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

There are many home loans provider in the market to make our dream come true. But before we opt for any home loan provider, we need to consider certain factors related to property that we are interested in buying and also about the salient features offered by a home loan provider. The Indian housing finance industry has grown by leaps and bound in few years. Total home loans disbursements by banks have risen which witnessed phenomenal growth from last 5 years. There are greater numbers of borrowers of home loans. Today many banks provide home loans whether commercial banks or financial institutions to the people who want to have a home. The housing sector plays an important role in the economic development of the country. By this study we will be finding out satisfaction level of customers and problems faced by them in obtaining home loans. Research methodology to be used for study will be both primary and secondary data and based on that we will be drawing our recommendations and conclusion.

1

INTRODUCTION TO HOME LOANS Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above all gathering funds little by little to afford one’s dream. Home is one of the things that everyone one wants to own. Home is a shelter to person where he rests and feels comfortable. Today many banks are providing home loans whether commercial banks or financial institutions to the people who want to have a home. Many banks are providing home loans at cheapest rate to attract consumers towards them. The more customer friendly attitude of these banks, currently offer to consumers cheapest loan over homes. We can take different types of home loans like Home construction Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc. for different schemes available in the market. There are different types of home loans tailored to meet our needs. The main reason for boom in home loan market is the change in government policies. It is our government’s motivation that the home loan interest rates in India have fallen considerably. Lot many banks are offering home loans and this is available at low EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending rate is in the range of 7.5 to 15 %. Today HDFC Bank and Standard chartered bank has become the first player in this sector to announce a housing loan for a 20 years period. No doubt it will enhance the end cost people to plan their house over longer duration now; it has been made easy for a person to buy that dream house which he dreamt of long ago.

OBJECTIVES

2

The main objectives of the study are as follows:• • • •

To know the ideas of customers about home loan products and services. To study the satisfaction level of customers about home loans. To study the problems faced by customers in obtaining the home loans. To make comparative study of Disbursement of home loans by Commercial banks. To study the home loan schemes by different banks.

RESEARCH METHODOLOGY

3

The purpose of the Research methodology is to describe the research procedure. This includes overall research design, the sampling procedure, the data collection method, and the analysis procedures and methods. In this COMPARATIVE STUDY & ANALYSIS OF HOME LOANS descriptive type of research will be used for collecting the primary data. It includes surveys, Questionnaires and fact finding enquiries of different kinds & secondary data is collected from secondary sources such as Internet, Books, Journals, Newspapers, etc. 1. Primary Data: Primary data is collected in the form of survey of the public/investors based on the Questionnaires formulated & by personal Interview. Primary data: Questionnaires & Personal Interview 2. Secondary Data: For secondary data collection method, the help of various reference books, journals have been taken and data is also collected by way of surfing through various websites. Secondary data: Internet, Books & Journals. 3. Sample Size: A sample size of 100 is taken for this study. Random Sampling technique is used for the survey.

REVIEW OF LITERATURE

4

1.33cr. 72.86. economy.73 cr. They also exercise invisible power over their client resources. They are the heart of Indian Financial System.21 cr on march 14. In India. any amount over and above the lent sum was defined as usury. The ill consequences of usurious lending – the ruination of individuals and family – were witnessed at the local level and therefore the community held the practitioner in contempt.602. In money matters. The ability of the banking system to perform its task efficiently & in harmony with our neds & economic goals depends in a large measure on its efficient management. 22. But the need for capital and loans existed and in the absence on alternative solutions. Theory & practice of banking – K K Upadhyay – Pearl Books ( First Publish – 2008) Although ‘Banking’ is an old Activity and has its roots in economics. 4. majority of the population lives in slums and shabby shelters in rural areas. government and society at large. ( First Edition 2009) Banks are in the forefront of economic development.75.052. outstanding bank credit amounted to Rs. the Government of India has been 5 . Banks in India have been playing a unique role in mobilizing saving credit disbursement.224. growing & adaptable banking system capable of meeting the demand of society. Investment touched Rs9. Bank Management – Vasant Desai – Himalaya Publishing House. investment & providing other services. In December 2006 Fulbag Singh and Reema Sharma had studied about the housing Finance in India. Housing. 2. According to the latest figures released by the Reserve Bank of India. lending and borrowing was mainly between individuals and what was meant by usury in these transactions was commonly known and understood. finance. To many people ‘banking technology’ means the use of computers and related hardware to streamline and automate banking operations. the word ‘banking technology’ is of recent origin. safely & profitably if we are to have a strong. Deposits touched Rs 30. This book attempts to demystify the word ‘banking technology’ and offers much broader meaning and more realistic and operationally sufficient perspective on ‘banking technology’. the usurious lenders became an indispensable component of the society. The banking system must be managed prudently . From the last decade. and commerce. 3. commercial bank. as one of the three basic needs of life.N Reddy – Pearl Books ( First Publish – 2008) In earlier times. always remains on the top priority of any person. 2008. Banking and its credit creation – C.

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 20002006.continuously trying to strengthen the housing sector by introducing various housing loan schemes for rural and urban population. 6.e. their portfolio amounts and the defaults for the last ten years. which was introduced in 1988. In feb 1 2009 Vincent W. 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. Almost all firms convert unused credit line portions into spot loans and take out new lines. which have a wide menu of financing options. Our findings are consistent with their predictions. Firms facing higher rates and fees have smaller credit lines. from 1995-96 to 2004-05 by working out relevant ratios in terms of percentages and the compound annual growth rates. 5. Firms with higher growth commit to larger lines of credit and have a higher rate of line utilization. 6 . 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.. We avoid this problem by using a unique proprietary data set from a large financial institution of loan commitments made to 712 privatelyheld firms. Souphala Chomsis engphet and John C. They studied that. The National Housing Bank (NHB) was set up in 1988 as an apex institution for housing finance and a wholly-owned subsidiary of Reserve Bank of India (RBI). The paper is based on the case study of LIC Housing Finance Ltd. Sumit Agarwal. Most loans are in the form of credit lines.. i. Driscoll had studied about the Loan commitments and private firms. Empirical studies of line demand have been complicated by their use of data on publicly traded firms. Firms experiencing more uncertainty in their funding needs commit to smaller credit lines. which analyzes region-wise disbursements of individual house loans. The main question addressed is how much households borrow when refinancing their current mortgage debt in a cash-out transaction. The first attempt in this regard was the National Housing Policy (NHP).

we find considerable Real Estate Investment in India. In the last few years. You can avail loan against existing house for renovation or expansion etc. 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. either in the field of Residential Property in India or Commercial Properties in India.INDUSTRY OVERVIEW Indian home loans Industry: Home loans in India have made people Buy Property in India in spite of the skyrocketing prices. Today the new home purchase loan is much easily available and is much cheaper than what was available earlier. In simpler terms when you want to own a home and can’t afford to pay the amount in lump sum. India Housing has put together a comprehensive data to provide you with the cheapest Home Loans available in the market. The housing loans are popular there too. Especially when you plan to buy a home on loan. housing loan scenario in India has changed drastically. We have listed all the important housing finance institutes and some of the top home finance banks providing lowest interest rates. however. Banks are now everywhere and the schemes are implemented even in villages and smaller towns. It has taken a front seat and people are looking forward to owning their own houses. Today. There are many nationalized banks that offer finance for affordable housing. the activity of building flats is little slow. you can pay it in monthly installments with an interest rate. 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. It is no more a dream that required lifetime saving and a difficult decision to make. 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. It would not be 7 . Home loan means that you buy a house on installments. Purchasing the home of your dreams is not an easy task.

Making sure that the builder has all sanctions and facility to build a good building is very important. Apart from low rate of interest. this can be seen in the stats shown below with average ticket size (loan size) and Amount disbursed is rising every year the 8 . The interest rate available is also of two different types. 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. IDBI Bank. This loan is available to those who want to design their homes according to their requirement and taste. taking a loan is not a difficult task. In the fixed rate loan. Taking home loans these days has become simpler. 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. In other words. With interest rates going down. Housing loans which were 16. Some of the leading banks offering home loans in India. Indian Home loans industry is growing at a fast pace 30% per annum. The other thing is to look into is the property that is to be brought. Standard Chartered Bank and Axis Bank . With the RBI regularly bring down interest rates. the bank should also provide some value added services. people increasingly number apply to take these loans. there is also a boom in the Number of home loans mortgage brokers in India. this loan is meant for those who themselves want to construct their new home. As shared earlier. One is the fixed rate loan and the other is the floating rate loan. Lot many banks are offering home loans and this is available at low EMIs (Equated monthly Installments). The main reason for this boom in home loan market is the change in government policies. Bank of Baroda. There is also a trend to opt for home construction loan. It is our government’s motivation that the home loan interest rates in India have fallen considerably.5% to 13%. However. there are different types of home loans available today.5% to 18% a few years ago fell by 11. taking home loans have become extremely easy. HDFC Bank . SBI. However. In the last few years the floating interest rate has been a favorite among most of the people taking home loans. Today lending rate is in the range of 7. whatever interest is fixed on the start of loan is carried on for the complete period. High EMIs are now a thing of past. including ICICI Bank.wrong to say that there has been a boom in the home loan market and with this boom. in the other one.5 to 15 %. Again. before taking a loan.

The demand drivers are fast growing middle class population. 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. they have a different story to tell. Impact of slowdown on home loan market in India: The fear of a recession looms over the United States. ICICI Bank's average home loan disbursement in a month is around Rs 2. Initial estimates by bankers suggest that the increase in rate for home loans and other 9 . Institutions now charge a floating rate of 8 to 8. IDBI Bank and leading mortgage firm HDFC are now apparently making a conscious attempt to curb their aggression in the home loan market. forcing banks to become selective. 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. UTI Bank. On record. 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. Bankers who were earlier falling over each other to dole out home loans.000 crore in March. U.25 per cent on home loans above Rs 20 lakh. the world catches a cold. So the role of this slowdown is a major issue to be discussed while talking about Home Loan Market in India. that the eventual loan disbursement was just Rs 5 lakh. Most bankers aren't willing to confirm any slowdown in their home loan portfolio. 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. to his shock. rise in working women workforce. bigger aspirations of youth.opportunities have become more dominant for different organization in India. "The slowdown in the home loan market for select players like ICICI Bank was evident from January. they attribute the marginal dip in home loan disbursements to the recent hike in interest rate. Tax saving. which has come down to almost Rs 2. whenever the US sneezes. have suddenly become choosy. ICICI Bank. while credit is growing at almost 28%. Transparency in the real estate market." said a private sector banker. however. it is still low. Even this slowdown the deposit growth for the sector as a whole is around 17%. Privately. Banks like SBI. And as the clinch goes.S slowdown has affected almost all sectors not only in US but to all over the world.500 crore in a month. even for soft furnishings. in absolute terms. However.

Last week. who asked not to be named. the hike in interest rates may be lower as the impact would be felt for the first year. Home loan growths of disbursals were at 20 per cent in 2007-08 according to a study by the credit rating agency CRISIL. other state-run banks may also come out with scheme offering home loan at a fixed rate of 8%. CASA deposits are the cheapest source of funds for a bank 10 . Interest and market trends in year 2009-10: Home loan interest rates. 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. Analysts believe that interest rates have not yet bottomed out and there will be further cuts in borrowing rates over the next few months. Following in State Bank of India’s (SBI’s) footsteps. Even as the provisioning requirement has gone up around 60 basis points.5%). other banks will follow suit. 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. said SBI can afford to lend at such cheap rate as it has one of the best current and savings account (CASA) deposit ratio. the cut in the CRR meant banks would have to keep less money with the RBI and hence they had more money to lend. 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). On the other hand. The slower growth reflects the impact of rising property prices and interest.segments would be around 25-50 basis points (0. especially on new home loan accounts. The RBI started slashing the key policy rates since October last year. but in absolute terms represents a substantial expansion. 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. a Standard & Poor’s company. The cut in the repo rate meant commercial banks would have funds available at a lower cost. The chairman of one of the major banks. This rate is lower than the 30 per cent annual increase seen in the past three years. after taking into account the worsening liquidity situation of banks here.25% to 0. 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. Weaker banks and banks with a large portfolio of these loans are likely to be more affected and may hike rates first.

TYPES OF HOME LOANS Housing loans offered by banks are of different types: 11 .and a high CASA deposit ratio brings down their average cost of funds. State Bank of India froze its new home loan rates at eight per cent for one year recently. NIM is the difference between the rates at which banks borrow and lend. This in turn helps the bank in offering cheaper credit while maintaining their net interest margin (NIM). State-owned banks started cutting their home loan rates after country's largest lender.

In cases where the period from the date of purchase of land to the date of application has exceeded a year. etc. If you have purchased this plot within a period of one year before you started construction of your house. banks and HFCs sanction you home purchase loans for this process. painting. plumbing. for external works like structural repairs. Home construction loans: This loan is available for the construction of a new home on a said property. Home improvement loans: These loans are given for implementing repair works and renovations in a home that has already been purchased. most HFCs will include the land cost as a component. One can avail of such a loan facility of a 12 . The documents that are required in such a case are slightly different from the ones you submit for a normal Housing Loan. the land cost will not be included in the total cost of property while calculating eligibility. If you want to buy a flat in some society or some already built house.• • • • • • • • • • • Home Purchase Loans Home Construction Loans Home Improvement Loans Home Extension Loans Home Conversion Loans Land Purchase Loans Stamp Duty Loans Bridge Loans Balance Transfer Loans Refinance Loans Loans to NRIs Home purchase loans: This is the basic home loan for the purchase of a new home. to value the total cost of the property. electrical work. waterproofing or internal work like tiling and flooring.

eliminating the need for pre-payment of the previous loan. Land purchase loans: This loan is available for purchase of land for both home construction or investment purposes. for example addition of an extra room etc.) • • • • • • • Home extension loans: An extension loan is one which helps you to meet the expenses of any alteration to the existing building like extension/ modification of an existing home. after obtaining the requisite approvals from the relevant municipal corporation. Through a home conversion loan. 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. One can avail of such a loan facility of a home extension loan. 13 . 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. after obtaining the requisite approvals from the relevant building authority. Stamp duty loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property. the existing loan is transferred to the new home including the extra amount required.home improvement loan.

Some of the leading banks offering home loans in India. Bank of Baroda. previous credit history and the cost of the property. which is lower. 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. Balance. 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. Standard Chartered Bank and Axis Bank. until a buyer is found for the old home. In such cases you may opt to swap your loan. 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. HOME LOAN PROCEDURE IN INDIA 14 . The bridge loan helps finance the new home. IDBI Bank. including ICICI Bank. HDFC Bank State Bank.Bridge loans: Bridge Loans are designed for people who wish to sell the existing home and purchase another. This could be done from either the same HFI or another HFI at the current rates of interest. SBI.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. Kotak Bank. 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.

Validation of the Information: In the next stage. the place of employment of the customer. and credentials of the employer. employment. rate of interest. They usually conduct checks on the residential address of the customer. 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. 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. However. HFCs validate the information provided by the customer on the application form. tenor of the loan. They comprise documents to establish income. they send all the documents for a thorough legal scrutiny. investments. The customer also needs to hand over a cheque for payment of an up front (non -refundable) processing fee of about 0. mode of repayment and general terms and conditions of the loan. These documents remain in the custody of the HFC till the time the loan is fully repaid. Submission of Documents: Once the sanction letter is passed. etc. residence.Submission of Application Form: After choosing a particular home loan.5-1% of the loan amount to the HFC. the customer submits the application form to the housing finance company (HFC) along with other relevant documents as required by the HFC. Issue of Sanction Letter: After due appraisal of customer profile. age. Validation of Property: 15 . the money is sanctioned only after the documents and the property on behalf of which the loan is being granted is thoroughly verified. annual / monthly reducing balance. Once the documents are handed over to the HFC. a sanction letter is issued which contains details such as loan amount. This is the actually the approval of the money lending procedure by the company.

Prior to disbursement. Payment Procedure: Once all the above mentioned process. Once the HFC is satisfied that the property is legally and technically clear. they disburse the loan amount. the HFC also conducts a site visit to the customer's property to ensure that all construction norms have been adhered to properly. the borrower is entitled to take the money from the lender party. The disbursement from the HFI is on the basis of the stage of construction of the property. The EMI payments commences only after the entire sanctioned loan amount is drawn HOME LOANS INTEREST COMPARISON 16 . 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).

25 8.50 9.50 10.50 9.50 9.50 9.75 10.50 9.00 8.50 9.50 9.50 9.00 EMI/ Lakh Floating (INR) 2076 1230 1044 932 2100 1300 2175 1375 1137 1033 2162 1364 721 1016 2149 1373 1137 1032 2076 1267 8.50 9.50 9.The table below illustrates the comparison between the interest rates from various Housing Finance Companies and banks.50 9.75 9.75 11 11 11 11 10.75 10.50 10.75 9.50 EMI / Lakh (INR) 2028 1227 970 868 2064 1280 1029 949 2101 1294 1045 933 2101 1294 1045 933 2100 1294 1044 932 2150 1350 17 .00 9.25 9.50 11 11 11 9.50 9. Finance Institution Loan Period Fixed (in years) Bank of Baroda Up to 5 6 to 10 11 to 15 16 to 20 State Bank Of India Up to 5 6 to 10 11 to 15 16 to 20 HDFC Up to 5 6 to 10 11 to 15 16 to 20 ICICI Bank Up to 5 6 to 10 11 to 15 16 to 20 LIC Housing Finance Up to 5 6 to 10 11 to 15 16 to 20 Up to 5 PNB Housing Finance 6 to 10 9.25 9.25 8.50 8.50 9.50 9.25 9.75 10.00 9.75 10.

The comparisons among different commercial banks which offer home loans in regard of Disbursement of home loans are as: Home loans distributed by HDFC and Commercial banks: (Rs. in crore) Years State Bank India Of HDFC LTD Punjab National Bank CITI Bank ICICI BANK 18 .50 10. offered by commercial banks to attract the customers.50 1106 999 It can be seen that if one wishes to go for floating loans.50 1030 933 10. the bank which gives the best deal as far as the interest rate is concerned is HDFC followed by PNB Housing Finance and SBI with the lower rates. COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS There are number of schemes and products.11 to 15 16 to 20 9.25 9.

PNB & CITI bank respectively Rs.21 104.65 2007-08 252.97.778.97 Interpretation: There is no doubt that every bank tries to maximize its home loan disbursement.97.15 1023.65 144.00 11.43 183.00 775.97 and Rs.10 224.33 2005-06 192.01 778.26 120.778.56 1103.47 crore as compared to HDFC.47 265.33 27. Rs.01 crores.00 97.09 176.55 123.2004-05 140.27 240. 1103. Rs.15 90. Recovery of Home loans: Years State Bank India (Rs in crore) HDFC Of BANK Punjab National Bank CITI Bank ICICI BANK (Rs in crore) 19 .46 213. But on the basis of data it is concluded that SBI shows high loan grants of Rs.07 9.75 120.07 30.75 2008-09 Total 282.24 2006-07 235.08.06 150.1023.08 240.67 19. ICICI. On this analysis the SBI are higher loan providers as compared to other sector banks.87 180.

26 228.12 675.91 72.05 5.37 690.16 105.20 10.56 902.65 2008-09 Total 262.12 2005-06 172.27 98.31 14.39 209.00 91.58 23. ANALYSIS & INTERPRETATION Age wise classification: 20 .23 150.30 185.00 2006-07 185.75 231.68 144. The CITI Bank is having lowest recovery of their granted amount as home loans.86 127.2004-05 90.90 18. ICICI and Punjab national bank recovered the sanction amount.85 256.05 97.07 165.28 63.05 920.16 Interpretation: It is evident from the table that every bank whether public or private showed increase HDFC LTD has the greatest recovery of home loans thereafter SBI.46 2007-08 192.35 133.

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

Taken Home loan 22 . most of the respondents are Male.G dr e e n 3% 3 Me a l Fm ea l e 6 7 % Interpretation: From the above chart we can find that 67% are Male respondents and 33% are Female respondents. Therefore.

8% Yes N o 92% Interpretation: From the above chart we found that majority of the respondents have taken loan. Bank preferred to take loan 23 .

24 . The reason is due to specialized services in home loans. and efficient query handling and also people consider these banks safer as compared to others.30 25 20 15 10 5 0 PNB H DF C ICICI SBI CITI O T HER B A NK S e r ie s 1 Interpretation: The analysis showed that a large number of customers prefer SBI and HDFC LTD as compared to others. more amounts of loans.

etc. 25 . 11% by hoardings and 3% by other medium.e.V. 1% 1 42% Other Interpretation: From the above chart we found that majority of respondents(42%) got information about home loan schemes by word of mouth i. 17% by Television. from friends. 27% by newspaper. relatives.Source of information about home loans scheme 1 7% 3% 27% Nespaper Hoardings Word of m outh T.

26 .Things attracted customer 3% 7 2% 8 In re t ra te s te Se rvicep vid d ro e Pa b ckp rio y a e d Sch m s e e 1% 4 1% 4 7 % All o th a o e f e bv Interpretation: From the above chart we found that majority of respondents (37%) said all the above factors are important for them and 28% specifically said that interest rate provided by the bank plays an important role in making their decisions regarding home loans.

36% respondent’s annual household income is between 2 to 5 lacs. 42% respondent’s annual household income is between 5 to 8 lacs.Annual income 14% 8% > 2 Lacs 2. above it can be seen that 8% respondent’s annual household income is less than 2 lacs. 27 .5 Lacs 36% 5-8 lacs 8 lacs & above 42% Interpretation: From the fig. 14% respondent’s annual household income is more than 8 lacs.

36% respondent’s are took the loan amount is between 1 to 5 lacs.10 Lacs 36% More than 10 Lacs 37% Interpretation: From the fig. 14% respondent’s are took the loan amount is more than 10 lacs. above it can be seen that 10% respondent’s are took the loan amount is less than 1 lacs.5 Lacs 5 .Loan amount taken 17% 10% Less Than 1 Lacs 1 . 28 . 37% respondent’s are took the loan amount is between 5 to 10 lacs.

78 % respondents are says that if the interest rate is high for the home loans. they will not go for it. they will go for it. 29 .Even if the Interest rate is high for the home loans. you will go for it? 22% Yes No 78% Interpretation: From the graph above it can be seen that 22% respondents are says that even if the interest rate is high for the home loans.

. customers get housing loan for tax benefits is 43%. 33% and very more number of customers found problem in paying cash in one go is 23%.What are the reasons for taking a home loan? 43% 33% Non availability of funds Reluctance to pay cash in on go Tax Benefit 24% Interpretation: To interpret the response of the questions. it is concluded that most of people lack of money in fulfilling their dreams and few of them were reluctant to pay cash in one go and wanted to pay their home loans slowly in installments.e. 30 . the figures shows that most of the customers find the problem in availability of funds i. On the basis of study.

The data shows that most of the respondents prefer the Home purchase Loan which is more than other types of loans. 6% of the respondent’s are taken Home Extension Loan and 2% of the respondents are taken Home Equity Loan and 7% of the respondents are taken Land Purchase Loan.Types of home loan 6% 2% 7% 46% Home Purchase Loan Home Construction Loan Home Improvement Loan Home Extension Loan Home Equity Loan Land Purchase Loan 21% 18% Interpretation: From the graph above it can be seen that 46% of the respondents are taken home purchase loan. 18% are taken Home Construction Loan and 21% are taken Home Improvement Loan. 31 .

This will crush the curtsy of customers to avail the home loan.Problems face while getting home loans 11% 41% Lack of know ledge Procedural delays and non cooperation A ny other 48% Interpretation: From the graph above it can be seen that 41% respondents does not have proper knowledge about different home loan products so they face problem in making a good deal. as well as the attitude of bank employees some times non cooperative and it creates a hurdle in building trust and Confidence among customers about banks. 48 % respondents are faced problems of procedural delays. 32 . 11% respondents are faced other problems while getting home loans. which harass the customers lot.

37 % respondents are satisfied with the after home loan services provided by their bank whereas 62 % respondents are somewhat satisfied with same. Hardly 1% respondents are not satisfied with the after home loan services provided by their bank. Does the cost of home loan is appropriate. according to your demand? 33 .Costumer satisfaction 1% 37% S a ti s f i e d A v er age 62% D i s s atis f i ed Interpretation: From the graph above it can be seen that:.

according to their demand. whereas 31 % respondents are says that the cost is not appropriate. according to their demand. Are you satisfied by the time taken in sanctioning the loan? 34 .31 % Yes No 69% Interpretation: From the graph above it can be seen that 69 % respondents are says that the cost of home loan is appropriate.

procedure for sanctioning the loan was done in proper time period where as 39% are not satisfied the sanctioning the loan since they have to face delay in procedure for sanctioning the loan. Are you aware of all terms and conditions of home loans? 35 .No 39% Yes 61% Yes No Interpretation: From above analysis we come to know that 61% customers are satisfied by time taken in sanctioning the loan since.

Yes No No 17% Yes 83% Interpretation: From the graph above it can be seen that 83% people are aware of terms and conditions about the home loans provided by the respective banks as the banks are treating customers properly where 17% are not aware of terms and conditions since some banks are not communicating with the customers properly. Which grade you want to give of home loan schemes of your bank? 36 .

FINDINGS: 37 .11% 17% Excellent Very Good Good 26% 46% Satisfactory Interpretation: From the graph above it can be seen that Majority of the respondents said that they were happy with the schemes which their banks are providing and 46 % of the respondents gave good grade to the home loan schemes and 11 % respondents are not satisfied with the schemes provided by their banks.

and efficient query handling 3.. the procedure is very long. SBI having good brand image in the minds of customers and since it is a public The analysis showed that a large number of customers prefer SBI and HDFC LTD sector bank people feel more secure as compared to the private banks. Many respondents said that interest rate provided by the bank plays an important choose the bank which offers minimum interest rate.1. PROBLEMS FACED BY CUSTOMERS IN AVAILING HOME LOANS 38 . more amounts of loans. 6. 2. as compared to others. 5. 4. role in making their decisions regarding home loans. Some of the customer’s felt that the interest rates are some what high and they will Some of the customer does not having good faith on private banks and they prefer Majority of respondents said that time taken in sanctioning the loan is very long and Most of the respondents were satisfied with the home loan schemes. The reason is due to specialized services in home loans. public sector banks. 7.

• The banks do not take into account the paying capacity of customers. So above discussed are the problems which are faced by customers while availing home loans. • The attitude of bank employees some times non cooperative and it creates a hurdle in building trust and Confidence among customers about banks. which harass the customers lot. No doubt banking industry has made many efforts to enhance the customer satisfaction but customer still faced some problems. • The customer does not have proper knowledge about different home loan products so they face problem in making a good deal. RECOMMENDATIONS AND SUGGESTIONS 39 . This will crush the curtsy of customers to avail the home loan. These are high lightened as below: • There are procedural delays.There are everything in the world has good or bad points. So some customers are not able to get amount of loan needed by them.

then. yet customers seek less interest rate which can lower their cost of house. the banks should provide specialized services in this sector. 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. 40 . less lengthy procedure for the sanctioning of loan to the customer.• • • The Banks should use easy procedure. that the bank which having lower interest rates. especially for the customers who are illiterate. Needles to say. have the maximum clients for loans. So banks should try to lower their interest rates. • The public sector banks should improve their overall services to increase the number of customers for home loans. To increase the customers. • To satisfy their customers and for good dealings in future. or say. They should recruit professionals to provide such services and to satisfy the customers. these should be completed in less time. in case this exists. • Although the interest rates are on specific norms. These services can be such as proper guidance to the Customer regarding the processing of loans. This will be helpful in attracting more customers. There should be less number of legal formalities.

Today many banks provide home loans whether commercial banks or financial institutions to the people who want to have a home. The whole research was carried out in a systematic way to reach at exact results. Some of the respondents felt that the interest rates are some what high and they will choose the bank which offers minimum interest rate.CONCLUSION The Indian housing finance industry has grown by leaps and bound in few years. The whole research and findings were based on the objectives. There are greater numbers of borrowers of home loans. 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. Total home loans disbursements by banks have risen which witnessed phenomenal growth from last 5 years. The housing sector plays an important role in the economic development of the country. 41 . The reason is due to specialized services in home loans. and efficient query handling. more amounts of loans. By this study we have tried to find out satisfaction level of customers and problems faced by them in obtaining home loans. From this comparative study on home loans we conclude that large number of customers prefers SBI and HDFC LTD as compared to other banks for home loans.

Pay back period E).QUESTIONNAIRE 1. From which of the following bank have you taken loan? A. Any Other ____________ Punjab national Bank HDFC ICICI SBI CITY BANK Other(Please Specify) ______________ B). Schemes 6. Less than 1 lacks C). E. B. C. Hoarding/banners D). Television 3.1-5 lacks D). 5-10 lacks B). More than 10 lacks 42 . which things attract you the most? A). All of the above 5. What is your annual income? A) C) >2 lacks 5-8 lacks B) D) 2-5 lacks 8 lacks and above B). While taking loan. D. How much loan amount you took? A). A). F. Have you taken home loan? (A) Yes (B) No 2. Interest rates C). Service Provided D). Newspaper C). Word of mouth E). From where have you got information about home loans scheme? 4.

Are you satisfied with the after home loan services provided by your bank? A). E). Home purchase loan Home construction loan Home improvement loan Home extension loan Home equity loan Land purchase loan 10. Tax benefit 9. F). B). Even if the Interest rate is high for the home loans. Does the cost of home loan is appropriate. Lack of knowledge b. What are the reasons for taking a home loan? A.7. Any other (please specify) 11. Average C). Dissatisfied 12. Are you satisfied by the time taken in sanctioning the loan? (A) Yes (B) No 43 . C). Procedural delays and non cooperation c. you will go for it? (a) Yes (b) No 8. What problems did you face while getting home loans? a. Reluctance to pay cash in on go C. What types of home loan you are taken? A). D). according to your demand? (A) Yes (B) No 13. Satisfied B). Non availability of funds B.

14. What suggestions do you want to give for improvements in home loans Scheme? _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ ___________________________ 44 . Are you aware of all terms and conditions of home loans? (A) Yes (B) No 115. Which grade you want to give of home loan schemes of your bank? Excellent  Very Good  Good  Satisfactory  16.