstep and helps you find a home as per your requirements. Many banks are providing home loans at cheapest rate to attract consumers towards them. The more customer friendly attitude of these banks, currently offer to consumers cheapest loan over homes. In view of acute housing shortage in the country, and keeping in mind the social – economic role of commercial banks in the present times, the RBI advised banks to encourage the flow of credit for housing finance. With the RBI reducing bank rate, the home loan market rates nose-diving by 50 basis points. The HDFC Bank and Standard chartered bank has become the first player in this sector to announce a housing loan for a 20 years period. No doubt it will enhance the end cost people to plan their house over longer duration now; it has been made easy for a person to buy that dream house which he dreamt of long ago. HDFC also provides with Home Improvement Loan for internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminium windows. HDFC finances up to 85% of the cost of renovation (100% for existing customers). Current status is that HDFC reduced home loan rates by 50 basis points for all its existing floating rate customers.

1.2 ADVANTAGES OF HOME LOANS:The various benefits of home loans arising to the customers are:(i)

Attractive interest rates:-

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The various banks offer attractive interest rates to boost and help their customers. Many banks provide loans on fixed or floating rates to facilitate consumers as per their needs. (ii)

Help in owning a home:The home availed by a person with the help of banks, because they provide technical and financial assistance to customers for owning their dream home. (iii) No requirement of guarantor:The commercial banks now a day, liberlise their laws regarding home loans. Some of banks don’t even require the guarantor to grant loan to their consumers. They also make consumers free by reliving him to find a guarantor to complete the proceedings of availing loan. (iv)

Door-Step Services:These door to step services are provided from enquiry stage to the final disbursement takes place such services are beneficial for customers in present busy life. Banks like ICICI bank and standard chartered bank provide door to step services to customers to borrow loan. (v)

Loan period:There are many banks which provide maximum loan tenures upto 15-20 years based on the loan amount and the creatibility of customers. This relieves the customers to repay loan amount till a long period. (vi)

For accidental death insurance :Some banks provide free accidental death insurance with housing loan which is also beneficial for the customers. These benefits or advantages of home loans are responsible for making than so popular among customer that a person who don’t have their home and want to buy, they do it with home loan. Home loans help such persons in making their dream home.

1.3 DISADVANTAGES OF HOME LOANS:The main disadvantages of home loans are high lightened as below: (i)

Delays in processing :Many times, there are huge delays in processing of providing home loans because various formulations to be fulfilled in this process. Due to these delays customers feel mentally as well as financially weak. (ii)

Fluctuating interest rates :Some banks give home loans at floating rates, which fluctuate at Different intervals due to some reasons. These changes sometimes, may lead to increase in interest rate which will increase the cost of home loans to the customers (iii)

High Cost:-

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The public sector banks charge high processing cost for home loan’s sanctioning. They are forced to pay serious charges at various stages to fulfill the requirements. Some consumers are not able to pay such charges so such people could not avail the benefits of home loan schemes.

(iii)

Problems in disbursement:There are many problems in disbursement of home loan amount. There are some delay in disbursement of loan amount to the customers due to legal formalities. This causes problems to the customers. These are limitations or disadvantages of home loans. But some times some banks charges high installments to repay loan amount. Such also causes problem to customers. These limitations can be removed by providing good and promote services to the customers.

1.4 DISBURSEMENT OF HOME LOANS :The every bank has its own procedure to disburse the loan amount among customers. After choosing your right home, the next step is disbursement of home loans. The loan amount is disbursed after identifying and selecting the property or home that are purchased and submit the requisite legal documents. In the disbursement of home loans a clear title and full verification to ensure that a person has full rights on his house. The 230A clearance of seller and /or 371 clearances from the appropriate authority of income tax is also needed. (I) Eligibility criteria:However, if one is a resident or non-resident individual who is planning to buy a house in India, one can apply for a home loan. If a person has decided to buy a property in the near future, he/she can apply for a loan before even selecting the property. Once the maximum amount to put into the property has been decided, the Housing Finance Institutions or Banks will let the customer know that how much he/she is eligible for and this helps to plan out the budget. (ii) Conditions regarding co-applicants: All Housing Finance Institutions lay down conditions on who can be co-applicants. all co-owners to the property. need to be co-applicants to the loan necessarily. These institutions do not permit minors to join in as either coowner or as co-applicants because a minor is not eligible to enter into a contact as per law. They do not permit even friends or relatives who are not blood relatives to take a property jointly.However, Income of coapplicants can be clubbed together to get higher loan eligibility. Given below is a Table that throw light on acceptable relationship of a co-applicant for clubbing of income. Income Clubbing of Co-applicants:- It is as follows:Combination Income Clubbing: -

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 Husband-Wife: - Income of husband-wife can be clubbed.  Parent - son: - It can be clubbed if only son is there but not if any male sibling exists.  Brother-Brother: - If they are currently staying together and intend to stay together in the new property, then only, their income-can be clubbed for above purposes.  Brother-Sister: - No clubbing-is possible.  Sister-Sister : - No clubbing is possible.  Parent-Minor- Child: - No clubbing is possible in this case also. (iii) General Terms and Conditions: - The following are the terms and conditions applicable to the basic home loan product only. These are likely to change on the basis of the variations of the home loan product. Typically, in general home loans, the following conditions are applicable :1) The loan to value ratio (LTV) cannot exceed a particular percentage. This differs from product to product and from one Housing Finance Institutional Bank (HFI/B) to another. The components of the value of the Property calculated here are covered under cost of property. 2) The maximum tenure of the bank is nominally fixed by HFI/Bs. However, HFls/Bs do provide for different tenures with different terms and conditions. 3) The installment that one pay is normally restricted to about-50-per cent of the monthlygross income of the candidate. 4) The total monthly outflow towards all the loans that have been availed of, including the current loan is normally restricted to 50% of the gross monthly income. 5) One will be eligible for a loan amount which is the lowest as per one's eligibility. This is calculated as per the LTV norms, the HR, norms and the FOIR norms as mentioned above. 6) Most HFls/Bs consider the profile before they judge the repayment capacity. The judgement is based on age, qualifications, number of dependents, employment details, employer credentials, work experience, previous track record of repayment of any loans that have been availed of, occupation, the industry to which the candidate's business relates to, if he/she is self-employed, then the turnover in the last 3-4 years etc. 7) Some HFIs/Bs insists on guarantees from other individuals for the repayment of the loan. In such cases, the customers has to arrange for the personal guarantee before the disbursement of the loan takes place.

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8) The property should be technically clear before the HFIs/Bs disburses the loans amount. Most of institutions and banks have a teams of technical experts who visit the site to get a technical report before the disbursement of loan. This is also beneficial to the customer as they check for the technical quality and compliance with local laws. 9) The property should be legally clear before one can avail of a disbursement of the loan amount. Housing-Finance Institutions /Banks (HFIs/Bs) take legal clearance from their lawyers before the disbursement of amount. This proves to be beneficial to the customers as a legal expert checks his/her documentation to ensure that he/she get a proper title to the property. 10) The disbursement of the loan is as per the progress of construction of the property unless it is a ready property in which case the disbursement will be by one single cheque. PEMI or simple interest on the loan amount disbursed to the customer in case of a part disbursement will be payable by the customer on the disbursement. 11) The disbursement in most cases will be favoring the builder or the seller or the society or the development authority as the case may be. The disbursement will come in the customer's favour under special circumstances only. 12) The repayment of loan can be made either through deduction against salary, post-dated cheques, standing instructions or Auto debit instructions to bank. 13) The principle is amortized either on annual reducing or monthly reducing basis as the case may be. The above terms and conditions are generally true for most Housing finance Institutions/Banks with respect to the general Home Loans. However, the specific terms and conditions vary with respect to special Housing Finance Institutions or Banks. (iv) Charges applicable to home loans :The different kinds of charges applicable to home loans are discussed below: a) Processing fees :First of all, comes the process fee. This is a charge that is levied by most HFls/Bs. This has to be paid at the time of submission of the application form. It's normally charged as a percentage of the loan amount sanctioned. Some HFls also charge a flat fee based on the loan amount instead of a percentage. When a lower amount is sanctioned the excess fees paid at the time of submission of the application is adjusted with the charges, which one make to the HFI/B subsequently. Most HFls/Bs refund the processing fee if the loan application is rejected. b) Administrative fees :-

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This charge is again, normally, a percentage of the loan amount sanctioned. It is collected by the HFI/B for the maintenance of customer's records, issuing interest certificates, legal charges, technical charges, etc. though the tenure of the loan. It is payable by the customer when he/she accepts the offer letter given by the HFI/B. This payment has to be made before the availment of the disbursement. The mode of collection of these fees varies from one HFI/B to another. c) Rate of interest :This is the rate of interest applicable on the loan amount through the tenure of the loan. It is charged on the principal monthly reducing method. Most HFIs/Bs give an option to select either a fixed rate of interest or a variable rate of interest. d) Legal Charges:Some HFIs/Bs mainly Public Sector Banks levy legal charges that they incur on getting the property documents vetted by their panel of lawyers. e) Technical Charges:These charges are also levied by certain Housing Finance Institutions/Banks (HFIs/Bs) to meet their expenses on the technical site visits to the customer's property. This ensures quality of construction and construction within the norms as stipulated by the respective approval authority. f) Stamp duty and registration charges:HFIs that go in for a registered mortgage pass these charges on to the customer. These are rather heavy in certain states depending on the laws laid down by the state where one buy a property. g) Personal Guarantee from Charges :Since the personal guarantee provided by the customer need to be stamped, these charges are also recovered from the customer. They are charged to him by HFIs who demand for Guarantees. h) Cheque Bounce Charges :-

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In case the cheques through which one make a payment to HFls get dishonored, some minimum charges are levied by the HFI. The same are recovered from the customer. (i) Delayed payment charges :HFls/Bs charge delayed payment charges from the customer if he/she delays the payment of installments beyond the due date. (j) Additional charges :These are levied as a percentage on the delayed payment charges by most HFls. They are levied if one fail to pay the dues within the stipulated time after a delay has taken place. (k) Incidental charge :This is payable in case the HFI/B sends a representative from their organization to collect their outstanding dues. It is normally charged at a flat rate per visit. These charges are levied by most HFls/Bs. l) Prepayment Charges :This is a penalty charged by HFls/Bs from when one makes either a part prepayment or a full repayment of the loan. This charge is levied only on lump sum payments and not on the EMls that one pays. This charge is levied on the amount prepaid by one and not on the entire outstanding principal. These charges are gradually being discount. So, these are the charges levied by most Housing Finance Institutions and Banks while granting home loan to the customers. Now, the decision on the repayment capacity shall be talked about as follows. (v) Judgement regarding repayment capacity on the basis of income :To understand how the income of a customer is considered to arrive at his repayment capacity, it is first necessary to classify customers into salaried and self employed individuals. a) The income of the salaried individual is considered in the following manner:Gross monthly income as it appears on the salary slip Less:- Any non regular variable income appearing on the salary slip (including overtime, etc.) Add : - 50 per cent of the average variable income of the last six months.

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Add: - Any fixed cash/voucher payments for which proof can be submitted. Add: - 50 per cent of the average variable cash/voucher payments with proof like traveling reimbursement etc. Add :- HRA receivable if not being received already in the salary slip. The above income calculated for the calculation of eligibility using IIR and FOIR norms. For calculation of FOIR, the installments of all the loans that one has availed of currently for which repayment is being made is taken into account as well. The lower of the two eligibilities is considered as the maximum repayment capacity. b) To consider income of Self-employed individuals we further classify them into Professionals and non-professionals . •

Professionals:- Comprising doctors, chartered accountants, lawyers, architects, etc. For calculation of eligibility of professional's income is computed by most HFIs using the gross professional receipts instead of the Net profit as in the case of selfemployed non-professionals.

•

Non-Professionals: - The income of non-professionals is normally calculated by HFIs in the following manner: -

Average of the net profits of last 2 years as it appears in the profit and loss account (Returns need to be filed for the same. They should be filed regularly before the due date is over). Less: - Any income, which is unusual and non-recurring in nature like sale of some asset, etc which affects profits substantially, Add: - Any expense that is unusual and non-recurring in nature like repairs and maintenance that has not been capitalized and effect profit adversely. Add: - 50 per cent of the average depreciation of the last two years. The above income is calculated for the calculation of eligibility using IIR and FOIR norms. For calculation of FOIR the installments of all the loans that one has availed of currently for which repayment is being made is taken into account and the eligibility is worked out. The lower of the two eligibilities is considered as the maximum repayment capacity. (vi) Credit documentation:-

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Given below is the exhaustive list of credit documents- that need to be submitted for a general home loan product. The documents vary from one HFI/B to another based on one's employer, qualifications experience etc. the general requirements are as follows: (a) Income Documents : For salaried slips for the last three months appointments letter-salary certificateretainership agreement, if appointed as a consultant-Form 16 issued by the employer in customer's name income document for self employee - last three years profit and loss account statement duly attested by Chartered Accountants. Last three years Balance Sheets duly attested by Chartered Accountant, last three years Income Tax Returns with computation chart duly filed and certified by the Income Tax authorities. b) Proof of employment : Identify card issued by the employer- Visiting card. (c) Employer's details (In case of private limited companies) : Profile of employer on employers letterhead (to be signed by a senior person in the organization) comprising • Name of promoter/directors • Background of promoters/directors • Nature of business activity of your employer • Number of employees • List of branches/factories • List of suppliers • List of clients/customers • Turnover of employer • Annual reports of the employer for the last two to three years. (d) Proof of age (Anyone of the following) : Passport- Voter's ID card-PAN card-Ration card-Employer's identity card-School leaving certificate-Birth certificate. (e) Proof of residence (Anyone of the following) : -

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Ration card-Passport- PAN card-Rent agreement, if the customer is staying currently on rent- Bank Pass book-Allotment letter from the company if he/she is residing in company quarters. (f) Proof of name change (If applicable) : A copy of the official gazette –A copy of a newspaper advertisement publicizing the name change-Marriage certificates. (g) Proof if investment (If required) :Bank statement for the last six months of all operating and salary accounts - Bank statements for the last six months of all current accounts, if self-employed-any other photocopies of investments held, if required by the HFC. (vii) Legal documentation :Legal Documentation the typical legal documents that need to be submitted to the HFC arc discussed here. Given below is a list of legal property documents that need to be submitted to the HFC for mortgage of the property. The name and the list of documents vary from state to state and also depend on the type of property being financed. A broad outline of the documents required is given below. a) Acceptance copy of the offer letter issued by the HFC/B. b) Title documents of the property that include -sale agreement duly Registered-Own contribution receipts - Allotment letter-Registration receipt-Land documents indicating ownership, if applicable- Possession letter-Lease agreement, if applicable (Property bought from a development authority) - Mortgage deed if the HFC opts for a registered mortgage. c) No Objection Certificate from the developer, society or development authority as applicable. d) Personal Guarantees, if applicable. e) In case of alternator additional security, documents for the same depending upon the security details. f) Post dated cheques for the EMls.

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The above documents are only indicative in nature and do not cover the entire list. It may, also be noted that in a resale case, the previous chain of agreement also need to be taken. (viii) The tax benefits that are applicable to housing loans for individuals :Currently Tax Benefits to individuals are available only for the Home Loans and Home Extension Loans products. The benefits available are covered under these sections. Property Insurance :Is it compulsory to insure the property? some HFls insist on a mortgage redemption life insurance policy. In this case the customer gets a benefit of an interest rate reduction. Though the HFI may not insist, it is better to go in for property insurance to safeguard the asset against any sort of damage or loss. The customer can select the tenure for the property insurance. The insurance premium is changed up front. Most insurance companies provide for huge discounts on the rate of premium for larger tenures. The premium charged currently is seventy-seven for every lakh of property for a year. So a customer has to fulfill various conditions to be eligible for availing home loan from a Housing Finance Institution/Bank After fulfilling these conditions, a customer can avail loan at low interest rate i.e. fixed rate floating rate. A decision on whether one should go in for a fixed-rate loan or a floating-rate loan now is a function of two factors i.e. One's perception of where interest rates in the economy are headed and one' capacity to ride the interest rate changes. A floating-rate loan let one take advantage of further falls in interest rates but one stand to loose if interest rate, rise again. However this decision is based on the perception of the consumer.

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CHAPTER-2

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CHAPTER-2 OBJECTIVES OF STUDY There is no strongest foundation for your dream home, than a cheap loan. Home loans have become that stronger foundations for people who want to own a home. The main objectives of the study are as follows :1) The main objective of this study is to know the Customers perceptions about home loans of HDFC housing development finance corporation LTD. 2) To analyze the history of hdfc ltd. 3) Generating good business to the company by promoting and selling the products of HDFC LTD. 4) To know the ideas of customers about home loan products and services. 5) To make comparative study of Disbursement of home loans by Commercial banks. 6) Fixing the appointments with the customers. 7) To study the satisfaction level of customers about home loans. 8) To study the problems faced by customers in obtaining the home loans. 9) Visiting the customers and closing the deal.

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10) To learn about various aspect of hdfc home loan ltd.

2.1 PURPOSE OF THE STUDY The main purpose of this study is to attain the knowledge of the processing system of home loans. the main purpose of the study are as follows :•

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

•

To study the satisfaction level of customers about home loans.

•

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

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

2.2 SCOPE OF STUDY The Indian housing finance industry has grown by leaps and bound in few years. total home loans disbursements by banks has risen which witnesses phenomenal growth from last 5 years. There are greater number of borrowers of home loans. so by this study we can find out satisfaction level of customers and problems faced by them in obtaining home.

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CHAPTER -3

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CHAPTER-3 RESEARCH METHODOLOGY OF THE STUDY RESEARCH METHODOLOGY:Research methodology is a way to systematically show the research problem. It may be understood as a science of studying how research is done scientifically. It is necessary for the researcher to know not only the research methods but also the methodology. This Section includes the methodology which includes. The research design, objectives of study, scope of study along with research methodology and limitations of study etc. • To know the Customers perceptions about home loans of HDFC housing development finance corporation LTD. •

To study the satisfaction level of customers about home loans.

•

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

•

To make comparative study of disbursement of home loans by commercial banks, the study shall be conducted in the manner enumerated below-

3.1- RESEARCH DESIGN:This project is based on exploratory study as well descriptive study. It was an exploratory study when the customer satisfaction level was studied to suggest new methods to improve the services of HDFC LTD in providing home loans and it was descriptive study when detailed study was made for comparison of disbursement of home loans by commercial banks. 3.2 – SOURCES OF DATA :-

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To fulfill the information need of the study. The data is collected from primary as well as secondary sourcesA - PRIMARY SOURCE:I decided primary data collection method because our study nature does not permit to apply observational method. In survey approach we had selected a questionnaire method for taking a customer view because it is feasible from the point of view of our subject & survey purpose. We conducted 100 sample of survey in our project to judge the satisfaction level of customers which took home loans. • Sample size;For the questionnaire I have taken the sample size of 100 customers of HDFC LTD. B – SECONDARY SOURCE:It was collected from internal sources. The secondary data was collected on the basis of organizational file, official records, news papers, magazines, management books, preserved information in the company’s database and website of the company. 3.3- SAMPLING :Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study. SAMPLE SIZE :Large sample gives reliable result than small sample. However, it is not feasible to target entire population or even a substantial portion to achieve a reliable result. So, in this aspect selecting the sample to study is known as sample size. Hence, for my project my sample size was 100. The Sample Size consists of both the Professional and Business class people. IT peoples, Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample. SAMPLING TECHNIQUE:Random sampling technique was used in the survey conducted. TOOLS OF ANALYSIS:Data has been presented with the help of bar graph, pie charts, line graphs etc.

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PLAN OF ANALYSIS:Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively. 3.4 DATA COLLECTION INSTRUMENT DEVELOPMENT :The mode of collection of data will be based on Survey Method and Field Activity. Primary data collection will base on personal interview. I have prepared the questionnaire according to the necessity of the data to be collected. 3.5 LIMITATIONS OF THE STUDY:This study also includes some limitations which have been discussed as follows: i) The sample size of 100 customers and 4 banks might prove a limitation because of difficulty in generalization of results. ii) To collect the data from various banks was quite difficult due to non- cooperation of some banks. This proved to be major limitation of the study. iii) To access such a large number of customers was difficult because of non-cooperative attitude of respondents. iv) Lack of data was also the other limitation of the study as some of banks do not have proper data on topic. v) There was limitation of time to conduct such a big survey in limited available time. vi) Ignorance and reluctant attitude of customers was also a major limitation in this study. Thus above all were the limitations in this research study. The maximum efforts were made to overcome these limitations in the study.

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CHAPTER-4

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CHAPTER – 4 REVIEW OF LITERATURE SUMMARY:• After going through pervious studies of Home loans I came to conclude that• There is growth of home loans after 2001. • Home loans have an inverse relation with interest rates i.e. when interest rate low the demand of home loans increase. (Ojha 1987) • People are going more towards home loans than private mortgage insurance .(Berstain 2008) • Government taking various steps to encourage people to go toward home loans .(Haavio, Kauppi 2000) • Growth of home loans are due to increase of living standard of people, shifting from joint family to nuclear family .(Lacourr, Micheal 2007) • There are some problems also attach with these home loans such as time i.e filling of application of loan to closing ,people have their own specified needs from these home loans which are not fulfilling. (Lacour Micheal 2006). • SBI provide a very low interest rate on home loans as compared to other banks. (SBI May 2000) Now after this conclusion the details of reviews are below-

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Berstain David (2009) examined in his study taken from 2001 to 2008 that in this period there is increase use of home loans as compared to private mortgage insurance (PMI).he have divided his study into four sections. Section 1 describes why people are going more for home loans than PMI. the main reason for this that now home loans market provide Piggybank loans for those people who don’t have 20% of down payment. Section 2 tells the factors responsible for the growth of home loans and the risks on shifting toward home equity market without any PMI coverage. PMI can protect lenders from most losses up to 80% of LTV and the absence of PMI will result in considerable losses in an environment. Section 3 tells the measures in changes of type of loans. For this he have taken the data from the 2001 and 2007 AHS a joint project by HUD and Census The results of this analysis presented in Table One reveal a sharp increase in the Prevalence of owneroccupied properties with multiple mortgages among properties with Newly originated first mortgages. Section 4 describe the Financial status of single-lien and multiple-lien households and for this he have taken the survey of consumer finance and show that financial position is more weaker in multiple loans than the single loans. Vandell, Kerry D (2008) analysis the sharp rise and than suddenly drop down home prices from the period 1998- 2008. changes in prices are for the reasons as such economic fundamentals , the problem was not sub prime lending per se, but the Fed‘s dramatic reductions, then increases in interest rates during the early- mid-2000 , the housing ―boom was concentrated in those markets with significant supply-side restrictions, which tend to be more price-volatile; he problem was not in the excess supply of credit in aggregate, or the increase in sub prime per se, but rather in the increased or reduced presence of certain other mortgage products. La courr, Micheal (2007) analysis in his study the factors affected the increase in the level of Annual percentages rates (APR) spread reporting during 2005 over 2004. the three main factors are changes in lender business practices; (2) changes in the risk profile of borrowers; and (3) changes in the yield curve environment. The result show that after controlling for the mix of loan types, credit risk factors, and the yield curve, there was no statistically significant increase in reportable volume for loans originated directly by lenders during 2005, though indirect, wholesale originations did significantly increase. Finally, given a model of the factors affecting results for 2004-2005, we predict that 2006 results will continue to show an increase in the percentage of loans that are higher priced when final numbers are released in September 2007. La cour Micheal (2006) examined the home purchase mortgage product preferences of LMI households. Objectives of his study to analysis the factors that determined factors their choice of mortgage product , is different income groups have some specified need to met particular product. The role pricing and product substitution play in this segment of the market and do results vary when loans are originated through mortgage brokers? For this they have use the regression analysis and the results are high interest risk reduce loan value. Self employed borrower chooses reduce documented loans than salaried workers.use of this product type seems to be more prevalent among borrowers with substantial funds for down payment and better credit scores. In case of pricing Multi families requires price premium and larger loans carry lower rate. And the role of time, particularly, the time required for the loan to proceed from application to closing it is find that government

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lending taking the longest time and Nonprime loans the shortest time.Multi family properties take longer time in closing. And during peak season take longer time to close. And for last objective it is find that broker originated loans close faster.The effect of mortgage brokers on pricing and other market outcomes is fertile ground for additional research. Dr. Rangarajan C. (2001) said that the financial system of India built a vast network of financial institutions and markets over times and the sector is dominated by banking sector which accounts for about two-third of the assets of organized financial sector. Haavio, Kauppi (2000) stated that countries where a large proportion of the population lives in owner – occupied housing are experiencing higher unemployment rates. Than countries where the majority of people live in private rental housing, which might suggest that rental housing enhances labour mobility. In this paper, they develop a simple inter temporal two region model that allow us to compare owner occupied housing markets to rental markets and to analyze how these alternative arrangements allocate people in space and time. announced that it will offer loans for Rs. 2-10 lakh at 12.5 percent the lowest rate offered by any housing finance provider, big brother SBI has taken the rate war in the home loans category to new heights. This is because, apart from the low rate, the interest on these loans is calculated on principal, which is reduced every month unlike other housing finance companies which calculate interest on annually reducing basis. Narasimham Committee (1991) points out that although the banking system in our country has made rapid progress during the last two decades, there is decline in productivity and efficiency and erosion of profitability. The committee strongly make indications of liberlising, deregulating economy to make Indian baking system more competitive and efficient. Ojha (1987) in his paper "modern international caparison of productivity and Profitability of pubic sector banks of India" making Comparison on the basis of per employee indicators and taking examples of state bank group and Punjab National bank noted that Indian banks are the lowest in all accounts. However such international comparison will not be fair for numbers of reasons. Godse (1983) in his essay, “looking a fresh at banking productivity” observe that productivity aspect is only at the Conceptualization stage in banking industry. He suggested improvement in productivity and procedures, costing of operations and capital expenditure etc. Fanning (1982), while examining bank productivity of British banks observed that although the productivity of the UK clearing banks is improving, they are still heavily over manned as compared with similar banks else where. Kulkarni (1979) in his study “Development responsibility and profitability of banks” stated that while considering banks costs and profits, social benefits arising out of it cannot

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be ignored. He suggested that while meeting social responsibility banks should try to make developmental business as successful as possible. Varde and Singh (1979) in a study "profitability of commercial banks" over 15 years gave consideration to two types of factors that effects interest rates levels i.e. internal factors (including operational and managerial efficiency of individual basis). Banking Commission (1972) reviewed bank operating methods and procedures and made recommendations for improving and modernizing these, particularly relating to customers services, credit procedure and internal control systems. It observed that present methods of working out branch profitability are not appropriate and an integrated costing and financial reporting system is needed. Department of Banking operations and development, RBI : Bombay observed that the rapid expansion of banks activities since 1970 called for a phase of consolidations to improve the quality of banks operational efficiency, productivity and customer services.

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CHAPTER-5

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CHAPTER-5 INTRODUCTION TO THE INDUSTRY 5.1 THE HISTORY OF INDIAN HOME LOANS:Home loans in India have made people Buy Property in India in spite of the skyrocketing prices. Today, we find considerable Real Estate Investment in India, either in the field of Residential Property in India or Commercial Properties in India. Home Loans in India are disbursed by many Banks as Loan Banking is on of the most important function of the Financial Services in India. Property Dealers and Real Estate Consultants in India usually recommend that we undertake appropriate Home Loan or Mortgage Loan counseling so that we can Buy Apartment in India at an affordable Mortgage Rate.Purchasing the home of your dreams is not an easy task. Especially when you plan to buy a home on loan. Home loan means that you buy a house on installments. In simpler terms when you want to own a home and can’t afford to pay the amount in lump sum, you can pay it in monthly installments with an interest rate. The interest rates of home loans are expected to go down even further according to analysts who foresee a cut down in the rates by the RBI in the wake of the decision taken by US Federal Reserve to cut its rates by a significant margin. There are number of companies offer cheap home loans at a low interest rate. You can avail loan against existing house for renovation or expansion etc. There are many nationalized banks that offer finance for affordable housing. India Housing has put together a comprehensive data to provide you with the cheapest Home Loans available in the market. We have listed all the important housing finance institutes and some of the top home finance banks providing lowest interest rates. In the last few years, housing loan scenario in India has changed drastically. It has taken a front seat and people are looking forward to owning their own houses. It is no more a dream that required lifetime saving and a difficult decision to make. Today the new home purchase loan is much easily available and is much cheaper than what was available earlier. Banks are now everywhere and the schemes are implemented even in villages and smaller towns. The housing loans are popular there too, however, the activity of building flats is little slow. It would not be wrong to say that there has been a boom in the home loan market and with this boom; there is also a boom in the Number of home loans mortgage brokers in India. Rukmini Devi Institute of Advanced Studies

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The main reason for this boom in home loan market is the change in government policies. It is our government’s motivation that the home loan interest rates in India have fallen considerably. Lot many banks are offering home loans and this is available at low EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending rate is in the range of 7.5 to 15 %. Again, there are different types of home loans available today. The interest rate available is also of two different types. One is the fixed rate loan and the other is the floating rate loan. In the fixed rate loan, whatever interest is fixed on the start of loan is carried on for the complete period. However, in the other one, the interest rate is not fixed and as the interest rate goes up or low the effect is directly transferred to the person who is taking the loan. In the last few years the floating interest rate has been a favorite among most of the people taking home loans. There is also a trend to opt for home construction loan. This loan is available to those who want to design their homes according to their requirement and taste. In other words, this loan is meant for those who themselves want to construct their new home. As shared earlier, taking a loan is not a difficult task. However, before taking a loan, one must realize that the relationship with the bank will be for a longer period usually 15 to 20 years so one must ensure faith and integrity in bank. Apart from low rate of interest, the bank should also provide some value added services. The other thing is to look into is the property that is to be brought. Making sure that the builder has all sanctions and facility to build a good building is very important. Taking home loans these days has become simpler. With the RBI regularly bring down interest rates; taking home loans have become extremely easy. Housing loans which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down, people increasingly number apply to take these loans. Some of the leading banks offering home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank , Bank of Baroda, SBI, Standard Chartered Bank and Axis Bank . 5.2 Home Loan Procedure in India :Submission of Application Form: - After choosing a particular home loan, the customer submits the application form to the housing finance company (HFC) along with other relevant documents as required by the HFC. They comprise documents to establish income, age, residence, employment, investments, etc. The customer also needs to hand over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-1% of the loan amount to the HFC. Validation of the Information: - In the next stage, HFCs validate the information provided by the customer on the application form. They usually conduct checks on the residential address of the customer, the place of employment of the customer, and credentials of the employer. Some HFCs may insist on a personal interview with the customer and perform a reference check on the references provided by the customer on the application form. Issue of Sanction Letter :- After due appraisal of customer profile, a sanction letter is issued which contains details such as loan amount, rate of interest, annual / monthly reducing balance, tenor of the loan, mode of repayment and general terms and conditions

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of the loan. This is the actually the approval of the money lending procedure by the company. However, the money is sanctioned only after the documents and the property on behalf of which the loan is being granted is thoroughly verified. Submission of Documents: - Once the sanction letter is passed, the customer is required to leave the entire set of original documents pertaining to the property being purchased with the HFC as security for the loan amount sanctioned. These documents remain in the custody of the HFC till the time the loan is fully repaid. Once the documents are handed over to the HFC, they send all the documents for a thorough legal scrutiny. Validation of Property: - Prior to disbursement, the HFC also conducts a site visit to the customer's property to ensure that all construction norms have been adhered to properly. Once the HFC is satisfied that the property is legally and technically clear, they disburse the loan amount. The disbursement from the HFI is on the basis of the stage of construction of the property. Payment Procedure: - Once all the above mentioned process, the borrower is entitled to take the money from the lender party. Until such time that the entire sanctioned amount is not drawn, the customer is supposed to pay a simple interest on the Actual Amount drawn (without any principal repayments). The EMI payments commences only after the entire sanctioned loan amount is drawn. 5.3 INTEREST RATES PROVIDED BY VARIOUS BANKS Finance Institution

Loan Period (in years)

Fixed

EMI / Lakh (INR)

Floating

EMI / Lakh (INR)

Bank of Baroda

Up to 5 6 to 10 11 to 15 16 to 20

9.00 9.25 9.50 9.50

2076 1230 1044 932

8.00 8.25 8.25 8.50

2028 1227 970 868

State Bank Of India

Up to 5 6 to 10 11 to 15 16 to 20

9.50 9.75 -

2100 1300 -

8.75 9.25 9.25 9.75

2064 1280 1029 949

HDFC

Up to 5 6 to 10 11 to 15 16 to 20

11 11 11 11

2175 1375 1137 1033

9.50 9.50 9.50 9.50

2101 1294 1045 933

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Up to 5

10.75

2162

9.50

2101

6 to 10 11 to 15 16 to 20

10.75 10.75 10.75

1364 721 1016

9.50 9.50 9.50

1294 1045 933

Up to 5 6 to 10 LIC Housing Finance 11 to 15 16 to 20

10.50 11 11 11

2149 1373 1137 1032

9.50 9.50 9.50 9.50

2100 1294 1044 932

Up to 5 6 to 10 PNB Housing Finance 11 to 15 16 to 20

9.00 9.00 9.25 9.50

2076 1267 1030 933

10.50 10.50 10.50 10.50

2150 1350 1106 999

11

1032

9.50

932

9.00 9.00 9.25 9.50

2076 1267 1030 933

10.50 10.50 10.50 10.50

2150 1350 1106 999

ICICI Bank

16 to 20 Up to 5 6 to 10 PNBHousing Finance 11 to 15 16 to 20

The above table illustrates the comparison between the interest rates from various Housing Finance Companies and banks. It can be seen that if one wishes to go for floating loans, the bank which gives the best deal as far as the interest rate is concerned is HDFC followed by PNB Housing Finance with the lower rates. Lock-in facility by banks :A lock-in, also called a rate-lock or rate commitment, is a lender’s promise to hold a certain interest rate and a certain number of points for you, usually for a specified period of time, while your loan application is processed. (Points are additional charges imposed by the lender that are usually prepaid by the consumer at settlement but can sometimes be financed by adding them to the mortgage amount. One point equals one percent of the loan amount.) Depending upon the lender, you may be able to lock in the interest rate and number of points that you will be charged when you file your application, during processing of the loan, when the loan is approved, or later. A lock-in that is given when you apply for a loan may be useful because it’s likely to take your lender several weeks or longer to prepare, document, and evaluate your loan application. During that time, the cost of mortgages may change. But if your interest rate Rukmini Devi Institute of Advanced Studies

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and points are locked in, you should be protected against increases while your application is processed. This protection could affect whether you can afford the mortgage. However, a locked-in rate could also prevent you from taking advantage of price decreases, unless your lender is willing to lock in a lower rate that becomes available during this period. It is important to recognize that a lock-in is not the same as a loan commitment, although some loan commitments may contain a lock-in. A loan commitment is the lender’s promise to make you a loan in a specific amount at some future time. Generally, you will receive the lender’s commitment only after your loan application has been approved. This commitment usually will state the loan terms that have been approved (including loan amount), how long the commitment is valid, and the lender’s conditions for making the loans such as receipt of a satisfactory title insurance policy protecting the lender. Oral or written lock-in agreement? :Some lenders have preprinted forms that set out the exact terms of the lock-in agreement. Others may only make an oral lock-in promise on the telephone or at the time of application. Oral agreements can be very difficult to prove in the event of a dispute. It is wise to obtain written, rather than verbal, lock-in agreements to make sure that you fully understand how your lender’s lock-ins and loan commitments work and to have a tangible record of your arrangements with the lender. This record may be useful in the event of a dispute. Charges of a lock-in:Lenders may charge you a fee for locking in the rate of interest and number of points for your mortgage. Some lenders may charge you a fee up-front, and may not refund it if you withdraw your application, if your credit is denied, or if you do not close the loan. Others might charge the fee at settlement. The fee might be a flat fee, a percentage of the mortgage amount, or a fraction of a percentage point added to the rate you lock in. The amount of the fee and how it is charged will vary among lenders and may depend on the length of the lock-in period. Types of lock-in:Locked-In Interest Rate--Locked-In Points :- Under this option, the lender lets you lock in both the interest rate and points quoted to you. This option may be considered to be a true lock-in because your mortgage terms should not increase above the interest rate and points that you’ve agreed upon even if market conditions change. Locked-in Interest Rate--Floating Points:- Under this option, the lender lets you lock in the interest rate, while permitting or requiring the points to rise and fall (float) with changes in market conditions. If market interest rates drop during the lock-in period, the points may also fall. If they rise, the points may increase. Even if you float your points, your lender may allow you to lock-in the points at some time before settlement at whatever level is then current. (For instance, say you’ve locked in a 10½ percent interest rate, but not the 3 points that went with that rate. A month later, the market interest rate remains the

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same, but the points the lender charges for that rate have dropped to 2½. With your lender’s agreement, you could then lock in the lower 2½. Points.) If you float your points and market interest rates increase by the time of settlement, the lender may charge a greater number of points for a loan at the rate you’ve locked in. In this case, the benefit you might have had by locking in your rate may be lost because you’ll have to pay more in up-front costs. Indian Economy is growing at a nice pace (8% p.a) which is also driving per capita income rise. The demand of real estate has reached at a new peak according to ninth five year plan there is a shortage of 42million houses .But in India the figures to GDP are smaller in comparison to the other countries Contribution of housing to GDP is close to 8%. Sources: NHB 5.4 Indian Market for Home loans is more than Rs.500,000 crore:Today, not only the metros are witnessing the housing crunch even the second tier cities like- Jaipur, Bhubneshwar, Lucknow, Trivendrum etc. are falling into the dearth of living space and wanting for more expansion. India Report: Indian credit report in comparison to the other Asian countries is shown in the statistics below, which is among the lowest. It is Indian psyche that credit is termed bad, Indian are traditionally not inclined to take credit this reflects in the figures below:GRAPH :- 5.1

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5.5 Indian home loans Industry:Indian Home loans industry is growing at a fast pace 30% per annum, this can be seen in the stats shown below with average ticket size (loan size) and Amount disbursed is rising every year the opportunities have become more dominant for different organization in India. The demand drivers are fast growing middle class population, rise in working women workforce, bigger aspirations of youth, Tax saving, Transparency in the real estate market. GRAPH:- 5.2

Still in comparison to other nations India has a long way to go, The figures shown below shows that even the GDP/mortgage ratio is low which indicates that credit is not well sought as figure below shows the average percentage of mortgage to GDP .

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GRAPH:-5.3

Comparison with other nations India fall behind in terms of Mortgage Penetration which directly demonstrates the potential in Indian market for Housing mortgage finance companies GRAPH:- 5.4

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Sources: RBI

Real Estate is currently sought of as a great means of Investment, the prices of residents have shot up very high which is clearly shown in the figure below, the major cities have witnesses lot of development and price appreciation which demonstrates the growing demand . more and more people are migrating to cities for work / business. More and more jobs are created and price index rise becomes inevitable. Price Index: FIG-5.5

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The above figure shows the rise in prices of space per sq feet in different major cities. Housing shortage in India: - The below figure shows the ever-increasing demand for houses in India and also mentioned here is the Rural and urban requirement. Banks are driving new strategies to tap both the markets in a different way – Rural/Urban. There are categories with Indian loan demand, which is shown in this figure

FIG:- 5.6

5.6 Recent trends of home loan in India:In order to understand the recent trends we need to know or understand various factors. These factors play vital role in Indian home loan market. These include interest rate on which banks provide home loan, tax rebate on home loan and its impact. Apart from this to understand the recent trend we need to compare the trends of home loan of different years. Here we have compared the interest and other market trends of year 2009 with 200708. This kind of comparison gives the result which helps us to understand the trends of market of any industry. Apart from the impact of present and past economic ups and down also affect the trends. Today the US slowdown is the major issue which has affected almost

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all the industry. So we have also discussed this issue in terms to define trend of home loan market in India. 5.7 Impact of slowdown on home loan market in India:The fear of a recession looms over the United States. And as the clinch goes, whenever the US sneezes, the world catches a cold. This is evident from the way the Indian markets crashed taking a cue from a probable recession in the US and a global economic slowdown. U.S slowdown has affected almost all sectors not only in US but to all over the world. Indian economy has also been affected by this slowdown because India is a growing country and almost in all sectors various multinational companies have major contribution. So the role of this slowdown is a major issue to be discussed while talking about Home Loan Market in India. Bankers who were earlier falling over each other to dole out home loans, even for soft furnishings, have suddenly become choosy. Banks like SBI, ICICI Bank, UTI Bank, IDBI Bank and leading mortgage firm HDFC are now apparently making a conscious attempt to curb their aggression in the home loan market.situation is like that if a customer who recently approached a private sector bank for a home loan of about Rs 10 lakh for a tenure of 15 years found, to his shock, that the eventual loan disbursement was just Rs 5 lakh. Most bankers aren't willing to confirm any slowdown in their home loan portfolio. On record, they attribute the marginal dip in home loan disbursements to the recent hike in interest rate. Privately, however, they have a different story to tell. "The slowdown in the home loan market for select players like ICICI Bank was evident from January. ICICI Bank's average home loan disbursement in a month is around Rs 2,500 crore in a month, which has come down to almost Rs 2,000 crore in March," said a private sector banker. ICICI Bank officials denied any slowdown in their home loan portfolio and they say that the recent dip in interest rates has had some impact on disbursals. However, in absolute terms, it is still low. Even this slowdown the deposit growth for the sector as a whole is around 17%, while credit is growing at almost 28%, forcing banks to become selective. Institutions now charge a floating rate of 8 to 8.25 per cent on home loans above Rs 20 lakh. Initial estimates by bankers suggest that the increase in rate for home loans and other segments would be around 25-50 basis points (0.25% to 0.5%). Even as the provisioning requirement has gone up around 60 basis points, the hike in interest rates may be lower as the impact would be felt for the first year. It would also depend on how well capitalized the banks are as the rise in provisioning and risk weightage would affect the return on equity for banks. Weaker banks and banks with a large portfolio of these loans are likely to be more affected and may hike rates first. Home loan growth of disbursals were at 20 per cent in 2007-08 according to a study by the credit rating agency CRISIL, a Standard & Poor’s company. This rate is lower than the 30 per cent annual increase seen in the past three years, but in absolute terms represents a substantial expansion. The slower growth reflects the impact of rising property prices and interest. HDFC: yielding Ground: Loan growth may slow down in 2009-10 as the company loses some market share.

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GRAPH :5.7

Competition is not new to HDFC, after all ICICI Bank was a tough competitor when it went on a customer acquisition spree some years back. This time around, although ICICI may not be in a position to give HDFC a run for its money, public sector banks, especially State Bank of India (SBI) could. The difference between four years ago and now is that money today is not yet cheap and certainly not as inexpensive as it was back in 2004 and 2005. Of course with bank loans to HDFC now treated as priority lending, the cost of funds for HDFC should come down. But should long-term rates go up, HDFC will feel the pinch. That’s why the market sat up and took note when SBI kicked off an 8 per cent inthe- first -year product believing HDFC could lose some market share. In the recent rally, the stock which had plunged to a two year low, has gained 31 per cent to the Sensex’s 23

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per cent. The good news is that transactions could start picking up in the second half of 2009 now that property prices have started trending down as have interest rates. But although the home loan major believes it can manage a growth of 20 per cent in 2009-10, analysts are not so sure. CLSA points out that HDFC’s loan growth (presecuritisation) would be around 15-17 per cent. One reason for this is that HDFC Bank may now hold back a higher proportion of loans that it originates; the bank currently sources just over a fourth of HDFC’s loans. As a result HDFC’s operating income may increase by about 15 per cent in 2009-10 while its net profits should grow by about 10-12 per cent. HDFC has always scored when it comes to keeping bad loans in check, which is why a few delays or even defaults will not hurt the balance sheet. At Rs 1,653,the stock trades at around 2.8 times the estimated adjusted book value for 2009-10. 5.8 Interest and market trends in year 2009:- Home loan interest rates, especially on new home loan accounts, started softening from the beginning of this year when the Reserve Bank of India (RBI) announced sharp cuts in the repo rate and cash reserve ratio (CRR). The RBI started slashing the key policy rates since October last year, after taking into account the worsening liquidity situation of banks here. The central bank has reduced its key policy interest rates (repo and reverse repo) and reserve ratio (CRR) four times in the last six months. The cut in the repo rate meant commercial banks would have funds available at a lower cost. On the other hand, the cut in the CRR meant banks would have to keep less money with the RBI and hence they had more money to lend. Analysts believe that interest rates have not yet bottomed out and there will be further cuts in borrowing rates over the next few months. While the interest rate cut expectation is a thing of the past, the question is will it go back to the old levels of 7-8 percent which contributed to a property boom? Consensus is already building up for the fact that we are headed towards a low interest rate regime in the coming couple of years, in line with global trends. In the case of the domestic economy, the trigger for low interest rates has already happened on the deposit front with banks reducing the rate by 1-2 percent in the last few weeks. Now, the deposit rate has come down to single digit even with respect to long term deposits (on 3-5 years) and that would mean banks have access to cheaper funds. With inflation too sliding down at a rapid pace, there is hope for continuance of a cheaper rate regime. Following in State Bank of India’s (SBI’s) footsteps, other state-run banks may also come out with scheme offering home loan at a fixed rate of 8%. The Indian Banks’ Association (IBA) would review the response of borrowers towards the SBI scheme after three weeks and if it finds that there has been a good response, other banks will follow suit. Last week, SBI had announced that it would offer home loans at a flat rate of 8% to all borrowers and would freeze this rate for one year. The chairman of one of the major banks, who asked not to be named, said SBI can afford to lend at such cheap rate as it has one of the best current and savings account (CASA) deposit ratio. CASA deposits are the cheapest source of funds for a bank and a high CASA deposit ratio brings down their average cost of funds. This in turn helps the bank in offering cheaper credit while maintaining their net

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interest margin (NIM). NIM is the difference between the rates at which banks borrow and lend. State-owned banks started cutting their home loan rates after country's largest lender; State Bank of India froze its new home loan rates at eight per cent for one year recently. HDFC Reduces Home Loan Rate By 0.5 Percent: - Home finance major HDFC reduced home loan rates by 50 basis points for all its existing floating rate customers. HDFC also said that it will charge 10.25 percent of interest annually from new applicant for a loan of Rs 20 lakh or less. And for loans of more than Rs 20 lakh, it will charge interest at 11.25 percent. The bank also reduced the interest rate on deposits that it accepts from the public by 50 basis points. In a statement to the media, HDFC informed that all the changes will come into effect from December 22. HDFC was able to bring home loan cuts because the government and RBI had taken series of measures to infuse liquidity into the economy. Over the last three months, RBI has cut key policy rates, including cash reserve ratio, repo and reverse repo rates, and statutory liquidity ratio. Government has also infused money into the housing sector through the National Housing Bank. PSU banks are also forced to cut rates for new home loans up to Rs 20 lakh. Although in the past few weeks several banks cut home loan rates, but those decisions applied only to new customers. HDFC is the first major housing lender to cut rates for both current and new customers. While commenting on this matter, Keki Mistry, HDFC vice chairman and MD said that the bank was able to exercise the move especially because of the recent reduction in the cost of funds. The wholesale funding rate has declined from October-November levels hence HDFC decided to pass on the benefits to its customers, both old and new ones. 5.9 Types of home loans: Housing loans offered by banks are of different types:• • • • • • • • • • •

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

Home purchase loans:-

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This is the basic home loan for the purchase of a new home. If you want to buy a flat in some society or some already built house, banks and HFCs sanction you home purchase loans for this process. Home construction loans:This loan is available for the construction of a new home on a said property. The documents that are required in such a case are slightly different from the ones you submit for a normal Housing Loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFCs will include the land cost as a component, to value the total cost of the property. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility. Home improvement loans:These loans are given for implementing repair works and renovations in a home that has already been purchased, for external works like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility of a home improvement loan, after obtaining the requisite approvals from the relevant building authority. the following are coming under the home improvement loans: • External repairs • Tiling and flooring • Internal and external painting • Plumbing and electrical work • Waterproofing and roofing • Grills and aluminum windows • Waterproofing on terrace • Construction of underground/overhead water tank • Paving of compound wall (with stone/tile/etc.) • Borewell. Home extension loans:An extension loan is one which helps you to meet the expenses of any alteration to the existing building like extension/ modification of an existing home; for example addition of an extra room etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite approvals from the relevant municipal corporation. Home conversion loans:This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through a home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan. Rukmini Devi Institute of Advanced Studies

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Land purchase loans:This loan is available for purchase of land for both home construction or investment purposes. Stamp duty loans:This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property. Bridge loans:Bridge Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home.

Balance- transfer loans:Balance Transfer is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest. Refinance loans:Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you have taken drops over the years and you stand to lose. In such cases you may opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower. NRI home loans:This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or property in India. The HFCs offer attractive housing finance plans for NRI investors with suitable repayment options. On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs 1 crore, based on the repayment capacity, previous credit history and the cost of the property. The bank may provide a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land. The repayment capacity is calculated taking into account factors such as: • Age • Income/Salary • Qualifications • Dependant/(s) • Assets/Liabilities • Credit History • Stability / continuity of your employment/business • Income of co-applicant/(s)

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Taking home loans these days has become simpler. With the RBI regularly bring down interest rates; taking home loans have become extremely easy. Housing loans which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down, people increasingly number apply to take these loans. Some of the leading banks offering home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank. 5.10 HDFC Home Loan:Highlights:• • •

• • • • • •

HDFC markets its parent HDFC's home loan products. Finances up to 85% of the cost of the property (Agreement value + Stamp duty + Registration charges). Home improvement loan, which facilitates internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminum windows. Finances up to 85% of the cost of renovation (100% for existing customers). Home extension loan for extension of an existing dwelling unit under the same terms as applicable to home loan. Land Purchase Loan to purchase land for constructing house. Finances up to 70% of the cost of the land. Repayment over a maximum period of 10 years. Fixed Rate, Floating Rate and options to structure loan as partly fixed or partly floating. Flexible repayment options to suit individual needs. Insurance cover under Term Assurance Plan Offer in-house scrutiny of property documents.

Eligibility; - HDFC home loans are available for: • • • • •

Purchase of flat, row house, bungalow from developers Purchase of existing freehold properties Purchase of properties in an existing or proposed co-operative housing society or apartment owner's association Purchase of first Power of Attorney purchases in Delhi for DDA flats allotted before 1992. Construction of own house

HDFC home loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co-owners. Maximum tenure is 20 years subject to retirement age. Loan Amount: - 85% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer.

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Rate of Interest :- The current applicable fixed rate of interest in respect of the total loan approved is as follows: For loans up to Rs.2, 00,000:Term of Loan (No. of Years)

Rate Per Annum (%p.a)

Up to 5 6 - 10 11 - 15

10.00 10.75 11.00

For loans greater than Rs.2, 00,000 Term of Loan (No. of Years)

Rate Per Annum (%p.a)

5 10 15

10.00 11.00 11.25

All loans on annual rest basis. You repay the loan in Equated Monthly instalments (EMIs) comprising principal and inertest.EMI per Rs 1, 00,000 (for loan up to Rs.2, 00,000) Term of Loan (No. of Years)

Rupees

5 10 15

2199 1401 1159

EMI per Rs.1, 00,000 (for loan greater than Rs.2, 00,000) Term of Loan (No. of Years)

Rupees

5 10 15

2199 1416 1175

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Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest.An early redemption charge of 2% of the amount being prepaid is payable on repayment of a loan ahead of schedule. Repayment Period: - Repayment Options – Step Up Repayment Facility; - helps younger borrowers to take a much bigger loan today based on an increase in their future income. Flexible Loan installments Plan: - Often customers, parents and their children wish to purchase properties together. The parent is nearing retirement and their children have just started working. This option helps such customers combine the incomes and take a long term home loan where in the instalment reduces upon retirement of the earning parent. Tranche Based EMI - Customers purchasing an under construction property need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. To help customer save this interest, HDFC has introduced a special facility of Tranche Based EMI. Customers can fix the installments they wish to pay till the time the property is ready for possession. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards Principal repayment. The idea is customer benefits by starting EMI and hence repays the loan faster. Accelerated Repayment Scheme provides borrower the opportunity to repay the loan faster by increasing the EMI. Whenever the borrower gets an increment, increase in disposable income or have lump sum funds for loan prepayment, they can benefit by saving of interest because of faster loan repayment. Borrower can benefit by: • • •

Increase in EMI means faster loan repayment Saving of interest because of faster loan repayment You can invest lump sum funds rather than use it for loan prepayment. The return from the investments also gives you the comfort of paying the increased EMI...

Documents Required :Salaried Customers Self Employed Professionals

Self Employed Businessman

Application form with photograph

Application form with photograph

Application form with photograph

Latest Salary-slip

Education Qualifications Certificate Education Qualifications Certificate and Proof of business existence and Proof of business existence

Form 16

Last 3 years Income Tax returns (self and business)

Business profile

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Last 6 months bank statements

Last 3 years Profit /Loss and Balance Sheet

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

Processing fee cheque

Last 6 months bank statements Processing fee cheque

Last 6 months bank statements (self and business) Processing fee cheque

The Credit Appraisal is an important step in sanctioning loan applications .Hence the Credit Appraiser needs to have certain important documents to compute the credit worthiness of the applicant .In the case of salaried person these include the following :1) SALARY SLIPS (3 MONTHS CURRENT) :- The salary slip is usually a printed sheet of paper that contains 2 components Income/Earnings collumn: - It contains an exhaustive list of the various components that are added to the persons salary. They contain various components like Basic pay, HRA etc. Deductions :- It contains an exhaustive list of various components that are deducted from the persons Earnings. They contain various components like Income tax, Provident fund, Employee Loans etc. 2) BANK STATEMENTS(6 MONTHS CURRENT) ;- The bank statement contains the various transactions that the applicant performs in his bank account. It has 3 components • • • •

• •

Date Descriptions ;- It contains the brief and standardized description of the activity or the account related to the transaction .Eg. Clearing cheque 166129, Transfer deposit. Deposits: - It contains the amounts that were credited to the account Withdrawal ;- It contains the amounts that were debited to the account. This is carefully studied to find out about any regular withdrawals or a series of checks so that any existing loans may be revealed and there can be a correct estimate of the repayment capacity. Balance :- It shows effect of transaction on the pre existing account balance Special feature :- HDFC will not consider any loan s with out standing EMI of or below 6 months.

3) FORM 16 :- It is form given by Employer which states the income earned from that company during the full financial year ,and gives the details of Tax deducted at source. 4) COPY OF INCOME TAX RETURN(SARAL) :- The SARAL tax return form reveals the structure of incomes and/or the various earnings of the tax returnee .It also

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shows the various deductions that will not be included and it also contains the Rebates on which he earns tax benefit. 5) RESIDENCE PROOF :- The residence proof includes the Electricity bill, Telephone bill, Ration Card ,Passport. 6) PHOTO ID PROOF :- The photo proof includes the Pancard ,Voter ID card, Employee ID card, Passport etc. 7) AGE PROOF: - The age proof includes the Pan card, Passport, Photo ID. 8) LOAN APPLICATION FORM DULY FILLED :- It can also be downloaded from HDFCs user friendly web based portal.

9) CHARGES FOR PROCESSING FEES :- This is a standard and nominal fees to be paid at the time of applying for loan Fees structure.

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

OR 5618/HDFC takes from applicant whichever is less. This is applicable time to time. 10) PHOTOCOPIES OF PROPERTY PAPERS. NON RESIDENT INDIAN SALARIED/EMPLOYED; - An NRI is a person with Indian citizenship but residing in another country. An NRI can take a housing loan from HDFC. He is however not eligible for a Top Up loans,Home Equity Loans,Non Residential Premises Loans .He is however eligible for Home Improvement and Home Extension Loans from HDFC . An NRI Loan is appraised on the Net Salary. This is the take home pay package obtained after reducing the deductions from the earnings .As this salary is low it reduces their loan eligibility .However the salary is converted into Indian Currency for computing credit worthiness.The figure obtained is higher in Indian currency hence the loan eligibility rises.Eg 5,487$ american dollars will mean 2,46,915 Rupees. SELF EMPLOYED PROFESSIONALS :- An NRI applicant can also be a Doctor, Engineer etc.In these cases HDFC will put them in the special category of Self Employed Professionals.

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Their credit appraisal is carried out as follows:Their latest available Profit and Loss A/c is reviewed by the credit appraiser. This account has two sides a Profit side which reveals all earnings and gains .There is also a Loss side which shows all taxes, liabilities and losses. We refer to the Profit side a the Gross Receipts.These includes components revealing the nature and amount of the Prime income and other earnings Eg Consultation fees in case of Doctor . From the Gross Receipts we calculate the Gross Profits and thereon move to calculate Loan eligibility .Which is the loan amount that can be conveniently sanctioned to the applicant. Loan Eligibility = Gross Profit * 2 Another important consideration is that the Annual outflow of EMIs should not exceed the NET PROFIT. The Net Profit is computed by deducting the various costs and losses from the Gross profit. SOURCES OF LOAN APPLICANTS 1) WALK IN :- This refers to the Applicants who apply for the loan by going to the service centre or regional branch office .They may have come to know about HDFC s home loan service from any source but this is their first contact with HDFC is in absence of any intermediary like friends, sales men etc.The applicants who contact through or by the Website are also included in the walk in category. Walk-In applicants are given concessions on fees and charges which is applicable from time to time. 2) CALLCENTRE LEADS: - The callcentre leads refer to the applicants that come in contact with HDFC through HDFC Bank or through HLSIL .HDFC bank is the banking section of HDFC which informs HDFC Ltd about persons who it thinks to needing a loan .HLSIL which has been started by HDFC Ltd and refers to Housing Loan Services India Limited. This organization has been especially started by HDFC to assist persons searching for home loans at easy rates and good service.HLSIL contacts probable needfuls of home loan, contacts them, explains them the various advantages of an HDFC home loan and get their loan application filled. Every HDFC service centre has its own team which is managed by leader who reports diectly to the Branch Manager .In the India habitat centre the HLSIL team is under the leadership of a team leader who reports directly to Mr. Prashant Malik(Branch MgrIHC /Ranked 2nd in the prestigious National Corporate Challenge 2005 conducted annually by HDFC ) 3) DSAs and BSAs; - These are respectively the Direct selling agents and the Business selling agents.the DSAs refer to organizations which work in agreement with HDFC and forwards them the loan requests of applicants they contact or those that contact them on the other hand BSAs usually forward loan requests and assist HDFC by forwarding them the names addresses contact nos etc of various probable needfuls of home loans BSAs usually are Builders who book houses for sale in the future. they may also include Brokers.Egs for DSAs are Nishk,Chatrath,BKM.etc

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Deposits: Individuals: - these are:• Fixed Rate Deposits • Variable Rate Deposits HDFC has instituted well-defined service standards for both depositors and deposit agents. HDFC has been able to mobilise deposits from over 10 lac depositors. Outstanding deposits grew from Rs. 1,458 crores in March 1994 to 19,359 crores in March 2009. Much of this success can be attributed to its strong brand image, superior services, security and above all, the significant contribution made by HDFC's deposit agents. HDFC has over 15,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel. HDFC has been awarded “AAA” rating for its deposits from both CRISIL and ICRA for the FOURTEENTH consecutive year, representing highest safety as regards timely payment of principal and interest. The problem of Negative Amortization is specific to the Adjustable or the Variable rate loans that are lent to customers. In the case of Variable rate home loans there are three components:• RPLR – 14% (CURRENT) • SPREAD – 3% (CURRENT) • ROI- 11% The term RPLR is short for Retail Prime Lending Rate. this rate is dependent on market forces .In India the RPLR has been observing an upward trend .As a result of this there is a change in rate of interest to be applied to different loans.RPLR is revised every 3 months In which it may or may not change. Spread refers to a special discount offered to loan applicants coming to HDFC.this discount is fixed by HDFC .Every loan applicant is eligible to receive this discount from HDFC Ltd.It helps create a market advantage and benefits the Applicants.Spread is fixed for an uncertain length of time .It is absolutely dependent on the companys discretion to change it or not. Currently HDFC is offering 2.5% spread on a loan of above 20 lacs and 3% spread on a loan of below 20 lacs. ROI is the rate of interest that is applicable to the loan at the time of lending. It is computed by subtracting spread discount from the RPLR. at the time of lending the ROI is good enough to repay the interest as well as the principal components .However as the RPLR increases as it is bound to do so after some time the required EMI also increases .Hence after some time the EMI becomes insufficient to repay the principal as well as the interest component .

STAGES OF HOME LOAN Application

Munirka HUB

DataEntry Login

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Disbursement of loan The Loan

Fixed charges

DoubleChecking Over(DCOVR)

Recommendation Over(ROVR)

The representation shown above is not a perfect copy of the actual process. This is because these stages are taking place simultaneously and one application is being taken care for by the experienced employees of both HDFC Ltd service centre and HDFC Ltd HUB (also called the back end office).Also the applicant may be asked to send information or may be asked questions regarding his requirement and/or his documents for his own convenience Hence the loan application may or may not shuttle through different stages. APPLICATION STAGE :- This is the stage where the Application Form first reaches the concerned Service Centre Here all the documents in the application are reviewed by the experienced staff present at the service centre The HDFC Ltd employee who reviews the file checks to see whether all documents are present and in their proper place .He checks if the documents are duly filled,not fake,attested by authority in question and present in order.In case any document is missing the applicant is contacted electronically or by mail .The applicant is contacted by telephone and requested for the document until he denies it being with him. This exercise is called FOLLOW UP. the credit appraisal of the loan application starts at this stage. The service centre employees compute the gross salary, IIR, FOIR, Loan Eligibility ratio etc.The credit worthiness of the applicant is calculated here. It is also at this stage that the QUICK DATA ENTRY of the loan application is done to create a serial no. of the application. after that another page appears and more data is entered .It is now that a special and unique LOAN A/C NO. is created under which all the loan processes will be carried out. The number that has been generated is communicated to the applicant by means of a letter and/or electronic communication the system of electronically recording the data helps to create ready reference, a proof ,helps in quick and easy processing of the data. It also helps to very easily and quickly share data with other employees of HDFC. The next and important processing performed at the service centre is that of filling up a document known as the INTERVIEW SHEET. for processing individual loans (salaried cases) .It contains various simple entries like :1. Name of borrower 2. Name of co-borrower 3. Income details:-Family background and permanent address etc. It also contains various important entries like.

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5. Gross Salary 6. Rental 7. Other incomes 8. Obligations: - The various other loans that the applicant is entitled to pay ,their amount, their remaining terms ,source etc. 9. Remarks;- This collumn contains the various findings that the employee has found out after thorough review of the applicants documents such as bank statement, salary slip etc. Hence the interview sheet contains the important findings which the employee has collected after careful review of the various documents .The interview sheet helps to cut corners and helps save time by not having other employees to go through the documents again and again .It hence acts as a souce of quick reference. After all this has been performed well enough the loan application will be arranged in a file and all it will be given its loan a/c no which also acts as its file no. the file is now ready to be sent to the HUB where further processing will take place. SCANNING: - In this stage the various important documents of the applicant are scanned. this helps to create their electronic copy which acts as a ready reference, a proof, and can also be shared and utilized by other employees of HDFC Ltd. DATA ENTRY :- The file has been sent to the back end office or the HUB .At HUB there are many experts with their own specializations . these officials review the various parts of the filae again and perform many specialized tasks Data entry is also one of these tasks .this entry is much more different and complex as compared to the earlier performed Quick Data Entry. An exhaustive amount and type of information has to be entered into the ILPS system ranging from Personal Details, Employment Details to Property Rate History and Customer Interactions. RECOMMENDATION OVER (ROVR) :- The Recommendation OVER is also reffered to as the First Appraisal at this stage certain specially appointed persons have been given the responsibility of recommending a loan. These people have to take special care of reviewing every document, and all the small details that need to be considered before considering the loan application to be valid. After this the file is sent to another specially appointed person as explained below. At this stage if any correction or mistake is present it can be sent back to the Service Centre. DOUBLE CHECKING OVER :- As the name suggests at this stage a specially appointed person will double check all the past proceedings .He will examine the Loan file for any discrepancies ,any missing and /or misplaced documents,the Credit Appraisal results,etc.this is a very important stage and must be handled with exceptional care. This is because a mistake at this stage can cause a great loss to the company.The Double checker is responsible for the ultimate sanctioning of the loan .If any mistake is done at this stage there is no going back and hence no protection.HDFC takes great care while appointing double checkers .They should have completed a select number of years with the company and should have shown exemplary performance and must posses experience.

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SANCTIONING :- An authorized sanctioning authority within HDFC itself will review the remarks of Double Checker and Sanctioning authority .If it considers the loan suitable to be Sanctioned it gives its approval .After it has given its approval stamp the ILPS system will automatically send a letter to the Applicant that his loan has been sanctioned. After this approval the Applicant can go to whichever Service Centre which he selects to get his loan disbursed. SPECIAL CASE :- A special case can arise if the applicant has not mentioned the property for which he wants to take a loan .In that case the applicant can let the case be remain pending . this means that the Applicants loan request will be considered to be complete even though he has not decided the property. However the Applicant is expected to finalise the property in a short time. A Property Address is necessary to 1. get the loan disbursed 2. Process the Legal and Technical Appraisal of the property and its Papers.

DISBURSEMENT: - The last and final stage in the Home Loan process is that of disbursement. after the sanctioning has taken place the applicant becomes a registered customer of HDFC Ltd . He can now take the disbursement of the loan from any of the various service centre of HDFC .The loan shall be disbursed in one Lump sum or in suitable installments to be decided by HDFC with reference to the need and/or progress of construction (which decision shall be final and binding on the borrower).The borrower hereby acknowledges the receipt of the loan disbursed as indicated in the receipt.

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CHAPTER-6

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CHAPTER-6 COMPANY PROFILE

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OF HDFC HOSING DEVELOPMENT FINANCE CORPORATION LTD INTRODUCTION:Housing Development Finance Corporation Limited , founded 1977 by Ravi Maurya and Hasmukhbhai Parekh, is an Indian NBFC, focusing on home mortgages. HDFC's distribution network spans 243 outlets that include 49 offices of HDFC's distribution company, HDFC Sales Private Limited. In addition, HDFC covers over 90 locations through its outreach programmes. HDFC's marketing efforts continue to be concentrated on developing a stronger distribution network. Home loans are also Sharcket through HDFC Sales, HDFC Bank Limited and other third party Direct Selling Agents (DSA). HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000 lives year ending March 31, 2007. HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27 years. SNAPSHOT-I •

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

•

Almost 90% of initial shareholding in the hands of domestic institutes and retail investors. Current 77% of shares held by foreign institutional investors.

•

Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In:

CHART:- 6.1

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HDFC LTD

72.26% HDFC STANDARD LIFE

60% HDFC ASSET MANAGEMENT

23.26% HDFC BANK (inclusive

 HDFC Standard Life insurance Company- HDFC holds 72.26 %.  HDFC Asset Management Company – HDFC holds 60%  HDFC Bank- HDFC holds 23.26%.  Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.  HDFC Chubb General Insurance Company – HDFC holds 74%.

SNAPSHOT-II

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•

Loan Approvals

Rs. 805 billion.

(Up to Dec 2007) •

(US $ 18.30 bn.)

Loan Disbursements

Rs.669 billion

(Up to Dec. 2007)

(US $ 15.20 bn)

•

Housing Units financed

•

Distribution

2.5 million.

 Offices

181

 Outreach Programs

90

jjjjjjjj

Type

HDFC Limited

Public (BSE: 500010)

Founded Headquarters Key people

1977 Mumbai,India Ravi Maurya Hasmukhbhai Parekh

Industry

Housing Finance

Revenue

US$ 1.49 billion (2008)

Employees Website

1,029 www.hdfc.com

KEY EXECUTIVE HDFC HOUSING DEVELOPMENT FINANCE CORP LTD

:-

Mr. Deepak S Parekh: - serves as Executive Chairman and Chief Executive Officer of the Board of Housing Development Finance Corp. Ltd., (HDFC). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales). Mr. K.m mistry: - The Managing Director of the Corporation. He has been employed with the Corporation since 1981 and was the executive director of the Corporation since 1993.

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He was appointed as the deputy managing director in 1999 and the Managing Director in 2000. He is also a member of the Investors’ Grievance Committee of Directors. Ms. Renu S. Karnad: - The Executive Director of the Corporation. She has been employed with the Corporation since 1978 and was appointed as the Executive Director of the Corporation in 2000. She is responsible for overseeing all aspects of lending operations of HDFC.New Delhi. BOARD OF DIRECTORS:Mr. D S Parekh - Chairman

Mr. D N Ghosh

Mr. Keshub Mahindra - Vice Chairman

Dr. S A Dave

Ms. Renu S. Karnad - Executive Director

Mr. S Venkitaramanan

Mr. K M Mistry - Managing Director

Dr. Ram S Tarneja

Mr. Shirish B Patel

Mr. N M Munjee

Mr. B S Mehta

Mr. D M Satwalekar

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

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

•

Intelenet Global: BPO services for international customers.

•

CIBIL: Credit Information Bureau India Limited.

•

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

•

HDFC Mutual Fund

•

HDFC reality.com: Helps to search properties in all major cities in India

•

HDFC securities

•

HDFC Standard Life Insurance Company Ltd Aug, 2000

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JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and been conferred with many awards. HDFC is rated ‘AAA’ by both CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s and Standard and Poor’s. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively. HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture. HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life Insurance Companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.) India’s leading housing finance institution and the Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Both the promoters are will known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry- all important factors to consider when choosing your insurer. Business Growth:The company commands a market share of over 60% in the housing finance sector. Leveraging on its brand equity HDFC has also entered the Indian Mutual Fund scene quite recently. HDFC was the only applicant to be given clearance by the government, to enter the Rs 250 bn life insurance business. This in itself speaks volumes about the management’s professional reputation. Financial year 2000 proved to be a boon for housing finance companies, as the tax benefits announced in the budget, coupled with the low real estate prices and rising disposable incomes, spurred housing demand. As a result, demand for housing finance too has registered high rates of growth. The housing sector has now been recognized as an engine of economic growth and HDFC is well placed to capitalise on this surge in demand. Against this backdrop, HDFC logged in an excellent performance. The company’s approvals and disbursements during the first half of financial year 2001 witnessed a year on year growth of 33% and 32% respectively. The robust growth in itself is a conclusion that HDFC’s business is far less susceptible to any economy downturn. (TABLE:-6.2) Financial Snapshot

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Growth ratios

FY98

FY99

FY00

1HFY01

Operating income

13.7%

21.6%

15.2%

21.1%

331.7% -24.6% -54.0%

346.8%

Other income Net profits

18.3%

13.8%

20.4%

19.8%

Approvals

28.9%

25.2%

30.3%

33.4%

Disbursements

31.1%

24.4%

31.2%

31.5%

% change compared to corresponding previous period The entry of new players has not in any way significantly reduced HDFC’s domination in terms of volume. However, the increased competition has led to a decline in interest spread (the difference between interest income earned and interest paid). Over the last couple of years HDFC’s spread has shrunk from 2.1% in financial year 1997 to 1.8% in financial year 2000. When it comes to containing risk, the company’s track record is among the best in the financial sector. During the financial year 2000, HDFC has reduced the quantum of loans where payment was in arrears to just 0.9% of its portfolio. This is because individuals account for nearly 70% of its total outstanding loans. The high level of an individual investor’s personal contribution in a house makes the possibility of default less likely. In keeping with its tradition of playing safe, HDFC is diversifying its business. The company has chosen the acquisition route to increase its assets and customer base in its core business of housing finance. Its recent acquisition of Home Trust Housing Finance and Gruh Finance will not only increase its size but will also bring the economies of scale. Apart from these traditional methods of growing, HDFC is also leveraging the Internet to consolidate its business. It has picked up a stake in various portals. These are pure investments to draw synergies for its existing businesses. Its proposed venture with TCS for setting up call centres can potentially provide HDFC with strong revenue streams. The venture is aimed at cornering a share of $10 bn IT (information technology) enabled services market where India has a significant cost advantage. While its investments in new business may not yield immediate returns, they are likely to enhance HDFC’s returns on equity over the medium term. It will also help in expanding its customer base and provide more credence to its cross-selling efforts. HDFC derives an edge in all its forays because of its wide reaching marketing and distribution network (over 44,000 agents). Once it has the entire range of products (post insurance), the company has plans to enter into distribution of financial products by Rukmini Devi Institute of Advanced Studies

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leveraging its own as well as the network of HDFC Bank. The company can leverage its existing channels to provide the products and services in the areas of Infotech services, asset management, life insurance and commercial banking. This over a longer time frame can emerge as a major source of revenue for the company. The company’s proactivity and brand name, has always accorded it premium valuations on the bourses. But the evidence of increasing competition (from SBI and ICICI) may lead to slow down in its growth, in turn affecting its current valuations. Nevertheless, if its investments in new ventures like call centres, mutual funds, insurance and Internet initiatives click, then HDFC looks set for higher growth and hence, valuations. Also one should not ignore the value of its 27% stake in HDFC Bank (India’s No. 1 private sector bank), which will pay rich dividends to the company. The near term concerns however, are centered on its diversifications. It is not easy for the company to dominate its other new businesses, as it has done in housing finance. With its entry into the insurance sector in association with Standard Life of the UK, the growth from other income may slowdown, as the insurance business requires long gestation period and large investments. Lower than anticipated returns could also worry its investors. GRAPH:-6.3

BUSINESS OBJECTIVES:- The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets. ORGANISATIONAL GOALS:- HDFC's main goals are to :a) develop close relationships with individual households, b) maintain its position as the premier housing finance institution in the country,

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c) transform ideas into viable and creative solutions, d) provide consistently high returns to shareholders, and e) to grow through diversification by leveraging off existing client base. In addition to home building loans, HDFC also offers home extension, home improvement and home conversion loans. It also helps to identify and value properties. HDFC also offers depository services in form of term deposits.

Types of Products offered HDFC provide loans to meet all your requirements for you to make that house a home. • Home Improvement Loan •

Home Extension Loan

•

Loans to professionals for office or clinic.

•

Home Equity Loans (Loan Against Property)

•

Loan against Rent receivables

•

Short Term Bridging Loan.

•

Loans to professionals for non-residentials premises loan

Key Associates and Subsidiaries: - These are:HDFC BANK:• 23.26% owned by HDFC(inclusive of warrants) •

Market Cap US $ 11 billion

•

ADRs listed on NYSE

• In February 2008, HDFC Bank board approved the merger with Centurion Bank of Punjab {CBOP} (1 share of HDFC Bank for 29 Shares of CBOP) •

1,412 branches, 528 cities, 2,890 ATMs

•

Over 12 million customer accounts

•

Key business areas

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_ Wholesale banking Retail banking Treasury operations • Financials (as per Indian GAAP) for the half year ended Sept 30, 2008 – Total net revenues: Rs 48.26 bn, increase of 51% over previous year – PAT: Rs 9.92 bn, increase of 44% over the previous year HDFC Standard Life Insurance Company Ltd. (HDFC-SL) :Structure: - Strong and stable partnership:• Tie up with Standard Life Assurance Company, U.K. • HDFC holds 72.26% of the equity of HDFC-SL Products: - Diversified product portfolio covering all life stages and needs:• Offers 20 individual products and 5 group plans along with 5 optional riders • Offers 8 fund options with market linked products Premium income and growth: - Values driven growth:Total premium income of Rs. 48.59 bn for FY 07-08 (Previous year Rs 28.56 bn); reflecting a growth of 70% Q1 08-09 growth in total premium of 34% over Q1 07-08 Funds under management of group new business increased by 8% in as at June 30, 2008 as against the previous year. Coverage: - Committed to increasing coverage in an under-insured market :Achieved a total sum assured of Rs. 33.12 bn in respect of 0.25 million lives covered in Q1 09 taking the cumulative sum assured to Rs. 907.5 bn covering over 3.66 million lives Claims other than withdrawals/surrenders amounted to Rs 0.09 bn . Distribution: - Diversified distribution network to cater to customer preference: - HDFC network is used to cross sell by offering customized products Operates out of 575 offices across the country serving over450 locations Network of over 1,62,000 financial consultants, 379 corporate agents and other sales intermediaries . Market share: - Market share of 7.3% (private sector) and 4.7% (overall) in terms of Effective Premium. Key performance indicators and business practices: -A diversified distribution mix including the tied agency and alternate channels • Banks, brokers, telemarketing, direct sales force Tied agency contributed 64% effective premium in Q1 09 Strong bank assurance tie-ups with public, private, cooperative and foreign banks amongst the leading players in the pensions segment Leveraging technology to strengthen processes.

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• •

Workflow system awarded the best technology innovation Web based facility to service customers and channel partners

HDFC ASSET MANAGEMENT:• • • • • • •

Tie-up with Standard Life Investments (SLI) HDFC holds 60% of HDFC Asset Management HDFC MF offers 34 equity and debt oriented products Earned a Profit after Tax of Rs 1.18 billion for FY08; Return on Equity: 75% Paid a dividend of 150% for FY08 to equity shareholders Total assets under management (AUM) as at September 30, 2008, stood at Rs. 647 bn which is inclusive of portfolio management and advisory Services of Rs. 170 bn. Equity assets as a proportion of the mutual fund’s AUM is 35%.

HDFC PROPERTY FUND:• Launched in March 2005 • First Scheme: HDFC India Real Estate Fund – Fund corpus: US $ 250 million – fully invested – Domestic, 7 year close ended fund – Funds managed by HDFC Venture Capital Limited • HDFC International Fund – Fund Corpus: US$ 800 million – International, 9 year close ended fund – Targeted at premier institutions and funds across the world Interested in taking an exposure in Indian real estate. HDFC ERGO GENERAL INSURANCE COMPANY LTD:• • • • • •

HDFC holds 74% and ERGO (Germany) holds 26% The company offers Auto Insurance, Home Insurance, Group Accident Insurance, Group Travel Insurance, Commercial Insurance which includes Fire and Marine and Specialty Insurance Products like Directors & Officers Liability . Achieved Gross Written Premium of Rs. 2.4 bn. Operates out of 28 locations across the country HDFC network is used to cross sell Home Insurance & Accident Insurance HDFC and HDFC Bank database is used to cross sell Accident Insurance.

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CONSOLIDATED EARNINGS:(As at March 31, 2008)

HDFC

consolidated

Return on Equity

27.8%

28.2%

Return on Average Assets

2.7%

2.7%

Earnings per share (Rs)

85

95

Profit after Tax (Rs in billion)

24.36

27.13

Total Assets (Rs in billion)

810.99

925.83

DISTRIBUTION NETWORK: - HDFC’s distribution network spans 254 outlets that include 54 offices of HDFC’s distribution company, HDFC Sales Private Limited (HSPL). In addition, HDFC covers over 90 locations through its outreach programmes. Distribution channels form an integral part of the distribution network with home loans being distributed through HSPL, HDFC Bank Limited and other third party direct selling associates. To cater to non-resident Indians, HDFC has offices in London and Dubai and service associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Al Khobar, Jeddah and Riyadh in Saudi Arabia.

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HDFC HOME LOAN ADVANTAGE :• • • • • • • •

Home loan counselling sharing over 30 years of home loan experience Door step service Helps in finding Dream home Wide Product Range Multiple Repayment Option Wide Network of financing Post disbursement service Loan repayment option

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AWARDS & ACCOLADES:• • • • • • • • • •

Goldman Sachs has listed HDFC as one among top 7 financial services organization in 2008. HDFC ranked among the top 3 Best Managed Companies in India by Finance Asia in 2007 Selected as the best Indian company in the FIs / NBFCs / Financial Services sector at the Dun & Bradstreet – American Express Corporate Awards 2006 and 2007. Best Investment Management Company in India by EUROMONEY 2007 HDFC was awarded a rating of 4 out of 5 in Karmayog's ‘Corporate Social Responsibility Ratings’ in 2007. HDFC is featured in the Limca Book of Records 2006, for the landmark achievement of Rs. One trillion in home loan approvals HDFC was awarded the Gold Shield in the Finance Sector by ICAI for excellence in Financial Reporting in 2005. This is the 14th time HDFC has been selected for this award. HDFC has been awarded the 'Business Superbrand' status. HDFC has been awarded the 'Best Home Financier' title by Outlook Money – 2005 Economic Times Corporate Citizen of the Year Award - November 2004.

FUTURE: - HDFC has always been market-oriented and dynamic with respect to resource mobilisation as well as its lending programme. this renders it more than capable to meet the new challenges that have emerged. Over the years, HDFC has developed a vast client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client base for future growth. Internal systems have been developed to be robust and agile, to take into account changes in the volatile external environment. HDFC has developed a network of institutions through partnerships with some of the best institutions in the world, for providing specialized financial services. Each institution is being fine-tuned for a specific market, while offering the entire HDFC customer base the highest standards of quality in product design, facilities and service.

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CHAPTER-7

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CHAPTER- 7 DISBURSEMENT OF HOME LOANS BY HDFC HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED This chapter contains results and discussion on disbursement of Home loans by HDFC LTD. It is divided into two parts one part is related to the disbursement of home loans by HDFC LTD and the second part included the comparative study of disbursement of home loans made by commercial banks. Disbursement of Home loans by HDFC LTD:GRAPH-7.1 HDFC: Housing loan spreads:2.35% 2.30% 2.25% 2.20% 2.15% 2.10% 2.05% 1QO4 2QO4 3QO4 4QO4 1QO5 2QO5 3QO5 4QO5 1QO6 2QO6 1QO7 2QO7 1QO8 2QO8 1Q09

• • •

HDFC surprises positively on 4Q numbers with the bottom line at Rs7334mn, 11% above our and Street estimates, reporting 16% growth at the pretax, preextraordinary level. Hence the stock was up a significant 13.8%% today and has outperformed the Sensex by 22.6% since its recent lows in March. 4Q09: Retail and wholesale disbursement growth was healthier than expected at 17% firm spreads at 2.2%. Cost-income ratio continues to improve and so does asset quality.

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•

Demand dynamics: Consumer and wholesale demand expected to grow 18-20% in FY10E with average loan size at Rs1.5 million. Boost expected in 2H10E as real estate prices and interest rates bottom out.

(TABLE: - 7.2) HDFC: 4Q09 Summary Rs mn

4Q09A

Y/Y

Income from Operations 30,715 42% Total Interest Expenses 20,641 52% Net Interest Income 10,073 26% Fees 743 106% Operating Expenses* 619 13% Operating Profit 10,198 33% Capital Gains 12 -99% Others 67 -17% Total Other Income 78 -94% Pre-Tax Profit (pre-extraordinaries) 10,267 16% Pre-tax PROFIT 10,267 -6% Tax 2,943 -9% Net Profit 67% 4% Interest Income/Interest Expense Cost Income 5.7% -3% Fees/Operating Income 7% 3% Disbursements 124,390 17% Sanctions 153,460 17% Loans 851,981 17%

Q/Q 6% 1% 18% 215% -38% 32% -22% 20% 11% 31% 31% 25% -3% -6% 4% 32% 59% 3%

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GRAPH-7.3 HDFC: Y/Y Disbursement growth:45% 40% 35% 30% 25% 20% 15% 1QOO 2QOO 3QOO 1QO1 2QO1 3QO1 1QO2 2QO2 1QO3 1QO4 1QO5 1QO6

1QO7 1QO8 1QO9

YOY DISBURSEMENT GROWTH ------- ANNUAL AVG DISB. GROWTH HDFC provides long-term housing loans to low and middle-income individuals, as well as to corporations. HDFC also provides construction finance to real estate developers, besides providing lease-financing facilities to companies and development authorities for infrastructure and other assets.

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CHAPTER-8

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CHAPTER-8 COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS 8.1 - Disbursement of Home loans by different banks:HDFC LTD :Years

No. of Home loan account holders.

Home loan Disbursed (in crore Rs.) Distributed

Recovered

Balance

2004-05

700

90.07

63.05

27.02

2005-06

950

120.00

91.20

28.8

2006-07

1130

144.67

127.31

17.36

2007-08

1435

180.33

165.90

14.43

2008-09

1594

240.00

228.12

11.88

Interpretation:On the above table, it is evident that there are increase in No. of account holders from 700 to 1594 in the year 2008-09. The loan amount distributed among home loan account holder has also increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in 200809. The recovery procedure for home loans is also strengthening due to increment in recovered amount, i.e. Rs.63.05 crore to Rs.288.12 crore. So it nut shall there are upward trend in number of accountholders and disbursement of home loans. Rukmini Devi Institute of Advanced Studies

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Punjab National Bank :Years

No. of Home loan account holders.

Home loan Disbursed (in crores Rs.) Recovered

Distributed

2004-05

810

120.15

97.28

22.87

2005-06

950

183.26

150.00

33.26

2006-07

1120

213.65

185.86

28.05

2007-08

1433

240.87

231.07

9.80

2008-09

1500

265.15

265.05

9.10

Balance

Interpretation:The Punjab National Bank is Public sector Bank. It comes second after State Bank of India in its branch location and expansion. From the Table, the figures show that there are increasing trend in customer base from 810 in the year 2004-05 to 1500 in the year 2008-09. The bank also show enhancement in loan amount up to Rs.265.15 crore in the year 2008-09. The recovery process of loans in past is slow but now it is increasing.

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Standard Chartered Bank :Years

No. of Home loan account holders

Distributed

Home loan Disbursed (in crores Rs.) Recovered

Balance

2004-05

106

6.21

5.27

0.94

2005-06

130

11.55

10.16

1.38

2006-07

154

17.06

14.35

2.70

2007-08

180

20.09

18.68

1.41

2008-09

260

24.10

23.91

0.48

Interpretation:The standard chartered bank is a private sector bank. It has also upgraded its position in banking sector in DEHRADUN. The figures shown in table reveals that there is upward shift in customer base of Bank from 106 customers to 260 customers. The bank has also increased its share in housing finance by distributing Rs. 24.10 crores in 2008-09. The recovery procedure of Home loan is very sound.

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ICICI BANK:Years

Distributed

2004-05

No. of Home loan account holders 650

Home loan Disbursed (in crores Rs.) Recovered

104.33

98.12

6.21

2005-06

853

123.24

105.00

18.24

2006-07

1019

150.65

133.46

17.19

2007-08

1132

176.75

144.65

32.10

2008-09

1434

224.00

209.16

14.84

Balance

Interpretation :The amount reveal that there is tremendous increase in Home loan accountholders. The amount distributed as home loan is also increased from Rs. 104.33 in 2004-05 to Rs. 224 crore in 2008-09. But the recovery mechanism of the Bank is not so good that’s why the outstanding amount shows fluctuating trend. 8.2 -COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS:There are number of schemes and products, offered by commercial banks to attract the customers. The comparison among different commercial banks which offer home loans in regard of Disbursement of home loans are as:-

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No. of Home loan account holders ;Table 8.2(a) Years

HDFC LTD

Punjab National Bank

Standard chartered Ban

ICICI Bank

2004-05

700

810

106

650

2005-06

950

950

130

853

2006-07

1130

1120

154

1019

2007-08

1435

1433

180

1132

2008-09

1594

1500

260

1434

Average of No. of accounts holders: - Total of home loan customers = -------------------------------------No. of year Table 8.2 (b) Name of Bank

Average (Rs)

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Percentage of Accountholders

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HDFC LTD

1109

32

Punjab National Bank

1163

34

Standard Chartered Bank

166

5

1018

29

3456

100

ICICI BANK Total

GRAPH:- 8.2 Home loan holders of HDFC LTD and commercial banks

35 30 25 percentage of home loan holdes

20 15 10 5 0 HDFC LTD

PNB

SCB

ICICI BANK

Interpretation:The figure reveals that HDFC LTD is having large number of home loan accountholders. So it ranks first among other banks. But government sector PNB is not behind so much with 31% also market leader. The banks have shown increase in their Rukmini Devi Institute of Advanced Studies

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customers base from 2004 to 2008.but loan cases.

HDFC LTD comes as market leader in the home

Home loans distributed by HDFC and Commercial banks:Table 8.3 (a) Years

HDFC LTD

Punjab National Bank

Standard chartered Bank

ICICI BANK

2004-05

120.15

90.07

6.21

104.33

2005-06

183.26

120.00

11.55

123.24

2006-07

213.65

144.67

17.06

150.65

2007-08

240.87

180.33

20.09

176.75

2008-09

265.15

240.00

24.10

224.00

(Rs.in crore) Average of home loans granted Total home loans granted = --------------------------------No. of years

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Table. 8.3 (b) Name of Bank

Average (Rs)

Percentage of home loans granted (Rs in crore)

HDFC LTD

204.62

39

Punjab National Bank

155.01

29

Standard Chartered Bank

15.80

3

ICICI BANK

155.79

29

Total

531.22

100

To understand the comparison more effectively and closely, it has been shows Diagrammatically as follows:GRAPH:- 8.3

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Home loans granted by HDFC LTD and commercial banks 40 35 30 percentage 25 of home 20 loan granted 15 10 5 0 HDFC LTD

PNB

SCB

ICICI BANK

Interpretation:There is no doubt that every bank tries to maximize its home loan disbursement. But on the basis of data it is concluded that HDFC LTD shows high average of loan grants Rs. 20.62 crore as compared to ICICI, standard charted bank and PNB respectively. Rs155.01, Rs. 15.80 and Rs. 155.79 crores. On this analysis the HDFC LTD are higher loan provider as compared to other sector banks.

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Recovery of Home loans:Table 8.4 (a) Years

HDFC BANK (Rs in crore)

Standard chartered Bank (Rs in crore) 5.27

ICICI BANK (Rs in crore)

97.28

Punjab National Bank( Rs in crore) 63.05

2004-05 2005-06

150.00

91.20

10.16

105.00

2006-07

185.86

127.31

14.35

133.46

2007-08

231.07

165.90

18.68

144.65

2008-09

256.05

228.12

23.91

209.16

98.12

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Total home loans recovered = ---------------------------------No. of years

Table 8.4 (b) Name of Bank

Average (Rs)

HDFC LTD Punjab National Bank Standard Chartered Bank ICICI BANK

184.05 135.21 14.47 138.08

Percentage of home loans recovered( Rs in crore) 39 30 3 28

Total

471.80

100

It is more clear with the help of this diagram:- GRAPH:- 8.4

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Home loans recovered by HDFC LTD and commercial banks

40 35 30 25 percentage 20 of recovery 15 10 5 0 HDFC LTD

PNB

SCB

ICICI BANK

Interpretation:In the previous years the recovery process of granting loans are very unorganized and inefficient. So there are less recovery of home loans by the commercial banks. But it is evident from the table that every bank whether public or private showed increase HDFC LTD has the greatest recovery of home loans i.e. 39%, thereafter Punjab national bank recovered the 30% of sanction amount. The standard chartered bank is having lowest recovery of their granted amount as home loans. Outstanding Balance :Table 8.5 (a) Years

HDFC LTD (Rs in crore)

Punjab National Bank(Rs in crore)

Standard chartered Bank(Rs in crore)

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2004-05

22.87

27.02

0.94

6.21

2005-06

33.26

28.8

1.38

18.24

2006-07

28.05

17.36

2.70

17.19

2007-08

9.80

14.43

1.41

32.10

2008-09

9.10

11.88

0.48

14.84

Average of balance due Total of Balance due in 5 years = -------------------------------------No. of years

Table 8.5 (b) Name of Bank

Average (Rs)

Percentage of balance due (Rs in crore)

HDFC LTD

20.61

34

PNB

19.89

33

Standard Chartered Bank

1.38

2

ICICI BANK

17.72

31

Total

59.15

100

Average of one bank

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%age = --------------------------- x100 Total Average of Banks The diagrammatically presentation of data is as:- GRAPH:- 8.5

Balance due on home loans by HDFC LTD and commercial banks 35 30 percentage of balance due

25 20 15 10 5 0 HDFC LTD

PNB

SCB

ICICI BANK

Interpretation:From the above table and figure it shows that standard chartered bank has been less outstanding balance among other banks. The HDFC LTD got high balances due to large customer base, not proper recovery process and lack of modernisation of activities. The public sector bank PNB is having more balance due i.e. 33% as compared to standard chartered bank and icici bank.

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CHAPTER-9

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CHAPTER-9 ANALYSIS & INTERPRETATION The analysis is based on the responses given by customers through questionnaires. AGE GROUP OF SURVEYED RESPONDENTS TABLE 9.1: Age group 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years

No. of Respondents 127 67 46 24

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More than 60 years

6

CHART-9.1:

Analysis:- From the chart above we find that 47% of the respondents fall in the age group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years. Therefore most of the respondents are relatively young (below 26 years of age). and 6% respondent’s age are 50-60 years and 2% respondent’s age are 60 to above years. GENDER CLASSIFICATION OF SURVEYED RESPONDENTS TABLE-9.2 Sr. No. 1 2

Category Married Unmarried Total

No. of Respondents 140 60 200

Percentage 70% 30% 100% Base 200 respondents

CHART-9.2

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Interpretation From the table and graph above it can be seen that  70% respondent’s are married.  30% respondent’s are unmarried.

Educational qualification of respondent’s TABLE-9.3 Sr. No. 1 2 3

Category Under graduate Graduate Post graduate Total

No. of Respondents 50 80 70 200

Percentage 25% 40% 35% 100% Base 200 respondents

CHART-9.3

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Interpretation From the table and graph above it can be seen that  25% respondent’s are under graduate.  40% respondent’s are Graduate.  35% respondents are Post graduate.

Number Of year’s Are You in Dehradun? TABLE-9.4 Sr. No. 1 2

Category Less than five years More than five years Total

No. of Respondents 78 122 200

Percentage 39% 61% 100% Base 200 respondents

CHART-9.4

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Staying years in Dehradun

39% less than five years more than five years

61%

Interpretation From the table and graph above it can be seen that  39% respondent’s are in Dehradun is less than five year’s.  61% respondent’s are in Dehradun is more than five year’s.

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 9.5: Customer profile Student

No. of respondents 7

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Housewife Working Professional Business Self Employed Government service employee

5 116 49 24 24

Chart-9.5

student

11%

11%

3% 2%

22%

housewife working professional business

51%

self-empoyed government service

Interpretation From the table and graph above it can be seen that:51% of the respondents are working professionals, 22% are into business and 11% are selfemployed, 11% of the respondent’s are government service employee and 3% of the respondents are student and 2% of the respondents are house-wife. ANNUAL HOUSE HOLD INCOME? TABLE-9.6 Sr. No. 1 2 3 4

Category Less than 2 lacs Between 2 to 5 lacs Between 5to 8lacs More than 8 lacs Total

No. of Respondents 98 62 30 10 200

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Percentage 49% 31% 15% 5% 100% 106

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Base 200 respondents

CHART-9.6

Interpretation From the table and graph above it can be seen that  49% respondent’s annual household income is less than 2 lacs.  31% respondent’s annual household income is between 2 to 5 lacs.  15% respondent’s annual household income is between 5 to 8 lacs.  5% respondent’s annual household income is more than 8 lacs.

Do you know about HDFC housing development finance corporation LTD? TABLE 9.7: Category

No. of Respondents

Yes

164

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No

16

CHART:-9.7

Awareness about HDFC LTD

9% YES NO

91%

Interpretation:From the table and graph above it can be seen that  91% respondent’s are known about HDFC LTD  9% respondent’s are not known about HDFC LTD

Table 9 .8:Reasons for getting the home financed

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Sr.No.

Number of Reasons

Percentage

a.

Non-availability of funds

36

b.

Reluctancy to pay cash in one go

35

c.

Tax benefit

24

d.

Any other

5

GRAPH:- 9.8

percentage of customers

40 35 30 25 20 15 10 5 0

nonreluctancy availability of funds

tax benefit

any other

Interpretation :To interpret the response of the questions, the figures shows that most of the customers find the problem in availability of funds i.e. 36% and very less number of customers found problem in paying cash in one go is 35%, customers get housing loan for tax benefits is 24%. This was the expected response because a large number of people find a problem of availability of funds which works as an obstacle in owning a dream home. In today's life, people hardly earn both means and ends of life and they don't have much of money to buy a home or a land to construct house because of cost of property. So, they take the advantage of home loans provided by different banks at different terms feasible to the customers. There are very less number of people, who don't own home even

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when they have sufficient funds and they take the advantage of home loans because they don't want to pay huge cash in one go. On the basis of study, it is concluded that most of people lack of money in fulfiling their dreams and few of them were reluctant to pay cash in one go and wanted to pay their home loans slowly in installments.

Table-9.9 From where you have got your home financed Name of Banks / company

Percentage of customers

HDFC LTD

55

Punjab National Bank

15

Standard Chartered Bank

07

ICICI BANK

20

Any other

03

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

GRAPH:- 9.9

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From where you have got your home financed

60 50 40 percentage of 30 customers 20 10 0

HDFC LTD

PNB

SCB

ICICI BANK

any other

Interpretation:The analysis showed that a large number of customers prefer HDFC LTD as compared to others. The data shows that 7% of customers took loan from Standard Chartered Bank, 20% of customers from ICICI BANK, 15% Customers took loan from Punjab National Bank, 55% of customers took loan from HDFC LTD and a 3% of customers fall under the category of 'Any other' which included State Bank of India, Canara Bank, Punjab and Sind Bank, etc. The data shows that most of people prefer HDFC LTD compared to public sector banks and other private banks. This is because of the extra services provided by HDFC LTD. However, there is less difference in figures of ICICI Bank and Punjab National Bank. But there is considerable difference in figures of the two private sector banks i.e. ICICI bank and Standard Chartered Bank. As ICICI is the market leader in the home loans sector. This may be the reason for such difference in Standard Chartered Bank's percentage and ICICI Bank's percentage. Another reason for specialized services in home loans, more amounts of loans, and efficient query handling. However, the analysis showed that the people prefer HDFC LTD for home loan because of their services and excessive feat compared to other banks.

Table-9.10 Sources of information about Home Loans Scheme

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Sources of information

Percentage of customers

Newspapers

49

Magazines

16

Banners/Hoardings/Pamphlets

11

Word of mouth

20

Any other source

04

CHART:-9.10 percentage of source of information about home loans scheme

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20% 11%

4%

newspaper

49% 16%

magazines banners word of mouth any other source

Sources of information about Home Loans Scheme Interpretation:The data shows that around 20% of customers got information from source of 'Word of Mouth' which includes information from friends, relatives, colleagues etc. 49% of customers got information from newspapers, only 16% of customers from magazines and 4% of customers got information about home loans schemes under 'Any other source' and 11% through Banners/ Hoardings/Pamphlets .

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Opinion about the services of HDFC LTD Services of HDFC LTD

Percentage of customers agreeing Strongly agree

Agree

Neutral

Disagree

Strongly disagree

a. Professionally managed

86%

10%

4%

-

-

b. Reliable & transparent

67%

33%

-

-

-

c. Socially responsible

75%

10%

15%

4%

-

d. Customer care

20%

68%

8%

-

-

e. Query handling

20%

76%

4%

-

-

GRAPH-9.11

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Opinion of customers about HDFC LTD

90 80 70 60 percentage of customers

strongly agree agree neutral disagree strongly disagree

50 40 30 20 10 0

a

b

c

d

e

factor

Interpretation:Customers from HDFC LTD are quite satisfied from their services like query handling and customers social responsibility of banks towards customers and professionally managed services. They don't give so good response to reliability and transparency services of banks. So, customer's satisfaction level toward HDFC LTD services is lightly satisfied.

Table-9.12

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Opinion of customers about home loan schemes HDFC LTD :Services of HDFC LTD

Percentage of customers agreeing Strongly agree

Agree

Neutral

Disagree Strongly disagree

a. Amount of loan

60%

35%

5%

-

-

b. Legal formalities

42%

45%

14%

-

-

c. Interest rates

32%

56%

12%

-

-

d. Repayment options

26%

64%

10%

-

-

e. Security demanded

20%

32%

48%

-

-

f. Installments

55%

40%

5%

-

-

g. Services

45%

30%

18%

6%

1%

h. Processing for sanction of loan

55%

24%

18%

3%

-

GRAPH:- 9.12 Percentage of satisfaction level of customers of HDFC LTD

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70 60 50 percentage of customers

strongly agree agree

40 30

neutral disgree strongly disagree

20 10 0

a

b

c

d

e

f

g h

factors

Interpretation:The analysis shows that the customers of HDFC LTD gave 60 percent of amount of loan and legal proceedings, 56% to interest rates, 45% to proceedings and services, 55% to installments. So, customer of HDFC LTD didn't give response regarding the services of the bank / company except to the amount of loan and legal formalities.

TABLE:- 9.13

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DATA GIVES PREFERENCE COMPANIES AND BANKS

COMPANY’S NAME

OF

RESPONDENTS

OF

NO.OF RESPONDENTS

HOME

(%)

HDFC LTD

78

78

STANDARD CHARTERED BANK

2

2

ICICI BANK

10

10

PNB

7

7

SBI

3

3

100

100

TOTAL

LOANS

GRAPH:-9.13

NO. OF RESPONDENTS 80 70

percentage of customers

60 50 40 30 20 10 0 HDFC LTD

SCB

ICICI BANK

PNB

SBI

INTERPRETATION:From the table and graph above it can be seen that:78% of the people contacted prefer HDFC LTD to any other and therefore it is ranked no.1 by that percent of respondents. PROBLEMS FACED BY CUSTOMERS IN AVAILING HOME LOANS

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There are everything in the world has good or bad points. No doubt banking industry/ company has made many efforts to enhance the customer satisfaction but customer still faced some problems. These are high lightened as below: 1) The customer does not have proper knowledge about different home loan products so they face problem in making a good deal. 2) There are procedural delays, which harass the customers lot. This will crush the curtsy of customers to avail the home loan. 3) The attitude of bank employees some times non cooperative and it creates a hurdle in building trust and Confidence among customers about banks. 4) The banks do not take into account the paying capacity of customers. So some customers are not able to get amount of loan needed by them. So above discussed are the problems which faced by customers while availing home loans.

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CHAPTER-10 FINDINGS 1. HDFC LTD having good brand image in the minds of customers. Rukmini Devi Institute of Advanced Studies

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2. Majority of the people got loans from HDFC LTD only 3. Most of the customers are not aware of the products of HDFC home loans 4. Some of the customer’s felt that the interest rates are some what high 5. Some of the customer not having good faith on private banks like Standard chartered bank, HSBC bank etc. 6. Most of the people are directly go to HDFC to apply a home loan 7. Some of the customer of HDFC already benefited through HDFC home loan products and services 8. Customer awareness is medium about HDFC products. 9. HDFC LTD providing good services to their customers.

CHAPTER-11

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CHAPTER-11 RECOMMENDATIONS AND SUGGESTIONS These suggestions have been discussed as follows:-

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1) To increase their customers, the HDFC LTD should provide specialized services in this sector. These services can be such as proper guidance to the customer regarding the processing of loans, especially for the customers who are illiterate. 2) To satisfy their customers and for good dealings in future, the HDFC LTD should make prompt disbursement of loan amount to the customers so that they can buy or construct their dream home as early as possible. 3) The HDFC LTD should use easy procedure, or say, less lengthy procedure for the sanctioning of loan to the customer. There should be less number of legal formalities, in case this exists, then, these should be completed in less time. This will be helpful in attracting more customers. 4) Although the interest rates on specific norms, yet customers seek less interest rate which can lower their cost of house. So banks should try to lower their interest rates. Needles to say, that the bank which is having lower interest rates, have the maximum clients for loans. 5) HDFC LTD provide loan according to the repaying capacity of the customer and his/her eligibility. Due to which, some customers are not able to get amount of loan needed by them. So, the HDFC LTD should soften their norms regarding the loan amount. 6) Create awareness: The Company has to take care of awareness creation about the products and services among the customers. 7) Charges: The Company has to reduce the mortality and administration charges. 8) The company has to reduce their interest rates on home loan products and services. 9) The company has to identify the potential customers. 10) Company should consider the present competition and should act according to the customer needs. 11) The HDFC LTD should try to provide proper knowledge regarding their home loan schemes, even to people who don't know about such schemes and their benefits especially in rural areas. So they should provide knowledge to the ignorant customers, especially in rural areas and backward urban area So, above are the main suggestions provided to the HDFC LTD. By considering these suggestions, the HDFC LTD can strengthen their customer base in home loans sector. They should improve their services and reduce legal proceedings and should be friendly to their customers. All this will be helpful to satisfy their customers.

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CHAPTER-12

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CHAPTER-12 CONCLUSION 1) In my study we came to know that many peoples are interested to take a home loan from HDFC LTD to construct their homes. Rukmini Devi Institute of Advanced Studies

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2) Home loans have long period when compare to other personal loans and other loans. So peoples are confused to take a home loan. 3) Even though the interest rates are high peoples are willing to take a loan from HDFC LTD due to some reasons. 4) The interest rates also some what high when compare to other banks 5) The loan sanction process is low when compare to other banks. 6) For disbursement process is also it will take low time when compare to other banks Finally the whole research was carried out in a systematic way to reach at exact results. The whole research and findings were based on the objectives. However, the study had some limitations also such as lack of time, lack of data, non-response, reluctant attitude and illiteracy of respondents, which posed problems in carrying out the research. But proper attention was made to Carry out research in proper way and to make accurate conclusion for the HDFC LTD which may beneficial for banks to enhance their customer base.

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BIBLIOGRAPHY REFERENCES REVIEWS  Berstain David(2008), “Home equity loans and private mortgage insurance: Recent Trends & Potential Implications”, Vol.3 No.2, August 2008, Pp. 41 - 53

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 Dr. Rangarajan C. (2001), “A Simple Error Correction Model of House Price”.Journal of Housing Economics Vol. 4, No. 3,pp 27 – 34  Fanning (1982), “The Demand for Home Mortgage Debt” Journal of Urban Economics, Vol 11 No 2, November, pp. 770-774  Godse (1983), “looking a fresh at banking productivity”, Journal of Real Estate Literature, Vol. No. 13, Page 141 to 164.  Haavio, Kauppi(2000) , “Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMDA Data," Federal Reserve Bulletin,Vol no 80(2), December 2000 Pp-79-108  Kulkarni (1979), “Development responsibility and profitability of banks” Journal of Economic Perspectives, Vol 9 No 1 ,pp. 26-32.  La courr, Micheal(2007) , “Economic Factors Affecting Home Mortgage Disclosure Act Reporting” The American Real Estate and Urban Economics Association, Vol.2 No. 2 May 18, 2007, Pp. 45 -58  La cour Micheal(2006) , “The Home Purchase Mortgage Preferences Of LowandModerate Income Households”, Forthcoming in Real Estate Economics , Vol 18, No 4 , December 20, 2006, p. 585.  Vandell ,kerry D(2008), “Subprime lending and housing bubble:tail wag dog?”International Journal of Bank Marketing, vol 21,no 2, pp. 53-7  Brochure on home loans from HDFC LTD NEWS PAPERS  The Times of India  Financial Express WEB PAGES:http://www.hdfcindia.com/ http://www.hdfcindia.com/others/popup/news/hdfc_fin_result_june_30_08.html www.hdfc.com http://www.iloveindia.com/real-estate/housing-finance- companies/hdfc.html http://www.loansnews.info/Home-loan/hdfc-home-loans/ http://www.hdfcindia.com/loans/hm-loan-documents.asp http://www.thinkplaninvest.com/2009/01/hdfc-will-cut-home-loan-rates/ http://www.suncorp.com.au/suncorp/personal/home_loans/tips/faq.aspx

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http://investing.businessweek.com/research/stocks/people/people.asp?ric=HDFC.BO http://www.economywatch.com/companies/forbes-list/india/housing-developmentfinance-corporation.html http://www.hdfcindia.com/loans/home-loan.asp http://docs.google.com/gview?a=v&q=cache:woJTMDV1HLYJ:www.hdfc.com/pdf/32 AGM%2520speech.pdf+hdfc+housing+finance+development+product&hl=en&gl=in http://www.munichre.com/en/press/press_releases/2007/2007_10_30_profile_hdfc.aspx http://www.hdfc.com.mv/faq.htm http://ayaanbayaan.com/hdfc-ltd-financial-results-indian-gaap-for-the-period-april-tojune-2009/ http://www.valuenotes.com/press/pr_HDFC_250ct05.asp?ArtCd=70013&Cat=C&Id=1 00

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QUESTIONNAIRE Dear Sir/ madam I am Rajni doing MBA from G.G.S.I.P University. I m preparing a project on A STUDY ON HOME LOANS. For this I have designed a Questionniare to know your views and

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satisfaction level of home loans .please fill the given as per your thinking and experiences with this. I will be thankful to you for this. Name: ……………………………………………………………………….. Address: …………………………………………………………………….. Contact No :®………………( O)……………… (M)……………………… City: ………...............Pin: ………………….State: ……………………….

1. Name: ____________________ 2. Age: (a) Below 30

(b) 30-40

3. Occupation: (a) Professional (e) Others

(c) 40-50

(b) Self-employed

(d) Above 50 (c) Salaried

4. Which income group do you belong? (Per annum) (a) Below 2 lakhs (b) 2-4 lakhs (c) 4-6 lakhs (d) 6 lakhs and above 5. Have you ever taken Home loan before? (a) Yes (b) No 6. If yes, from which Bank/company? (a) ICICI (b) HDFC (d) Centurion bank of Punjab

(c) UTI (e) others

7. Are you Satisfied with the services provided? (on 5 point scale) _____________________________________________________________________ Highly dissatisfied

dissatisfied

Neutral

satisfied

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8. While taking loan, which things attract you the most? (a) Interest rates (b) Service Provided (c) Pay back period (d) Schemes (d) Others 9. Even if the Interest rate is high for the personal loans, you will go for it? (a) Yes (b) No 10. How much loan amount you took? (a) Less than 1 lakhs (c) 5-10 lakhs

(b) 1-5 lakhs (d) more than 10 lakhs

11. Even if the Interest rate is high for the Home loans, you will go for it? (a) Yes (b) No 12. Do you own a home…? Yes [ ] No [ ] If Yes, then, Proceed……… 13. Have you get it financed? Yes [ ] No [ ] If Yes, then, proceed…….. 14. What is reason for getting it financed? 1. Non availability of funds [ ] 2. Reluctance to pay cash in on go [ ] 3. Tax benefit [ ] 4. Any other (please specify) ......................................... 15. From which of the following banks/ company you have got if financed? Standard Chartered Bank [ ] State Bank of India [ ] ICICI Bank [ ] HDFC LTD [ ] Any other (please specify) ........................................... 16. From where have you got information about home loans scheme? (Check list)………………….. Newspapers [ ] Magazines [ ] Hoarding/banners [ ] Word of mouth [ ] Any other (please specify)...........................................

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17. What problems did you face while getting home loans? a. Lack of knowledge b. Procedural delays and non cooperation c. Any other (please specify) ........................................ 18. Did you face any problem after sanction of loan? ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 19. What suggestions do you want to give for improvements in home loans Scheme? ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________

THANKS

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