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DECLARATION

I, Mr. Pavan kumar Desai here by declare that this project work which is entitled
as submitted in the partial fulfillment of the requirement for the award, the
degree of Masters of Business Administration by Karnataka University Dharwad
is my original work and is not submitted elsewhere for the award of any degree or
Diploma

Place: Hubli
Date: 10-07-2007

PAVAN KUAMR DESAI

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

ACKNOWLEDGEMENT
Its human bound duty to acknowledge those personalities who contributed
immensely to my efforts and guided me in the right direction.
I express my sincere thanks to Dr.M.M.Bagali, Director, KLESs IMSR, Hubli for
giving me an opportunity to have corporate exposure and learning at CAN FIN
HOMES LTD.
I take this opportunity to express my deep sense of gratitude to Mr. V. Arun
kumar, the branch manager, CAN FIN HOMES LTD HUBLI, for extending his cooperation in completing my project work successfully.
I am grateful to my faculty Prof. Mahesh Vanjeri, faculty of KLESs IMSR hubli
for his constant encouragement, high inspiration and valuable guidance
throughout my research work.
I am even grateful to Prof. Mahantesh Kuri, former faculty of KLESs IMSR hubli
for his valuable guidance through out my project work.
I would like to express my gratitude to my parents and friends for their support
and inspiration.
Last but not the least I would like to thank all the people who directly & indirectly
helped me to complete this project successfully.

Pavan kumar
Desai
KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

CONTENTS
Page no
1.

Executive summary

2.

Industry overview

3.

Company overview

17

4.

Introduction to the project

26

5.

Housing loan procedure of the company

28

Individual housing loan

29

Loan application & fees

34

Credit appraisal

35

NHB guidelines

45

Sanctions

47

Documentation

48

Inspection of the property

54

Disbursement

55

Recovery

58

Post sanction follow up

59

Enhancement of Loan

61

6.

Customer preference towards home loans

63

7.

Analysis

68

8.

Findings

86

9.

Conclusions

87

10. Recommendations

88

11. Limitations

89

12. Bibliography

90

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

13. Annexure

91

EXECUTIVE SUMMARY

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

EXECUTIVE SUMMARY
I TITLE OF THE PROJECT
Study of housing loan procedure and customer preference towards housing
loan.
COMPANY
@ CAN FIN HOMES LTD, HUBLI.
II BACKGROUND OF THE PROJECT
The robust growth in the demand for housing finance in recent years has been
remarkable. No doubt interest rates have gone up compared to earlier years, but
due to massive competition among the leading financial institutions, made the
customer to get the housing finance for affordable interest rates along with the
good service.
Housing finance is the long term financial assistance specifically advanced to
acquire/ purchase/ construct a dwelling unit against the security of first charge on
the property to be funded.
RATIONALITY BEHIND CHOOSING THIS PARTICULAR TOPIC
Housing finance is an area, which is becoming a major industry contributing
towards economic growth of the country. In 90s only few financial institutions use
offer housing finance but as of now it is very stiff competition among all market
players because every bank and financial institutions started offering housing
finance.
So it is essential to know why the customer prefers the particular financial
institution. . ? Even it is also important to Gain in depth knowledge and what are

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

the procedures that the financial institutions follows for housing loan, right from
application till the end of the loan including post sanction follow up. I.e. housing
loan procedure and the how the customer prefers the particular bank of financial
institution, has made me to choose the project.
III THE RESEARCH PROCESS
1. PROBLEM DEFINITION
Loan disbursement of Can Fin homes hubli branch has decreasing every year
where as Loan disbursement of Can Fin homes as a whole is doing good
business, so there is a need for the study
i. OBJECTIVES
1. To study the housing loan procedure of the company.
2. To assess the customer preference in respect of housing loans
SUB OBJECTIVES
1. To study about the different kinds of products under home loans
2. To have thorough knowledge about various norms and documents specific
to all the products.
3. To study the procedure for sanctioning a housing loan.
4. To assess the market potential in hubli Dharwad for housing loan.
5. To assess then the customer choice of pattern in preferring particular
financial institution for, hosing loans.
iii VARIABLES AFFECTING THE PROBLEM

Rate of interest

Quality of service

Processing of loan

Documentation

Quantum of finance

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

2. RESERCH PLAN
i.

Data source: Primary data.

ii.

Research approach: Personal interview.

iii.

Research instrument: Questionnaire.

IV.

SAMPLING PLAN

V.

Sampling unit:

: Professionals, employees and business class category.

Sampling size

: 100 samples

Sampling method

: convenient sampling.

DATA ANALYSIS
Using Statistical Package for Social Science (SPSS)

VI.

FINDINGS

1. It was found that out of 100 samples 24% of the respondents belongs to
professional category, 33% of the respondents belongs to employee category,
20% of the respondents belongs to business class and rest 13% belongs to
others.

2. The major portion respondents are in the age group of 30-36 years and 42-48.
3. The major respondents fall in the income group of Rs 10000-15000 and 1500020000.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

4. The major criterion for selecting Housing loan is the rate of interest among the
respondents.

5. It was found that 64% of the respondents would go for construction of new
house and they would avail the housing finance facility.

6. Among the prospective customer, 30% of the customer preferred can fin homes
regarding their choice of financial institution with respect to housing loan.
VI. RECOMMENDATIONS

A major chunk of respondents have not availed the housing loan from the Can
Fin Homes and it should catch in the high level of awareness and popularity to
promote their home loan schemes in the fast industrializing landscape.

Since the rate of interest figures high on the list of criteria for choice of home
loan. Can Fin Homes should have to re-look at the interest rate, which is right
now higher than other financial institutions like SBI, LIC etc.

The company has to take some necessary steps to create awareness among
the public, which is low right now.

The company should conduct the promotional activities, to show his


competitiveness among the market players and even to catch hold its target
segments.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

Can Fin Homes should tie up for salary deduction facility, with government
organization, educational institutions & other organizations, which will be easy
for the employees of those organizations to repay the loan without any hurdles. .

For that the company should go for Television ads and holdings and other
means of advertisement. Once in 4 month company can conduct melas also to
update the customers about its products and services.

INDUSRTY OVERVIEW

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

INDUSTRY PROFILE

Housing finance industry - an overview


Highlights

Significantly, there has been no dearth of demand for housing and consequently for
finances for the same have been abundant.

Market dynamics play a pivotal role in determining the lending rates. Considering the
same, the housing finance industry has been in a slump in recent times.

The entry of banks into the housing finance sector has posed a serious threat to
already existent players in the field.

The housing sector is witnessing a clash between major players. Foremost amongst
this is the ICICI and HDFC imbroglio. The latter is giving sleepless nights to HDFC.

Tax sops provided by the Government of India is a significant step towards upholding
the future prospects of this industry.
Sector Comments

Nearly 25 lakh houses are built every year in India. However, the nations requirement is
around 65 lakh houses per annum. The housing sector in India is facing an estimated
shortage of 4.1 crore houses and according to the Ninth Plan, the demand-supply gap

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in urban housing is 3.3 crore houses. In case, all these urban housing dwellings were to
be built, it would require an investment of Rs. 150,370 crore.
Traditionally, the housing finance business has been yielding a margin of around 2 per
cent. The skill of the players is in converting their advances that have a maturity period
of 15-30 years with the deposits that mature within three years. Though, the National
Housing Bank (NHB) refinances housing loan up to Rs. 2 lakh disbursed to the lower

income group, this is just a negligible proportion of advances to the major players. The
primary sources of funds are fixed deposits, debentures, private placement of bonds
and borrowings from banks and financial institutions. Thus, efficient financial
management has a key role to play in this industry.
Lending rates are predominantly market-driven and in view of the same, the housing
finance industry has been in a slump in recent times with there being low demand from
builders and investors alike. Furthermore, the entry of banks into the housing finance
sector has also not augured well for the industry. Most housing finance companies cater
mainly to the higher income group having reasonably assured creditworthiness. In a
scenario marked with the absence of speedy foreclosure regulations, most companies
prefer to stay away from rural and the Low-Income Group (LIG). However, it must be
noted that demand for housing in the Middle-Income Group and High Income Group
segments has also recorded a steady rise lately.
Market profile

The Indian housing finance sector is crowded with players of all sizes and nature:
government organizations, insurance companies, banks, housing finance companies
and co-operative organizations like HUDCO and NHB. Major players in the Industry are
HDFC, LIC Housing Finance, Dewan Housing, Can Fin Homes

and Gujarat Rural

Housing. The youngest entrant into the Industry, which is penetrating rapidly, is ICICI.

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Interestingly, both Can Fin Homes Limited and its parent Canara Bank are into housing
finance. It is the same with quite a few banks, for example, Bank of Baroda and BOB
Finance, Vysa Bank and Vysyabank Housing. Though HDFC and ICICI also have their
banking arms, they compete with each other in personal loans, but not housing loans.
The industry comprises of nearly 383 housing finance companies although
disbursements from only the leading 26 institutions are eligible for re-finance from
National Housing Bank, which is the regulatory body for these companies. These

Housing Finance Companies (HFCs) constitute nearly 95 % of the total disbursement


by the industry. However, owing to the slump in real estate market over the last one
years, the industry posted a fairly low disbursement growth.
Market trends

The housing sector is witnessing a clash between major players. HDFC had ruled this
sector with a lions stranglehold. It was smooth sailing for HDFC all these years and it
seemed that its monopoly was there to stay forever. However, out of the blue emerged
ICICI Home Loans, when this financial institution decided to clash arms with HDFC on
its home front. Within a year of its launch, ICICI Home Loans is giving the industry
leader, HDFC, sleepless nights.
Undercutting in the interest rates is all in the game and so is every other trick in the
book. HDFC is gathering its wits to beat its competitor at its own game. It launched an
aggressive hoarding campaign designed in the style of follow the leader. HDFC has
launched its website propertymartindia.com as a joint venture with the Mahindras.
Following suit, ICICI too, launched its home portal indiahomeseek.com. So the war
rages on both at the retail level and also in the form of a cyber war. ICICI has lowered
its prime lending rates on short and medium term loans from 13 per cent to 12.5 per

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cent. Thus, bringing the interest on housing loans at par with the foreign exchange
loans.
HDFC also reduced the interest rates on its housing loans from 13.25 per cent to 13 per
cent. It went an extra mile to woo the borrowers of loans up to Rs. 1 crore by allowing
them the facility to either opt for a fixed interest rate of 13 per cent or a floating interest
rate of 12.5 per cent. As the name indicates, a borrower opting for the first choice will
have to repay the loan at an interest rate of 13 per cent irrespective of any future hike or
cut in the rates. Those choosing the second option would be subject to the vagaries of
the interest market and may gain or lose in the bargain. The company has also reduced

the interest on loans borrowed by non-resident Indians. These loans repayable within
five years will attract an interest rate of 11.5 per cent per annum while loans with a term
of 6-10 years will be charged interest at 12.5 per cent. The above rates are under the
fixed interest rate option. Similar floating rate loans would be charged at 5 per cent less
interest. Originally, only the commercial banks offered housing loans on floating interest
rates, now that HDFC is offering loans at a 12 per cent floating rate, ICICI also has a
floating rate home loan in the pipeline.
Price sensitivity factors

Noteworthy fact here is that NHB refinance to the HFCs comprises a mere 7% of

the loans disbursed. In other words, most HFCs have to arrange for a major part of the
disbursals from their own resources. Thus, low spreads, mismatched asset and liability,
competition posed by banks with recent regulations requiring commercial banks to
invest 40 per cent of their advances towards the priority sector, etc. pose problems for
the lending division.

The first housing finance company to cut down its interest rate after RBI slashed

the PPF interest rate by 1 per cent on January 14, 2000 was HUDCO. When the
National Housing Bank, the refinancing agency of all housing finance companies,

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slashed its rates by up to 50 basis points, it triggered off a virtual interest war in the
industry. HDFC, ICICI, LIC Housing Finance, PNB Housing Finance Limited and a host
of others followed suit. In a game of one-upmanship, the companies have been vying
with one another to offer the best deal in a rapidly growing market.

CRISIL has forecast an increase in the interest rates in the second half of this

year. This will be due to the demand of funds by the Centre and also the corporates
exceeding the supply. The Central Government has projected a Rs. 31,000 crore higher
borrowing this year than last years figure of Rs. 86,000 crore. The State Government
borrowings would add up to a further Rs. 27,500 crore and the corporate demand would
be higher by Rs. 11,000 crore. As compared with the supply, CRISIL expects the short

Fall to be around Rs. 15,800 crore. To make up this short fall, even if there is a 1

per cent cut in CRR, interest rates are still bound to increase.

The Union Budget 2000-01 has given a shot in the arm to the industry by raising

the exemption applicable to individual borrowers on the interest paid on housing loans
to Rs. 1 lakh. The existing tax rebate of 20 per cent under section 88 of the Income tax
Act of 1961, covered repayment of housing loans, subject to a maximum of Rs. 10,000.
The same has now been doubled to Rs. 20,000. This, coupled with the lowering of the
interest rate would enable a borrower to enjoy tax exemption upto a loan of Rs. 7.5 lakh
for a 15-year term. He can now have access to better tax planning options on account
of the exemption and a lower Equated Monthly Installments (EMI) due to longer term of
repayment. Furthermore, individuals who already own a house can now invest in a new
house and yet claim exemption from capital gains on the sale of the asset. The tax
exemption on the interest paid on housing loans has also been extended up to the year
2003. This move will benefit the salaried employees, especially the middle-class
populace. A dream of providing 25 lakh rural houses has been envisaged in the budget.
Out of these, 12 lakh houses will be built under the India Awas Yojana and another
one-lakh houses would be provided under the Credit-cum-Subsidy scheme for families
with an annual income below Rs. 32,000. Moreover, around 1.5 lakh houses to be
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constructed under the Golden Jubilee Rural Housing Finance Scheme will be eligible
for refinance from the NHB.

The industry has found new avenues such as securitisation, which are expected

to be launched in the market very soon. This mechanism would require a pool of assets
(mortgages), which would be sold by the HFCs to NHB. These assets in turn would act
as a Special Purpose Vehicle (SPV) and would be sold as pass through certificates to
investors, which initially would be from groups earning pension funds, mutual funds,
financial institutions, commercial banks and other trusts or institution which require
monthly fixed income.

The mortgages would be for loans up to a period of 10 years, on which HFCs would
earn 16 % from borrowers. The spread is to be passed back to the concerned HFCs in
the form of premium at purchase of mortgages or service charge over a period of time.
It is expected that with the success of securitization the circulation of funds would
increase coupled with cash flows generated by these funds. Furthermore, a secondary
market for mortgages would become feasible for HFCs.

Outlook

The industry is witnessing a boom at present boosted by the generous budget sops and
rock bottom real estate prices. The demand is a result of genuine individual needs for
housing. The prospects of the industry would be further strengthened on the
amendments to the Rent Control Act and repealing of the controversial Urban Land
Ceiling Act. Thus, the housing finance industry is on solid ground and has interesting
prospects ahead. As for the small players, they will have to take the harsh decision to
either exit the industry or merge with bigger entities. It is also amply clear that in the

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future, industry leader HDFC will have to share the spoils with the aggressive Young
Turk - ICICI. Notwithstanding the competition, the customer has nothing to lose as he
can choose the best loan scheme from the ICICI and HDFC fold, with minimum interest
and a nil processing fee.
Conclusion

Despite the abovementioned factors, several bottlenecks still exist in the industry, which
have to be taken care of before any of the above can bring about an improvement in the
prospects of the industry. From an overall viewpoint demand for housing is ever rising
and the same would be reflected on the demand for funds. Hence, the profitability of the
industry should commence on the positive track in the future.

MAJOR PLAYERS OF THE MARKET


HDFC
CAN FIN HOMES
LIC
ICICI BANK
DEWAN HOUSING FINANCE CORPORATION

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COMPANY OVERVIEW

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COMPANY PROFILE

COMPANY PROFILE

Can Fin Homes Ltd (CFHL) was promoted in 1987, the "International Year
for Shelter for the Homeless" by Canara Bank in association with reputed
financial institutions including HDFC and UTI. Now NHB is also an
important equity holder in CFHL.

CFHL was set up with the mission of promoting HOME OWNERSHIP and
increasing HOUSING STOCK all over the country.

The vision of Canara Bank on the relevance of having an exclusive outfit for
providing housing finance at a time when institutional finance was not flowing to
the housing sector to the required extent and banks had constraints in locking up
funds in long term housing finance saw the birth of CFHL.

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STANDING

Can Fin Homes Ltd. (CFHL) is the first and the biggest bank sponsored
Housing Finance Company (HFC) in the country and one among the top
players in the country's housing finance sector.

The company has a standing of over 20 years.

CFHL is one among the four HFCs selected by NHB in its first phase of
securitization programme.

CFHL enjoys 5 Star rating from NHB for the purpose of refinance.

CFHL's Deposit programme enjoys "MAA+" rating, which is the highest


possible under High Safety rating.

CFHL has an all India presence with a network of 46 branches.

CORPORATE PHILOSOPHY

CFHL has an organizational culture interwoven with the following basic


approaches.

Easy accessibility of senior Executives to the common client.

Transparency in functioning.

Integrity and ethics in business practices.

Delivering quality customer service.

Total commitment to results at all levels.

Continuous innovation.

Recognition and reward systems for highly performing staff.

Encouragement to employees to innovate on the job, to try out new ideas


and to excel.

Senior Executives acting as friend, philosopher and guide to the branch


teams.

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PRODUCT MIX
Can fin homes offers a products mix consisting of housing finance as well
as non-housing financial schemes.
1.

HOUSING FINANCE

A)

Housing Loan Schemes for Resident Indians

After having seen over a lakh satisfied customers secure their own homes, Can
Fin Homes now looks toward your home financing requirements. Having spent

over a decade in the home finance business, can fin is well placed to understand
the significance and importance of your need to own a home. This section is here
to do just that, see you realise the dream of owning a home, as swiftly and
smoothly as possible.
The main focus at Can Fin is to understand you before we go about
understanding and assessing your loan requirements. The human element of
trust, confidence and friendship is as important to us as your loan financing is.
Our trained and courteous staff ensure that you are first at ease and in full
confidence with them, before anything else. We at Can Fin call it "Friendship
Finance" since we believe in making friends with you, before we finance your
requirements.
Once you have familiarized yourself with our personnel and understood the terms
and conditions of the financing, then there's very little paperwork you need to do.

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In fact, the paperwork required by Can Fin Homes to clear your application, is
perhaps the least in the entire home finance industry! So don't wait any longer,
the details of the documents you must provide are given in this section.

A) Housing Loan Schemes for NRIs


We will finance for housing loans to Indian Nationals (Indian passport holders)
residing abroad for construction/purchase of residential unit for their self
occupation on return to India and also to undertake major repairs, renovation and
extension work to the existing residential building.
For Can Fin to assess the quantum of your loan eligibility, it looks into your
repayment capacity. This is based on your income, work permit/green card, bank
accounts, visa, age, qualification, work experience, number of dependents, etc.
To work out the details, mail us and our experts will understand your need and
find a suitable loan option that suits you best
2.

NON-HOUSING FINANCE

Can fin offers three different types of non housing financial scheme. Those are
as follows.

A)

PREMISES LOAN SCHEME FOR PRACTISING PROFESSIONALS (VENTURE)


PURPOSE
For construction / purchase / setting up / extension / renovation /
furnishing / interior decoration of office / clinic / nursing home etc.

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ELIGIBILITY
1. Only

practicing

professionals,

i.e.,

Doctors, Architects,

Chartered

Accountants, Company Secretaries etc. who have been regularly filing


their Income Tax Returns for last two years are eligible to apply for a loan
under the scheme.
2. Existing borrowers having satisfactory track record with the company and
new customers based on their credentials in the market and who conform
to the requirement under point 1 above will be eligible to apply for a loan
under the scheme.
3. The applicant should be the owner of the premises.

B)

LOAN AGAINST RENT RECEIVABLES (N-CASH)


PURPOSE
For meeting any genuine needs and purposes acceptable to the company
ELIGIBILITY
1. Individuals who are salaried persons / professionals / business men, who
have property leased / rented out to PSUs, Central / State / Semi
Government

Undertakings,

reputed

corporates,

banks,

financial

institutions, insurance companies, MNCs etc., including the property


leased / rented out to Can Fin Homes as office premises or quarters to its
Executives / Officers are eligible to apply for a loan under the scheme.
2. Individuals having property leased / rented out to non-corporates shall be
considered selectively at the discretion of the Managing Director.

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3. Proposals of firms, which satisfy the above criteria, can also be


considered.
4. Rent/ lease agreement should be a duly registered document.
C)

MORTGAGE LOAN SCHEME (NETWORTH)

PURPOSE
For meeting any genuine needs and purposes acceptable to Can Fin
Homes, against the security of mortgage of property (land and building)
ELIGIBILITY
Individuals who are salaried persons / professionals / businessmen, who
have adequate repaying capacity supported by proof of income in the form

of salary certificate for 6 months / Income Tax Returns for the last two
financial years etc. will be eligible to apply for a loan under the scheme.

BRANCH NETWORK

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Name of Branch
Ahmedabad
Jayanagar, Bangalore
Cunningham Road, Bangalore
Koramangala, Bangalore
Vijayanagar, Bangalore
HRBR Layout
Bangalore
Registered Office
Bhopal
Bhubaneswar
Calicut
Chandigarh
Chennai
Cochin

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Coimbatore
Davangere
New Delhi
Hubli
Goa
Gurgaon
Hyderabad
Indore
Jaipur
Lucknow
Madurai
Mangalore
Mumbai
Navi Mumbai (Vashi)
Mysore
Noida
Patna
Pondicherry
Pune
Raipur
Secunderabad
Tambaram
Thane
Trichur
Trivandrum
Trichy
Vijayawada
Visakhapatnam
Vadodara
Velachery
Vashi
Kukatpally
Faridabad

TARGET CUSTOMERS

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Major target customer of can fin homes is mainly rich class and upper middle
class population.
MAJOR COMPETITORS
When can fin homes started its operation in the year 1987, it was the first
financial institute which offered housing loan, during that time there were no
competitors but in later years HDFC, DHFL, ICICI, SBI and LIC were started
operations in this sector, now we can say they are the major competitors for can
fin homes.

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INTRODUCTION

TO

THE

PROJECT

This project has two aspects namely, study of housing loan procedure and
customer preference towards the housing loan.
BACKGROUND OF THE PROJECT TOPIC

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Housing finance is an area, which is becoming a major industry contributing


towards economic growth of the country. In 90s only few financial institutions use
offer housing finance but as of now it is very stiff competition among all market
players because every bank and financial institutions started offering housing
finance.
To Gain in depth knowledge and what are the procedures that the financial
institution follows for housing loan, right from application till the end of the loan
including post sanction follow up. I.e. housing loan procedure has made me to
choose this part of the project
OBJECTIVES
1. To study the housing loan procedure of the company.
2. To assess the customer preference in respect of housing loans
SUB OBJECTIVES
1. To study about the different kinds of products under home loans
2. To have thorough knowledge about various norms and documents
specific to all the products.
3. To study the procedure for sanctioning a housing loan.
4. To assess the market potential in hubli Dharwad for housing loan.
5. To assess then the customer choice of pattern in preferring particular
financial institution for, hosing loans.

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HOUSING LOAN PROCEDURE OF THE


COMPANY

I INDIVIDUAL HOUSING LOAN

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Different aspects of individual housing loan are discussed in this section.


1.

PURPOSE
Can Fin Homes Ltd extend financial assistance for:-

a) Purchase of ready built residential house/flat/apartment.


b) Construction of residential dwelling unit.
c) Undertaking major repairs, renovation, upgradation and extension to the
existing residential unit.
d) Purchase of Vacant Plots
2

ELIGIBILITY

a) Any major, solvent, healthy resident/non-resident Indian citizen who and/or


whose immediate family (wife& minor children) wants to own a dwelling unit
is eligible for housing loan.
b) The applicant should have adequate regular source of income with sufficient
repayment capacity.
c) In case of business/ profession/ self-employed category, the person should
not be more is more than 58 years. 65 years will be treated as his/her
retiring

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d) In case of salaried class the employee should be confirmed in service and


should have a minimum of 5 years of service left before retirement.
e) The building proposed to be constructed or purchased should be in the
individual name of the applicant or his/her spouse or jointly with close
relatives namely spouse, father, and mother children. The owner of the
property should become applicant and the co-owner of the property should
become the co-applicant to the loan.

3.

SECURITY

a) Prime:

Equitable mortgage of property to be financed by way of first


charged.

b) Collateral: To take care of certain unforeseen eventualities and in the event


of making certain relaxations in norms (Eg: The applicant has only 5years of
service left and would like to avail loan for a 7 years term). It is advisable to
obtain as much as possible liquidable.collateral securities such as:
I. LIC/Postal insurance policies
II. National Savings Certificates.
III. CFHL/Bank deposits
IV. Government bonds/Gifts Edged securities.
c) Personal Guarantee:
Personal Guarantee should be obtained in the following cases:
I. Two Guarantors If the applicant is of non-salaried category.

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31

II. Two Guarantors in the absence of salary recovery category.


III. One interim guarantor where the proposal is for the purchase of
ready built unit and creation of mortgage is not immediately
possible.
It is required to insist for at least one good guarantor in all other cases as the
guarantor is of much help to us in the matter of recovery in the event of default.
Who should be the guarantor?
I. The guarantor should be a person of repute and should be credit
worthy.
II. The net assets should not be less than our loan amount.
III. His age should normally match with the age of the loan applicant.(
Please keeping view the term of the loan and retirement age.)
Guarantor Particulars should be obtained in the prescribed format.

4.

QUANTUM OF LOAN AND MARGIN

Maximum of Rs 100 Lakhs for acquisition and construction of dwelling unit.


Maximum Rs 500000/- for major repairs, renovations, up gradations extensions
of the existing residential building under NHB refinanceable scheme and upto
Rs 50 Lakhs for extension purpose under general repair for loan scheme for
additional and extensions.

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However quantum of loan shall be determined taking into consideration the


repayment capacity, term of loan and margin investment.
Repayment capacity or income installment ratio
Upto 50% of the gross income is treated as ones repayment capacity towards
housing loan obligation.

Margin or loan cost ratio


In case of construction, minimum 15% of the total project cost (Including the
cost of land i.e. registered value of land plus cost of stamp and registration
expenses) should be brought in by the loan applicant as margin.
In respect of purchase of ready built house /flat/apartment a minimum of 15% of
the purchase consideration should be met by the applicant. However, the cost
of building (excluding land) should be reasonable and the plinth area of the
building sufficient for a decent leaving.
5

RATE OF INTERST

Rate of interest may vary from tome to time, RO will communicate the same to
the Branches. A ready reckoner showing monthly installment (EMI chart) will
also be supplied by RO.
The rates of interest are related to the entire amount of loan and are not on slab
basis. Interest will be calculated on monthly rests basis.

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Branches may come across cases where the applicant has availed a loan from
financial institution and approaches us for a loan on second charge/ pari- passu
basis. In such cases, for computing rate of interest, loans of both the institutions
are to be aggregated. However, loan granted by the employer of the applicant
under their own housing loan scheme should not be aggregated for this
purpose.

6.

TERM OF LOAN

Term would normally vary from 5 to 20 years or till the age of retirement in
case of salaried class or attainment of 65 years in case of others, whichever
occurs earlier.
7. REPAYMENT OF LOAN
Repayment of loan shall be made within the term stipulated, by way of Equated
monthly installments (EMI). Till the loan amount is fully disbursed, the interest
for the month in which last disbursement was made has to be recovered as
PEMI interest and repayment of the loan (EMI) should commerce from the
succeeding month.

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II

LOAN APPLICATION AND FEES

APPLICATION
Normally, an application is to be issued after conducting a preliminary interview
by the Branch incharge, who has satisfy himself about the genuine need for the
housing loan, regular income repayment capacity and other legal/technical
aspects of the property. Issue o application merely on demand should be
avoided.
While issuing the application, a general list of documents to be submitted by the
application may be issued. When the applicant submits the loan proposal, it
should be thoroughly verified as to whether all the required information and
documentary proof i.e. salary certificate, IT returns, audited balance sheet,
profit and loss account, age proof, documents, title deeds, guarantors letter
etc. are submitted. If the proposal is complete in all respect the same may be
accepted under an acknowledgement.
PROCESSING FEE
While accepting the proposal in the aforesaid manner, the processing fee is to
be collected. The processing fee is meant for processing the proposal, legal
expenses, search fee etc. The processing fee so collected is non-refundable if
the loan is sanctioned. If the loan is not sanctioned it will be partly refunded
retaining 10% of the fee paid subjected o minimum of Rs 250-. In case reduced
loan is sanctioned, the excess of processing fee collected may be adjusted
towards the administrative fee. After the loan is sanctioned, If the applicant
withdraws his proposal, the entire processing fee is to be retained and no
amount is refundable.

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III CREDIT APPRAISAL


Credit appraisal is very important exercise in Can Fin Homes. The credit
appraisal eliminated loans in the initial stage it self.
Credit appraisal is nothing but various aspects like the need for the house,
sources of income, repaying capacity, credit history, willingness to repay, quality
of the security, enforceability of the security legally, etc.
A Loan application may be strong in respect such as larger down payment or
low installment to income ratio, but every borrower is nonetheless required to
have a good credit history and the borrowers willingness to pay in part a
subjective process.
The intelligence, prudence, alertness, judgment capacity etc., will help the
appraisal in making his task easy. Inept handling or any laxity in observing
norms/guidelines or overlooking certain vital aspects, or trying to show some
concessions in requirements with a view to oblige a prospective borrower will
certain endanger the safety of the loan and create problem both for CFHL and
the person who recommends/sanctions the loans.
It is therefore, to be understood that appraisal is a more important exercise than
making disbursements and obtaining security. Recovery of loan is depends
very much upon the quality of appraisal. As housing loans are long term in
nature, the Branch in charge should exercise extraordinary diligence and care
at the time of appraisal. Broadly, the appraisal is done from three angles.

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1. Appraisal of the borrower- Financial appraisal


2. Appraisal of the property- Technical appraisal
3. Appraisal of the legal title to the property - Legal appraisal

PERSONAL INTERVIEW OF THE LOAN APPLICANT


Branch in charge should personally conduct interview of the loan applicant to
ascertain whether the proposal confirms to Can Fins credit norms and could be
accepted in the principle pending through appraisal.
However, no commitment whatsoever is to be given to the applicant until the
whole appraisal process is completed, requirements are complied with the
sanction from concerned authority is obtained.

1.
A)

FINANCIAL APPRAISAL
The applicant or the co applicant (joint owner of the property or spouse of

the applicant is co-applicant) should have independent source of income (either


by way of salary or out of self employment/profession/business) for which
documentary evidence like salary certificates, income tax returns, assessment
orders, audited financial statements should be produced. A careful analysis
should be made to ensure that the income declared is quite reasonable, as in
some cases, the applicants will have tendency to get the income shown in an

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B)

inflated manner. While analyzing the income details, it is to be ensured that


these do not include certain types of income like interest on securities, profit
from the sale of shares etc., which are not of regular nature, similarly
reimbursement of actual expenditure incurred by the employee

like

conveyance, medical, paper and periodical etc., and allowance like overtime,
incentives etc., cannot be included without ensuring that these are regular
income and likely to be paid to the employee in future too.
C) The repaying capacity (how much one can pay per month towards housing
loan) is to be assessed based on the income (gross as well as net), his
commitments towards the family as could be observed from number of
dependents towards the family as could be observed from the number f
dependents, their age, (school going/college going/marriageable children) etc.
D) Normally upto 50% of the income can be taken as ones approximate repaying
capacity. However, the applicant should be left with adequate income meeting
the debt repayment obligation, for family maintenance.
E) Another important aspect is about the stability of the income. This is to be
assessed by the reckoning as to how many years the applicant has been in a
particular service / profession / business. How stable the organization is where
he is working is or the business, security of job, expected increased in income,
lifestyle, savings history, other income, other assets and liabilities, etc. Apart
from the above, his willingness to repay the loan should be assessed. The
above aspects could be assessed either from submitted reports, market
enquiries individual enquiries, family background, etc.
It is a common experience that sometimes, people including employers do not
convey any negative remarks about the applicant even if they are sure. The

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appraiser should find cues from the remarks of the referee and make further
oral enquires to ensure that there are no adverse remarks or opinion about the
prospective borrowers.
F)

The referee letters are to be sent directly to the respectable trustworthy


persons who have the fair knowledge about applicant.

G) The genuineness and veracity of all the proof and supporting documents
submitted should be verified.
It is a common experience that sometimes, people including employers do not
convey any negative remarks about the applicant even if they are sure. The
appraiser should find cues from the remarks of the referee and make further
oral enquires to ensure that there are no adverse remarks or opinion about the
prospective borrowers.
H) It should also be ensured that the applicant has adequate liquid resources to
meet the differential cost (i.e. cost of the project minus loan) and escalated
cost, If any, so as to ensure that he will not resort to any outside borrowings.
I) Housing loans should not be considered exclusively on the basis of irregular
income like expected rent / agricultural income.

2.

TECHNICAL APPRAISAL

Technical appraisal is to be carried out by the technical officer of he branch


wherever available or the branch incharge or any other authorized person
appointed by RO, after the financial appraisal is completed.

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A) Construction of a dwelling unit :


Any house to be constructed requires approval of concerned authorities like,
development authority, municipal corporation panchayat etc. This is to ensure a
proper layout of the houses and adequate ventilation, lighting, drainage,
structural stability, and also to safeguard the interest if of every family against
any unauthorized construction, which may inconvenience the neighborhood.
Hence sanctioned building plan and license to construct from the competent
authority should be obtained.
During the course of construction, if any deviation from sanctioned plan is
intended to be made, permission from the authority shall be obtained before the
proposed deviation is executed.
On completion of the construction, the authorities will issue occupancy
certificate and/or assesses the building for tax purpose. For multi-storied
buildings, approval is necessary for site plan as well as individual plan. Before
giving the permit, the authorities will examine he fire safety system s, means of
assess and circulation, floor space and other conformity to the zonal laws,
water supply and other amenities, parking space, etc.
Building laws applicable to the area issued by the competent authorities is to be
referred and be guided accordingly.

i.

In some of the states, construction of residential houses on the agriculture land


is not permitted. Hence necessary conversation permission by the competent
authorities on the use of the land wherever necessary, should be obtained.

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ii.

The building to be constructed should be in good locality connected by proper


road. It should have all the basic provisions like sewerage, water connection,
electricity etc.

iii.

A detailed estimate for construction as per the sanctioned plan duly certified by
a civil engineer/architect should be obtained and should confirm to quality
construction. Reasonability of estimated cost should also be ensured.

iv.

The quality of the unit should be of a reasonably high order. For ensuring the
longevity of the building the applicant should be advised to build the house with
quality materials, good workmanship etc., and at the same time thrust may also
be given to low cost technology.

B.

Purchase of ready built house/flat/apartment:


i.

Age of the building should be not more than 12 years.

ii.

The future life expectancy of the building should not be less than 25
years.

iii.

Vacant possession of the building should be available.

iv.

It should be an independent residential unit with all basic amenities.

v.

It should be in good locality with proper approach road.

vi.

The sanctioned building plan should be obtained and ensured that


the existing building confirms to the plan.

vii.

The building should be in a good condition and there is no need for


any major repairs.

C.

Flat/apartment :
i.

Only flat/ apartments which are constructed by builders of repute can


be financed.

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ii.

Land on which the flats/apartments are constructed should be free


from all encumbrances. Branch incharge should verify all the original
title deeds/documents pertaining to the whole land to rule out the
possibility of substituting mortgage.

LEGAL APPRAISAL

3.

Once the proposal is cleared from the financial and technical angle, clearance
from the legal angle is to be looked into. Housing loan are granted normally
against prime security of the property that is proposed to be constructed. For
security purpose it is to be examined whether the land already owned, where
the building is proposed to be constructed and/or building is proposed to be
purchased is clear from all encumbrances and the applicant has to be clear and
marketable title to enable him to create valid mortgage in favour of CFHL.
STEPS INVOLVED IN SECURITISATION
In the process of securitization of the loan, three steps are involved:

a)

a)

Collection and documents/title deeds.

b)

Preparation of legal security reports.

c)

Creation of mortgage.

Collection and documents/title deeds.


In the first instance, the law officer wherever provided, or the branch incharge
himself will do a preliminary securities of the title deeds and other documents.
He should ensure that all the required original documents are produced for
security. A list of such documents normally required for legal appraisal of
different types of properties

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b)

Preparation of legal security reports.


No doubt the security of title is to be done by the advocate who is on our panel.
All the same, the branch in charge cannot be ignorant of various legal aspects
and legislations relating to property matters.
Any person who makes an attempt to investigate the title in respect of an
immovable property should have a fair knowledge of the transfer of property
act, Registration act, Laws relating to land, Laws of inheritance and succession,
trusts, personal laws of Hindu and Muslim, Local laws, Urban Land ceiling act
etc.

i.

Transfer of Property act


Transfer of Property act deals with sale, exchange, lease, gift, and mortgage
etc. All these types of transfer require registration. The act deals with the
transfer of properties by act of properties. The same does not cover transfer
effected through execution of decrees, grants made by government and by way
of testamentary disposition. While investigating the title, it becomes imperative
to study whether property is marketable.

ii.

Stamp act
Stamp

act

deals

with

the

stamp

duty

payable

on

the

different

instruments/documents. Adequacy of stamp duty should be ensured.


iii.

Registration act
It is necessary to verify as to whether a particular document requires
registration or not under the provision of Indian Registration Act.
In some of the transfers like partition, release, family arrangements, Charge, do
not require the same to be reduced in writing. If they are reduced in writing,
registration becomes compulsory.

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iv.

Succession of Property
The succession in respect of a property of deceased person must be enquired.
If Hindus, they are governed Hindu Succession Act, Muslim by their personal
law and others by Indian succession Act.

v.

Minors Property
If the property is owned by minor, he/she is governed under Hindu minority and
Guardianship Act, Muslims by the personal Law and others by Guardian and
Wards Act.
A minors property cannot be alienated without courts permission.

vi.

Flow of Title
Under the Indian Law there is no fixed period for which the title is required to be
traced. However it has been decided to trace the title for a minimum period of
13 years.
Section 52 of the Transfer of Property Act has been amended by some of the
states under which notice of pendency of suit can be registered. Such a notice
binds a transferee who is not a party to the suit. This aspect also needs to be
looked into.
vii.

Check Points
While examining the title of deeds the following may be kept in mind:

1)

The property is inheritable.

2)

The transferor has the right and capacity to transfer.

3)

The transferor is competent to make transfer.

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4)

Consent of any person or body or authority if necessary for transfer


has been obtained.

5)

All the interested parties have joined the document.

6)

The entire interest of transferor has been transferred.

7)

The identity of the property is retained.

8)

The document has been properly stamped executed and attested.


All the required original documents/tile of deeds should be made available t the
lawyer for his scrutiny.
In case of purchase, the draft sale deed favoring the borrower has to be got
approved by the panel lawyer.

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NATIONAL HOUSING BANK GUIDELENES ON INDIVIDUAL HOUSING


LOAN
a) INTRODUCTION
National Housing Bank (NHB) is a subsidiary of Reserve Bank of India set up
on July 9, 1988 to act as a principal agency to promote housing finance
institution and to promote housing financial assistance by way of refinance. It
also provides technical, administrative and advisory services and on the whole
performs the role of nodal agency by regulating the working of housing finance
institutions at all levels. NHB is responsible, inter alia, for the development of
housing finance system n the sound lines.
b) OBJECTS OF THE REFINANCE SCHEME
The objects of this refinance scheme are to encourage construction of new
dwelling units as also extension, upgradation, renovation, and major repairs of
the existing housing stock by persons belonging to low income group.
c) SCOPE OF THE REFERENCE SCHEME
Refinance will be provided only in respect of direct lending to individuals/groups
to borrowers (formal or informal, including co-operating housing society).
Accordingly, refinance by NHB is a boon to housing finance institutions as they
can replenish their replenishable resources by taking recourse to this facility to
the fullest extent.
d) SCALE OF REINANCE AND ADVANCES ELIGIBLE FOR REFINANCE
i. Refinance from NHB will be available to the extent of 100% of housing loans
disbursed for acquisition/construction of new housing units and for
upgradation and major repairs and extension to the existing dwelling units.

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e) PERIOD OF REFINANCE
Refinance from NHB will be available for a period of 20 years irrespective of
actual repayment period given to the borrower. Hence, branches are not
supposed to give the repayment period beyond 20 years. for the loans which
are eligible for refinance from NHB.

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SANCTION OF LOANS

All the loan proposals received are to be disposed of within responsible period.
No proposal should be kept pending beyond 3 months, under any
circumstances
Power to sanction loans at the branch level vests only with the branch
incharge. Second line managers acting officials will not have powers to
sanction/recommend/disburse loans unless they are specifically empowered by
RO in writing. However during the leave period of branch incharge
disbursements under sanctioned loans may be made. Such disbursements are
subject to ratification by the regular branch incharge.

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DOCUMENTATION
One of the foremost and major functions of CFHL is lending long term housing
loans to constituents. This results in contractual relationship between CFHL
and the customer which needs to be supported by proper evidence. To this
context documentation assumes utmost importance.
MEANING AND PURPOSE
Documentation means obtaining proper documents in appropriate forms in
accordance with the law executed by the relevant party/ies. Documentation
establishes a legal relationship between the lender and borrower. The terms
and conditions of loans, the securities offered rights and liabilities of the parties
and reduced to writing which reduces ambiguity.
Documentation is necessary to ensure due repayment of the loan by the
borrower and in case default by him, entities CFHL to legal recourse and
recovery of loans. Proper Documentation not only helps the lender in litigation
but also ensures that the borrowers do not contest on technical growth.
In short the purposes of the Documentation are;
a)

To create a record of transaction.

b)

To create a valid and effective charge on securities in favour of CFHL.

DOCUMENTS THE BORROWER IS REQUIRED TO SUBMITT BEFORE


AVALING THE LOAN
Documents to be submitted along with loan application include

Personal document

Property document

Security document

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Personal documents:
Salaried class:

Salary certificates or certified copies of salary certificates with deductions


for the past 6 months.

Form 16 from the employer for the past 3 years.

Bank Statements for a period of last six months

Age proof of the applicants. (Copy of passport /driving license/voter's ID


Card /Ration Card)

Income proof of the applicants.

Self employed/business class:

Balance sheet and profit and loss account for the past 3 years.

Statement of total Income and income tax assessment orders and returns
for the last 3 years.

Brief note on the nature of business, year of establishment, present


bankers, form of organization and the capacity in which the applicant is
engaged.

Net worth of the applicant/ co-applicant.

Bank Statement of the last 9 months of both Savings bank account and
Current bank account(Company account)

Property document
Your loan will be disbursed after you identify and select the property or home that
you are purchasing and on your submission of the requisite legal documents.

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While you may be under the impression that the list of documents asked for is
rather extensive, please note that it is for your own good. Each and every single
document asked for will be verified and checked to ensure your safety.
This may take some time but we want to ensure a clear title and will complete all
the legal and technical verifications to ensure that you have full rights to your
home.
Documents for construction of House:

Title deeds of the property, i.e. sale deed in favour of the present owner
and prior link sale deeds tracing the ownership of the property for a period
of at least 13 years. RTCs/RORs also to be submitted wherever
applicable.

Conversion/alienation order from competent authority for conversion of


agricultural land!for residential purpose

Encumbrance certificate/Search Report fov the past 13 years.

Khata Cestificate/Possession Certificate/LocatioN Certifmcate/ 7/12


extract/ Chitta/ patta/ Adangal.

Upto date tax / Lease rent pa)d rceipts of th property.

Sanctioned building plan and libense fr construction from competent


authority.

Development Agreement/Power of Attorney between the Builder and Land


owner, if applicable

Necessary Permmssion from various local authorities lake Electricity


Board, Watr Sup`lx Board, Airport Authority etc., is to be fuRnished

Agreement of sale/ Agreemant for construction in favour of the applicant,


showinf details of estimate or the diffarent stages of payments as the case
may "e.

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Documents`fr purchase of Glat:

Title deeds od the Site/plgt, i.d. sale deed in favour of the loan applicant
and prior lin+ title deedw tracing the mwnership of the roperty for a eriod
of atleast 13 yeaps. RTCs/RORs also to be submitted wh%rever
applicable.

Conversion/alienation order from competent authority for conversion of


agricultural land for residential purpose

Encumbrance certificate/Search Report for the past 13 years.

Khata Certificate/Possession Certificate/Location Certificate/ 7/12 extract/


Chitta/ patta/ Adangal in the name of the applicant.

Upto date tax / Lease rent paid receipts of the property.

Sanctioned building plan and license for construction from competent


authority.

Development Agreement/Power of Attorney between the Builder and Land


owner, if applicable

Estimate of construction cost from a qualified engineer.

Documents for purchase of House:

Title deeds of the property, i.e. sale deed in favour of the present owner
and prior link sale deeds tracing the ownership of the property for a period
of atleast 13 years. RTCs/RORs also to be submitted wherever applicable.

Conversion/alienation order from competent authority for conversion of


agricultural land for residential purpose

Encumbrance certificate/Search Report for the past 13 years.

Khata Certificate/Possession Certificate/Location Certificate/ 7/12 extract/


Chitta/ patta/ Adangal.

Upto date tax / Lease rent paid receipts of the property.

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Sanctioned building plan and license for construction from competent


authority.

Development Agreement/Power of Attorney between the Builder and Land


owner, if applicable

Agreement of sale/ Agreement for construction in favour of the applicant,


showing details of estimate or the different stages of payments as the
case may be.

Documents for Site (Second Sale)

Title deeds of the property, i.e. sale deed in favour of the present owner
and prior link sale deeds tracing the ownership of the property for a period
of atleast 13 years. RTCs/RORs also to be submitted wherever applicable.

Khata Certificate/Possession Certificate/Location Certificate/ 7/12 extract/


Chitta/ patta/ Adangal.

Upto date tax paid receipts of the property.

Sanctioned layout plan from competent authority

Original Allotment Letter/Sale Intimation letter/Grant Letter / Sale offer


letter issued by authorities.

Documents for Direct allotment of site by competent authority

Letter of allotment given by the competent authority

No object letter from the authority for creating mortgage in favour CFHL, if
the site is allotted under leasehold right

Proof of part payment made to the Development Authority

Any other documents necessary as per the procedure or Law if a


particular State

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Documents for Repair/Renovation/Upgradation

Title deeds of the property, i.e. sale deed in favour of the applicant and
prior link sale deeds tracing the ownership of the property for a period of at
least 13 years

Encumbrance certificate/Search Report for the past 13 years.

Khata Certificate/Possession Certificate/Location Certificate/ 7/12 extract/


Chitta/ patta/ Adangal in the name of the applicant.

Upto date tax paid /Lease rent paid receipts of the property.

Estimation for the repair/renovation/upgradation from Registered Engineer

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INSPECTION OF THE PROPERTY


Any property whether it is vacant site or built house or an apartment/flat has to
be inspected by the branch incharge or technical officer or any other officer of
the branch and a report submitted as per the prescribed format, before making
disbursement.
The inspecting officer, in the case of construction/repair of dwelling unit, should
verify the investment of borrowers margin/ differential project cost and assess
the work done so far. Further, he should assess the actual amount required for
the next stage of work.
Every further disbursement should always be preceded by the spot inspection
and submission of inspection report.
All inspection relating to the progress and quality of the work and the fact,
whether construction is commensurate with the estimate and is confined to the
sanctioned plan, should be ensured.

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DISBURSEMENTS
FOR

PURCHASE

OF

HOUSE/FLAT/APARTMENT,

READY

FOR

PROFFESSION
Immediately on completion of documentation, inspection and ensuring the
investment of margin or differential project cost, the loan may be disbursed in
lumpsum.
The loan proceeds along with differential project cost (if not already paid) shall
be directly paid to the vendor/builder in the presence of the sub-register after
ensuring that the sale deeds as per the draft copy approved by the advocate
appointed by can fin, and all original documents of title to the property are
obtained from the vendor. The receipt issued by the register for having
accepted the documents for registration should be obtained.

FOR CONSTRUCTION AND REPAIRS, EXTENSION OF DWELLING UNITS


After completion of documentation/mortgage formalities, inspection of the
property and ensuring the investment of margin/differential cost, the loan may
be released in 3 or 4 stages.
Every disbursement of loan should be preceded by a spot inspection and
submission of inspection report. With the final disbursement the construction of
the building should be completed in all respect as per the plan and estimate.
Overrun cost of any, should be borne by the borrower at every stage.
As a model showing the percentage of amount to be released at different stage
depending upon the progress of work is given below:

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Stage of completion

a)

Percentage of Amt to be released

Foundation
12.0%

b)

Brickwork upto lintel


10.0%

c)

Doors and window frames fixed


3.5%

d)

Lintel, Brickwork upto roof level


10.0%

e)

RCC roof
10.5%

f)

Complete plastering
8.5%

g)

Flooring (mosaic, cuddapah etc.)


8.5%

h)

Door/ window shutters and fixed complete

With glass frame, tower bolts etc.


i)

Distempering/ parapet wall

Whether proof course etc.


j)

6.5%

Water supply, electrical works and

Sanitary works.
k)

17.5%

8.0%

Miscellaneous work such as Kitchen platform

Shelves, rain water pipes etc.

5.0%

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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INSURANCE
Property offered as security to Can Fin Homes may be insured for its full value
at the cost of the borrower covering risk due to theft, burglary, natural
calamities, fire, strike, riot and civil commotion and other appropriate hazards
during the pendency of the loan. However, getting the insurance cover is left to
the option of the individual borrower. If the insurance is taken, Can Fin should
be made beneficiary of the policy until the loan is cleared. Even though insuring
the property is optional, Branches may impress the borrowers to the property
insured as the beneficial is mutual. At present Can Fin Homes has tied up with
AVIVA insurance, to provide the insurance facilty to it customer.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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RECOVERY
PRE EQUATED MONTHLY INSTALMENTS INTEREST (PEMII)
Interest on the party disbursed loan amount is collected at the end of every
month and is called pre equated monthly installments interest (PEMII).
PEMII is calculated on daily product basis at the applicable interest rate if it is
for a fraction of month (for daily product calculation 360 days is treated as a
year). PEMII for full month is calculated on a monthly product basis.
Once the loan is fully disbursed, the PEMII for the month in which last
disbursement was made has to be collected and repayment of loan (EMI)
commences from the succeeding month.
EMI consist of both principal and interest and Presently Can fin homes Ltd
has discontinued Annual rest interest calculation method and adopted only
Daily rest basis calculation.
PENAL INTEREST
PEMII & EMI will be collected on its due dates. After which it is said to be in
default, and penal interest will have to be charged for the overdue period (i.e.
from the day following the one on which the PEMII/EMI was due till the date of
payment including the grace period. While calculating the number of days the
day of payment should be excluded).

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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OTHER CHARGES, COSTS & EXPENSES


a)

Stamp duty for creation of mortgage:

The stamp duty, if any, for

creation of mortgage in favour of CFHL should be met by the borrower only.


b)

Loan recovery expenses: All expenses incurred for the purpose of

recovering the loan (sending due notice, reminders, telephone calls, registered
letters, legal notice, conveyance on a/c of personal visits, suit filing expenses,
lawyers fees etc.) should be recovered separately from the borrower/s.
POST SANCTION FOLLOW UP
The entire loan sanctioned shall be recovered in terms of the repayment
condition stipulated. For this purpose a close watch and follow up of each loan
account on a day to day basis is necessary. The branch should be in constant
touch with the borrower to ensure that they are prompt in their repayments.
With all the selectivity, care and caution observed while granting the loans, it is
a common feature that some of the borrower tend to default in making payment
of the loan installments.
In respect of the defaulted loan accounts, Can Fin Homes takes the following
follow up action.
a) First reminder will be issued in the form of letter on the 16 th day of default by
ordinary post and party may be contacted over telephone wherever
possible.
b) Second reminder will be issued in the letter format, is to be sent under copy
to the guarantor (if any), and by ordinary post if the default is more than 1
months old.
c) Third reminder will be issued in the letter format, is to be sent under copy to
the guarantor (if any), and by registered post if the default is more than 2
months old.
d) In the absence of fruitful result, branch to contact borrower/s and
guarantor/sin a person

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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i.

To persuade them to clear their arrears.

ii.

To make them aware of their responsibilities and also the consequences in


the event of non-clearance of overdues.

iii.

To find out the reason for default.

All reminders will be sent promptly at appropriate time without any delay, to the
correct address. Personal contact will have the much desired effect. Branch will
take all necessary steps to recover the arrears within 3 months.

e)

In the absence of any response for the previous reminders and personal

contacts. A final registered letter recalling the entire loan liability will be sent to
the borrower/s or guarantor/s after the expiry of the 3 months from the date of
default duly forming them that the matter will be referred to the legal department
to initiate the legal action.
f)

Despite issuing notice, if the arrears are not cleared immediately, a legal

notice will be issued to the borrower/s or guarantor/s through the panel of lawyer
by taking prior permission from the Regional Office.
g)

In the meantime, if its ascertained that the default is not international and

the reason for awareness id genuine, branch may be recommend such cases to
RO for rephrasing the arrears.
h)

If the default is international and in spite of legal notice the overdues are not

cleared, the branch will explore the possibilities of filing suit for recovery after
ensuring the validity of loan papers, worth of the property to be attached,
chances of realizing our money etc.
i)

Not withstanding anything contained herein above, the suit/case may also

be filed in the following circumstances :


i.

If the check given by the borrower towards loan payment bounces, legal
action may be

initiated under the negotiable instrument act.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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ii.

If there is reasonable apprehension that the borrower is unable to


pay his

debts or

proceedings for taking him into insolvency have

commenced.
iii.

If the property given as security depreciate in value.

iv.

If the property given as security for the loan is sold, disposed of,
charged, or alternated.
v.

If the attachment is levied on the mortgaged property or any part thereof

and/or certificate of proceedings are taken or commenced for recovery of any


dues from the borrower.
vi.

Any other similar grounds which warrant immediate legal


recourse.

ENHANCEMENT OF LOANS
At the time of credit appraisal itself, the Can Fin will ensure that the loan for
which the applicant is eligible is sufficient to complete the project in all respects
and he is in a position to meet the overrun cost that may occur during the
course of the construction from his own source without approaching us for
additional finance.
The loan disbursement will be made in different stages in such a way that the
last installment is released only if the building could be completing in all
respects.
In genuine and exceptional cases depending upon the creditworthiness of the
borrower, a enhancement of loan is accepted.
Before accepting the enhancement of loan the Can Fin will ensure:
a)

That the original loan account is regular in all respect.

b)

That the term of the loan is retained as originally fixed.

c)

That the specific request letter duly signed by the borrowers or co-

borrowers and guarantor (if any) is submitted along with the required
processing fee and revised construction cost estimate.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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d)

That the borrower is agreeable for the applicable higher rate of interest

for the entire loan amount (both original as well as enhanced additional loan).
This enhanced rate of interest is chargeable from the date of commencement
of availing the enhanced loan.
The request for may be accepting only when the loan account is in the pre-EMI
stage. There cannot be any reason for accepting the proposal for enhancement
when the entire loan amount is disbursed, because the final disbursement
should co inside with the completion of the construction in all respects and if at
all the borrower has invested extra money over and above the earlier estimated
margin, the same constitutes project overrun cost which the borrower is

supposed the meet at every stage out of his own sources. Hence the
reimbursement of such already incurred extra expenditure is not permissible.
On sanctioning the enhanced loan, the borrower should be provided with the
modified sanctioned letter for the enhanced loan amount duly noting down the
reference of earlier sanctioned letter, revised EMI, revised rate of interest
applicable not only to the enhanced portion but also to the originally sanctioned
amount. Acceptance note has to be obtained from the borrower along with
administrative fee on the enhanced portion of the loan.
DOCUMENTATION
In addition to the loan papers/documents obtained for the original loan amount.
It is necessary to obtained additional loan papers/documents as under:
a)

If the mortgage is already created, to over the enhanced portion of the

loan further mortgage should be created by obtaining letter evidencing deposit


of title of deeds from the borrower/mortgager.
Where first mortgage itself is not created, the same may be subsequently put
through for the entire loan amount.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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b)

An endorsement from the borrower under his signature, on the last page

of the original loan agreement already obtained to the following effect :


In the view of my/our availing an additional loan of Rs. ___________ and in
view of the rescheduling of the repayment of loan amount I/We have executed
supplementary agreement to this agreement.
c)

A supplementary loan agreement on non-judicial stamp paper of

requisite value.
d)

Further encumbrance certificate showing nil encumbrances till the

creation of further mortgage.


e)

Whenever guarantee of any person has been obtained a fresh letter of

guarantee for the total loan to be obtained from the same guarantor or new
guarantor either for the total amount or for the enhanced loan amount.

CUSTOMER

PREFERENCE

TOWARDS

HOUSING LOAN

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

64

Its always worth to work on problem area rather than study of existing system.
Based on interaction with the Personnel of the organization, I could find out two
problem areas.

1. Identifying and defining problem


A) The problem is with the decline in the disbursement of loan, In fact can fin was
the first organization who has come with housing loan facility during 1987. It was
doing well. But now days because of stiff competition and all retail banking
started availing housing loan facility to its customers, which is the measure threat
we can say.

2. Identifying the variables, affecting the problem.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

65

A) Probable factors that could affect the above problem are


i. Interest rate
ii. Competition
iii. Interruption of retail banking
iv. Level of income
v. Ability to repay the loan

GROWTH ANALYSIS OF CAN FIN HOMES HUBLI LTD


YEAR
SANCTIONS (Rs In
Lakhs)
DISBURSMENT ( Rs in
Lakhs)
NPA (Rs in Lakhs)

2002-03

2003-04

2004-05

2005-06

2006-07

1070

748

460

663

140

845

728

408

529

175

29

196

157

165

134

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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1200
1000
800
SANCTIONS
600

DISBURSMEN
T
NPA

400
200
0
2002-03

2003-04

2004-05

2005-06

2006-07

The sactions as well as the disbursements of Can Fin Homes ltd Hubli, are
declining year by year and the rate of Non performing asset of the branch is been
increased .

OVERALL GROWTH OF THE COMPANY

YEAR

2001-02

2002-03

2003-04

2004-05

2005-06

SANCTIONS(Rs in crs)

401.22

420.8

467.42

531.42

824.28

DISPERSMENT (Rs in crs)

354.19

366.32

394.86

456.61

653.95

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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AMOUNT (In crs)

OVERALL GROWTH OF THE COMPANY


900
800
700
600
500
400
300
200
100
0

SANCTIONS(Rs in
crs)
DISBURSMENT (Rs in
crs)

200102

200203

200304

200405

200506

YEARS

We can observe in the above shown graphs, that the overall


company is growing at the increasing rate where as the Can fin
homes, hubli is facing decline in the sanctions and disbursement of
home loans and NPA rate is increasing every year, which is bad sign
for the branch.

THE RESEARCH PROCESS


1. PROBLEM DEFINITION
As per above two graphs it clearly shows that, Loan disbursement of Can Fin
homes hubli branch has decreasing every year where as Loan disbursement of
Can Fin homes as a whole is doing good business,

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

68

ii VARIABLES AFFECTING THE PROBLEM


the following are the major variables which plays major role in the customer
choice of the institutions.

Rate of interest

Quality of service

Processing of loan

Documentation

Quantum of finance

2. RESERCH PLAN
i. Data source: Primary data from different category of customers.
ii. Research approach: Personal interview.
iii. Research instrument: Questionnaire.
VI.

SAMPLING PLAN
Sampling unit:

: Professionals, employees and business class category.

Sampling size

: 100 samples

Sampling method

: convenient sampling.

Contact Method: Personal interview

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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ANALYSIS

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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age of the respondents

Valid

24-30
30-36
36-42
42-48
48-54
54-60
Total

Frequency
13
30
20
22
9
6
100

Percent
13.0
30.0
20.0
22.0
9.0
6.0
100.0

Valid Percent
13.0
30.0
20.0
22.0
9.0
6.0
100.0

Cumulative
Percent
13.0
43.0
63.0
85.0
94.0
100.0

age of the respondents


40

30

Frequency

20

10

0
24-30

30-36

36-42

42-48

48-54

54-60

age of the respondents

Among the 100 respondents 13% belongs to the age 0f 24-30 years,
30% belongs age of 30-36years, 20% belongs to 30-36 years of age,
22% belongs to 36-42 years of age. Where as 9% & 6% belongs to the
age of 48-54 &54-60 respectively.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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catagory of the respondents

Valid

Pofessional
Employee
Businessman
Others
Total

Frequency
34
33
20
13
100

Percent
34.0
33.0
20.0
13.0
100.0

Valid Percent
34.0
33.0
20.0
13.0
100.0

Cumulative
Percent
34.0
67.0
87.0
100.0

40

30

F re q u e n cy

20

10

0
Pof essional

Employee

Businessman

Others

catagory of the customer

Out of 100 samples 34% respondents belong to professionals, 33% belongs to


employee category. Where as 20% & 13& respondents belong to business &
other category respectively.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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Income level of the respondents

Valid

5,000-10,000
10,000-15,000
15,000-20,000
20,000-25,000
25,000-30,000
30,000&above
Total

Frequency
22
37
29
5
6
1
100

Percent
22.0
37.0
29.0
5.0
6.0
1.0
100.0

Valid Percent
22.0
37.0
29.0
5.0
6.0
1.0
100.0

Cumulative
Percent
22.0
59.0
88.0
93.0
99.0
100.0

Income level of the respondents


30,000&above
25,000-30,000
20,000-25,000

5,000-10,000

15,000-20,000

10,000-15,000

Income is the major factor in case of housing loan. Among 100 samples
surveyed, 22% respondents belongs to the income range 5000-10000, 37%
belongs to 10000-15000. 29% belongs to 15000-20000. Where as 5%, 6% & 1%
respondents belongs to the income group of 20000-250000, 25000-30000 &
above 30000 respectively.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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Do you have own house in hubli or dharwad

Valid

yes
No
Total

Frequency
64
36
100

Percent
64.0
36.0
100.0

Valid Percent
64.0
36.0
100.0

Cumulative
Percent
64.0
100.0

Do you have own house in hubli or dharwad


No

yes

Among 100 samples surveyed 64 persons have their own house, 36


respondents stays in rented house and those can be the prospective
customers of the company

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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If yes, how many years ago have you constructed it

Valid

not applicable
1-5years
5-10years
10-15years
15-20years
Total

Frequency
36
15
21
18
10
100

Percent
36.0
15.0
21.0
18.0
10.0
100.0

Valid Percent
36.0
15.0
21.0
18.0
10.0
100.0

1-5years

5-10years

10-15years

Cumulative
Percent
36.0
51.0
72.0
90.0
100.0

40

30

20

F requency

10

0
not applicable

15-20years

This is to know the respondents future home loan necessity with


respect to years of leaving in his/her own house.

Among 64

respondents, 23% are staying in own house from past 5 years, 33% are
staying in own house from past 10 years.16% & 28% of the
respondents are staying in own house from 10-15 & 15-20 years
respectively.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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Have you taken financial assistance for house construction or modification

Valid

not applicable
yes
no
Total

Frequency
38
45
17
100

Percent
38.0
45.0
17.0
100.0

Valid Percent
38.0
45.0
17.0
100.0

Cumulative
Percent
38.0
83.0
100.0

no

not applicable

yes

Out of 62 samples 27% of the respondents have not availed the housing loan
and rest 73% respondents have availed the housing loan.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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If yes specify the financial institution from where you availed finance

Valid

not applicable
icici
hdfc
sbi
can fin homes
lic
others
Total

Frequency
55
4
3
18
3
14
3
100

Percent
55.0
4.0
3.0
18.0
3.0
14.0
3.0
100.0

Valid Percent
55.0
4.0
3.0
18.0
3.0
14.0
3.0
100.0

Cumulative
Percent
55.0
59.0
62.0
80.0
83.0
97.0
100.0

others
lic

can fin homes

sbi

not applicable

hdfc
icici

Out of 45 samples 9% of respondents have taken the loan from ICICI, 7% of


respondents from the HDFC, 40% of respondents from the SBI, 7% of
respondents from the CAN FIN HOMES, 31% of respondents from LIC and rest
7% of respondents have taken the housing loan

from the other financial

institutions

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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What made you to select that financial institution

Valid

not applicable
service
rate of interest
brand name
early disbursements
Total

Frequency
55
16
27
1
1
100

Percent
55.0
16.0
27.0
1.0
1.0
100.0

Valid Percent
55.0
16.0
27.0
1.0
1.0
100.0

Cumulative
Percent
55.0
71.0
98.0
99.0
100.0

early disbursements
brand name

rate of interest

not applicable

service

Out of 45 samples 36% of the respondents have chosen the respective financial
institutions because of good service, 60% of the respondents because of rate of
interest, 3% & 3% of the respondents have chosen because of brand name &
early disbursements respectively. Where as no respondent has given importance
to amount of finance as well as easy documentation.

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Rank your preferences for following financial institution in respect of housing loan
facility.
FINANCIAL
INSTITUTIO
N

ICICI

HDFC

SBI

CFHL

LIC

OTHER
S

POINTS

152

184

219

155

172

70

This is to say, if given a chance 24% of the respondents prefer SBI, 19% of the
respondents prefer HDFC, 18% of the respondents would prefer LIC. 16% & 16%

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

79

of the respondents prefer ICICI & CAN FIN HOMES respectively and rest 7% of
the customers prefer other financial institutions.

Processing of loan

Valid

Not applicable
dissatisfied
neutral
satisfied
highly Satisfied
Total

Frequency
55
3
17
22
3
100

Percent
55.0
3.0
17.0
22.0
3.0
100.0

Valid Percent
55.0
3.0
17.0
22.0
3.0
100.0

Cumulative
Percent
55.0
58.0
75.0
97.0
100.0

Processing of loan
highly Satisfied

satisfied

Not applicable

neutral

dissatisfied

Among the 45 samples, 7% of the respondents are dissatisfied with the


processing of the loan by their respective financial institutions, 38% said neutral.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

80

48% of the respondents are satisfied and 7% are highly satisfied with the
processing of loan

Rate of interest

Valid

Not applicable
highly dissatisfied
dissatisfied
neutral
satisfied
highly satisfied
Total

Frequency
55
1
3
15
25
1
100

Percent
55.0
1.0
3.0
15.0
25.0
1.0
100.0

Valid Percent
55.0
1.0
3.0
15.0
25.0
1.0
100.0

Cumulative
Percent
55.0
56.0
59.0
74.0
99.0
100.0

Rate of interest
highly satisfied

satisfied

Not applicable

neutral

dissatisfied
highly dissatisfied

Among the 45 samples, 3% of the respondents are highly dissatisfied with the
rate of interest of their respective financial institutions, 6% of the respondents are

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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dissatisfied, and 33% said neutral. 55% of the respondents are satisfied and 3%
are highly satisfied with the rate of interest.

Quality of service

Valid

Not applicable
dissatisfied
neutral
satisfied
highly satisfied
Total

Frequency
55
3
15
23
4
100

Percent
55.0
3.0
15.0
23.0
4.0
100.0

Valid Percent
55.0
3.0
15.0
23.0
4.0
100.0

Cumulative
Percent
55.0
58.0
73.0
96.0
100.0

Quality of service
highly satisfied

satisfied

Not applicable

neutral

dissatisfied

Out of 45 samples, 7% of the respondents are dissatisfied with the quality of


service provided by their respective financial institutions and 33% said neutral.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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51% of the respondents are satisfied and 9% are highly satisfied with the quality
of service.

Legal procedures and documentation

Valid

Not applicable
dissatisfied
neutral
satisfied
highly satisfied
Total

Frequency
55
8
12
23
2
100

Percent
55.0
8.0
12.0
23.0
2.0
100.0

Valid Percent
55.0
8.0
12.0
23.0
2.0
100.0

Cumulative
Percent
55.0
63.0
75.0
98.0
100.0

Legal procedures and documentation


highly satisfied

satisfied

Not applicable
neutral

dissatisfied

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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Out of 45 samples, 18% of the respondents are dissatisfied with the legal
procedures & documentation followed by their respective financial institutions
and 27% said neutral. 51% of the respondents are satisfied and 4% are highly
satisfied with the documentation.

Quantum of finance

Valid

Not applicable
dissatisfied
neutral
satisfied
highly satisfied
Total

Frequency
55
7
13
22
3
100

Percent
55.0
7.0
13.0
22.0
3.0
100.0

Valid Percent
55.0
7.0
13.0
22.0
3.0
100.0

Cumulative
Percent
55.0
62.0
75.0
97.0
100.0

Quantum of finance
highly satisfied

satisfied

Not applicable
neutral

dissatisfied

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Among the 45 samples, 16% of the respondents are dissatisfied with the
quantum of finance provided by their respective financial institutions and 29%
said neutral. 49% of the respondents are satisfied and 6% are highly satisfied
with the quantum of finance.

Would you like to go for constuction of new house or modification in


near future

Valid

yes
no
Total

Frequency
64
36
100

Percent
64.0
36.0
100.0

Valid Percent
64.0
36.0
100.0

Cumulative
Percent
64.0
100.0

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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New house in near future


70

60

50

40

30

Frequency

20

10
0
yes

no

With the above data we can say, 64% of the respondents would go for
construction of new house or modification in near future and rest 36% of the
customer would not go for new house construction or modification.

If yes, would you like to go for housing finance facility

Valid

yes
no
Total

Frequency
64
36
100

Percent
64.0
36.0
100.0

Valid Percent
64.0
36.0
100.0

Cumulative
Percent
64.0
100.0

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, HUBLI

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no

yes

The above data shows that, among 100 samples, 64% of the respondents would
go for housing finance facility and rest 36% would not. This 64% of the
respondents could be prospective customers for the can fin homes.

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If yes, choose the financial institution that you prefer to go for

Valid

not availing housing fin


icici
hdfc
sbi
can fin homes
lic
others
Total

Frequency
40
9
8
13
18
8
4
100

Percent
40.0
9.0
8.0
13.0
18.0
8.0
4.0
100.0

Valid Percent
40.0
9.0
8.0
13.0
18.0
8.0
4.0
100.0

Cumulative
Percent
40.0
49.0
57.0
70.0
88.0
96.0
100.0

others
lic

can fin homes

not availing housing

sbi

hdfc

icici

Out of 100 samples, 60% of the respondents would avail the housing loan,
among them 15% of respondents prefer ICICI, 13% of respondents prefer HDFC,
22% of respondents prefer SBI, 30% of respondents prefer CAN FIN HOMES,
13% of respondents prefer LIC and rest 7% of respondents prefer other financial
institutions.

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FINDINGS
1. It was found that out of 100 samples 24% of the respondents belongs to
professional category, 33% of the respondents belongs to employee category,
20% of the respondents belongs to business class and rest 13% belongs to
others.

2. The major portion respondents are in the age group of 30-36 years and 4248.

3. The major respondents fall in the income group of Rs 10000-15000 and


15000-20000.

4. The major criterion for selecting Housing loan is the rate of interest among the
respondents.

5. It was found that 64% of the respondents would go for construction of new
house and they would avail the housing finance facility.

6. Among the prospective customer, 30% of the customer preferred can fin
homes regarding their choice of financial institution with respect to housing
loan.

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CONCLUSIONS
We can conclude from the above findings that
1. Out of 100 respondent the major covered by employee category followed by
professional category.
2. Rate of interest followed by the quality of the service are the major criteria of
availing housing loan facility.
3. It was found that out 45 existing customers, only 3 respondents have availed
the loan from CAN FIN HOMES, feed back with respect to service was
satisfactory.
4. Even it was found, 55 prospective customers are not much aware of CAN FIN
HOMES.
5. Among the prospective customer, 30% of the customer preferred can fin homes
regarding their choice of financial institution with respect to housing loan but it
was found that they are lagging in obtaining proper information

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RECOMMENDATION
A major chunk of respondents have not availed the housing loan from the Can
Fin Homes and it should catch in the high level of awareness and popularity to
promote their home loan schemes in the fast industrializing landscape.

Since the rate of interest figures high on the list of criteria for choice of home
loan. Can Fin Homes should have to re-look at the interest rate, which is right
now higher than other financial institutions like SBI, LIC etc.

The company has to take some necessary steps to create awareness among
the public, which is low right now.

The company should conduct the promotional activities, to show his


competitiveness among the market players and even to catch hold its target
segments.

Can Fin Homes should tie up for salary deduction facility, with government
organization, educational institutions & other organizations, which will be easy
for the employees of those organizations to repay the loan without any hurdles.

For that the company should go for Television ads and holdings and other
means of advertisement. Once in 4 month company can conduct melas also to
update the customers about its products and services.

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LIMITATIONS
.
1. Sampling size was very less. It may not represent the whole population
2. The duration of the project was only 8 weeks. So detailed research was not
possible.

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BIBLIOGRAPHY

MARKETING MANAGEMENT
BY KOTLER & KELLER
MARKETING RESEARCH
BY TULL & HAWKINS.

Web site referred


www.canfinhomes.com
Magazines which helped me during this project are

BUSINESS WORLD

BUSINESS INDIA

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ANNEXEURE

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QUESTIONNIRE
I, Pavan desai, student of KLESs IMSR undertaking a Project at Can Fin Homes Ltd Hubli
on the topic of Customer Preference regarding Home loans. I request you to fill this
questionnaire. The purpose of information provided by you will be used for academic
purpose and I assure you that the information provided will be kept confidential. I request
you for your kind Co-operation

Name

____________________________________

Age

____________________________________

Occupation

____________________________________

Company

____________________________________

Designation

____________________________________

Income (per month)

5000-10000

Address

10000-15000

15000-20000

20000-25000

25000-30000

Above 300000

_____________________________________
_____________________________________
_____________________________________
_____________________________________

Tel/Mob/e-Mail

_____________________________________

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________________________________
1.

Do you have own house in Hubli or Dharwad?


Yes
No
If No go to question - 8

2.

If yes, how many years ago have you constructed it?


1-5 years

5-10 years

10-15 years

15-20years

3.

Have you taken any financial assistance for house construction or modification?
Yes
No
If No go to question- 8

4.

If yes please specify the financial institution from which you have availed finance?
ICICI bank
HDFC
SBI
Can fin Homes

5.

6.

LIC

If Others, Specify __________________

What made you to select the financial institution?


Amount of finance
Service
Rate of interest

Brand name

Easy documentation

Early disbursements

Rank your preferences for following financial institution in respect of housing loan
facility is considered?
First preference-1
Last preference-6
FINANCIAL INSTITUTIONS
ICICI
HDFC
SBI
CAN FIN HOMES
LIC
OTHERS_________________

RANK

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7.

Are you satisfied with the service provided by existing financial Institution?
Highly
Dissatisfied

Dissatisfied Neutral Satisfied Highly


Satisfied

Processing of
Loans
Rate of
Interest
Quality of
Services
Legal procedures &
documentation
Quantum of
Finance

8.

Would you like to go for construction of new house or modification in near future?
Yes
If No go to question - 11

9.

No

If Yes Would you like to go for Housing finance facility?


Yes
If No, Go to question - 11.

10.

No

If yes, choose the financial institution that you prefer to go?


ICICI

HDFC

SBI

CAN FIN HOMES

LIC

OTHERS ______________

11. Your opinion about Can Fin Homes Housing finance facility?
_______________________________________________________
_______________________________________________________
_______________________________________________________

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Thanks for spending your valuable time

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