A COMPARATIVE STUDY OF HOME LOANS OF STATE BANK OF

INDIA (S.B.I) AND HOUSING DEVELOPMENT FINANCE

CORPORATION (H.D.F.C) BANKS: AN EMPERICAL STUDY OF
BATHINDA, PUNJAB

Introduction: Food and shelter is the basic need of human beings. Shelter is a social
security as well as a status symbol.

In India, a house has got immense social and economic value. The living place has
many names: House, Dwelling, Shelter, Bunglow, Mansion, Palace etc., all
meaning same but the owners belong to different income strata of society.
However, all people are not lucky enough to own a house. There are millions of
indians who do not own a house and many even do not own a few square feet of
land. They sleep in the open air, below trees, on footpaths in cities. House is a
basic human need. A secured ownership of a house can raise the welfare of the
household that lives in it and enhances productivity, efficiency and creativity. But
housing development has been slow. Because housing is a large investment, it
requires long-term finance.

Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries
and above all gathering funds little by little to afford ones dream. Home is one of
the things that everyone one wants to own. Home is a shelter to person where he
rests and feel comfortable. Many banks providing home loans whether commercial
banks or financial institutions to the people who want to have a home.
//www.slideshare.net/abhijit055/study-of-the-procedure-of-disbursement-of-home-
loan-of-hdfc-bank-in-pune-city

The demand of home loans has increased dramatically. Part of the reason for this
increase is because the accessibility of loans has gotten bigger. Today, home loans
are available in the market at very low interest rates that meet the demands of
many home buyers. A home represents the largest asset that typically people have
and this is why home loans have such a huge impact in the loan market today.
When a person purchases a home, he or she will be investing a huge amount of
cash. Many people cant come up with the whole money to pay out the house,
while some others cant even afford to invest money for the house they will like to
purchase. When getting a home loan, the individuals should consider taking care
of different aspects related to the home loan.
A Home Loan is taken out from a bank or financial company in order to
purchase/construct a new house or reconstruct an existing mortgage. There are
several different ways in which an individual can get a home loan mortgage. Over
the past few years, many new banks and housing finance companies have opened
up and are providing attractive and low lending rates. There are many housing
finance lenders which we work with who are ready to give you the latest
information about the bank of mortgage rates.

An individual who is looking for housing loans should be aware of all his
requirements and then he/she can search for housing finance services in India.
Without knowing the requirements it is difficult to understand the process of a
home loan. A borrower who is ready to go for house loans should check their
monthly incomes and the location of the borrower. You will also want to look into
getting home insurance quotes for your new home. Given the present economic
conditions, the prices of properties are rapidly on the rise especially in the major
cities across India. This is making it difficult for middle class families to afford
these huge investments. Keeping this fact in mind, bank of mortgage services in
India considered these facts and came up with attractive mortgage interest rates so
that the middle class families can take a home lending bank loans. Borrowers
should consider each and every aspect of home lending from selecting the property
to closing the finance loan amount. The borrowers will be maintaining a long-term
relationship with the finance company so it is wise to take a loan from a bank
which you feel comfortable with.

There are many factors and steps involved in getting home loans in India. Banks
thoroughly verify all the credit history of the borrower and analyze the CIBIL
score. If everything is in good standing the banks will sanction the loan where the
borrower can get 80% to 85% of the bank of mortgage loan. For example, if you
are looking for a Rs. 10 lakhs home, you will only be eligible for a loan of Rs. 8-
8.5 lakhs. The remaining must come out of your personal savings and will serve as
a deposit.

House loans are given to the borrower in the form of money by housing finance
committees. Home seekers would use this money to buy or construct a house and it
is their responsibility to repay the loan amount taken from the bank or housing
finance companies. The bank will consider your property as lenders security and
based on the value of the property, bank of mortgage sanctions will be provided for
the house loans. Banks grant the loans with a predetermined lending rate and loan
repayment period. In any case, if the borrower fails to repay back the loan amount,
the bank will have the rights to hold the property until the loan amount is paid back
along with the mortgage interest rates. The later stages involved in this process
beyond the property being held are:

Principal Amount

Repayment Period (Tenure)

Guarantor

Down payment

EMI

Processing Time

By knowing all the terms and related information, one can easily go through the
different stages involved in house loans and this will help you figure out the loan
amount. In recent years, there has been a huge demand for bank of mortgage loans
and there are a number of banks and housing finance services in India who provide
a home loan to a borrower. www.bankandfinance.com/loan/Home-
Loan/Introduction-to-Home-Loans.php

Definition of 'Home Loan'

A sum of money borrowed from a financial institution or bank to purchase a house.

Home loans consist of an adjustable or fixed interest rate and payment term

ADVANTAGES OF HOME LOANS

The various benefits of home loans arising to the customers are:-

Attractive interest rates

Help in owning a home

No requirement of guarantor
 Door-Step Services

Long loan period

For accidental death insurance

DISADVANTAGES OF HOME LOANS

The main disadvantages of home loans are high lightened as below:

Delays in processing

Fluctuating interest rates

High Cost

Problems in disbursement

These are limitations or disadvantages of home loans. These limitations can be

removed by providing good and prompt services to the customers.

PROCESS OF TAKING A HOME LOANS

The process of taking a home loan can be daunting, especially if you have never
applied for any loan earlier. And ignorance on your part can not only make it an
unpleasant experience, but also prove to be costly.

Here is a step-by-step guide to equip you with the right info, so you know what to
expect.

From applying for a home loan to getting it involves various stages. These are:

Step 1: Application form

Step 2: Personal Discussion

Step 3: Banks Field Investigation

Step 4: Credit appraisal by the bank and loan sanction

Step 5: Offer Letter

Step 6: Submission of legal documents & legal check

Step 7: Technical / Valuation check

Step 8: Valuation
Step 9: Registration of property documents

Step 10: Signing of agreements and submitting post-dated cheques

Step 11: Disbursement

1. Applying for a loan

Filling up the application form is the first step. The look of an application form
may differ from bank to bank, but nearly 80 per cent of the information they need
is similar. Most of this is basically your personal and professional information,
details of your financial assets and liabilities and the details of the property (if
finalized) including the estimated cost and the means of financing the same.

Documents to submit

While submitting the application form, every bank asks for several documents.
And most banks these days provide doorstep service, so that you dont have to
spend time visiting their office to submit the documents. However, some banks still
insist on the customer visiting their offices at least once.

Proof of income: This will need to be backed up by proof such as copies of last
three years Income Tax returns (along with copies of Computation of
Income/Annual accounts, if any), Form 16/Form 16A, last three months salary
slips, copies of the last 6 months statements of all your active bank accounts in
which your salary/business income details are reflected, etc. Other documents that
you need to provide with your application form include age proof, address proof
and identification proof. You may also be asked to give your employment details.

Age proof: Copy of your school leaving certificate/Driving license/Passport/ration

card/PAN card/Election Commissions card/etc.

Address proof: Similar documents need to be provided to prove that you are
actually staying at your current address.

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.

Your employment details: If your 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 you submit serve a specific purpose. The lending
institution uses them to study your financial status.

The bank statements you submit 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 your bank in the statement indicates
that a cheque issued by you was returned by your bank. Many such cheque returns
can have a negative impact on your loan sanction.

Cheque bounces - if cheques deposited by you are returned by the issuers bank,
they will be visible in your bank statement and again, banks have specific norms as
to how many such returns are acceptable in a period of one year.

Regular periodic payments - the existence of periodic payments to other finance

companies/banks etc. indicate an existing liability and you will need to provide full
details to the lender.

Your investments also come under the scanner. This helps the bank to estimate
your ability to pay the down payment as well as your savings habit.

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. For instance, if you take a loan of Rs 10 lakh, you
will have to pay around Rs 2,500 to Rs 5,000 as processing fee. The agent dealing
with you earns a commission from the bank, which to some extent is also affected
by the amount of fees paid by you.

Most banks have flexible fee structures, and it is advisable that you negotiate hard
to find out the banks 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 are normally higher.

This fee is collected to maintain your loan account, and includes work like sending
Income Tax certificates every year, maintaining post-dated cheques, etc.

2. Personal discussion: Face to face.

After youve formally and successfully completed the application process, all you
have to do is wait till the home finance institution evaluates your papers. The wait
normally lasts only a day or two or sometimes even less. However, some banks
insist on meeting you after receiving the application form, and before the loan
sanction. This is to gather more details about you that may not be mentioned in the
application form and to reassure them of your repayment capacity.

Again, this stage is insisted upon only in very few cases these days.

3. Field Investigation: Checking you out

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 you provide. The bank checks all your information including
your existing residential address, your place of employment, employer credentials
(if you work for a small organization), residence and work telephone numbers.
Representatives are sent to your workplace or residence to verify the details.

Even the references you have provided in the application form are checked out.
While this may sound irritating and an invasion of your privacy, banks are forced
to undertake validation in the absence of any credit bureau. Once your credentials
are validated, it helps establish trust between you and the bank.

4. Credit appraisal and loan sanction: Getting the nod.

This is the make-or-break stage. If the bank is not convinced about your
credentials, your application may get rejected. If it is satisfied, it sanctions your
loan.

The bank or the home financier establishes your repayment capacity based on your
income, age, qualifications, experience, employer, nature of business (if self-
employed), etc. and based on these, works out your maximum loan eligibility, and
the final loan amount is communicated to you. The bank then issues a sanction
letter. This letter may either be an unconditional letter, or may have certain terms
and conditions mentioned, which you have to fulfill before the loan disbursal.

5. Offer letter: I do

Once the loan is sanctioned, the banks sends you an offer letter mentioning the
following details:
 loan amount

Rate of Interest

Whether fixed or variable rate of interest linked to a reference rate

Tenure of the loan

Mode of repayment

If the loan is under some special scheme, then the details of the scheme

General terms and conditions of the loan

Special conditions, if any

Acceptance copy:

If you agree with what is mentioned in the offer letter from the bank, you will have
to sign a duplicate letter of the same for the banks 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.

6. The legal angle: Property and papers.

Now, the focus of the banks activities shifts from you to the property you intend to
buy. Once you select your property, you need to hand over the entire set of original
documents pertaining to your property to the bank so that it can keep them as
security for the loan amount given to you. These normally include:

The title documents of your seller, which prove the sellers title including the chain
of title documents if he is not the first owner.

NOCs from the legal owners such as cooperative housing societies, statutory
development authorities, the lessor of the land in the case of leasehold land, etc.
NOCs are not required where the property is situated on freehold land and the
entire land is being transferred along with the structure.

These documents remain in the banks custody until the loan is fully repaid.

Legal check:

Every bank conducts a legal check on your documents to validate their

authenticity. Even the draft sale documents that you will be entering into with your
seller will be scrutinized.
The documents are sent to a lawyer in their panel (either in-house or outsourced)
for a thorough scrutiny. The lawyers report either gives a go-ahead if documents
are clear, or it may ask for a further set of documents. In the latter case, you are
expected to hand over the additional documents to the bank for a clear title.

So, if a bank decides to disburse your housing loan, you have every right to smile,
since you can safely assume that your property documents are clear and the
transaction is safe.

7. Technical / Valuation check: Making doubly sure:

Banks are extremely careful about the property they plan to finance. They send an
expert to visit the premises you intend to purchase. This expert could either be a
bank employee or he could belong to a firm of architects or civil engineers.

Site visit: The site visits to your property are conducted to verify the following:

In case of under construction property:

Stage of construction is the same as that mentioned in the payment notice

given to you by the builder.

Quality of construction

Satisfactory progress of work.

Layout of flats and area of property is within permissions granted by the

governing authority.

The builder has the requisite certificates to start construction at the site.

Valuation of the property in relation to other deals in the surrounding areas.

In case of ready/resale construction

External / internal maintenance of the property.

The age of the building.

Will the building last the loan tenure? This has a direct bearing on your loan
eligibility, since the loan tenure will be restricted to the maximum age of the
property as decided by the banks engineer and this will impact your loan
eligibility.

Quality of construction.

Surrounding area (development).

 Whether the builder has received the requisite certificates for handing over
possession of the flat.

There is no existing lien or mortgage on the property.

Valuation of the property in relation to other deals in the surrounding areas.

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.

8. Valuation: Reality check

Since housing loans are cheaper than other loans, there have been cases where
individuals have shown purchase of properties from related entities at inflated
prices to obtain cheap loans.

Since the risk associated with diversion of funds is higher than if the loan was used
for genuine purposes, banks carry out an independent valuation to find out whether
the transaction is in line with the existing market price of the area.

Valuation has become a key parameter in determining the loan amount that can be
sanctioned by the bank. The valuation process is quite subjective and depends on
the quality and ability of the person sent by the bank for valuation.

Valuation of real estate as a profession is still in its infancy in India and is still non-
standardized. In many cases, the valuer determines the value of the property at an
amount that is lower than the documented cost of the property and this would
result in the loan amount being lower, since the bank funds a certain percentage of
the cost or valuation of the property, whichever is lower.

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, you can safely assume
that there is no difference between the documented cost of the property and the
banks valuation amount.
9. Registration: Sealing the deal

After the legal and technical / valuation check, the draft documents as cleared by
the lawyer need to be finalized and signed and the stamping and registration of the
documents need to be done. Also, if any NOCs are pending, these need to be
obtained in the format approved by the banks lawyer.

10. Signing the home loan agreement: In black & white.

All borrowers need to sign the home loan agreement. You also need to submit post-
dated cheques for the first 36 months (if that is the agreed mode of repayment).
The original property documents have to be handed over to the bank at this stage.
Some banks also create a document recording the handing over of the property
documents to them as security for the due repayment of the home loan.

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 you.

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 you as per the home loan agreement signed by you.

11. Disbursement: The big payout.

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 your favour
have been submitted and all the necessary loan agreements have been executed,
finally, it is payment time! You will now actually receive the cheque in your hand.
Time to celebrate! But hold on a second. Before the big moment arrives, you need
to submit documents to prove that you have paid your personal contribution
towards the property, since banks normally finance only up to 85-90 per cent of the
total cost of the house.

In case you are expecting money from other sources to fund your own
contribution, you 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 you
provide documents to support that you have made an excess payment from your
own account that the cheque will be handed over to you directly by the bank.

Quick tips:

All banks charge interest on the loan amount from the day on which the cheque has
been made and not from the day on which the cheque is handed over to you/seller.
So, take delivery of the cheque the same day or the very next day to avoid paying
extra interest on money.

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 under-construction properties, the payment is
made in parts, also known as part-disbursement.

Each option would have different disbursement processes.

Part disbursement: When a loan is partly disbursed, the bank does not start EMIs
immediately, since it is calculated on the total loan amount at a particular rate of
interest and for a given tenure. Moreover, it normally does not start breaking up the
installments into its principal and interest components until the entire loan amount
is disbursed.

To overcome this difficulty, banks charge simple interest on the partly disbursed
loan amount. For instance, if you have a sanctioned loan of Rs10 lakh, but the
property is under construction and the bank has disbursed only Rs4 lakh, you will
be charged a simple interest only on the disbursed amount. This process continues
until the final disbursement takes place. The simple interest paid is called Pre-emi
interest or Pre-emi.

At this stage, banks may take only around three to six post-dated cheques on
account of Pre-emi.

Full and final disbursement: If it is a ready-possession property, the bank

disburses the entire loan amount in favour of either the reseller or the builder.

The relationship continues

The final disbursement does not end your 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:
Post-disbursement documents

Repayment

Income tax certificate

Prepayment

loan pre-closure/satisfaction

Post-disbursement documents

Payment receipt: Once the bank hands over the pay order to you, you in turn are
expected to hand it over to the reseller or the builder. You should get a receipt from
them for the payment and hand it back to the bank, as it will become part of your
mortgage documentation.

Share certificates: In case your property is part of a society, you will need to get the
flat transferred to your name by asking the society to issue the share certificate in
your 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 you need to repeat
the process until you 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 your installments are to be deducted against your salary, you need a letter
from your employer accepting this arrangement and directly remitting the amount
to the bank every month. This is possible only if your organization has an
arrangement with the bank for all employees.

Some banks allow you to give standing instructions to the bank where you have
your savings/current account to deduct money each month crediting your home
loan account.

Some banks allow the monthly installments to be paid by convenient ECS facility.
Another possible mode of payment is by cash or demand draft (not all banks offer
this). You can deposit the EMI every month at the banks office.

Income Tax certificate:

Every bank issues an income tax certificate that serves as requisite proof to let you
avail of tax benefits that accrue on repayment of a home loan. This will typically
contain the total amount of interest and capital repaid during the year.

This is mandatory to claim the tax benefit in respect of self-occupied property. You
will have to file this with your tax returns and submit this to your employer or
chartered accountant to calculate your tax liability.

Prepayment:

You can prepay a loan either in part or in full at any given point of time. You 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 you 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 you make full repayment and ask for
release of your property documents.

Loan pre-closure/satisfaction:

You also have the option of completely repaying the loan at any time. Of course,
each bank has its conditions for pre-closure. Also, the loan will get completely paid
off on the expiry of the tenure of the loan if you have paid all your installments on
time.

Once you have completely repaid your loan, ensure that the entire set of original
property documents is handed back to you. You should also ask the bank for a No-
Objection 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 you have guarantors, the bank will issue a separate letter for each of the
guarantors stating that their liability has come to an end. Only after you receive
these documents can you say that the property is now completely free of mortgage.

At this stage, in some cases, you may discover that the original documents have yet
not been received by the bank from the registrar. In such cases, you will need to
follow up with the registrar and get the documents from them directly by showing
them a copy of the banks clearance certificate.

Sometimes, (and we must stress only sometimes) the bank may misplace your
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 you want to shift your loan to a new
lender.http://www.apnapaisa.com/home-loan/process/

Home Loan
Home Loan is a secured loan offered against the security of a house/property
which is funded by the banks loan, the property could be a personal property or a
commercial one. The Home Loan is a loan taken by a borrower from the bank
issued against the property/security intended to be bought on the part by the
borrower giving the banker a conditional ownership over the property i.e. if the
borrower is failed to pay back the loan, the banker can retrieve the lent money by
selling the property.
Types of Home Loan
There are different types of home loans available in the market to cater borrowers
different needs.
Home Purchase Loan
Home Improvement Loan
Home Extension Loan
Home Conversion Loan
Bridge Loan
Home Construction Loan
Land Purchase Loan
Home Purchase Loan

These are the basic home loans for the purchase of a new home. These loans are
given for purchase of a new or already built flat/bungalow/row-house

Home Improvement Loan

These loans are given for implementing repair works and renovations in a home
that has already been purchased by the customer. It may be requested for external
works like structural repairs, waterproofing or internal works like tiling and
flooring, plumbing, electrical work, painting, etc
Home Construction Loan

These loans are available for the construction of a new home. The documents
required by the banks or bank for granting customer a home construction loans are
slightly different from the home purchase loans. Depending upon the fact that
when customer bought the land, the lending party would or would not include the
land cost as a component, to value the total cost of the property.

Home Extension Loan

Home Extension Loans are given for expanding or extending an existing home. For
example addition of an extra room, etc. For this kind of loan, customer needs to
have requisite approvals from the relevant municipal corporation.

Land Purchase Loan

Land Purchase Loans are available for purchase of land for both home construction
or investment purposes. Therefore, customer can be granted this loan even if
customer is not planning to construct any building on it in the near future.
However, customer has to complete construction within tenure of three years on
the same land.

Bridge Loan

Bridge Loans are designed for people who wish to sell the existing home and
purchase another. The bridge loan helps finance the new home, until a buyer is
found for the old home.

Public Sectors Bank

A Public sector bank is a bank that is owned by the government. The government
owns and controls the banks operations. The chairman, managing director and
other senior officials of the bank are answerable to the ruling government
regarding their functions and operations.

List of Public Sector Banks in India

State Bank of India
State Bank of Hyderabad
State Bank of Patiala
State Bank of Mysore
State Bank of Bikaner and Jaipur
 State Bank of Travancore
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Bharatiya Mahila Bank(BMB)
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab and Sind Bank
Punjab National Bank
Syndicate Bank
UCO Bank
United Bank of India
Union Bank of India
Vijaya Bank
IDBI Bank

Out of the following above banks, S.B.I bank is detailed for the information of
home loans with respect to public sector bank.

Company Profile of S.B.I

History of SBI

State Bank of India (SBI) is an Indian multinational, public sector banking and
financial services company. It is a government-owned corporation with its
headquarters in Mumbai, Maharashtra. As of 2016-17, it had assets of 30.72 trillion
(US$460 billion) and more than 14,000 branches, including 191 foreign offices
spread across 36 countries, making it the largest banking and financial services
company in India by assets. The company is ranked 232nd on the Fortune Global
500 list of the world's biggest corporations as of 2016.

The bank traces its ancestry to British India, through the Imperial Bank of India, to
the founding, in 1806, of the Bank of Calcutta, making it the oldest commercial
bank in the Indian subcontinent. Bank of Madras merged into the other two
"presidency banks" in British India, Bank of Calcutta and Bank of Bombay, to
form the Imperial Bank of India, which in turn became the State Bank of India in
1955.[8] Government of India owned the Imperial Bank of India in 1955, with
Reserve Bank of India (India's Central Bank) taking a 60% stake, and renamed it
the State Bank of India. In 2008, the government took over the stake held by the
Reserve Bank of India.

State Bank of India is a banking behemoth and has 20% market share in deposits
and loans among Indian commercial banks.

State Bank of India (S.B.I)

State Bank of India is an Indian multinational financial service company based in
Mumbai , Maharashtra. It was incorporated in 1955. Arundhati Bhattacharya is an
Indian banker and currently the Chair-Managing director of the State Bank of
India. SBI is the largest bank in the India. The bank currently has a national wide
network of 16,333 branches and 54,560 Automated Teller Machine (ATM). S.B.I is
one of the largest employers in the country having 222,033 employees. Some of
the major competitors for S.B.I in the banking sector are Axis Bank, ICICI Bank,
HDFC Bank, Punjab National Bank, Bank of Baroda, IndusInd Bank, Canara
Bank, Bank of India and Union Bank of India. S.B.I offer various types of loans
produced such as:-

1. SBI Home Loan Scheme

2. SBI Pre-approved Home Loan

3. SBI Yuva Home Loan

4. SBI Max Gain Home Loan

5. SBI Realty Home Loan

6. SBI NRI Home Loan

7. SBI Gram Niwas/Sahyog Niwas/Tribal Plus

8. SBI Green Home Loan

Private Sector Banks

Private sector banks are those banks in which majority of stake are hold by private
individuals and not by the government.
 AXIS Bank Ltd
Bandhan Bank Limited
Capital Local Area Bank Ltd
City Union Bank Ltd
Coastal Local Area Bank Ltd
DCB Bank Ltd
Dhanlaxmi Bank Ltd
ICICI Bank Limited
IDFC Bank Limited
IndusInd Bank Limited
ING Vysya Bank Ltd
Karnataka Bank Ltd
Kotak Mahindra Bank Limited
Krishna Bhima Samruddhi Local Area Bank
RBL Bank
Subhadra Local Area Bank Ltd
Tamilnad Mercantile Bank Ltd
The Catholic Syrian Bank Ltd
The Federal Bank Ltd
The HDFC Bank Ltd
The Jammu & Kashmir Bank Ltd
The Karur Vysya Bank Ltd
The Lakshmi Vilas Bank Ltd
The Nainital Bank Ltd
The South Indian Bank Ltd
Yes Bank Limited

Out of the following above banks, HDFC bank is detailed for the information of
home loans with respect to private sector bank.

Company Profile of H.D.F.C

History of HDFC

The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995. The Housing
Development Finance Corporation (HDFC) was amongst the first to receive an 'in
principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBI's liberalization of the Indian Banking Industry in
1994.
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable
network of over 1416 branches spread over 550 cities across India. All branches
are linked on an online realtime basis. Customers in over 500 locations are also
serviced through Telephone Banking. The Bank also has a network of about over
3382 networked ATMs across these cities.

Housing Development Finance Corporation (H.D.F.C)

Housing Development Finance Corporation (H.D.F.C) Bank Limited is an Indian
financial services company based in Mumbai, Maharashtra. It was incorporated in
1994. Aditya Puri is the Managing Director of H.D.F.C Bank. The bank currently
has a nationwide network of 4,014 Branches and 11,766 Automated Teller
Machine (ATM) in 2,171 Indian towns and cities. H.D.F.C Bank is the second
largest private bank in India as measured by asset. ICICI Bank is the first largest
Private Bank in India as measured by asset. H.D.F.C offer various types of loans
produced such as:-

Home Loan
Smart Draft
Loan against Rent Receivables
Personal Loan
Gold Loan
Tractor Loans
Two Wheeler Loan
Education Loan
Health Care Finance
Car Loan Loans against
Securities Commercial Vehicle Finance
Old Car Loan
Loans against Property
Construction Equipment Finance

Services offered by the company:

Personal Banking
Accounts & Deposits
Loans
Cards
Forex
Investments & Insurance

NRI Banking
Accounts & Deposits
Remittances
Investments & Insurance Loans Payment Services

Wholesale Banking
Corporate
Small & Medium Enterprises
Financial Institutions & Trusts
Government Sector
http://profit.ndtv.com/stock/hdfc-bank-ltd_hdfcbank/reports

Housing Development Finance Corporation Limited

Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd,
was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by
Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval
from RBI, for setting up a bank in the private sector. The bank was incorporated with the name
'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its
operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412
branches and over 3275 ATMs across India.

Scope and Significance of the Study

Present study will be conducted in Bathinda region; S.B.I & H.D.F.C bank of Bathinda region
has been taken as a representative unit of private banks and public sector banks. A survey of 100
people each from both the banks has been conducted who are the general people of the banks.
Professors, businessmen, Engineers and persons from self-employed category, etc, will be
surveyed.

Objectives of the study

To comparative study of home loan between S.B.I and H.D.F.C bank

To evaluate the customer satisfaction between S.B.I and H.D.F.C bank in context of home
loans.

DISBURSEMENT OF HOME LOAN

The every bank has its own procedure to disbursement the loan amount among
customers. After choosing your right home \, the net step is disburaement of home
loans. The loan amount is disbursed after identifing and selecting the property or
home that are purchased and submit the require legl documents.
PROFILE OF HDFC BANKAbout HDFC BANK HDFC Bank was incorporated
in August 1994, and, currently has an nationwide network of 2,544 Branches and
9,709 ATMs in1,399 Indian towns and cities. The Housing Development Finance
Corporation Limited (HDFC) was amongst the first to receive an in principle
approval from the Reserve Bank of India(RBI) to set up a bank in the private
sector, as part of the RBIs liberalisation of theIndian Banking Industry in 1994.
The bank was incorporated in August 1994 in the name of HDFC Bank Limited,
with its registered office in Mumbai, India. HDFC Bank commenced operations as
a Scheduled Commercial Bank in January 1995. HDFC is Indias premier housing
finance company and enjoys an impeccabletrack record in India as well as in
international markets. Since its inception in 1977,the Corporation has maintained a
consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units.
HDFC has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing related
credit facilities. With its experience in the financial markets, a strong market
reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.

Introduction: The origin of western type commercial Banking in India dates back
to the 18th century. The story of banking starts from Bank of Hindustan established
in 1770 and it was first bank at Calcutta under European management. It was
liquidated in 1830-32. In 1786 General Bank of India was set up. The Bank of
Calcutta established in 1806 immediately became Bank of Bengal. In 1921 these 3
banks merged with each other and Imperial Bank of India got birth. Imperial Bank
of India was later renamed in 1955 as the State Bank of India. Thus, State Bank of
India is the oldest Bank of India. After the independence, Reserve Bank of
India(RBI) was nationalized and given wide powers. The operations of all the
banks in India are controlled by the Reserve Bank of India. All the Indian banks
are governed by the Reserve Bank of India(RBI). This governing body took over
the reasonability of formally regulating the Indian banks in 1935. In 1949, Reserve
Bank of India was announced as the official Central Banking Authority for the
smooth supervision of the banking industry in India.

https://www.scribd.com/doc/19443643/A-STUDY-ON-HOME-LOANS-RAJNI-
MBA-3RD-SEM-FINANCE-COL-RDIAS-DELHI

file:///G:/disbursement/A%20Project%20Report%20on%20Home%20Loan%20_
%20Mortgage%20Loan%20_%20Loans.html

A loan that is acquired to purchase something. Car loans and home loans are
considered to be purchase loans. Purchase loans are usually repaid over a
designated point of time and are issued with some sort of fixed or variable interest
rate. "Becky and Tom applied for a purchase loan, so that they could purchase the
Mercedes Benz they always dreamed of owning

Read more:
http://www.investorwords.com/8198/purchase_loan.html#ixzz4ZRCiTXaF

4. Review of Literature

David C. (2008) concluded that many states compulsory pauses on both farm and nonfarm
residential mortgage foreclosures. Although moratoria reduced farm foreclosure rates in the short
run, they appear to have also reduced the supply of loans and made credit more expensive for
subsequent borrowers. The federal government took a number of steps to relieve residential
mortgage distress and to promote the recovery and growth of the national mortgage market.
Ashwani, Parvinder and Pushpinder (2009) studied the effect of various selected independent
variables (i.e Interest income, interest expenses, Non-interest income, operating and
administrative expenses and employee costs) on profitability of selected HFCs. Bi-variate
Correlation analysis was used to study the correlation between various variables. As per their
study, it was concluded that the overall profitability of the housing finance companies has gone
down as observed in falling trend of return on capital employed. Santoso and Sukada,
(2009)Even though housing is the largest asset owned by Indonesian households, most home
owners intend to leave their houses to their children rather than to reap the benefits of rising
house prices. Bandyopadhyay and Saha (2011) suggested that the borrower defaults on housing
loan payments is mainly driven by change in the market value of the property vis--vis the loan
amount and EMI to income ratio. They also identified that default on home loans also gets
triggered depending upon the borrower characteristics like marital status, employment situation,
regional locations, city locations, age profile and house preference. Ghosh S.(2012) in his study
mainly focused on the guidelines followed by commercial banks in India regarding the appraisal
process of housing loans with specific reference to Indian Overseas Bank. Gupta J. and Jain S.
(2012) focussed on the various practices adopted by cooperative banks in India and made a
comparison of the cooperative banks with respect to their efficiency with respect to lending
practices. The major findings of the study showed that majority (32% as per the study) of the
respondent were having housing loan for the bank under study, most (64% as per the study) of
the people prefer to take long term loan which is more than 3 years, there is a very simple
procedure followed by bank for loan, easy repayment and less formalities are the main factors
determining customers selection of loans, quality of services provided by the staff is satisfactory
because bank is catering to a small segment only and the customers are properly dealt with,
customers are satisfied with the mode of repayment of instalments, average time for the
processing of loan is less i.e approx 7 days. The authors also suggested measures to improve the
efficiency of the Cooperative banks. Rao T. S. (2013) discussed about the perception and
problems of home loan takers in Andhra Pradesh. The author has focused on research by taking
into account HDFC and SBI bank. The paper discussed about the Housing Policy frame work,
trends and progress in Housing Finance, the operational performance of HDFC and SBI with
regard to providing housing finance to individuals, perception and problems of home loan takers
in the State of Andhra Pradesh. The author concluded by stating that the Housing Finance in
India faced a number of set-back in decades but the designing of a shelter policy, the
organization of the housing finance market, the introduction of fiscal incentives have bought
about a number of changes in the housing finance. The services and product innovations are the
key tools for success. Kumaraswami M. and Nayan J. (2014) discussed about the importance of
housing finance and the institutions providing housing finance. A detailed discussion of the
marketing strategies adopted by financing institutions have been discussed by taking into account
the loan criteria eligibility, loan amount, interest rate, security, loan tenure, margin and
processing fee. Finally the paper highlights the performance of the housing sector, major findings
and suggestions to improve the effective marketing of housing finance for both public and
private sector banks.