Professional Documents
Culture Documents
BANKING INDRUSTRY
In partial fulfillment of the requirement of two years full time
Masters of Business Administration (MBA) Programme
Of THE GLOBAL OPEN UNIVERSITY (NAGALAND)
GUIDED BY:
PREPARED BY:
JITENDRA AGRAWAL
PROFESSOR
CERTIFICATE
This is to certify that Mr. MANMEET SINGH SALUJA , ROLL NO:PG/485/MBA(I)/2009J,
student
of
THE
GLOBAL
OPEN
__________________
__________________
(Director)
PREFACE
As a part of the course curriculum, the MBA students are required
to prepare a grand project in their final semester. The objective
behind the preparation of this report is to relate the Managerial
concepts and theories taught in the classroom to the practical
application, to develop the presentation skills and to learn how to
make effective reports.
INDEX
1.
2.
3.
4.
5.
6.
Research proposal 25
7.
8.
9.
10.
Analysis of information 67
11.
Chi-square correlation..92
12.
13.
Findings..117
4
14.
Conclusion..120
Pension fund industry in India grew at a CAGR of 122.44% from 1999-00 to 2007-08.
In terms of ownership, debit cards are more in number than credit cards but in terms of
transactions, use of credit cards is more prevalent than debit cards.
The ATM outlets in India increased at a rate of 28.09% from March 2007 to March 2008.
Outstanding Education loan segment is expected to grow at 36.41% till March 2009 from
March 2007 onwards to cross Rs. 27000 Crore Mark.
Two-wheeler finance industry is projected to forge ahead at a CAGR of 14.21% till 200910 from 2005-06.
Indian Mutual Fund industry witnessed a growth of 49.88% from May 2007 to May
2008, and a higher 215.61% growth was recorded in closed ended schemes.
India's retail-banking assets are expected to grow at the rate of 18% a year over the next
four years (2006-2010). Housing loan account for major chunk of retail loan.
10
11
having its name as synonymous as, housing finance. Gruh Finance, a subsidiary of HDFC is also
giving very good business in Gujarat.
Table2. 1
Bank
name
Interest
Type
upto 5
lakh
5-20
lakh
20-30
lakh
30-50
lakh
50-75
lakh
>75
lakh
Fixed
12.25
12.25
12.25
12.25
12.75
12.75
Axis Bank
Floating
8.75
8.75
8.75
9.25
NA
NA
Axis Bank
Fixed
14
14
14
14
NA
NA
Bank of
Baroda
Floating
9.75
9.75
9.75
Bank of India
Star Home
Loan Floating
Floating
9.25
9.25
9.25
10.25
11
11
Bank of
Maharashtra
Floating
9.25
9.25
9.25
9.75
9.75
9.75
Bank of
MaharashtraFestive offer
Floating
8.25
8.25
8.25
Bank of
Rajasthan
Fixed
Bank of
Rajasthan
Floating
7.5
7.5
7.5
Canara Bank
Fixed
11.5
11.5
11.5
11.75
11.75
11.75
Canara Bank
Floating
9.25
9.25
9.25
10
10
10
HDFC
Floating
8.75
8.75
8.75
9.25
9.25
HDFC
Fixed
14.25
14.25
14.25
14.25
14.25
14.25
Floating
9.0 14.0
9.0 14.0
9.0 14.0
9.0 14.0
9.0 14.0
9.0 14.0
HSBC Bank
12
Action
ICICI Bank
Floating
8.75
8.75
8.75
9.5
9.5
ICICI Bank
Fixed
16
16
16
16
16
16
IDBI Bank
Fixed
11
11
11
11
11
11
IDBI Bank
Special
Scheme
Floating
8.25
8.25
8.25
8.25
8.25
8.25
IDBI Home
Finance
Floating
8.25
8.25
8.25
8.25
8.25
8.25
IDBI Home
Finance
Fixed
13.75
13.75
NA
NA
NA
NA
Indian Bank
Floating
9.75
9.75
10
10.5
10.5
10.5
Indian
Overseas
Bank
Floating
8.75
8.75
8.75
10.25
NA
NA
J & K Bank
Floating
11.5
11.5
12.25
12.25
12.25
NA
Kotak Bank
Floating
8.5
8.5
8.5
8.5
8.5
NA
LIC Fix-oFloaty
Floating
8.9
8.9
8.9
8.9
8.9
8.9
LIC Housing
Finance
Floating
9.75
9.75
9.75
9.75
9.75
9.75
Moneyline
Credit Ltd
Floating
15
15
15
15
15
15
Oriental Bank
of Commerce
Floating
9.25
9.25
9.5
10.25
10.25
10.25
Oriental Bank
of Commerce
Fixed
10.25
10.25
10.5
NA
NA
NA
PNB Housing
Finance Ltd
Floating
9.5
9.5
10
10
10
10
PNB Housing
Finance Ltd
Fixed
13
13
13
13
13
13
Floating
8.25
8.25
8.5
10
10
10
Punjab
National Bank
Fixed
10.5
10.5
10.75
10.75
10.75
10.75
13
Punjab
National Bank
Floating
9.25
9.25
9.75
9.75
9.75
9.75
Punjab
National
Bank- Festive
offer (Fixed)
Fixed
8.5
8.5
8.5
8.5
8.5
8.5
Punjab
National
Bank- Festive
offer
(Floating)
Floating
8.5
8.5
8.5
8.5
NA
NA
Reliance
Home Finance
Floating
8.25
8.25
8.25
8.25
8.25
8.25
SBBJ
Advantage
Home Loan
Fixed
NA
NA
NA
NA
SBBJ
Advantage
Home Loan
Floating
NA
NA
NA
NA
SBBJ Easy
Home Loan
Fixed
NA
NA
SBBJ Easy
Home Loan
Floating
NA
NA
SBI
Floating
9.75
9.75
9.75
10.25
10.25
10.5
SBI
Advantage
Home Loan
Fixed
NA
NA
NA
NA
SBI
Advantage
Home Loan
Floating
NA
NA
NA
NA
SBI Easy
Home Loan
Fixed
NA
NA
SBI Easy
Home Loan
Floating
NA
NA
Fixed
12.75
12.75
12.75
13.5
13.5
13.5
South Indian
Bank
14
offers various types of home loans for its customers which may have tenure up to 20
years. The home loan interest rate is connected to the ICICI Bank Floating Reference
Rate (FRR/PLR). Here it can be added here that, the PLR has been reduced to 14.75%
from its previous rate of 15.25% since June 4, 2009. As on January 23, 2009, ICICI HFC
has 1416 branches with an asset of Rs. 3,74,410 crore. As on December 31, 2008, the
company has a net worth of Rs. 50,035 crore.
16
17
The following chart shows the financial institutes, banks and other specific institutes involved in
financing the people for the houses.
18
Figure 3. 1
The following institutes are providing different Home Loan product to the different class of the
people in the society and conduct the activity of financing and refinancing in the sector.
1. Scheduled Commercial Banks
2. Housing Finance Companies
19
The concept of Co-operatives as an institutional mechanism for satisfying various needs of the
people is premised on the principles of self-help as well as collectiveeffort. Scheduled State
Co-operative Banks, Scheduled District Cooperative Banks and Scheduled Urban Cooperative
Banks come under heading of the Schedule Cooperative Banks. Housing cooperatives have a
prominent place in the cooperative movement in the country. Today, it is estimated that there are
over 92,000 primary housing cooperatives with over 6.5 million members.
The co-operative sector has played an important role in providing housing to its members and
has made a significant impact across the country. The cooperative sector is expected to play a
lead role, particularly in land acquisition, allotment of land and housing sites to encourage group
housing and development of amenities in their projects, as envisaged in the National Housing
and Habitat Policy. The National Co-operative Housing Federation (NCHF) was established as
an apex organization for coordinating, guiding and promoting cooperative housing activities in
the country.
Agriculture and Rural Development Banks
Keeping in view the housing shortage in rural areas, a few state governments, after suitable
legislative amendments, have permitted the Agriculture and Rural Development Banks (ARDBs)
to lend for housing. As the ARDBs do not fall under the category of either SCBs or specialized
housing finance institutions, NHB formulated a scheme to subscribe to special rural housing
debentures floated by ARDBs, backed by the mortgages originated by them, in order to extend
financial assistance to this category of institutions.
21
borrowers. In addition, NCHF also helps the ACHFS in improving their financial, organizational
and technical capabilities.
The primary housing co-operatives functioning at the grass root level are supported by 25
ACHFS all over the country with a membership of over 6.5 million. These ACHFS represent
about 92,000 housing co-operatives all over the country out of which, about 31,000 housing cooperatives are affiliated to state level ACHFS for getting financial assistance.
22
institutions to adopt aggressive practices including very high loan to value loans, softening of
collateral requirements, competitive pricing etc. with such an aggressive approach being
followed may lead to increase in the default rates.
Cost of funds
The prevailing interest rate war has resulted in constant downward revision of interest rates.
Further, the spreads are increasingly becoming thin as the lending rates are fast nearing the cost
of funds. While during 1993-94, the interest rate on housing loans were in the range of 17-18%
the same right now are in the range of 7%-8.5%. This may lead to erosion of profitability in the
long run.
Security Deficit due to norms
Many primary lending institutions are making terms and conditions of sanction flexible and
liberal, thus enabling the borrowers to avail the loans even more than value of security for long
tenure of 20 to 25 years. The large quantum of institutional finance in the property transactions
may lead to the problem of security deficit.
Due diligence Issues
Increasingly, there have been instances of dilution in due diligence on the part of lenders.
Sometimes, loans are sanctioned without strictly complying with laid down rules, systems and
procedures. This situation arises primarily out of fierce competitive pressures. It is observed that
the growing customer expectations force the Prime Lending Institutes to compromise due to
diligence, field verification process and appraisal norms, in a rush to sanction the loan at the
earliest.
Lack of Uniformity of norms amongst industry players
While banks and HFCs are the prominent players, HFCs face few constraints. The regulatory
norms stipulate 10% capital adequacy for banks whereas the same is 12% for HFCs. Further,
banks have access to lower cost retail funds compared to HFCs. Uniformity in norms and hence
24
a level playing field has to be ensured for a healthy housing finance system. These are newer
challenges which need to be addressed and resolved in times to come.
Industry Fragmentation
The fragmented nature of the housing finance industry is a major impediment for its further
growth. Despite this, the industry has managed to grow mainly due to consistent decline in
interest rates, tax incentives given by the government and changing income profile of the Indian
middle class population.
Conflicting Interests
While the private housing finance institutions are required to abide by the guidelines of the
NHB, the general financial institutions, which include the commercial banks, follow the
guidelines set by the RBI. Today, both these sections are competing with each other for the same
housing pie but their functioning and lending practices seem to bear no similarity.
ALM
Asset liability mismatch is one of the biggest risks housing finance institutions are confronted
with. Funding of long term loans with short term deposits, leads to a mismatch between assets
and liabilities that can be overcome by adopting appropriate asset liability management (ALM)
techniques.
25
Future Outlook
The onset of year 2010 has brought in some good news for those who are dreaming of a 'home'
with home loan rates as well as property rates spiraling downwards.
The considerable reduction in rates is already beginning to affect deposit rates and will soon lead
to a fresh round of rate cuts for both deposits and loans. In fact home seekers are likely to see
single digit interest rates for regular 20 year home loans (not just for those below Rs. 20 lacs) in
this quarter from at least the PSU banks.
Recently announced stimulus package by the Government entails consumers seeking home loans
between Rs. 5 lacs+upto Rs. 20 lacs a fixed interest rate (for 5 years) of 9.25% and nil
processing and pre-payment fees and free life insurance to boot. However it cannot solve the
issue of lack of risk appetite in the banks. Clearly, the banks want to play safe. On the other hand
consumers The significant reduction in interest rates is likely to result in some increase in
demand for such properties. Notwithstanding some corrections, property prices in popular areas
continue to be unaffordable and we are unlikely to see new demand emerging till the prices reach
some kind of equilibrium. So the number of consumers who will take advantage of this package
is unlikely to be very high. Only if the property rates drop by between 20-25% in the middle and
high-end home segments, one can expect a spurt in the business.
In the meanwhile RBI can make the home loan seeker better equipped by issuing the licenses to
Credit Bureaus so that the consumer's right to his own credit report can be activated. This will
have a significantly positive effect on credit sensitivity in the country and bring home to the
consumer the benefits of paying their bills on time as well as the cost of not paying them on
time. Also make the necessary operational changes in Section 138 of the Negotiable instruments
act to ensure so that people realize the seriousness of issuing cheques and the impact of
dishonoring them. Finally, activate the Mortgage guarantee scheme so that the effective down
payment can be brought down in a home purchase.This will raise the customer's confidence level
and this is the need of the hour! Clearly all things going right we should see a spurt in business
in the last quarter of the year which is also traditionally a large demand quarter. Also await a
further reduction in property prices before they will act on the property purchase decision.
26
27
5. Research Proposal
Objectives
Macro Objective
Micro Objective
1. To study the preference and satisfaction level of the customers regarding Housing
Finance providers.
2. To study the Home Loan process in ICICI Housing Finance.
Scope
We have taken the Housing Finance as the product of Retail Banking sector. This project has
helped to know the macro factors affecting the Housing Finance sector in India. When it comes
to micro factors, customer satisfaction, preference and behavioral aspects regarding the Housing
Finance are the out puts of the live research. The study of the Home Loan Process at ICICI
Housing Finance has helped us to get practical exposure of operation hierarchy of Home Loan
Process.
Research Methodology
Data Source:Primary data:
Information collected though the survey of consumers of the bank
Secondary data:
Industry portals, company websites, magazines, newspapers, trade journals, other financial
data provided by the bank required for the study.
28
Research Approach:We have used the Survey Research to collect the primary data, as it is best suited for descriptive
research.
Research Instrument:We have used the questionnaire as our research instrument. In which close-ended and openended questions have help to understand consumer preference and behavior more clearly.
Sampling Size
consumers
Sampling Method
Contact Method:Out of the four method of primary data collection namely mail questionnaire, telephone
interview, personal interview and online interview; we will be using personal interview and
telephone interview , so that we can ask more questions.
Limitations
We have taken simple random sampling because population survey is not possible.
29
30
Here are the basic guidelines which every loan provider has to accept and follow before
sanctioning any loan in India.
Basic qualifications for a home loan (Resident Indian)
(I) A resident Indian is eligible for a home loan if he satisfies the following
conditions:
1. He must be earning a regular monthly income.
2. If he is from the salaried class, then he should a minimum of 5 years of service left.
3. Above 21 years of age at the commencement of the loan
4. Below 65 when the loan matures
5. If he is a business person or a professional or a self employed individual, then his age
should be less than 58 years at the time of applying for the loan.
6. The property that he wishes to purchase/construct should have a clear and marketable
title.
Resident Indian
(a)
Salaried Individual
31
A photocopy of the first and last pages of ration card or copy of PAN /telephone/
electricity bills.
A photocopy of Investments (FD certificates, Shares, any fixed asset, etc) or any other
documents supporting the financial background of the borrower
A photocopy of LIC policies with the latest premium payment receipts (if any)
Balance sheet, profit & loss account and statement of income with Income Tax returns for
the last 3 years certified by the Chartered Accountant
Bank statements of current and saving accounts for the last six months
A photocopy of the first and last pages of the Ration card or a copy of
PAN/telephone/electricity bills
(c)
Search and title report (with the details of the documents) for the last 30 years
33
Search and title report (with the details of documents) for the last 30 years
Search and title report (with the details of documents) for the last 30 years
Non-residents
34
Employment contract (if the contract is in any language other than English, the same has
to be translated into English and arrested by the employer/Indian Embassy)
The khata certificate (basic document indicating ownership of property as entered in the
register of the government authorities)
35
Khata certificate
Khata certificate
36
1 copy of your passport/ PAN card/ Driving License/ school leaving certificate/ birth
certificate/ LIC policy/ bankers sign verification
1 copy of last months telephone bill / ration card (first and last page) / title deed
property / rental agreement / driving license
Tri-partite agreement between the borrower, builder and housing finance company
37
No objection certificate from the builder to mortgage the property in favour of the
housing finance company
No objection certificate from other housing finance companies if the builder has availed a
project loan
38
39
From applying for a home loan to getting it involves various stages. These are:
40
41
Identification proof:
Same as above, but with photograph. Sometimes, the same document if it contains a photograph,
the current residential address and the correct age can be the proof for all 3 things.
Employment details:
If applicants company is not well-known, then a short summary about the nature of the
company, its business lines, its main customers, its competitors, number of offices, number of
employees, turnover, profit, etc may be needed. Usually, the company profile that is available on
the standard website of the company is enough.
Financial check:
All the income-related documents submitted by applicant serve a specific purpose. The lending
institution uses them to study financial status. The bank statements are scrutinized for:
Level of activity in the case of self-employed persons, this gives a very good clue about
the extent of business activities.
Average bank balance a cursory glance at the average bank balances maintained in a
savings bank account speaks volumes about the spending/saving habits of any individual.
Cheque returns a small charge debited by bank in the statement indicates that a cheque
issued by applicant was returned by applicants bank. Many such cheque returns can have
a negative impact on applicants loan sanction.
Cheque bounces if cheques deposited by applicant are returned by the issuer's bank, they
will be visible in applicants bank statement and again, banks have specific norms as to
how many such returns are acceptable in a period of one year.
42
Processing Fee:
Along with the application form and the credit documents, banks ask for a processing fee. This
fee varies from bank to bank, but is usually around 0.25% to 0.50% of the total loan amount. The
agent dealing with applicant earns a commission from the bank, which to some extent is also
affected by the amount of fees paid.
Most banks have flexible fee structures, and it is advisable that applicant negotiate hard to find
out the bank's minimum possible fees though it is unlikely that a bank will agree to provide a
loan without any upfront fee at all. Some banks have zero upfront fee loans, but that advantage
may be negated as their other charges such as legal charges and 'stamp duty is normally higher.
This fee is collected to maintain applicants loan account, and includes work like sending Income
Tax certificates every year, maintaining post-dated cheques, etc.
2. Personal discussion
After applicant has formally and successfully completed the application process, all applicants
have to do is wait till the home finance institution evaluates applicants papers. The wait
normally lasts only a day or two or sometimes even less. However, some banks insist on meeting
applicant after receiving the application form, and before the loan sanction. This is to gather
more details about applicant that may not be mentioned in the application form and to reassure
them of applicants repayment capacity.
3. Field Investigation
Thousands of people apply for loans everyday. And however eager a bank is to complete its
targets, every loan is a risk. So, it is only natural that it confirms or validates the details applicant
provides. The bank checks all applicants information including applicants existing residential
address, applicants place of employment, employer credentials (if applicant work for a small
43
organization), residence and work telephone numbers. Representatives are sent to applicants
workplace or residence to verify the details.
Even the references applicant has provided in the application form are checked out. While this
may sound irritating and an invasion of his/her privacy, banks are forced to undertake validation
in the absence of any credit bureau. Once applicants credentials are validated, it helps establish
trust between applicant and the bank.
5. Offer letter
Once the loan is sanctioned, the banks sends applicant an offer letter mentioning the following
details:
o
Loan amount
Rate of Interest
44
Mode of repayment
If the loan is under some special scheme, then the details of the scheme
Acceptance copy
If applicant agree with what is mentioned in the offer letter from the bank, applicant will have to
sign a duplicate letter of the same for the bank's records. Earlier, banks used to charge
administrative fees along with the offer letter. However, with rising competition, administrative
fees have virtually disappeared from the home loan market.
Every bank conducts a legal check on applicants documents to validate their authenticity. Even
the draft sale documents that applicant will be entering into with seller will be scrutinised.
45
The documents are sent to a lawyer in their panel (either in-house or outsourced) for a thorough
scrutiny. The lawyer's report either gives a go-ahead if documents are clear, or it may ask for a
further set of documents. In the latter case, applicant is expected to hand over the additional
documents to the bank for a clear title.
46
o Will the building last the loan tenure? This has a direct bearing on applicants loan
eligibility, since the loan tenure will be restricted to the maximum age of the
property as decided by the bank's engineer and this will impact applicants loan
eligibility.
o Quality of construction.
o Surrounding area (development).
o Whether the builder has received the requisite certificates for handing over
possession of the flat.
o There is no existing lien or mortgage on the property.
o Valuation of the property in relation to other deals in the surrounding areas.
o These inspections are carried out to protect consumer interests in terms of
construction quality, adherence to local laws, approved building plans, etc. A
technical inspection also lets the bank understand the progress of construction so
as to release the staggered disbursements.
47
This practice has led to severe consumer issues in an increasing number of cases, as the
valuation is normally done only after the consumer takes a sanction (by paying a fee) and after
identifying and committing to buy the property.
The valuation issue rarely arises when a property is purchased through a reputed builder directly
or if the property is pre approved. In both the cases, the banks would have already completed the
valuation and therefore, applicant can safely assume that there is no difference between the
documented cost of the property and the bank's valuation amount.
48
This document is also called a memorandum of entry and attracts significant stamp duty
depending on the amount of the loan in some states. The stamp duty payable on such a
memorandum is naturally recovered from applicant.
Not all banks create this memorandum and hence the stamp duty may or may not be payable,
depending on the practice of the specific bank. However, even where no such memorandum of
entry is created, the state government concerned may, in the future, demand a stamp duty on the
loan transaction, which naturally is recoverable from applicant as per the home loan agreement
signed by applicant.
11. Disbursement
After the bank has ensured that the property is legally and technically clear, all the original
documents pertaining to transfer of ownership of property in applicants favor have been
submitted and all the necessary loan agreements have been executed. Applicant will now actually
receive the cheque in his/her hand. Before the big moment arrives, applicant need to submit
documents to prove that applicant has paid his/her personal contribution towards the property,
since banks normally finance only up to 85-90 % of the total cost of the house.
In case applicant is expecting money from other sources to fund his/her own contribution, need
to provide sufficient evidence for the same. It is only after submitting this proof that the bank
will release part-disbursement of the loan.
The cheque will be in the name of the reseller (for resale flats), builder, society or the
development authority. It is only in exceptional circumstances, that is, if applicant provides
documents to support that he/she has made an excess payment from his/her own account then,
the cheque will be handed over to applicant directly by the bank.
Disbursement in stages
Usually, loans are disbursed on the basis of the stage of construction of the property. So, in case
of resale or ready possession properties, the disbursement is full and final. However, in case of
49
The final disbursement does not end applicants relationship with the bank. In fact, it is just the
beginning. And there are various issues / situations that arise in between the beginning of the
relationship and its end.
These include:
o Payment Receipt
o Repayment
o Income tax certificate
o Prepayment
50
o Loan preclosure/satisfaction
Payment receipt:
Once the bank hands over the pay order to applicant, applicant in turn are expected to hand it
over to the reseller or the builder. Applicant should get a receipt from them for the payment and
hand it back to the bank, as it will become part of applicants mortgage documentation.
Share certificates: In case applicants property is part of a society, applicant will need to get the
flat transferred to applicants name by asking the society to issue the share certificate in
applicants name and recording the transfer of ownership in their books. This normally happens
at the first AGM/EGM after the sale transaction. This transferred share certificate also happens
to be a part of the mortgage documentation and has, therefore, to be handed over to the bank
after the transfer takes place.
Repayment:
The loan is generally repaid by equated monthly installments, using post-dated cheques. Banks
usually ask for 12, 24 or 36 PDCs, after which applicant need to repeat the process until
applicant have repaid the loan. Some banks may also insist on a cheque for an amount equivalent
to the loan outstanding at the end of PDC period to ensure timely replenishment of PDCs for the
next 12, 24 or 36 months as the case may be.
In case applicants installments are to be deducted against applicants salary, applicant needs a
letter from applicants employer accepting this arrangement and directly remitting the amount to
the bank every month. This is possible only if applicants organisation has an arrangement with
the bank for all employees.
Some banks allow applicant to give standing instructions to the bank where applicant have
applicants savings/current account to deduct money each month crediting applicants home loan
account.
51
Another possible mode of payment is by cash or demand draft (not all banks offer this).
Applicant can deposit the EMI every month at the bank's office.
Prepayment
Applicant can prepay a loan either in part or in full at any given point of time. Applicant can also
prepay it even when it is only partly disbursed. However, most banks have an upper limit on the
number of times a person can prepay his loan in a year as well as on the minimum amount
applicant can prepay each time. Until recently, banks charged a penalty for part or full
prepayment. But increased competition has forced most banks to allow partial prepayment at nil
charge. Most banks levy a prepayment charge if applicant make full repayment and ask for
release of applicants property documents.
52
Certificate saying the account has been cleared. As an option, the bank may issue a consent letter
stating that the property is now free from mortgage.
If applicant has guarantors, the bank will issue a separate letter for each of the guarantors stating
that their liability has come to an end. Only after applicant receive these documents can applicant
say that the property is now completely free of mortgage.
At this stage, in some cases, applicant may discover that the original documents have yet not
been received by the bank from the registrar. In such cases, applicant will need to follow up with
the registrar and get the documents from them directly by showing them a copy of the bank's
clearance certificate.
Sometimes (and we must stress only sometimes) the bank may misplace applicants original
property documents leading to avoidable stress. In fact, the bank may claim that these documents
were never given to them at all. Hence the importance of insisting on a proper receipt of title
documents while handing them over to the bank.
Remember that receipt will come in very useful when the loan is fully paid off. Also, it is
extremely useful when applicant want to shift applicants loan to a new lender.
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54
Office Premises Loan can be used for purchase, construction, extension & also for improvement
(at the time of acquisition of office premises. It creates an opportunity to extend loans to selfemployed individuals to house their profession or business giving a permanent address for
55
generating steady flow of income. The product can also include the estimate of renovation at the
time of purchase of the property. This loan is especially meant for self-employed professionals
like Doctors, Architects etc.
Home Loans can be availed by Resident Indian who is Self-Employed and also by NonResident Indian who are Salaried.
EMI under Construction
EMI under Construction is offered for structuring a home loan to enable individuals to
commence his EMI in a partly disbursed under construction project. Commencement of EMI
ensures re-payment towards principal amount leading to savings in interest and faster repayment
of the loan. The EMI paid is as per the sanctioned loan amount and remains constant during the
tenure of the loan. The tenure of the loan keeps moving up with additional amount being
disbursed.
EMI under Construction can be availed by Resident Indian whether Salaried or Self-Employed
and also by Non- Resident Indian.
Balance Transfer
Balance Transfer is a facility offering the customer a choice to transfer the outstanding balance
of the loan availed for better terms & conditions. Balance Transfer helps to move from higher
rate of interest to lower rate of interest or increase in loan component as Top up. BT is possible
only from loans taken from HFCs approved by NHB for refinance, Banks or employer Loans
taken from Central or State Government. Balance Transfer can be availed by Resident Indian
whether salaried or Self-Employed
MoneySaver
Money Saver account is a home loan account with transaction facility. The account holder can
deposit & withdraw to the extent of balance maintained. On the commencement of EMI the
interest will be calculated on the outstanding debit balance. Thus, the home loan account holder
56
maintaining large balance in the Money Saver account can save on the interest paid by faster
repayment. This means one can pay less & repay loan faster.
This product can be offered only in case of first and final disbursement Part disbursement cases
cannot be offered this product. MoneySaver would be available at Floating Rates only & Fixed
EMI per lac per month would be applicable. IT certificate in the case of MoneySaver is not
issued. Money Saver can be availed by Resident Indian whether salaried or Self-Employed
Top Up Loan
Top Up Loan can be availed time and again for various personal requirement based on value of
the property. It offers the customer additional funds against the security of the same property. To
avail Top Up loan, the vintage of at least six months is required for the loan availed. The basic
eligibility emerges with good repayment track record. The end use letter is essential to be
collected.
The End use of Top Up Loans can be
Furnishing of home
Consumer durable
Childs education
Daughters marriage
Family holiday
Vehicle
Any other personal requirement of the borrower provided it is not speculative or illegal in nature.
This product is applicable to fully disbursed cases with no post- disbursement document
pending. This product is priced more than base home loan rates but lower than any personal loan
rates. Top Up Loan can be availed by Resident Indian whether Salaried or Self-Employed.
Loan on Phone
57
Loan On Phone is a pre-sanctioned loan. Its is based on the existing relationship of the customer
with ICICI Bank. The biggest advantage is that the customer can get the loan with minimum
documentation. Good banking transactions and repayment records becomes a strength for
availing loans in future. Loan on Phone can be availed by Resident Indian whether salaried or
Self-Employed
Home Equity Loan
Loan against property gives the owner of residential or commercial premises to leverage on the
value of the property. It offers the ability to unlock funds gives the advantage of looking at the
asset as a source of security bringing liquidity and retaining ownership. In case of HEL the
property should be self occupied by one of income considered applicants. The security of the
property ensures competitive rate of interest. The interest component of the EMI paid by SEP /
SENP can be booked as expenses in their P & L
Home Equity Loans are provided for many personal requirements of the customer viz.
Marriage
Child Education
Business
Improvement of Property
Medical Treatment
Home Equity Loans can be availed by Resident Indian who is Self-Employed and also by NonResident Indian who are Salaried.
Property Overdraft
The overdraft facility from ICICI Bank Home Loans allows you to borrow money against your
self-occupied property. The overdraft facility comes with a multi-city cheque book and phone
58
banking facility. The customer is charged interest only for the amount that he withdraws from the
account. Whenever he deposits funds into the account, they go towards reducing the outstanding
balance in the account.
Marriage
Child Education
Business
Improvement of Property
59
Medical Treatment
Lease Rental Discounting can be availed by Resident Indian whether salaried or Self-Employed
60
The loan must terminate before or when one turns 65 years of age or before retirement,
whichever is earlier.
If clients spouse is earning, put him/her as a co-applicant. The additional income shall be
included to enhance loan amount. Incidentally, if there are any co-owners they must
necessarily be co-applicants.
Fiance's income can also be considered for sanctioning the loan on combined income.
The disbursement of the loan, however, will be done only after the proof of marriage is
submission.
61
Providing additional security like bonds, fixed deposits and LIC policies may also help to
enhance eligibility.
While there is no need for a guarantor, it could be that having one might enhance credibility. If
so, loan officer would provide clients with the necessary details.
The final amount to be sanctioned will depend on your repayment capacity. However, what you
ultimately are entitled to will have to conform within the limits fixed for each loan.
Also, when the company looks at the total cost, registration charges, transfer charges and stamp
duty costs are included.
Secondary
FLIP considers income of two applicants and offers step down repayment facility
One of the applicants should have service period till the end of the tenure of the loan
FLIP would have two different EMIs during the tenure of the loan
The second EMI would be smaller & based on the lower income with longer tenure of the
applicant
FLIP can be availed by Resident Indian whether salaried or Self-Employed and also by NonResident Indian who is Salaried.
63
No medical checkup
Premium paid for the Critical Illness cover is eligible for tax benefits u/s 80D of the
Income Tax Act
Sum Insured remains constant throughout the policy period (loan O/S amount to come to
bank, rest goes to individual)
HomeAssure/HealthAssure Insurance cover for HomeAssure/HealthAssure provided by ICICI Prudential Life Insurance
Company.
Key Benefits of HomeAssure/HealthAssure
Life Cover from HomeAssure for the entire home loan tenure
Critical Illness cover from life threatening illnesses like cancer, coronary artery bypass,
heart attack, kidney failure, stroke, major organ transplant
Special non-medical limits only for ICICI Bank Home Loans customers
65
Dual benefit to customers, Life Cover from HomeAssure and Critical Illness Cover from
HealthAssure
Dual tax benefits, Section 80C benefits under HomeAssure, Section 80D benefits under
HealthAssure
66
Age/Term
10
11
18-30
0.381
0.484
0.589
0.695
0.802
0.91
1.023
1.136
1.254
1.364
31-35
0.421
0.545
0.673
0.805
0.944
1.088
1.239
1.396
1.559
1.715
36-40
0.547
0.719
0.899
1.086
1.283
1.49
1.708
1.939
2.185
2.424
41-45
0.752
1.002
1.269
1.554
1.861
2.188
2.538
2.913
3.313
3.701
46-50
1.163
1.567
2.002
2.468
2.969
3.504
4.074
4.681
5.324
5.941
51-55
1.82
2.465
3.153
3.882
4.66
5.489
6.375
7.326
8.346
9.341
56-60
2.709
3.692
4.76
5.92
7.18
8.541
10.004
11.585
13.302
14.996
12
13
14
15
16
17
18
19
20
21
18-30
1.488
1.614
1.746
1.882
2.022
2.167
2.319
2.476
2.641
2.813
31-35
1.89
2.072
2.264
2.465
2.677
2.99
3.135
3.384
3.646
3.922
36-40
2.694
2.983
3.289
3.612
3.955
4.318
4.701
5.104
5.527
5.969
41-45
4.146
4.617
5.114
5.638
6.189
6.768
7.378
8.019
8.694
9.409
46-50
6.646
7.392
8.182
9.021
9.912
10.857
11.855
12.911
14.034
15.228
51-55
10.49
11.715
13.022
14.422
15.926
17.545
19.285
21.156
NA
NA
56-60
16.988
19.158
21.517
NA
NA
NA
NA
NA
NA
NA
22
23
24
25
26
27
28
29
30
18-30
2.994
3.184
3.383
3.592
3.812
4.042
4.284
4.536
4.798
31-35
4.213
4.513
4.839
5.174
5.524
5.888
6.269
6.666
7.081
36-40
6.433
6.917
7.426
7.959
8.518
9.105
9.718
10.359
11.032
41-45
10.159
10.949
11.78
12.654
13.578
14.556
15.589
16.68
NA
NA
NA
NA
NA
NA
NA
Age/Term
Age/Term
46-50
67
68
69
70
9.
71
Name of Co-Applicant
Age
34 Years
Gender
Male
Occupation
Income
Residential Status
Ordinary Resident
Type of facility
Rs. 17,71,000/-
Term of Facility
17 Years
Type of Interest
15.75% as on date
15.75%-5.75%* = 10.00%
Number of EMIs
204
Amount of EMI
Rs. 18,086/-
Processing/Administration
Rs. 8,855/Charges (already included in EMI)
72
Rs. 912.06/-
Security
0% on Amount Prepaid**
Insurance Type
HomeAssure/HealthAssure
Amount of Insurance
Rs. 71,000/-
Margin Amount which is being deducted from PLR for Loan up to Rs. 20 Lakh as per
norms of ICICI Housing Finance. Eg: If current PLR of ICICI Housing Finance is 16.00% then
Adjustable Interest Rate would be (16.00% - 5.75%) = 10.25%.
**
In the case of Part Prepayment Client does not require to pay any Prepayment Charges
when he/she makes the payment of all EMIs up to the last 12 EMIs. Minimum 12 EMIs must
remain to avoid the Prepayment Charges.
73
74
There are many different products which are provided by the Banks and Housing Finance
Companies in India. The reason for asking this question is to know the degree of preference
towards Home Loan products by the people.
Table 9. 1
75
54
40
15
7
2
7
From the above graph we can see that maximum number of people prefer the Home Loan for
First Purchase in ready construction and under construction property. Out of which the
preference for the First Purchase in ready construction is comparatively higher, that is 42%. This
data shows that individuals are more attracted towards the purchase of house after they properly
see and feel the house. 32% people have chosen the Home Loan for Under Construction
Property, majority of them have approached Home Loan provider through builders tie-up. We
can see that only 2% out of the sample of 200 have chosen Land Loans. These individuals are
having income more than Rs. 5 Lakh. One of the major reasons for this is they get no tax benefit
on principal and interest of this loan.
2. Type of Home Loan Providers
There are many Housing Finance Companies and Banks which provide home Loan products.
The purpose of asking this question is to know the preferred source, of home loan provider, by
the people.
Table 9. 2
76
41
84
We can see that popularity of Banks in Home Loan sector is more than the Housing Finance
Companies. Banks capture 67% of our sample and 33% of people go for Housing Finance
companies. The reason for this is, Banks are providing many products and people are already
taking other services from Banks so Banks are easily acceptable by the people.
This question helps to know the preference of the people towards the Housing Finance
Companies.
Table 9. 3
Gruh Finance
LIC housing Finance
DHFL
14
19
5
Any other
Figure 9. 2
77
From the graph we can see that out of 41 people who have taken home loan from the HFC, 47 %
have chosen LIC Housing Finance which is highest amongst the group. One reason for this can
be the lower interest rate of LIC and brand name of LIC. Gruh Finance is also having the second
largest portion of 34 %. In any other category 3 people have specified PNB Housing Finance Ltd
and Bank of Baroda Housing Finance as home loan provider.
4. Banks
This question helps to know the preference of the people towards the Bank as home loan
provider.
Table 9. 4
S.B.I.
I.C.I.C.I.
H.D.F.C.
Any other
31
19
26
8
78
Figure 9.3
From the graph we can see that out of 84 people who have taken home loan from the Banks,
36% have chosen SBI. which is highest amongst the group Out of 31 individuals who have
chosen SBI, most of respondents are Government employees and business man. From this we
can say that popularity of SBI. is more in Private sector employees and Businessman. 31%
people have who have gone for HDFC includes 10 Private employees out of which 4 are the
employees of the same organization. Out of 19 individuals of ICICI 9 individuals are
Professionals. Any other category includes banks like ADC, Axis, Dena Bank , Bank of Baroda
and Punjab National Bank and ABN AMRO
5. Amount of loan
Although the loan amount depends on the income proofs, property price and persons ability to
repay the loan amount, this question helps to analyze the number of people falling in to different
ranges of loan amount.
79
Table 9. 5
15
50
49
6
5
From the graph we can see that majority of people prefers to take a loan of second and third
range which is 5 Lakh to 10 Lakh and 10 Lakh to 15 Lakh respectively. These individuals are
having the income range of 2.5 Lakh to 5 Lakh and few falls in the income range of more than 5
Lakh. Through this analysis we can say that middle class people are more likely to go for home
loans. Two individuals out of three who have taken the loan of more than 25 Lakh is for the Land
Loan. 7 Females out of 11 females have taken the Home Loan for the amount which is less than
5 Lakh. So that we can see that Females are more likely to take Home Loan of less amount.
6. Time duration of Home loan
There are many options available to home loan takers for deciding their time duration of paying
the Loan and amount of EMIs. This question gives an in-sight regarding the time duration
preferred by the people for Home Loan.
80
Table 9. 6
1 year to 5 years
14
36
48
27
5 years to 10 years
10 years to 15 years
15 years or more
figure 9.5
From the above graph we can see that 38% of people prefer the time duration of 10 years to 15
years to pay home loan. One of the main reasons for longer duration to repay the loan is lower
EMIs. As number of years increase the amount of EMIs decreases and this is more convenient to
the middle class people. All the individuals of the category 1 year to 5 years have taken the loan
of the amount less than 5 Lakh. The entire individuals who have taken the loan of more than 15
Lakh and few from the range of 10 Lakh to 15 Lakh falls in the time duration of more than 15
years.
7. Type of interest rate
There are two type of interest rate available to the Home Loan takers. This question gives an
insight towards the choice of interest rate by the people.
Table 9.7
Fixed Rate
45
81
Floating Rate
80
Figure 9.6
From the above graph, we can conclude that 64% of people go for floating rate of interest.
Floating rate gives flexibility and protection to the home loan takers as it varies according to the
market condition and economy of the country. The data shows that number of people are less
who are going for fixed rate of interest. Mostly people believe that if they take the loan at high
fixed interest rate and future interest rates will decrease then they will have to bear unnecessary
interest burden.
8. Range of Fixed interest rate
Interest rate is the important factor affecting the amount of EMIs. In this situation this question
helps to know the people who are paying the fix rate of interest falling in the different ranges
shown below.
Table 9.8
5% to 7%
7% to 9%
9% to 11%
0
0
3
82
11% to 13%
13% or more
17
25
Figure 9.7
The above mentioned data indicates that out of 45 people of this category, 55% pay fixed rate of
interest which is more than 13%. Currently Interest rates for Home Loan is low in all Banks and
HFCs. Because of non flexibility of fixed rates they are paying high interest rate and this is the
major reason for the dissatisfaction of all 16 individuals who are discussed in QUE.10 (III)
At the time of
Disbursement
0
0
5% to 7%
7% to 9%
83
Currently
0
42
9% to 11%
11% to 13%
13% or more
Dont know exactly
5
31
44
-
Figure 9.8
84
24
4
0
10
Figure 9. 9
Recession in the Indian economy and different steps taken by the RBI for the recovery of the
same is having the positive impact on the floating rates of interest in Home Loan. We can see
that 5 people were falling in the range of 9% to 11% of interest rate at the time of disbursement,
but currently there are 24 individuals falling in this range of floating interest rate. At the same
time we can not ignore that number of individuals falling in the interest rate range of more than
13% is the highest at the time of disbursement with 55% which is now 0%. There are 10
individuals who dont know their current floating rate of interest. This situation can be because
of lack of attention paid towards the timely notice letter sent by the Home Loan Company. In
SBI highest people have selected floating rate of interest, while in HDFC 19 individuals have
selected floating interest rate
85
10. Rating for the banks procedure from 1 to 5. (Where 5 stands for the best)
This question helps to understand the satisfaction level of Home Loan takers on the following
shown indicators.
Table 9.10
Ease of Documentation
1-Highly Dissatisfied
2-Disatidsfied
3-Average
4-Satisfied
5-Highly Satisfied
6
17
55
38
9
Figure 9. 10
From the findings we can see that 55 individuals out of people have given average rating and 38
individuals have given satisfactory rating. Most of the people who have given the rating of 4 and
5, which indicate satisfaction and high satisfaction, have taken the Home Loan from private
sector. Out of 17 individual who were dissatisfied include 6 Home Loan taker of SBI Housing
Finance, 4 Home Loan takers of Gruh Finance and rest 4 were of LIC Housing Finance.
86
Table 9. 11
0
14
50
47
14
Figure -9. 11
From the findings we can see that 50 individuals out of people have given average rating and 47
individuals have given satisfactory rating. People who were highly satisfied are mostly the client
of SBI Housing Finance and HDFC. From this information we can say that private sector is
taking less time for sanctioning of Home Loan
87
Table 9. 12
8
28
53
30
6
Figure 9. 12
53 individuals out of have given average rating to Interest rate charges. All those individuals
who are highly dissatisfied and majority of those who are dissatisfied are fixed interest rate
payers. Dissatisfaction towards fixed rate of interest is because of liberal rates offered to the
individuals who have opted for floating rate of interest for Home Loan.
Table 9. 13
Processing Fees
88
1-Highly Dissatisfied
2-Disatidsfied
3-Average
4-Satisfied
5-Highly Satisfied
1
25
67
28
4
Figure 9. 13
Processing Fees are almost similar in most of the Home Loan providers. 67 individuals have
given average rating to Processing Fees. One of the reasons for this can be, when it comes to the
charges or fees, people are not satisfied as they are less willing to pay such charges.
Table 9. 14
9
16
89
3-Average
4-Satisfied
5-Highly Satisfied
43
45
12
Figure 9. 14
43 people have responded for this question. Here one assumption can be made that 32
individuals, who are dissatisfied,would have had bad experiences with there Home Loan
providers.
90
Table 9. 15
Yes
No
13
112
Figure 9. 15
13 people are willing for the prepayment of the Home Loan in which 9 individuals are fixed
interest rate payers. This is the open ended question and people have given the reasons like
Fixed rate of interest is high on their Home Loan and they are more likely to go for
prepayment charges rather than paying high fix rate of interest.
Loan taker or sometimes paid separately, as per the choice of client. Insurance cover is decided
on the bases of the amount of Home loan, age of the person, property price and tenure of the
loan. Insurance cover cannot be more than the amount of Home Loan. Premium paying term is
the tenure of the Loan and if property is under construction then, construction period is also
added in that.
Table 9. 16
Yes
No
14
111
Figure 9. 16
92
As it is not compulsory and it highly depends on the preference of the Home Loan taker to either
take the insurance or not, majority of people from the sample of have not taken insurance with
their Home Loan. One of the reasons for this can be increased burden of premium as person is
already paying EMI and individuals are not much ready to bear extra payments.
People have responded for these questions for the transfer of Home Loan from one provider to
another provider. This question is helpful to know the factors affecting the satisfaction level of
the loan takers.
Table 9. 17
Yes
No
17
108
Figure 9. 17
93
17 people are willing to transfer there loan. All these people are the clients of private Home Loan
providers namely Gruh Finance, HDFC, ICICI. For this, people have given reasons like high
interest rate charged by them. Out of 17 individuals 8 have committed that they want to shift to
S.B.I. because of its 8% interest rate scheme.
15. Sources of approaching home loan provider
Before going for the Home Loan, people try to get the details of different products and loan
providers through different sources mentioned below. Generally they seek information like Rate
of Interest, commitment towards services and ease of all processes.
Table 9. 18
Personal Analyses
Builders tie-up
Friends suggestion
From Advertisement
If any other
12
20
60
15
18
Figure 9. 18
94
From the data we can see that word of mouth is the best source people think, to get the
information as 48 % people have taken suggestion from their friends and relatives for Home
Loan.
Any other category includes reasons like
Satisfied with the banking services, so have chosen the same for Home Loan.
Few were the clients of different other loans of that organization in the past and their
satisfaction level has led them towards the home loan of the same organization.
95
Personal Detail
Table 9. 19
Male
Female
114
11
Figure 9. 19
From the above graph we can see that 91 % of the respondents are Male and only 9 %
respondents are Female. This data includes the names of people who have taken the Loan on
their own names. Major decisions regarding huge amount of financial products are generally
taken by the Male.
96
Table 9. 20
Post Graduates
Graduates
Under Graduates
49
68
8
Figure 9. 20
From the Home Loan takers 55 % Individuals are Graduates, 39 % Individuals are Post
Graduates and 6% are under Graduates. So from this data we can conclude that maximum
number of people going for Home Loan are Graduates.
97
Table 9. 21
Private Employee
Government Employee
Businessman/Businesswoman
Professional
39
14
46
26
Figure 9. 21
From the above graph we can see that 31 % of people are private employees and 37 % of people
are businessman/woman. So from this data we can conclude that maximum number of people
going for Home Loan are private employees and businessman/woman.
98
Table 9. 22
2
22
59
27
15
Figure 9. 22
From the above graph we can see that people going for home loan, out of that 46 % are from the
income range of 2.5 Lakh to 3.5 Lakh. This people come unders the middleclass income level of
the society. People having income less than 1.5 Lakh and more than 5 Lakh covers the smallest
part of this chart.
99
100
ICICI
Table 10.1
Loan Amt
I Up to
ncome( in Lakh)
5 to 10
10 to 15
15 to 25
Lakh
Lakh
Lakh
More
Total
than 25
5
Lakh
Up to 1.5
1.5 to 2.5
2.5 to 3.5
11
More than 5
Total
12
19
3.5 to 5
101
0.21
2.52
1.052
0.21
0.57
6.94
2.9
0.57
0.15
1.9
0.78
0.15
0.052
0.63
0.26
0.052
Calculations
Arranging Observed & Expected Frequencies As Follows:
Fo
0
0
0
0
0
0
2
2
0
0
1
8
2
0
0
0
2
1
0
0
0
0
0
1
0
2
(O-E)2
fe
0
0
0
0
0
0.21
2.52
1.052
0.21
0
0.57
6.94
2.9
0.57
0
0.15
1.9
0.78
0.15
0
0.052
0.63
0.26
0.052
0
fo-fe
0
0
0
0
0
-0.21
-0.52
0.948
-0.21
0
0.43
1.06
-0.9
-0.57
0
-0.15
0.1
0.22
-0.15
0
-0.052
-0.63
-0.26
0.948
0
= 21.309
102
(fofe)2
0.000
0.000
0.000
0.000
0.000
0.044
0.270
0.899
0.044
0.000
0.185
1.124
0.810
0.325
0.000
0.023
0.010
0.048
0.023
0.000
0.003
0.397
0.068
0.899
0.000
(fofe)2/fe
0.000
0.000
0.000
0.000
0.000
0.210
0.107
0.854
0.210
0.000
0.324
0.162
0.279
0.570
0.000
0.150
0.005
0.062
0.150
0.000
0.052
0.630
0.260
17.283
0.000
21.309
Table 10.3
Hence Ho is accepted
Interpretation:
As figure shows the sample Chi Square the value of 21.309 is within the acceptance region.
Thus we accept the null hypothesis There is significant relation between income of a
respondent and amount of Home loan
HDFC
103
Table 10.4
Loan Amt
In Up to
come( in Lakh)
5 to 10
10 to 15
15 to 25
Lakh
Lakh
Lakh
More
Total
than 25
5
Lakh
Up to 1.5
1.5 to 2.5
2.5 to 3.5
14
More than 5
Total
15
26
3.5 to 5
Expected Frequency
Table 10.5
1.61
0.92
3.46
3.76
2.15
8.07
1.34
0.76
2.88
0.26
0.15
0.57
fo
Fe
fo-fe
104
(fofe)2
(fofe)2/fe
Table 10.7
0
0
0
0
0
1
2
3
0
0
6
1
7
0
0
0
1
4
0
0
0
0
1
0
0
(O-E)2
0
0
0
0
0
1.61
0.92
3.46
0
0
3.76
2.15
8.07
0
0
1.34
0.76
2.88
0
0
0.26
0.15
0.57
0
0
0
0
0
0
0
-0.61
1.08
-0.46
0
0
2.24
-1.15
-1.07
0
0
-1.34
0.24
1.12
0
0
-0.26
-0.15
0.43
0
0
= 6.237
tab. =26.293
0.000
0.000
0.000
0.000
0.000
0.372
1.166
0.212
0.000
0.000
5.018
1.323
1.145
0.000
0.000
1.796
0.058
1.254
0.000
0.000
0.068
0.023
0.185
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.231
1.268
0.061
0.000
0.000
1.334
0.615
0.142
0.000
0.000
1.340
0.076
0.436
0.000
0.000
0.260
0.150
0.324
0.000
0.000
6.237
As figure shows the sample Chi Square the value of 6.237 is within the acceptance region.
Thus we accept the null hypothesis There is significant relation between income of a
respondent and amount of Home loan
SBI
Table 10.8
Loan Amt
I Up to
ncome( in Lakh)
5 to 10
10 to 15
15 to 25
More
Total
Lakh
Lakh
Lakh
than 25
5
Lakh
Up to 1.5
1.5 to 2.5
2.5 to 3.5
11
More than 5
Total
12
11
31
3.5 to 5
Fo
fe
fo-fe
106
(fofe)2
(fo-fe)2/fe
0
0
0
0
0
1
4
3
0
0
2
4
5
0
0
0
4
3
0
1
0
0
0
2
1
0.12
0.38
0.35
0.064
0.064
1.03
3.09
2.83
0.51
0.51
1.41
4.25
3.9
0.7
0.7
1.03
3.09
2.83
0.51
0.51
0.38
1.16
1.06
0.19
0.19
-0.12
-0.38
-0.35
-0.064
-0.064
-0.03
0.91
0.17
-0.51
-0.51
0.59
-0.25
1.1
-0.7
-0.7
-1.03
0.91
0.17
-0.51
0.49
-0.38
-1.16
-1.06
1.81
0.81
= (O-E)2 = 24.636
E
107
0.014
0.144
0.123
0.004
0.004
0.001
0.828
0.029
0.260
0.260
0.348
0.063
1.210
0.490
0.490
1.061
0.828
0.029
0.260
0.240
0.144
1.346
1.124
3.276
0.656
0.120
0.380
0.350
0.064
0.000
0.001
0.268
0.010
0.510
0.000
0.247
0.015
0.310
0.700
0.000
1.030
0.268
0.010
0.510
0.000
0.380
1.160
1.060
17.243
0.000
24.636
tab. =26.293
Hence Ho is accepted
As figure shows the sample Chi Square the value of 24.636 is within the acceptance region.
Thus we accept the null hypothesis There is significant relation between income of a
respondent and amount of Home loan
Table 10.10
Other Banks
Loan Amt
5 to 10
fo to
I Up
ncome( in Lakh)
Up to 1.5
1.5 to 2.5
2.5 to 3.5
3.5 to 5
More than 5
Total
5 0Lakh
0
0
0
00
0
01
00
0
0
0
10
3
1
0
0
0
0
2
1
0
0
0
10 to 15
Lakh
fe
Lakh
Fo-fe
0
0
0
0
00
0
03
02
0
0
0
0
0.5
2.5
5
1
0
0
0.37
1.87
0.75
0
0
0.
0
0
0
0
0 0
0
0 0
0 1
0
0
0
0.5 1
0.5
2
-1
0
0
-0.37
0.13
0.25
0
0
-0.
108
15 to 25
More than
Total
25
0
1
0
0
2
(O-E)2
0.62
0.25
0
0
-0.62
0.75
0
0
0.384
0.563
0.000
0.000
0.620
2.250
0.000
0.000
5.057
= 5.057
E
The value of 5.057 = 2
2
tab. =26.293
Hence Ho is accepted
As figure shows the sample Chi Square the value of 5.057 is within the acceptance region.
Thus we accept the null hypothesis There is significant relation between income of a
respondent and amount of Home loan
Loan Amt
In Up to
come( in Lakh)
5 to 10
10 to 15
15 to 25
Lakh
Lakh
Lakh
More
Total
than 25
5
Lakh
Up to 1.5
1.5 to 2.5
2.5 to 3.5
More than 5
1092
Total
14
3.5 to 5
fo
0
0
0
0
0
0
0
1
0
0
1
fe
0
0
0
0
0
fo-fe
0
0
0
0
0
0.071 0.071
0.28 -0.28
0.57 0.43
0
0
0.071 0.071
0.64 0.36
110
(fo(fofe)2 fe)2/fe
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.005
0.078
0.185
0.000
0.071
0.280
0.324
0.000
0.005
0.130
0.000
0.203
4
3
0
0
0
0
2
0
0
0
0
2
0
1
= (O-E)2
2.57
5.14
0
0.64
1.43
-2.14
0
-0.64
0.071 0.071
0.28 -0.28
0.57 1.43
0
0
0.071 0.071
0.21 -0.21
0.85 -0.85
1.71 0.29
0
0
0.21 0.79
2.045
4.580
0.000
0.410
0.796
0.891
0.000
0.000
0.005
0.078
2.045
0.000
0.071
0.280
3.588
0.000
0.005
0.044
0.723
0.084
0.000
0.624
0.000
0.000
0.000
0.000
0.000
0.000
6.503
= 6.503
E
The value of 6.503 = 2
2
tab. =26.293
Hence Ho is accepted
As figure shows the sample Chi Square the value of 6.503 is within the acceptance region.
Thus we accept the null hypothesis .There is significant relation between income of a
respondent and amount of Home loan.
111
DHFL
Table 10.14
Loan Amt
I Up to
ncome( in Lakh)
5 to 10
10 to 15
15 to 25
Lakh
Lakh
Lakh
More
Total
than 25
5
Lakh
Up to 1.5
1.5 to 2.5
2.5 to 3.5
More than 5
Total
1120
3.5 to 5
fo
1
0
0
0
0
1
1
0
0
0
0
2
0
0
0
0
0
0
0
0
0
0
0
0
0
(O-E)2
fe
0.4
0.6
0
0
0
0.8
1.2
0
0
0
0.8
1.2
0
0
0
0
0
0
0
0
0
0
0
0
0
fo-fe
0.6
-0.6
0
0
0
0.2
-0.2
0
0
0
-0.8
0.8
0
0
0
0
0
0
0
0
0
0
0
0
0
= 2.917
113
(fo(fofe)2 fe)2/fe
0.360 0.900
0.360 0.600
0.000 0.000
0.000 0.000
0.000 0.000
0.040 0.050
0.040 0.033
0.000 0.000
0.000 0.000
0.000 0.000
0.640 0.800
0.640 0.533
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
2.917
tab
tab. =26.293
Ho is accepted
As figure shows the sample Chi Square the value of 2.917 is within the acceptance region.
Thus we accept the null hypothesis There is significant relation between income of a
respondent and amount of Home loan
Loan Amt
5 to 10 10 to 15 15 to 25
e Up to
Incom
( in Lakh)
More
Total
than 25
Lakh
Lakh
Lakh
5
Lakh
Up to 1.5
1.5 to 2.5
2.5 to 3.5
16
19
3.5 to 5
More than 5
Total
fo
fe
fo-fe
114
(fo-
(fo-
0
0
0
0
0
0
3
0
0
0
0
5
2
0
0
0
4
0
0
0
0
1
3
1
0
(O-E)2
0
0
0
0
0
0
2.52
0.47
0
0
0
5.9
1.1
0
0
0
3.36
0.63
0
0
0
4.21
0.78
0
0
fe)2
fe)2/fe
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
0.48 0.230 0.091
-0.47 0.221 0.470
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
-0.9
0.810 0.137
0.9
0.810 0.736
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
0.64 0.410 0.122
-0.63 0.397 0.630
0
0.000 0.000
0
0.000 0.000
0
0.000 0.000
-3.21 10.304 2.448
2.22 4.928 6.318
1
1.000 0.000
0
0.000 0.000
10.953
= 10.953
E
The value of 10.953 = 2
Degree of freedom (D.F.) = (r-1) x (c-1) = 16
2
115
Hence Ho is accepted
As figure shows the sample Chi Square the value of 10.953 is within the acceptance region.
Thus we accept the null hypothesis There is significant relation between income of a
respondent and amount of Home loan
Correlation Analysis
The coefficient of correlation is the second measure that we can use to describe how well
one variable is explained by another. When we are dealing with samples, sample coefficient
of relation is denoted by r and is the square root of sample coefficient of determination.
Here we have used r to study the relation between income of respondents and the home
loan amount.
SBI
Table 10.18
X
4.25
5
4.25
5
4.25
3
2
3
3
2
4.25
3
3
Y
7.5
12.5
12.5
20
12.5
20
7.5
12.5
12.5
7.5
20
12.5
12.5
x*y
31.875
62.5
53.
100
53.
60
15
37.5
37.5
15
85
37.5
37.5
116
x2
18.063
25.000
18.063
25.000
18.063
9.000
4.000
9.000
9.000
4.000
18.063
9.000
9.000
y2
56.25
156.25
156.25
400
156.25
400
56.25
156.25
156.25
56.25
400
156.25
156.25
2
2
4.25
4.25
3
3
2
4.25
3
2
2
2
3
4.25
5
1
2
3
98
5
10
4.000
25
5
10
4.000
25
20
85
18.063
400
20
85
18.063
400
12.5
37.5
9.000
156.25
7.5
22.5
9.000
56.25
12.5
25
4.000
156.25
25
106.25 18.063
625
12.5
37.5
9.000
156.25
7.5
15
4.000
56.25
12.5
25
4.000
156.25
7.5
15
4.000
56.25
7.5
22.5
9.000
56.25
12.5
53.
18.063 156.25
20
100
25.000
400
5
5
1.000
25
7.5
15
4.000
56.25
7.5
22.5
9.000
56.25
377.5 1317.5 346.500 5481.25
x =98,
x2=346.5,
y=377.5, xy=1317.5,
y2= 5481.25
= 3.16 = 12.17
b=xy-n
x2 -- n2
1317.5- 31(3.16)(12.17)
346.5- 31( 3.16)^2
b= 3.39
a = - b
=12.17- 3.4(3.16)
117
= 1.42
r2 =
a y + b xy - n
y2 - n 2
= 0.474
r = 0.689
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
ICICI
Table 10.19
x
3
3
3
3
3
3
2
2
2
1
5
3
4.25
3
4.25
4.25
3
3
3
57.75
y
7.5
12.5
7.5
5
7.5
7.5
7.5
12.5
12.5
7.5
20
7.5
7.5
12.5
12.5
7.5
7.5
7.5
7.5
177.5
xy
x2
y2
22.5
9
56.25
37.5
9
156.25
22.5
9
56.25
15
9
25
22.5
9
56.25
22.5
9
56.25
15
4
56.25
25
4
156.25
25
4
156.25
7.5
1
56.25
100
25
400
22.5
9
56.25
31.875 18.0625
56.25
37.5
9
156.25
53.
18.0625 156.25
31.875 18.0625
56.25
22.5
9
56.25
22.5
9
56.25
22.5
9
56.25
559.375 191.1875 1881.25
118
r2 =
a y + b xy - n
y2 - n 2
= 0.112
r = 0.336
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
HDFC
Table 10.20
X
3
4.25
4.25
4.25
4.25
2
5
2
2
2
3
2
3
4.25
3
3
3
3
3
3
3
3
3
3
3
2
y
5
12.5
7.5
12.5
12.5
5
12.5
7.5
12.5
12.5
5
5
5
12.5
5
5
5
12.5
12.5
12.5
12.5
12.5
12.5
12.5
5
12.5
xy
15
53.
31.875
53.
53.
10
62.5
15
25
25
15
10
15
53.
15
15
15
37.5
37.5
37.5
37.5
37.5
37.5
37.5
15
25
119
x2
9
18.0625
18.0625
18.0625
18.0625
4
25
4
4
4
9
4
9
18.0625
9
9
9
9
9
9
9
9
9
9
9
4
y2
25
156.25
56.25
156.25
156.25
25
156.25
56.25
156.25
156.25
25
25
25
156.25
25
25
25
156.25
156.25
156.25
156.25
156.25
156.25
156.25
25
156.25
80.25
r2 =
247.5
a y + b xy - n
784.375
265.3
2681.25
y2 - n 2
= 0.0729
r = 0.27
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
Other Banks
Table 10.21
x
3
4.25
3
5
3
4.25
3
4.25
29.75
r2 =
y
5
7.5
7.5
12.5
7.5
7.5
7.5
7.5
62.5
a y + b xy - n
xy
x2
y2
15
9
25
31.875 18.0625 56.25
22.5
9
56.25
62.5
25
156.25
22.5
9
56.25
31.875 18.0625 56.25
22.5
9
56.25
31.875 18.0625 56.25
240.625 115.1875 518.75
y2 - n 2
= 0.484
r=0.696
120
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
x
3
3
5
3
5
3
4.25
3
5
2
3
3
3
3
48.25
r2 =
y
12.5
12.5
12.5
7.5
12.5
12.5
12.5
7.5
25
12.5
5
7.5
7.5
12.5
160
a y + b xy - n
xy
37.5
37.5
62.5
22.5
62.5
37.5
53.
22.5
25
15
22.5
22.5
37.5
583.
121
x2
9
9
25
9
25
9
18.0625
9
25
4
9
9
9
9
178.0625
y2
156.25
156.25
156.25
56.25
156.25
156.25
156.25
56.25
625
156.25
25
56.25
56.25
156.25
2
y2 - n 2
= 0.287
r = 0.536
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
x
Y
y2
xy
5
7.5
56.25
37.5
5
7.5
56.25
37.5
4.25
7.5
56.25
31.875
4.25
7.5
56.25
31.875
3
12.5 156.25
37.5
2
7.5
56.25
15
3
7.5
56.25
22.5
3
7.5
56.25
22.5
4.25
7.5
56.25
31.875
4.25
7.5
56.25
31.875
3
7.5
56.25
22.5
2
5
25
10
5
12.5 156.25
62.5
5
7.5
56.25
37.5
5
7.5
56.25
37.5
4.25
7.5
56.25
31.875
3
7.5
56.25
22.5
3
5
25
15
2
7.5
56.25
15
70.25 157.5 1368.75 581.875
122
x2
25.000
25.000
18.063
18.063
9.000
4.000
9.000
9.000
18.063
18.063
9.000
4.000
25.000
25.000
25.000
18.063
9.000
9.000
4.000
281.313
b=xy-n
r2 =
a y + b xy - n
y2 - n 2
= 0.0576
r =0.24
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
DHFL
Table 10.24
x
2
1
3
3
2
11
r2 =
y
7.5
5
7.5
7.5
5
32.5
a y + b xy - n
xy
15
5
22.5
22.5
10
75
x2
4
1
9
9
4
27
y2
56.25
25
56.25
56.25
25
218.75
y2 - n 2
= 0.582
r =0.763
Here the sign for r is positive. Thus, the relation between the two variables is
direct. This shows that amount of home loan is more dependent on income of
respondents.
123
124
11. Findings
Maximum number of people prefers the Home Loan for First Purchase in Ready
Construction and Under Construction property, which is 42 % and 32 % respectively.
Only 2% out of the sample of 125 has chosen Land Loans.
Banks capture 67% of our sample and 33% of people go for Housing Finance companies.
47 % have chosen LIC Housing Finance which is highest amongst the group. Gruh
Finance is having the second largest portion of 34 %.
36 % have chosen SBI which is highest amongst the group. HDFC stands at the second
position with 31 %.
40 % of people go for the Home Loan ranging from 5 Lakh to 10 Lakh. Most of the
people going for the loan, which ranges from less than 5 Lakh to 15 Lakh, are having the
income range of 2.5 Lakh to 5 Lakh.
38 % of people prefer the time duration of 10 years to 15 years to pay home loan.
64 % of people go for Floating rate of interest.
36 % of people pay fixed rate of interest which is more than 13%.
At the time of Disbursement 55 % of people were paying Floating Interest Rate more
than 13% and 39 % of people were paying Floating Interest rate ranging from 11% to
13%.
Currently 30 % of people are paying Floating Interest Rate from 9% to 11% and 5 % are
paying Floating Interest Rate between 11% to 13%.
55 Individuals have given average rating and 38 Individuals are satisfied with the Ease
Of Documentation.
125
50 Individuals have given average rating and 47 Individuals are satisfied with the Time
Duration for Loan Sanctioning.
53 Individuals have given average rating to Interest rate charges and 28 Individuals are
dissatisfied.
67 Individuals have given average rating to Processing Fees.
43 Individuals which is of the 125 respondents have given average rating to charges for
126
127
12. Conclusion
The Government of India and the Reserve Bank of India have been constantly providing an
enabling environment for the furtherance and development of the housing finance sector and
Two Million Housing Programs which are being monitored annually by the Ministry of Urban
Affairs and Poverty Alleviation. To give the boost to the economy and to control the money
supply in the market RBI has reduced the interest rates for home loans.
Majority of population of India consist of middle class people. This Housing survey reflects the
same fact that it is dominated by the middle class people when it comes to take the Home loan.
Recession in the Indian economy and different steps taken by the RBI for the recovery of the
same is having the positive impact on the floating rates of interest in Home Loan. Popularity of
Floating rate of interest is more compared to fixed rate of interest due to flexibility according to
economic condition
Main purpose of Housing Finance Companies is to provide Home Loan but still people are more
inclined to go for a Bank when it comes to taking a Home Loan.
Reason for dissatisfaction among the Home Loan taker is high fixed interest rate which is paid
by these people so they are more willing for prepayment and transfer of Home Loan.
Concept of insurance with Home Loan is not much popular in Home Loan takers, rather than
believing it as a risk cover people are taking it as an additional burden on their ongoing EMIs.
Above mentioned factors affect this sector positively or adversely but one of the major factors
which is helping this sector to grow is rapidly increased population and people are accepting this
as a need rather than a financial burden.
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