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A dissertation submitted to Department of Management in partial fulfillment of the requirement for the award of degree of BACHELOR OF BUSINESS ADMINISTRATION (HONS.)
Submitted by: KOMAL MARWAHA 7020070003
Supervisor: Miss Monika Kanali (lect,lpu)
LOVELY PROFESSIONAL UNIVERSITY PHAGWARA 2010
TO WHOMSOEVER IT MAY CONCERN
This is to certify that the project report titled “Comparative study of home loans of PNB and SBI” carried out by Miss KOMAL MARWAHA, D/o RAJESH
MARWAHA has been accomplished under my guidance & supervision as a duly registered BBA(Hons) student of the Department of Management, Lovely
Professional University, Phagwara. This project is being submitted by him/her in the partial fulfillment of the requirements for the award of the BBA(Hons) from Lovely Professional University. Her dissertation represents her original work and is worthy of consideration for the award of the degree of BBA(Hons)
___________________________________ (Name & Signature of the Faculty Advisor) Title: ______________________________ Dare: ______________________________
I KOMAL MARWAHA, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.
_______________________ (Student's name & Signature) _______________________ (Registration No.) Date:__________________
Finally. for their cooperation and support during this work. lecture. I wish to thank my family and friends for their encouragement and support that accomplishment me throughout the research work.who helpd andguided me for this work. I also would like to thanks all the staff members of the department.Acknowledgement First of all my sincere gratitude goes to my academic supervisor Miss Monika Kanali. 4 . Her conversation and encouragement will always be remembered. In many stages of project.phagwara. lovely professional university. her proudful expertise and professional knowledge provided crucial and key injection to the technical solution.
Growth. major players and their market share) 2.TABLE OF COTENTS Page no.4 Company’s history 2.5 Recent achievements and milestones 2. Need. Scope & Methodology 12-28 CHAPTER 2 Section 2.1 Conclusion 5.1 Introduction to Company 2.6 Product range of the company/industry 2.2 Objective. Landmarks.9 Future prospects/ plans 29-35 CHAPTER 3 Survey of Literature 36-65 CHAPTER 4 Interpretation 66 CHAPTER 5 Section 5. 6-11 Chapter CHAPTER 1 Section 1.1 Introduction to Subject 1.3 Profile of the organization 2.2 Limitations 67-69 70-72 CHAPTER 6 References CHAPTER 7 Questionnaire 5 .8 Financial status of the organization 2.2 Overview of the industry (History.7 Performance of the company over the last few years(Statistical Profile) 2.
and with all such conveniences. home loans are different in several respects. That is. unlike other types of loans.1 Section INTRODUCTION TO SUBJECT: Home loans work like any other debt. we must repay our debts with interest. With about a million home lenders and mortgage brokers it's becoming a tough challenge as the days are progressing. There are different type of home loan i. when the sites are coming up with all the latest tools and relevant information for us. Afterwards.CHAPTER 1 1. or some other type of lender. Owning a piece of land or property is a lifetime dream for every individual. • • • • • • • Home Purchase Loans Home Improvement Loans Home Construction Loans Home Extension Loans Home Equity Loans Land Purchase Loans Bridge Loans Home purchase loans: These are the basic forms of home loans used for purchasing of a new home.e. obtaining a home purchase loan or mortgage has 6 . However. a private lender. There are many home loans provider in the market. But at the same time. loans are simply specific money that we borrow from a bank.
we may be flummoxed to look so many attractive rates and offers in the market. or any other rooms for your growing family. 7 . The factors include in calculations for house building costs? • • • • Design of the house Construction cost Financing Cost Buildable site All the above mentioned costs will help us to determine the amount we may need to borrow. As work progresses you will need to make payments to the builder. terraces. In general it includes: repairs. recently purchased property or rented accommodation. kitchens. Many improvements in landscape and even swimming pools are nowadays considered to be a part of home improvement. by adding more rooms. we may also be required to consider the total expenditures to develop the site in order to build. terrace. or constructing a Puja ghar. a new bathroom. repairs. Each site is unique requiring different expenditures so this specific rupee amount will vary from site location to site location. It may also be used to enclose open balcony/terrace space. Home improvement loan: Home improvement loans are used to finance improvements and add on to the existing set of credentials of beauty on your owned house. Payment: Before the house starts getting build. energy-related items (permanent in nature).become really pretty simple. at the same time though. though. remodeling. Home extinction loan Home extension loans are used by customers to get loans from the banks to extend their houses. an extension or general property improvements. However. a new kitchen. Home improvement loans are used to maintain or enhance the value of your house. besides calculating the construction costs. wash rooms. Home construction loan: Home construction loans are used to finance for the construction of our newly acquired home or if we are planning to build a home. For example. we will be required to pay a deposit to your builder as well as paying a deposit for the land if we are buying land. not to forget the hidden costs associated with each of them. Luxury items and fireplaces are generally not eligible. Certain loans can be structured for progress payments to be made during construction.
medical expenses. that you have decided to purchase a land as an investment or for your own dream home. Bridge loans are used by customers as an effective vehicle to capitalize on a purchase opportunity. who wish to mortgage his/her property to the bank for taking some loan for some other purpose. land purchase loan: Land Purchase loans are used by customers who wish to purchase a plot of land for commercial or residential purpose. until a buyer is found for the home. higher education. Loans that are strictly for land purchase can be as scarce as good residential plots. The bridge loans help finance the new home. The amount of loan sanctioned also depends on a number of factors such as the age of the applicant at the time of loan. you will realize that a land purchase loan is one you will cherish. Home equity loan: Home equity loans helps customer to encash the market value of the commodity by taking a loan by mortgaging the property. it's up to the bank's discretion to consider the market value of the property and accordingly decide how much to pay to the customer. you have come to the best place you could have arrived in the web. only local institutions typically will be interested in lending for an empty lot. his/her credit history etc. Everyone has his/her dream perfectly sketched in his souls and so is his ambition to get his house erected on the exact location he dreamt that to be. So. provided the mortgager is a licensed title holder and the land is free form any kind of dispute. repayment capacity of the borrower. Home equity loans don't restrict one to use the loan money in specific investments. However it should not be used in any illegal or speculation purposes. Bridge loan: Bridge loans are designed for people who wish to sell the existing home and purchase another one. etc.Maximum Amount of Home Extension Loans: Banks generally offers about 70-85% of the total amount of home extension as loan. It can be considered as a short term financing scheme which 8 . Home equity loans are availed by customers. and have arrived here for finance. tenure of the loan. If you have found and shorlisted the piece of land. Both the residential as well as non residential property can be considered for the approval of the loan. Then. Now. It might also be used in marriage. While many lending firms around the nation compete to provide mortgages for the purchase of a house on a lot.
is generally expected to be paid back. 1. To know that which bank provide batter loan schemes. To know the consumer perception about the home loan of PNB and SBI. If the home gets sold before that time. retrieve real estate from foreclosure. They can also be operating loans for periods between LOI and acquisition. A population of peoples who take home loan from these banks will be considered for this study. or quiet period and IPO.2 Section OBJECTIVES To study the cost of home loans provided by the bank. 9 . So. Bridge loans in corporate finance are called gap financing. often used for commercial real estate purchases. SCOPE OF THE STUDY: This study is analysis and comparison of home loans provided by the SBI and PNB banks. till the time the borrower gets more permanent and lower cost financing. Bridge loan may contain a decent proportion of prepaid interest. RESEARCH METHODOLOGY Design of Research: The research will be exploratory in nature. I will try to explore about the home loans which would make a difference in the behavior of the consumer. you may receive interest payments back. I will also explore the impact of home loans on the market share of the banks. To analyze the home loan scheme by PNB and SBI banks. Effort will be made to throw light on most of the factors which have either indirect or direct effect on the behavior of the consumer. ICICI etc. but if it hasn't sold. Citibank. within the range of 6-36 months. (or swing loans as they are otherwise said) is a short term loan provided by various banks like Bank of India. It is helpful in analysing the home loan service provided to the customer and their comparison. sometimes as much as six months. you may be required to continue payments. bridge loans. and are used to cover the time between redemption of issuance of one bond and its replacement by a new issue.
sex. As these banks are established from so many years. • Sampling technique: The sampling technique will be probabilistic sampling more specifically the random convenient and judgemental sampling will be used. 10 . so we will make the strata on the basis of age. As in probabilistic sampling the select unit for observation with known probabilities so that statistically sound assumptions are supported from the sample to entire population so that we had positive probability of being selected into the sample. So it is necessary to take the sample size.Sampling plan: • Population: The study aimed to include the customers of SBI and PNB in nawanshahr. So. so we will find secondary data also and also use this data for the help of this research.. this research data will collected from the primary source and secondary source. In 100 respondents 50 respondents from PNB and 50 from SBI. and income group. gender. I will go for stratified random sampling as we are interested to study the home loan by SBI and PNB banks. income level. to make a comparative analysis of home loan schemes of these two banks. The sample will be taken in the form of strata based on age. so many researchers have done research on this topic. The sample will the peoples of age group lying between eighteen to thirty years. And from each strata we will go for random sampling. occupation. Sources of Data: I will use primary source of data that is structured questionnaire. • Sample Size: A Sample size of 100 respondents will be taken for the current study because it is not possible to cover the whole universe in the available time period.
PIE CHARTS . simple on seeing the charts anybody that what is being said. Tools and Techniques: As no study could be successfully completed without proper tools & techniques. Basic tools which I used for project are: . simple way. So I need not necessary for any observer to read all the theoretical detail. For the better presentation and right explanation I used tools of statistics and computer very frequently and I am very thankful to all those tools for helping me a lot. Technological Tools: MS -WORD MS-EXCEL 11 .BAR CHARTS .Our method of collecting the data is from the questionnaire that will be filled by the respondent from the sample.TABLES Bar charts and pie charts are very useful tools for every research to show the result in a clear. it will be structured questionnaire. Because I used bar charts and pie charts in my project for showing data in a systematic way. same with my project.
Ludhiana. Ahmedabad. A need for centralized banking system prompted PNB to go computerized and what followed was the establishment of CBS in Punjab National Bank branches in all the leading cities like Delhi.1 Section INTRODUCTION TO COMPANY: PUNJAB NATIONAL BANK : PNB has over 4500 branches and offices bringing the Punjab National Bank to your doorstep. Chennai. The website also provides info on the careers and recruitments at PNB and the exam results. credit cards and insurance. Internet Banking Services are provided to all customers in the CBS branches. Hyderabad. STATE BANK OF INDIA: State Bank of India (SBI) is India's largest commercial bank. Mumbai.State Bank of Hyderabad (SBH). primary dealership in government securities.CHAPTER 2 2. A branch and ATM locator is also available on the official website of Punjab National Bank. The careers at nationalized banks like PNB are the most sought after one and candidates are selected on the basis of their exam result. Gurgaon. PNB topped the Best Paying Commercial Bank category with an overall rating of 87. Jalandhar. Chandigarh. For an overview of the annual report or the bank profile. Nodal and Bangalore.45% as evaluated by the SSS Retirement.The eight banking subsidiaries are:State Bank of Bikaner and Jaipur (SBBJ).State Bank of 12 .State Bank of India (SBI). SBI has a vast domestic network of over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits and loans of all scheduled commercial banks in India. Death & Funeral Benefits Program. factoring services. Kolkata. Around 2400 offices come under the network of Centralized Banking Solution or CBS. the site can be resourceful. fund management. Pune. The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries offering merchant banking services.
Indore (SBIR). However. Then came the muchtalked-about liberalization and economic reforms that allowed banks to explore new business opportunities and not just remain constrained to generating revenues from mere borrowing and lending. despite the foray of foreign banks in the country. The specialized banking institutions that include cooperatives. was established. Industry estimates indicate that out of 274 commercial banks operating in the country. This provided the Indian banking scenario a remarkable facelift that only continues to get better with time. The Reserve Bank of India is the foremost monitoring body in the Indian Financial sector. The Indian banking system can be classified into nationalized banks. the Foreign Department and the International Services division. private banks and specialized banking institutions. 2. State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. In the industry. Bank of Bengal.State Bank of Patiala (SBP). The beginning of this industry can be traced back to 1786. a position in Treasury or Forex is considered right on top and this is followed by careers in Private Banking. Investment Banking and Retail Banking. 223 banks are in the public sector and 51 are in the private sector. SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings . But the industry changed rapidly and drastically. after the nationalization of banks in 1969. when the country’s first bank. This is primarily due to the size of the banks and the penetration of the networks. It is a centralized body that monitors discrepancies and shortcomings in the system. These private sector banks include 24 foreign banks that have begub their operations here. rural banks.2 Section OVERVIEW OF THE INDUSTRY: HISTORY: Banking in India has a long and elaborate history of more than 200 years. etc.State Bank of Mysore (SBM). Today.State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT). The industry is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances.the Domestic division. the public sector banks began experiencing numerous positive changes and enormous growth. the Foreign Offices division. form a part of the nationalized banks category. Opportunities The Banking sector is considered the most lucrative option in today’s job market. One could work in a variety of areas in banking industry including Recurring Deposit 13 . nationalized banks continue to be biggest lenders in the country. even today. As a result.
Investment analysts are the backbone of the financial services sector. Research and Markets has announced the addition of 'Indian Retail Banking. and finally conclude to a decision. Brokers who work for institutional investors are often called securities traders. as against 30% growth in home loans earlier. profitability projections. venture capitalists. etc. Besides it profiles 21 major players in the retail banking space and their strategies. which constitutes more than 52% of all retail loans. Non Banking Finance Companies. In order to help banks in India to understand the market and competition and plan future strategies. mortgage loan underwriter. loan officer. accountant.538 billion. loan manager. Rajiv Sabharwal. personal loan officer. The report also paints a future outlook for the market. This leap was despite the increase in risk weight by RBI for housing and real estate loans during August. Finally. grew at a robust rate of 44. it seems Reserve Bank of India's (RBI) flurry of measures to restrain the home finance market is paying off. In the Financial Services. assessor. some of the important jobs include that of a stockbroker who is essentially a person who buys and sells securities on behalf of individuals and institutions for some commission. post offices. While some brokers like to practice with individual clients others work for institutions. Housing. Growth: The limit for foreign direct investment in private banks has been increased from 49% to 74%. Indian Retail Banking continues to redefine the credit growth in the country. the banking sector is witnessing a decline in the growth of its home loan portfolio. and customer service executive among others.35% during 2005-06. Liberalization and globalization have created a more challenging environment in the banking sector as well as in the other segments of the financial sector such as mutual funds. senior general manager. 2005. we have just come out with an Industry Insight on Indian Retail banking . capital markets. This report analyses the retail banking market and its segments in India and presents the key trends. home loan agent.account. ICICI Bank. In addition. home loan officer. the limit for foreign institutional investment in private banks is 49%. loan processing officer. 2006' to their offering. Security analysts are those who advise companies on floatation’s of shares as they are expected to have sound knowledge of capital markets. They study the financial reports of companies. banking officer. assess various statistical information. Many prefer to work as dealers. product marketing and sales executive. It grew by a whopping 44. 14 . Equity Analysts do jobs similar to investment analysts and research the equity markets and make predictions. survey the industry as a whole and on the basis of the available information. compare financial results.2006 edition. along with issues and challenges. The home loan industry is experiencing a growth of 25% this year. With tightening of interest rates by the RBI and a simultaneous increase in real estate prices in a few markets.4% in 2005-06 to touch Rs 3. probationary officer. advisors and securities analysts.
asset classification. investment fluctuation reserve. another major player. Retail lending comprises 70% of the total loan portfolio of the bank. The banking sector has improved manifolds in terms of capital adequacy. a senior official of State Bank of India (SBI) said the home loan market is showing some signs of slowing down. there will be some impact on us too. the bank experienced total home loan disbursements of Rs 13. Housing Development Finance Corporation (HDFC) said the housing finance market for the middle class segment was growing at a healthy pace. etc. PNB Bank is a leading home loan lender of the country with about 30% market share. Kotak Mahindra Bank Sundaram Bank Oriental Bank of Commerce TOP 10 PLAYERS IN INSURANCE 15 . which has resulted in the fall in growth rates for home loans for the banking industry. Exposure to worldwide competition and deregulation in Indian financial sector has led to the emergence of better quality products and services. income recognition. It has become globally competitive and diverse aiming. provisioning. MAJOR PLAYERS: The financial sector in India has become stronger in terms of capital and the number of customers. risk management. but obviously interest rates hikes will also have an impact.400 crore.which has recorded the highest incremental growth in home finance segment in recent past. at higher productivity and efficiency. Home loan growth has reduced to 25% from its earlier growth rate at 30% and since we are an integral part of the industry. however. declined to disclose the bank’s current home loan growth rate. Reforms have changed the face of Indian banking and finance. In the first half of fiscal 2007. TOP 10 PLAYERS IN BANKING & FINANCE State Bank of India HDFC bank Citibank ICICI Bank Punjab National bank UTI Bank Hongkong & Shanghai Banking Corp. However. profitability. He. exposure limits. said.” He added that the bigger impact had come from real estate prices. “The real estate prices have become very high in few markets. Echoing a similar view. of which the home loan lending is about 50%.
and other electronic channels such as Internet banking. Iffco Tokio General Insurance Oriental Insurance Co. enhance liquidity and turnover and encourage voluntary holding of Government securities amongst a wider investor base Become an effective conduit for conducting open market operations. HDFC Standard Life Insurance 2. etc. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs.Life Insurance corporation of India Bajaj Allianz General Insurance ICICI Prudential Life Insurance ICICI Lombard General Insurance Birla Sunlife Insurance Tata AIG General Insurance New India Assurance Co. multi-national companies. Punjab National Bank boasts of a varied clientele consisting of small and medium industrial units. mobile banking.3 Section PROFILE OF THE ORGANISATION: PROFILE OF PNB: The profile of the PNB shows superior banking services in corporate. Ensure the development of underwriting and market making capabilities for Government Securities Improve secondary market trading system. exporters.The objectives of the Company are in line with objectives laid down by RBI for the Primary Dealers: Strengthen the infrastructure in the government securities market in order to make it vibrant. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked. personal and international banking. debit cards. liquid and broad based. today it offers the largest banking network to the Indian customer. 16 . which would contribute to price discovery. industrial and agricultural finance and finance of trade. Indian conglomerates and NRI. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience.
SBICAP Securities.The National Banking Group also delivers the entire spectrum of corporate banking products to other corporate clients. The bank is also looking at opportunities to grow in size in India as well as Internationally.000 employees in a period of 100 days using about 400 Trainers. SBI Factors. 2. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme. focusing on the prime corporate and institutional clients of the country’s biggest business centers. The others are the Project Finance unit and the Leasing unit. the Bank is also attempting to change old mindsets. attitudes and take all employees together on this exciting road to Transformation. In a recently concluded mass internal communication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and covered over 130.4 section 17 . Foremost among these a specialized group is the Corporate Accounts Group (CAG). The Corporate Banking Group and the National Banking Group are the primary delivery channels for corporate banking products. It is in the process of raising capital for its growth and also consolidating its various holdings.forming a formidable group in the Indian Banking scenario. SBI DFHI. on a nationwide platform. It presently has 82 foreign offices in 32 countries across the globe.PROFILE OF SBI: The SBI’s powerful corporate banking formation deploys multiple channels to deliver integrated solutions for all financial challenges faced by the corporate universe. The Corporate Banking Group consists of dedicated Strategic Business Units that cater exclusively to specific client groups or specialize in particular product clusters. It has also 7 Subsidiaries in India – SBI Capital Markets. Throughout all this change. to drive home the message of Change and inclusiveness. SBI Life and SBI Cards .
SBI HISTORY: The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of Bengal) was established. Today it is the second largest public sector bank in India. the Foreign Offices division. privatization continued with a second public offering of its shares.the Domestic division. the Bank of Bengal and two other Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. The joint sale by the Philippine government and the Lucio Tan Group of the 67% stake in PNB was completed within the third quarter of 2005. In 1955.COMPANY HISTORY: PNB HISTORY: Punjab National Bank of India was established by Lala Lajpat Rai in the preindependence India in 1895 in Punjab.77 per share bid offered by a competitor and purchased the shares owned by the government. PNB was fully privatized. the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of Parliament as successor to the Imperial Bank of India. The completion of sale is expected to speed up the development of PNB’s franchise and operational competitiveness. In 1921. The privatization started in 1989 when 30 per cent of its shares were offered to the public and it was listed on the stock exchange. In August 2005. SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings . with Lahore as its head office.In 1992. Later that year. Today. the Foreign Department and the International Services division. PNB became the first Philippine bank to reach P100 billion in assets. The Lucio Tan Group exercised its right to match the P 43. 18 . It was nationalized in 1969 along with 13 other major commercial banks.
The visionary zeal and the futuristic view of the Bank’s top management in the year 2007-2008 incubated the idea of introduction of a Centralised Banking solution. PNB’s choice of the Oracle Database has provided the bank’s IT infrastructure with robustness. the bank implemented industry-leading Finacle core banking solution from Infosys across its operations running a flexible. With Finacle’s agile and future proof technology.5 Section RECENT ACHIVEMENTS AND MILESTONES: PNB Recent achievements and milestones Punjab National Bank (PNB). With seamless integration of delivery channels such as ATM and internet banking solutions. the Oracle Database will help PNB take control of its enterprise information. 19 . reduce overall costs. but also centralize operations. 4 months ahead of schedule. In addition.5 million transactions and 22500 concurrent users – a significant achievement in the Indian banking industry. management features.2. provide flexibility of creating innovative banking products to its lines of business. Finacle core banking platform also provides the bank with exceptional agility for product innovation and improved flexibility of operations. Completed in November 2008. and scalable database platform from Oracle and innovative servers from Sun Microsystems With an increasingly dynamic business and regulatory environment. security and scalability as well as performance requirements to service 3. on Sun infrastructure and the Oracle Database setting a significant milestone for themselves and a new benchmark for the Indian banking industry. PNB sought to not only achieve automation. the bank today has over 22.500 concurrent users. standardize branch processes. The solution’s scalability has also enabled the bank’s scalability to be the best in the country with the number of peak transactions at 3. and at the same time. achieve high scalability for future business growth.5 million. and quickly and confidently adapt to an increasingly changing competitive environment. The bold and innovative thought culminated into the CBS architecture with Finacle application on Oracle Database and Sun hardware platform with Solaris Operating System. PNB is able to provide 24X7 services to customers at a reduced transaction cost. has announced that it has completed 100% core banking implementation at all its 4604 branches and extension counters through the Finacle Universal Banking Solution from Infosys. gain better business insight.
introduction of new and innovative products and visibility of business.8 times. along with improved value propositions for the urban affluent customers. seventy 75 per cent did not have any type of insurance. The anywhere anytime banking facility will enable the bank to offer products for every segment of the customer.4 Awards. SBI joins Chinese bank to touch 10. would now know about this small village where the 10000th branch of the SBI had been opened. Our objective is to accelerate the pace of growth by extending the benefits to a broader range of consumers in Tier II cities. "This milestone is even more remarkable as we have added one million cardholders in just ten months. data warehousing. Banks should go to the people and enroll them as account holders. including the Chinese. highly available and scalable grids of low-cost servers and storage. business intelligence and content management applications." SBI Card recently signed up Indian cricketer Yuvraj Singh as its brand ambassador. Crisil Award 2006 . CNBC TV – 18. 20 . he said adding they would be amazed by the bank's growth.000 branches when Union Finance Minister P Chidambaram inaugurated its latest branch here. The Lipper Award (Year 2005-2006) and most recently with the CNBC TV . People all over the world. "It is not an easy milestone though the SBI was the bank of the government and Indian people even before other banks were nationalised." he said. Speaking on the occasion.18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.000 branches was a great feat. The 100% implementation of Finacle Core Banking Solution shall enable PNB to further reduce operational costs and revenue leakage while improving productivity of branches. PNB long-standing and progressive partnership also highlights Finacle’s leadership in large scale banking transformation. Chidambaram said China's ICBC Bank was the other bank to have 10. 'That is what economists say is financial inclusion. Oracle customers can tackle the most demanding transaction processing. announced yet another landmark achievement of crossing the three million cardholders-mark.With secure.000 branches: Public sector State Bank of India on Sunday became only the second bank in the world to have 10.000 branches. a joint venture between State Bank of India and GE Money. Opening 10. CEO-SBI Card.” SBI RECENT ACHIVEMENTS AND MILESTONES: AWARDS:SBI has been the proud recipient of the ICRA Online Award . The Minister said out of the over 100 crore people. Similarly. India is a strategic market for Finacle and we look forward to closely collaborating with Punjab National Bank for their future growth plans. said. The bank should be proud of the achievement he said and wished that the bank opened one lakh branches.' he said. SBI Card reaches three million milestone: SBI Card. 50 per cent of the 11 crore farmers did not have bank account. the solution’s future proof technology and powerful capabilities. Roopam Asthana.
Operating expenses were down 23% despite investments made in systems enhancement and upgrading of facilities. and effectively in-source core overseas operations to its global data center in the Philippines. such as: • • • • • • Banking services NRI services International banking Corporate banking Agricultural banking International banking 2.7 Section PERFORMANCE OF COMPANTY IN LAST FIVE YEARS: PNB performance in last five years: 1st Quarter Net Income UP 48% Year-on-Year Taking-off from a breakthrough performance in 2007 with a registered net income of P1. PNB still managed to reflect a 136% growth in foreign exchange gains year-on-year. Total deposits closed firm at P180 billion. reduce non-performing assets and manage costs.2. Total consumer loans portfolio stood at P3.5 billion. PNB’s Japan. Net Income for the 1st Quarter of 2008 registered P457 million. Even as the operating environment proved volatile where negative trends are expected. up P2.6 Section PRODUCT RANGE OF COMPANY/INDUSTRY: The products and services provided by the SBI and PNB are in various fields. PNB has been able to concentrate on generating new client relationships in the corporate segment. from P242 million to P571 million. Hongkong and United States branches as well as the London subsidiary have already been converted and the rest of the Bank is expected to go live soon. up 48% from P308 million of the same period last year. both in the large and SME categories. 2008. This performance bucks industry trends for the 1st quarter of 2008 based on published income reports.3 21 . PNB’s consolidated total asset size remained strong at P242 Billion. The contribution from the consumer finance business has likewise continued to register accelerated growth. PNB continues to reap the benefits from its efforts to strengthen core businesses.7 billion versus end-2007. The Bank has recently implemented a new generation core banking system: Flexcube – an end-to-end solution designed to automate both corporate and retail banking businesses. As of March 31. Singapore. A relentless focus in generating low-cost funds from deposits and other funding sources led to a reduction in total interest expense by as much as 27%. With the significant strengthening of its balance sheet over the past few years.
66 lakh and Rs 2. As of March 31.17 lakh.13 lakh.42 crore. still way above the 10% ratio required by the Bangko Sentral ng Pilipinas. PNB’s Net Loans and Receivables closed P77 billion. the bank is also going flat out to increase its customer base. we have been steadily losing our marketshare from about 35% in 1970s to around 16% in 2006. but on the other. "Over the years.51%. Canara Bank has a business per employee (BPE) of Rs 4.36 crore and Bank of Baroda's (BoB) Rs 3." SBI said in that statement. Canara Bank's profit per employee (PPE) is also on the higher side at Rs 3. 2008. while Union Bank of India's BPE is at Rs 4. these two parameters are among the lowest in the industry. up 25% from end-2007. SBI performance in last five years: State Bank of India (SBI) is all geared up to increase its business per employee and profit per employee as it thinks that for SBI. On one hand. The respective Board of Directors of PNB and ABC passed resolutions last April 30. Subject to appropriate approvals and clearances. 22 . On the other hand. PNB will emerge as the 4th largest domestic bank in the country in terms of asset size once its planned merger with Allied Banking Corporation (ABC) is completed. The PPEs of Union Bank and BoB are at Rs 2. This transaction is subject to the approval of shareholders and regulatory authorities and is expected to be completed by the 3rd quarter of 2008. For instance. respectively. 2008 approving the plan to merge the two banks." SBI had recently said in a joint statement issued by the management and unions.51 crore. while its profit per employee is just about Rs 2. These are according to their respective annual reports for 2005-06. Combined new bookings for the 1st quarter 2008 already reached the half-billion mark. Our vast network is failing to attract the new and demanding young customers. PNB is going to the capital markets to raise a minimum of P3 billion of Tier 2 Capital in preparation for its maturing subordinated notes in February 2009. which is addressed to all SBI officers and employees and aimed at changing their attitude towards customers. the bank is trying to reduce its staff strength which would eventually improve the ratios.billion. "Our business per employee and profit per employee is one of the lowest in the industry.02 lakh. majority of the large public sector banks are better in terms of both these parameters.SBI's generates Rs 2. By contrast.99 crore of business per employee. PNB’s Capital Adequacy Ratio under Basel II remained formidable at 18.
The statement was jointly signed by chairman OP Bhatt, managing directors TS Bhattacharya and Yogesh Agarwal and top office bearers of its officers and employees associations. To address these issues, both the management and unions have agreed to work hand in hand. They have appealed to the bank's staffs to go flat out to increase its customer base."Let us be conscious of the customer's overall needs rather than only the transaction at hand. Let us expand our customer base," the statement read. The bank has nearly 37 lakh savings bank accounts in the Bengal circle itself.Meanwhile, the country's largest and oldest bank has offered an exit option scheme (EOS) to its employees. The bank has some 2.1 lakh staffs, out of which nearly 1.4 lakh are clerical and subordinate employees.
2.8 Section FINANCIAL STATUS OF THE ORGANISATION:
PNB financial status for last five years: Annual results
Mar ' 08 Sales Operating profit Interest Gross profit EPS (Rs) Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 14,265.02 11,537.48 9,584.15 8,459.85 7,778.94 10,029.21 8,730.86 4,006.24 64.98 7,149.74 5,721.06 4,683.04 4,056.84 6,022.91 4,917.39 4,453.11 4,154.99 3,230.64 2,874.77 2,707.21 3,120.86 48.84 45.65 44.72 41
Mar ' 08 Sources of funds Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds 315.30 10,467.35 315.30 9,826.31 315.30 8,758.68 315.30 265.30 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs)
1,66,457.23 1,39,859.67 1,19,684.92 1,03,166.89 87,916.40 1,77,239.88 1,50,001.28 1,28,758.90 1,11,015.69 92,607.16
3,699.64 1,535.70 1,384.12 779.83 53,991.71
2,247.74 293.85 1,237.92 715.98 45,189.84
2,106.92 302.38 1,076.69 727.84 41,055.31
1,875.65 1,645.93 312.49 910.42 652.74 321.04 746.08 578.81 -
4,380.84 14,798.23 -10,417.38 44,354.15
3,980.80 10,178.51 -6,197.71 39,708.10
3,762.79 9,518.93 -5,756.14 36,027.01
3,101.44 3,261.18 12,194.80 8,114.48 -9,093.36 -4,853.30 -
47,047.19 32,229.85 3153.03 2653.03
Profit loss account
Mar ' 08 Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses 2,461.54 23.31 2,352.45 18.03 2,114.97 20.15 2,121.23 19.16 1,654.06 10.85 15,925.65 12,104.24 9,791.12 9,712.63 9,617.34 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings
1,247.47 3,732.33 3,462.46 231.62 3,694.08 8,730.86 170.23 3,523.85 1,247.15 2,047.63 1.13 2,048.76 2,064.28 409.89 69.66 1,584.73
1,360.77 3,731.25 2,350.09 186.67 2,536.76 6,022.91 194.80 2,341.96 629.05 1,539.33 0.76 1,540.08 1,723.57 409.89 63.11 1,250.57
941.38 3,076.51 1,797.23 131.54 1,928.77 4,917.39 186.65 1,742.12 412.83 1,436.66 2.65 1,439.31 1,439.31 189.18 26.53 1,223.60
933.60 3,073.99 2,185.53 470.69 2,656.22 4,453.11 183.28 2,472.94 495.49 1,409.50 0.62 1,410.12 1,410.12 174.18 23.48 1,212.46
1,764.91 3,429.82 2,032.53 59.85 2,092.38 4,154.99 181.45 1,910.93 660.79 1,108.45 0.24 1,108.69 1,108.69 106.12 13.60 988.97
Mar ' 08 Profit before tax Net cashflow-operating activity Net cash used in investing activity Netcash used in fin. activity Net inc/dec in cash and equivlnt Cash and equivalnt begin of year Cash and equivalnt end of year 3,295.91 Mar ' 07 2,169.13 Mar ' 06 2,033.87 Mar ' 05 Mar ' 04 1,904.74 1,768.68 1,073.53 -349.83 1,544.81 2,268.51 529.29 -176.20 390.24 743.33
1,756.13 -10,144.34 14,961.44 -444.46 1,873.54 3,185.21 -159.41 1,157.57 -465.64 -793.13
15,645.52 24,791.69 11,089.03
18,830.72 15,645.52 24,791.69 11,089.03 8,820.51
SBI financial status for last five years: Annual results
Mar ' 09 Sales Operating profit Mar ' 08 Mar ' 07 0.90 0.35 Mar ' 06 0.44 -0.06 Mar ' 05 0.66 -0.03
loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding 0.35 -13.79 -3.36 -18.56 15.19 21.40 150.00 -309.22 150.67 -24.24 -12.64 15.63 -16.66 -230.14 -250.00 10.Interest Gross profit EPS (Rs) 24.57 0.38 275.40 150.48 0.56 16.24 0.57 0.72 0.59 1.32 -271.00 -265.12 -271.13 21.42 21.30 -21.66 15.00 -286.62 -230.64 -250.15 263.72 0.30 293.48 2.30 -20.10 0.10 0.98 296.44 306.27 -294.35 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 26 .47 -295.17 -14.35 0.35 15.56 -276.00 10.00 0.64 24.22 150.00 -245.79 -276.24 0.58 Balance sheet Mar ' 08 Sources of funds Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets.32 23.29 -4.52 -251.86 1.00 0.32 15.66 32.00 11.21 150.04 -294.10 -272.48 0.09 -276.00 -291.48 0.17 21.77 -231.
16 12.31 -268.03 0.56 0.20 -2.03 12.81 4.25 -312.11 1.98 -31.67 -294.11 21.79 0.27 -20.55 21.67 Mar ' 06 -20.17 -20.42 -268.76 21.30 28.65 -25.45 13.13 -4.36 0.29 27 .98 -2.02 0.08 -294.02 -31.40 -289.90 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Cash flow Mar ' 08 Profit before tax -18.58 2.29 0.10 0.35 -8.40 0.44 0.24 Mar ' 07 -4.80 0.72 0.08 0.27 0.39 12.01 -8.51 0.02 -20.01 -21.24 -18.98 Mar ' 05 -21.41 0.32 -312.03 0.44 0.01 0.56 -20.90 0.66 1.44 0.48 0.30 0.11 21.66 10.06 Mar ' 04 -25.53 3.32 0.95 9.42 0.12 0.01 -21.01 0.25 -18.08 0.29 0.68 -0.36 -18.(Lacs) Profit loss account Mar ' 08 Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 0.20 0.30 -2.11 -248.14 0.26 0.09 0.99 -289.29 -248.
PNB currently has 71 CBS branches in Kerala and has registered good growth from this region. 21. activity Net inc/dec in cash and equivlnt Cash and equivalnt begin of year Cash and equivalnt end of year -4. PNB in looking at increasing its international presence and in line with this. These include opening new branches and increasing the number of its core banking solutions branches. the company is planning to set up offices in UK. while the other locations are likely to commence operations by end of this fiscal year. SBI want the future mergers to be as smooth as the merger.89 16. Hong Kong and Canada.Post-merger.06 2.51 -7. or two at a time or in a phased manner.46 -6.51 16.85 30.85 -0.08 0.Net cashflow-operating activity Net cash used in investing activity Netcash used in fin.64 17.50 -13.27 5.65 10. The Canada office is likely to open very soon.89 -4.42 10.42 88.09 10.19 29.00.The Bank has started to leverage our vast SHG network for various services beyond credit delivery. the size of SBI’s balance sheet will cr-oss Rs 12. SBI future plans: SBI has set for itself an ambitious target of credit linking 1 million SHGs up to March 2008.65 5.16 11. Singapore. The State Bank of India (SBI) has formulated a “home-grown strategy” to merge its six associated banks with it within this fiscal.16 0.46 -131.06 10.9 Section FUTURE PLANS: PNB future plans: PNB has initiated various steps in a bid to expand its operations in the state of Kerala. 28 .02 0.000 million to fund its business expansion plans for this current fiscal.000 crore and its profitablity will increased.01 0. PNB unvieled its plans to raise additional capital of Rs.91 17. SBI drawn up a home-grown strategy to carry out the merger programme and we may take up such mergers one by one.
The main objective of the bank is to promote and establish the housing financial institutions in the country as well as to provide refinance facilities to housing finance corporations and scheduled commercial banks. from 1995-96 to 2004-05 by working out relevant ratios in terms of percentages and the compound annual growth rates. their portfolio amounts and the defaults for the last ten years. and the yield curve. majority of the population lives in slums and shabby shelters in rural areas. the Government of India has been continuously trying to strengthen the housing sector by introducing various housing loan schemes for rural and urban population. The National Housing Bank (NHB) was set up in 1988 as an apex institution for housing finance and a wholly-owned subsidiary of Reserve Bank of India (RBI). Moreover. for the salaried section. always remains on the top priority of any person. From the last decade. government and society at large. The paper is based on the case study of LIC Housing Finance Ltd. which was introduced in 1988. they estimate two empirical models of small-business lending by community banks. as one of the three basic needs of life. A relevant chart has also been prepared to highlight the results. Housing. the tax rebates on housing loans have been introduced. Three possible reasons for the extension of this selective credit subsidy to community banks and thrifts are examined. and (3) changes in the yield curve environment. 2007 Michael LaCour-Little had studied about the Economic Factors Affecting Home Mortgage Disclosure Act Reporting. stabilize the Federal Home Loan Banks. (2) changes in the risk profile of borrowers. The data reject the hypothesis that access to increased funds will increase the amount of small-business loans made by community banks. which analyzes region-wise disbursements of individual house loans. The public release of the 20042005 Home Mortgage Disclosure Act data raised a number of questions given the increase in the number and percentage of higher-priced home mortgage loans and continued differentials across demographic groups. Results suggest that after controlling for the mix of loan types. Specifically.e. Craig had studied about the Federal Home Loan Bank Lending to Community Banks. They empirically investigate whether funding constraints impact the smallbusiness lending decision by rural community banks. economy. 2) In December 2006 Fulbag Singh and Reema Sharma had studied about the housing Finance in India. i.. there was no statistically significant 29 . The first attempt in this regard was the National Housing Policy (NHP).. Thomson and Ben R. including the need to: subsidize community depository institutions. Here we assess three possible explanations for the observed increase in 2005 over 2004: (1) changes in lender business practices.CHAPTER 3 REVIEW OF LITERATURE: 1) In august 2001 James B. credit risk factors.are Targeted Subsidies Necessary? The Gramm-Leach-Bliley Act of 1999 amended the lending authority of the Federal Home Loan Banks to include advances secured by small enterprise loans of community financial institutions. and address a market failure in rural markets for small enterprise loans. In India. 3) In May 18.
S&Ls are more vulnerable to interest rate risk. These impacts come in several forms. Despite the increasingly more difficult economic environment. These impacts would be exacerbated by the increasing debt burden of the U. holders of mortgage assets are currently recasting or modifying troubled loans. Borde had studied about the “Is the Savings and Loan Industry Facing Extinction?” This article tells about the Saving and loan crisis. In an effort to keep homeowners in the home and reduce foreclosure expenses. 4) In may 1991 Stephen F. 5) In June 29. given a model of the factors affecting results for 2004-2005. a protracted housing slowdown could eventually cause modifications to become uneconomic and. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. credit quality 30 . Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them. With a somewhat similar liability structure to that of banks (mainly short-term deposits). However. the negative impact on the housing market could be quite large. it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. However. though indirect. we believe there are elements in place for the housing sector to continue to experience growth well above GDP. Importantly. we believe the risk of credit relaxation and leverage can't be ignored. it is likely that the home purchase boom of the past decade will continue unabated. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. They studied about the prospects of the U. Based on our analysis. Finally. we believe there are risks that can materially distort the growth prospects of the sector. wholesale originations did significantly increase. in the absence of adequate hedging measures. Although we have yet to see any materially negative consequences of the relaxation of credit standards. the asset structure of S&Ls is quite different. Such easing includes: * The drastic reduction of minimum down payment levels from 20% to 0% * A focused effort to target the "low income" borrower * The reduction in private mortgage insurance requirements on high loan to value mortgages * The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as "current" * Changes in the appraisal process which has led to widespread overappraisal/overvaluation problems If these trends remain in place. They include a reduction in the demand for homeownership. consumer and the reduction of home equity available in the home. Proposed solutions are discussed in the context of the industry as it currently stands. Specifically.S. such as home ownership mortgages. If there is an economic disruption that causes a marked rise in unemployment. 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. which can lead to lower profits when interest rates rise. 2001 Joshua Rosner had studied about the Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt. a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector.S. it appears that a large portion of the housing sector's growth in the 1990's came from the easing of the credit underwriting process. Therefore. Whereas banks assets consist of short-term loans. housing/mortgage sector over the next several years. S&L assets consist largely of long-term loans. thus. a decline in real estate prices and increased foreclosure expenses.increase in reportable volume for loans originated directly by lenders during 2005.
exited. a change in housing consumption affects the likelihood of borrowing elastically much more than the private mortgage amount of borrowers. We use a simultaneous equation Tobit estimation method. moral hazard and adverse selection problems 31 . current wealth plays an important role in home acquisition as public loans whose direct mortgage lending is a strong support for home purchasers. and thirdparty interventions such as delinquency housing counseling. Japanese households accumulate wealth for downpayments at a high rate. humane. better origination practices cannot eliminate the need for delinquency management. transparent. In terms of analyzing this framework. Therefore. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures. but my proposed analysis is based on whether the system honors and furthers the goals of wealth building. Avery and Allen N. maintained. Because those ends are not inexorably linked to ownership generally or owning a particular home. Legal scholarship should no longer discuss mortgage enforcement primarily in terms of foreclosure law and instead should include other debtor-creditor laws such as bankruptcy. Whatever their merit. Berger had studied about the Loan commitments and bank risk exposure. and to develop stable neighborhoods and communities. They studied that Public investment in and promotion of homeownership and the home mortgage market often relies on three justifications to supplement shelter goals: to build household wealth and economic self-sufficiency. Homeownership and mortgage obligations do not inherently further these objectives. to generate positive social-psychological states. However. this essay starts the process of analyzing mortgage delinquency management tools in the proposed fashion. On the other hand. One function of this brief essay is to identify an existing rough framework for managing delinquency. and community development. We estimate the wealth effect on private mortgage debt as well as housing consumption by applying a model where mortgage debt demand is derived from house purchase decisions and is determined jointly with housing consumption. 7) In 1999 Yoko Moriizumi had studied about the Current Wealth. Housing and private mortgage markets fluctuate very closely with the number of participants in the mortgage market. the number of housing starts is linked strongly to the private mortgage market. it is tempting to focus on its impact on mortgage credit cost and access or on the absolute number of homes temporarily saved. and predictable strategies for home exit as well as for home retention. Wealth effects on private mortgage debt. They studied about the Loan commitments increase a bank's risk by obligating it to issue future loans under terms that it might otherwise refuse. industry loss mitigation efforts. Although more empirical research is needed. a system of delinquency management that honors these objectives should strive to provide fair. and . The most visible triggers of the recent surge in subprime delinquency have produced calls for emergency foreclosure avoidance interventions (as well as front-end regulatory fixes). 6) In dec 2002 Melissa B. I contend that a system of mortgage delinquency management should be an enduring component of housing policy. Jacoby had studied about the Home Ownership Risk Beyond a Subprime Crisis: The Role of Delinquency Management. Therefore. Furtherance of housing and household policy objectives hinges in part on the conditions under which homeownership is obtained. 8) Robert B. however. positive social psychological states. and sometimes undermine them. and housing consumption are not elastic.statistics would likely become relevant once again. leveraged.in some situations . Given that high leverage or trigger events such as job loss and medical problems play significant roles in mortgage delinquency independent of loan terms. likelihood of borrowing. Housing Purchase and Private Housing Loan Demand in Japan.
in which lines give firms the speed and flexibility to pursue investment opportunities. They studied about the the impact of increased use of home equity lines and decreased 32 .S.Souphala Chomsisengphet and John C. We avoid this problem by using a unique proprietary data set from a large financial institution of loan commitments made to 712 privately-held firms. Contrary to common wisdom. which have a wide menu of financing options. White and Emily Y. We develop a combined model of debtors' decisions to file for bankruptcy and to default on their mortgages and show that the theory predicts positive relationships between both the homestead and personal property exemption levels and the probability of borrowers being denied mortgage (secured) and home improvement loans. economy has experienced substantial fluctuations in real and nominal interest rates since the 1970s. They studied that This paper investigates the relationship between bankruptcy exemptions and the availability of credit for mortgage and home improvement loans. Lin had studied about the Bankruptcy and the Market for Mortgage and Home Improvement Loans. We test these predictions empirically and find strong and statistically significant support when evidence from crossstate variation in bankruptcy exemption levels is used. Driscoll had studied about the Loan commitments and private firms. Hillebrand had studied about the Interest Rate Volatility and Home Mortgage Loans . 11) In nov 2000 Michelle J. These relationships also hold when we introduce state fixed effects into the model. 10) Faik Koray and Eric T. they studied that The U. Almost all firms convert unused credit line portions into spot loans and take out new lines. 2008 David P.potentially may result in these contracts being rationed or sorted. we find a positive relationship between mortgage rate volatility and home mortgage loans. suggesting that commitments generate little risk or that this risk is offset by the selection of safer borrowers. which yield a positive relationship between mortgage rate volatility and home mortgage loans. Empirical studies of line demand have been complicated by their use of data on publicly traded firms. 9) Sumit Agarwal. This paper investigates empirically the relationship between home mortgage loans and volatility in mortgage rates for the period 1971:02 through 2003:03. Further investigation indicates that this is due to volatility in the bond market. 12) In October 14. In times of high interest volatility. We test Martin and Santomero's (1997) model. Firms facing higher rates and fees have smaller credit lines. They studied that. Our findings are consistent with their predictions. commitment loans could be safer or riskier on average than other loans. Applicants for mortgages are 2 percentage points more likely to be turned down for mortgages and 5 percentage points more likely to be turned down for home improvement loans if they live in states with unlimited rather than low homestead exemptions. Most loans are in the form of credit lines. households disinvest in government securities and invest in real assets. Depending on the relative risks of the borrowers who do and do not receive commitments. the empirical results indicate that commitment loans tend to have slightly better than average performance. Firms with higher growth commit to larger lines of credit and have a higher rate of line utilization. Firms experiencing more uncertainty in their funding needs commit to smaller credit lines. Bernstein had studied about the Home Equity Loans and Private Mortgage Insurance: Recent Trends & Potential Implications.
The HOLC refinanced loans on some 10 percent of all nonfarm. The data does not support the view that homeowners with multiple liens are less risky and should therefore be allowed to avoid PMI. This paper documents the increase in residential mortgage distress during the Depression. and about 20 percent of those with an outstanding mortgage. This change in lending and borrowing behavior is not a subprime market problem. generally drive product choice. 33 . on average. This article employs recent mortgage origination data to focus on the revealed preferences of low. They studied about the The Great Depression was the worst macroeconomic collapse in U. Housing policy in the United States has long supported homeownership. installment loans. as of January 1. including pricing. amortizing mortgages. Multiple-mortgage financing packages as a percent of newly originated mortgages (mortgages originated within the previous five years) went from 14. consumer credit.S. and liquid assets) for multiple-lien versus single-lien households.and Moderate-Income Households. Further comparisons reveal a large decrease in the proportion of mortgages with PMI with the largest decreases in PMI coverage occurring among newly originated multiple-lien packages. they appear to have also reduced the supply of loans and made credit more expensive for subsequent borrowers. home mortgages were delinquent and. 14) In 24 oct 2008 David C. some 1000 home loans were foreclosed every business day. Although moratoria reduced farm foreclosure rates in the short run.and moderateincome (LMI) households in home purchase mortgage choice. According to one estimate. I identify the factors associated with conventional conforming. Empirical results show that individual credit characteristics and financial factors. yet variation persists across income groups. owner-occupied dwellings in the United States. history.S. and discusses actions taken by state governments and the federal government to reduce mortgage foreclosures and restore the functioning of the mortgage market. fully one-half of U. The multiple-mortgage percentage for seasoned mortgages (mortgages originated more than five years prior to the origination date) also increased by a modest amount.8% in survey year 2001 to 21.5% in survey year 2007. FHA.1 billion. nonprime and specially targeted programs.private mortgage insurance (PMI) on mortgage markets. Sharp declines in household income and real estate values resulted in soaring mortgage delinquency rates. 13) In aug 2007 Michael LaCour-Little had studied about the The Home Purchase Mortgage Preferences of Low. Wheelock had studied about the Government Response to Home Mortgage Distress: Lessons from the Great. The data confirms that in the years leading up to the mortgage crisis home buyers and lenders have aggressively used piggyback loans to avoid taking out PMI on first mortgages. The federal government took a number of steps to relieve residential mortgage distress and to promote the recovery and growth of the national mortgage market. with some variation evident when loans are originated through brokers. The reduced use of PMI and the increased use of home equity loans increased mortgage holder risk in several different ways and was a contributing factor to the 2008 mortgage and financial crisis. the HOLC acquired and refinanced one million delinquent loans totaling $3. Data from the SCF was used to compare five financial characteristics (credit card debt. Many states imposed moratoria on both farm and nonfarm residential mortgage foreclosures. The Home Owners Loan Corporation (HOLC) was created in 1933 to purchase and refinance delinquent home loans as long-term. 1934. home-owners equity. The Great Depression experience suggests how foreclosures might be reduced during the present crisis. Results also indicate that targeted conventional programs effectively compete with government-insured products in the LMI segment. Between 1933 and 1936. The comparisons suggest single-lien households tend to have slightly stronger financial variables than multiple-lien households.
15) In march 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about the Financial Market Imperfections and Home Ownership: A Comparative Study.S. home "bias" appears to be material for pricing. 18) In aug 2004 Mark Carey and Greg Nini had studied about the Is the Corporate Loan Market Globally Integrated? A Pricing Puzzle.as measured by outstanding mortgage loans and down payment ratios . The greater the shift.Mortgage interest tax deductibility is needed to treat debt and equity financing of homes equally. and Fairlie (2005) decomposition techniques. the findings reveal that during 20042006. After controlling for demographic characteristics. Following the Oaxaca (1973). We offer evidence that interest rate spreads on syndicated loans to corporate borrowers are economically significantly smaller in Europe than in the U.affects the age-profile of home ownership. Thus. Blinder (1973).. 17) In feb 1 2009 Vincent W. We also provide estimates of the marginal effect of certain borrower characteristics. cohort effects and calendar time effects. This is the case for both prime and subprime originations. The main question addressed is how much households borrow when refinancing their current mortgage debt in a cash-out transaction. The results have important implications for the debate on the relationship between saving and growth. Hendershott had studied abot the The Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage Interest.J. the cross-section is repeated over time and includes several demographic variables carefully matched between the different surveys. a collection of microeconomic data on fourteen OECD countries. loan and lender characteristics associated with equilibrium mechanisms suggested in the literature do not appear to explain the phenomenon. Countries that limit deductibility create a debt tax penalty that presumably leads households to shift from debt toward equity financing. and corporate financing costs differ in Europe and the U. we find strong evidence that the availability of mortgage finance . Even after controlling for changes in borrower risk characteristics." This may explain why pricing discrepancies are not competed away. the flattening of the yield curve explains a significant amount of the increase in rate spread reportable loans. Yao and Eric Rosenblatt and Michael LaCour-Little had studied about the unique paired loan dataset containing information on multiple conventional conforming mortgage loans of households to examine home equity extraction decisions over the period 2000-2006.000 households with aggregate panel data on mortgage loans and down payment ratios. merging data on more than 400.S. Results contribute both to the literature on refinancing behavior and the role of house price appreciation in providing funds that may be used for consumer spending or other purposes. 16) In 10 dec 2007 Irina Paley and Chau Do had studied about the Explaining the Growth of Higher-Priced Loans in HMDA: A Decomposition Approach. Borrowers overwhelmingly issue in their natural home market and bank portfolios display significant home "bias. Differences in borrower. important determinants of loan origination market outcomes remain to be identified. but the fundamental causes of the discrepancies remain a puzzle. Pryce and Patric H. country effects. 19) In july 2005 Gwilym B. this study identifies the fraction of the increase due to the flattening of the yield curve. This allows us to construct a truly unique international dataset. In most. They explore the determinants of the international pattern of home ownership using the Luxembourg Income Study (LIS). the less is the tax revenue raised by the limitation and smaller is its 34 . other things equal. especially at the young end. The period 2004-2005 showed a significant increase in Home Mortgage Disclosure Act (HMDA) rate spread reporting.
and 85 percent of the Hispanic APR gap. costing and market factors that appropriately explain mortgage pricing differentials. Wachter and Paul S. and annual percentage rate ("APR") conditional on getting either a subprime or prime mortgage. The estimation is based on 86. The public releases of the 2004 and 2005 HMDA data have engendered a lively debate over the pricing of mortgage credit and its implications regarding the treatment of minority mortgage borrowers. borrower credit history scores.This study examines the performance of home purchase loans originated by a major depository institution in Philadelphia under a flexible lending program between 1988 and 1994. Also. likelihood of delinquency is greater for borrowers with low credit history scores and those with high ratios of housing expense to income.000 newly originated UK loans from the late 1990s. and when the property is unusually expensive for the neighborhood where it is located. 20) In 1 nov 2007 Marsha Courchane studied about The Pricing of Home Mortgage Loans to Minority Borrowers: How Much of the APR Differential. Measuring the financing response to a legislative change is complicated by the fact that lenders restrict mortgage debt to the value of the house (or slightly less) being financed.negative impact on housing demand. We examine long-term delinquency in relation to neighborhood housing market conditions. We provide a unique empirical assessment of this issue by using aggregated proprietary data provided to us by lenders and an endogenous switching regression model to estimate the probability of taking out a subprime mortgage. Taking this restriction into account reduces the estimated financing response by 20 percent (a 32 percent decline in debt vs a 40 percent decline). and other factors. Although any potential discrimination is problematic and should be addressed. 21) In 1991 Susan M. We find that likelihood of delinquency declines with the level of neighborhood housing market activity. is attributable to observable differences in underwriting. We find that up to 90 percent of the African American APR gap. Calemhad studied about the Community Reinvestment and Credit Risk: Evidence from an Affordable Home Loan Program. our analysis suggests that little of the aggregate differences in APRs paid by minority and non-minority borrowers are appropriately attributed to differential treatment. 35 .
50 1) What is your occupation? Business man Student Government Employee Other House wife 15 0 22 0 9 25 20 15 10 5 0 Series1 Series2 Series3 STUDENT GOVERNMENT EMPLOYEE BUSINESS MAN Interpretation:o o o o o o o Total Number of Respondents was 46. HOUSE WIFE OTHER 36 . 4 respondents did not answer.CHAPTER 4 INTERPRETATION: SBI: NO. 0 of our Respondents was Students. 9 of our Respondents were Housewives. None of our Respondent belonged to the category of others. 22 of the Respondents were into government employees 15 of our Respondents were Businessman.
2) From how many years you are associated with this bank? Less than 1 year 1-5 years More than 5 10 24 12 30 25 20 Series1 15 10 5 0 Less than year 1-5 year more then 5 Series2 Interpretation:o o o o o Total Number of Respondents was 46 10 persons are associated less than 1 year 24 persons are associated from 1-5 years. 3) How do you come to know about the home loan schemes of that bank? News paper Television 18 14 37 . 12 persons are associated from more than 5 years.
Internet other resources 10 4 20 18 16 14 12 10 8 6 4 2 0 News paper Television Internet Other resources Series1 Series2 Interpretation:o o o o o Total Number of Respondents was 46 18 persons came to know from newspaper 14 persons came to know from television 10 persons came to know from internet 4 persons came to know from other resources 4) Are you aware of these type of home loans? Home purchase loan Home construction loan Home improvement loan Home equity loan Land purchase loan 9 18 6 4 9 38 .
9 peoples know home purchase loan. 6 peoples knowhome improvement loans.20 18 16 14 12 10 8 6 4 2 0 Series1 Interpretation:o o o o o 5) Are you aware all terms and conditions of home loans? Yes No lo an co ns tr u ct Ho io n m lo e an im pr ov em en tl oa Ho n m e eq ui ty lo La an nd pu rc ha se lo an Ho m e Ho m e pu rc ha se Total Number of Respondents was 46 Only 4 persons know home equity loan. Many of peoples know home construction loan. 40 6 39 .
40.e. 6) Are you satisfy with the interest rate charges by your bank? Strongly agree Agree Disagree strongly disagree 12 30 4 0 40 . Many of persons know all terms and conditions of home loan i.45 40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 46. 6 persons had not know properly about all terms and conditions.
16 14 12 10 8 6 4 2 0 Strongly agree Agree Disagree strongly disagree Series1 Interpretation:o o o o o Total Number of Respondents was 46 12 among all consumers are strongly agreed by interest rate of the bank. 30 among all consumers are agreed by interest rate of the bank 4 among all consumers are disagreed by interest rate of the bank 0 among all consumers are strongly disagreed by interest rate of the bank 7) Your bank offer which type of services? Mobile banking Net banking Forex banking 24 15 7 41 .
8) Do you agree that your bank loan processing is fast? Strongly agree Agree Disagree strongly disagree 8 26 9 3 42 . Only 7 persons said that bank offer forex banking services. 24 persons said that bank offer mobile banking services. 15 said that bank offer net banking services.30 25 20 15 10 5 0 Mobile banking Net banking Forex banking Series1 Interpretation:o o o o Total Number of Respondents was 46.
9) Do you satisfy with the after home loan services provided by your bank are best as compare to other bank? Strongly agree Agree Disagree strongly disagree 12 30 4 0 43 .30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1 Interpretation:o o o o o Total Number of Respondents was 46. 8 persons strongly agree that bank home loan processing is fast. 26 persons agree that bank home loan processing is fast. 3 persons strongly disagree that bank processing is fast. 9 persons disagree that bank processing is fast.
o o o 30 among all consumers are agreed by after sale services of the bank 4 among all consumers are disagreed by after sale services of the bank 0 among all consumers are strongly disagreed by after sale services of the bank 10) Does the cost of home loan is appropriate.35 30 25 20 Series1 15 10 5 0 Strongly agree Agree Disagree strongly disagree Interpretation:o o Total Number of Respondents was 46 12 among all consumers are strongly agreed by after sale services of the bank. according to your demand? Yes No 33 13 44 .
11) Are you satisfy with the employees behaviour of the bank? Strongly agree Agree Disagree strongly disagree 19 23 4 0 45 . o 13 persons said that home loan is not appropriate according to their demand. 33 persons said that home loan is appropriate according to their demand.35 30 25 20 Series1 15 10 5 0 Yes No Interpretation:o o Total Number of Respondents was 46.
No one is disagree with the employee behaviour of the bank. 12) Does the bank give any discount upon loan services? Yes No 40 6 46 . 23 persons satisfied with the employee behaviour of the bank. 4 persons disagree with the employee behaviour of the bank.25 20 15 Series1 10 5 0 Strongly agree Agree Disagree strongly disagree Interpretation:o o o o o o Total Number of Respondents was 46. 19 persons very satisfied with the employee behaviour of the bank.
Only 6 persons said that bank does not give any discount upon loan services.45 40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 46. 40 persons said that bank give discount upon loan services. 13) Are you satisfy by the time taken in sanctioning the loan? Yes No 34 12 47 .
34 persons are satisfied by the time taken 12 persons are not satisfied by the time taken 14) Have you face any difficulty during taking the loan? Yes No 39 7 48 .40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 46.
Only 7 persons does not face any difficulty during taking the loan. 15) Which grade you want to give of home loan schemes of the bank? Excellent Good Average below average 24 18 4 0 49 . 39 persons face difficulty during taking the loan.45 40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 46.
24 persons give excellent grade of the bank. No none give below average grade to the bank.30 25 20 15 10 5 0 Excellent Good Average below average Series1 Interpretation:o o o o o Total Number of Respondents was 46. 18 persons gove good grade to the bank. PNB: NO.50 1) What is your occupation? Business man Student Government Employee Other House wife 17 0 23 0 7 50 . Only 4 persons give average grade to the bank.
25 20 15 10 5 0 Series1 St ud en en t tE m pl oy ee O th er an m Bu sin Interpretation:o o o o o o o G ov er nm Total Number of Respondents was 47. 3 respondents did not answer. None of our Respondent belonged to the category of others. 2) From how many years you are associated with this bank? 3) Less than 1 year 1-5 years More than 5 17 19 11 Ho us e es s w ife 51 . 0 of our Respondents was Students. 7 of our Respondents were Housewives. 23 of the Respondents were into government employees 17 of our Respondents were Businessman.
20 18 16 14 12 10 8 6 4 2 0 Less than 1 1-5 years year More than 5 Series1 Interpretation:o o o o Total Number of Respondents was 47 17 persons are associated less than 1 year 19 persons are associated from 1-5 years. 3) How do you come to know about the home loan schemes of that bank? News paper Television Internet other resources 12 22 9 4 52 . 11 persons are associated from more than 5 years.
25 20 15 Series1 10 5 0 News paper Television Internet other resources Interpretation:o o o o o Total Number of Respondents was 47 12 persons came to know from newspaper 22 persons came to know from television 9 persons came to know from internet. 4) Are you aware of these type of home loans? Home purchase loan Home construction loan Home improvement loan Home equity loan Land purchase loan 9 19 9 2 8 53 . 4 persons came to know from other resources.
20 18 16 14 12 10 8 6 4 2 0 Series1 Interpretation:o o o o o 5)Are you aware all terms and conditions of home loans? Yes No pu rc ha se co ns lo Ho an tr u m ct e io im n pr lo an ov em en Ho tl m oa e eq n La ui nd ty lo pu an rc ha se lo an Ho m e Ho m e Total Number of Respondents was 47. Only 2 persons know home equity loan. Many of peoples know home construction loan. 34 13 54 . 9 peoples know home purchase loan. 9 peoples knowhome improvement loans.
13 persons had not know properly about all terms and conditions. 6)Are you satisfy with the interest rate charges by your bank? Strongly agree Agree Disagree strongly disagree 11 34 2 0 55 . 34.40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 47. Many of persons know all terms and conditions of home loan i.e.
40 35 30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1 Interpretation:o o o o o Total Number of Respondents was 47. 11 among all consumers are strongly agreed by interest rate of the bank. 34 among all consumers are agreed by interest rate of the bank 2 among all consumers are disagreed by interest rate of the bank 0 among all consumers are strongly disagreed by interest rate of the bank 7) Your bank offer which type of services? Mobile banking Net banking Forex banking 26 13 8 56 .
13 said that bank offer net banking services. 26 persons said that bank offer mobile banking services. 8)Do you agree that your bank loan processing is fast? Strongly agree Agree Disagree strongly disagree 4 21 13 9 57 . Only 8 persons said that bank offer forex banking services.30 25 20 15 10 5 0 Mobile banking Net banking Forex banking Series1 Interpretation:o o o o Total Number of Respondents was 47.
25 20 15 Series1 10 5 0 Strongly agree Agree Disagree strongly disagree Interpretation:o o o o o Total Number of Respondents was 47. 9) Do you satisfy with the after home loan services provided by your bank are best as compare to other bank? Strongly agree Agree Disagree strongly disagree 14 29 4 0 58 . 9 persons strongly disagree that bank processing is fast. 4 persons strongly agree that bank home loan processing is fast. 13 persons disagree that bank processing is fast. 21 persons agree that bank home loan processing is fast.
35 30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1 Interpretation:o o Total Number of Respondents was 47. 14 among all consumers are strongly agreed by after sale services of the bank. o o o 29 among all consumers are agreed by after sale services of the bank 4 among all consumers are disagreed by after sale services of the bank 0 among all consumers are strongly disagreed by after sale services of the bank 10) Does the cost of home loan is appropriate. according to your demand? Yes No 29 18 59 .
35 30 25 20 Series1 15 10 5 0 Yes No Interpretation:o o Total Number of Respondents was 47. 11)Are you satisfy with the employees behaviour of the bank? Strongly agree Agree Disagree strongly disagree 16 25 6 0 60 . 29 persons said that home loan is appropriate according to their demand. o 18 persons said that home loan is not appropriate according to their demand.
6 persons disagree with the employee behaviour of the bank. No one is disagree with the employee behaviour of the bank.30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1 Interpretation:o o o o o Total Number of Respondents was 47. 12)Does the bank give any discount upon loan services? Yes No 35 12 61 . 16 persons very satisfied with the employee behaviour of the bank. 25 persons satisfied with the employee behaviour of the bank.
35 persons said that bank give discount upon loan services. 13)Are you satisfy by the time taken in sanctioning the loan? Yes No 30 17 62 .40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 47. Only 12 persons said that bank does not give any discount upon loan services.
30 persons are satisfied by the time taken 17 persons are not satisfied by the time taken 14)Have you face any difficulty during taking the loan? Yes No 43 4 63 .35 30 25 20 Series1 15 10 5 0 Yes No Interpretation:o o o Total Number of Respondents was 47.
43 persons face difficulty during taking the loan. 15)Which grade you want to give of home loan schemes of the bank? Excellent Good Average below average 18 20 8 1 25 20 15 Series1 10 5 0 Excellent Good Average below average 64 . Only 4 persons does not face any difficulty during taking the loan.50 45 40 35 30 25 20 15 10 5 0 Yes No Series1 Interpretation:o o o Total Number of Respondents was 47.
Only 8 persons give average grade to the bank. 1 person give below average grade to the bank.Interpretation:o o o o o Total Number of Respondents was 47. 18 persons give excellent grade of the bank. 20 persons gove good grade to the bank. 65 .
The survey was conducted only on 100 respondents. Both PNB and SBI mostly offer mobile banking services. Hence findings would not be relevant to other cities.People are more satisfied by SBI for time taken for sanctioning the loan. Processing of SBI is fast then PNB. 1.CHAPTER 5 5.1 Section CONCLUSION: All the people are availing loan facility from both the banks. which could hamper the final results to a certain extent. of respondents of SBI were 46 and 47 of SBI Bank.Some of the respondents did not answer all the questions. 2. SBI peoples much know about home loans then PNB. 66 . 5. Peoples are relating with PNB more satisfy with the interest rate as compare to SBI. After home loan services of PNB is good as compare to SBI. Peoples related with SBI is more satisfy with the employee behaviour as compare to PNB.2 Section LIMITATIONS Although best of the efforts were made to conduct a prefect survey but still it faces certain limitation. Following were certain limitation of this project.The study confines itself to the respondents of “NAWANSHAHAR” region only. From all this I conclude that SBI bank provide good home loan services as compare to PNB and many peoples are very satisfied from SBI. 3. No.
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CHAPTER 7 QUESTIONNAIRE: Name____________ Qualification_________ Age 18-25 25-35 35-40 Above Gender_________ 16) What is your occupation? Business man House wife Other Government employee Student 17) From how many years you are associated with this bank? 1-5 Less than 1 year More than 5 year 3) How do you come to know about the home loan schemes of this bank? News paper Internet Television Other resources 4) Are you aware of these type of home loans? Home purchase laon Home improvement loan Home equity loan Home construction loan Home extention loan Land purchase loan 5) Are you aware all terms and conditions of home loans? Yes No 6) Are you satisfy with the interest rate charges by your bank? Strongly agree Agree 70 .
according to your demand? Yes No 11) Are you satisfy with the employees behaviour of the bank? Strongly agree Strongly disagree Agree Disagree 12) Does the bank give any discount upon loan services? Yes No 13) Are you satisfy by the time taken in sanctioning the loan? Yes No 14) Have you face any difficulty during taking the loan? Yes No If yes then specify___________________________ 15) Which grade you want to give of home loan schemes of your bank? Excellent Good 71 .Strongly disagree Disagree 7) Your bank offer which type of services ? Mobile banking Forex banking 8) Do you agree that your bank loan processing is fast? Strongly agree Strongly disagree Agree Disagree Net banking 9) Do you satisfy with the after home loan services provided by your bank are best as compare to other bank? Strongly agree Strongly disagree Agree Disagree 10) Does the cost of home loan is appropriate.
Average Below average 16) Any suggestions that you want to give___________________________________ _____________________________________________________________________ 72 .
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