MATUSHRI AHILYADEVI INSTITUTE OF MANAGEMENT & RESEARCH INDORE

SYNOPSIS OF MAJOR RESEARCH PROJECT ON ³A COMPARATIVE STUDY ON PROSPECT COUSTMER OF SBI AND PNB BANK FOR HOME LOANS´

GUIDED BY MS. SAMKITA JAIN

SUBMITTED BY SATISH KUMAR SLKARI MBA II YEAR BATCH 2008-10

TABLE OF COTENTS CHAPTER 1 (Section) 1.1 Introduction to Subject 1.2 Objective, Need, Scope & Methodology CHAPTER 2 (Section) 2.1 Introduction to Company 2.2 Overview of the industry (History, Growth, Landmarks, major players and their market share) 2.3 Profile of the organization 2.4 Company¶s history 2.5 Recent achievements and milestones 2.6 Product range of the company/industry 2.7 Performance of the company over the last few years(Statistical Profile) 2.8 Financial status of the organization 2.9 Future prospects/ plans CHAPTER 3 Survey of Literature CHAPTER 4 Interpretation CHAPTER 5 (Section ) 5.1 Conclusion 5.2 Limitations CHAPTER 6 References CHAPTER 7 Questionnaire

1.1 Section

INTRODUCTION
Home loans work like any other debt. That is, loans are simply specific money that We borrow from a bank, a private lender, or some other type of lender. Afterwards, we must repay our debts with interest. However, unlike other types of loans, home loans are different in several respects. Owning a piece of land or property is a lifetime dream for every individual. There are many home loans provider in the market.

There are different types of home loan:y y y y y y Home Purchase Loans Home Improvement Loans Home Construction Loans Home Extension Loans Home Equity Loans Land Purchase Loans

Bridge Loans

Home purchase loans:These are the basic forms of home loans used for Purchasing of a new home. With about a million home lenders and mortgage brokers it's becoming a tough challenge as the days are progressing. But at the same time, when the sites are coming up with all the latest tools and relevant information for us, and with all such conveniences, obtaining a home purchase loan or mortgage has become really pretty simple. However, at the same time though, we may be flummoxed to look so many attractive rates and offers in the market, not to forget the hidden costs associated with each of them.

Home improvement loan: Home improvement loans are used to finance Improvements and add on to the existing set of credentials of beauty on your owned house, recently purchased property or rented accommodation. Home improvement loans are used to maintain or enhance the value of your house. In general it includes: repairs, remodeling, energy-related items (permanent in nature), repairs, a new kitchen, a new bathroom, terrace, an extension or general property improvements. Luxury items and fireplaces are generally not eligible, though. Many improvements in landscape and even swimming pools are nowadays considered to be a part of home improvement.

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The factors include in calculations for house building costs? y y y y Design of the house Construction cost Financing Cost Buildable site All the above mentioned costs will help us to determine the amount we may need to borrow. Home equity loans are availed by customers. It may also be used to enclose open balcony/terrace space. we will be required to pay a deposit to your builder as well as paying a deposit for the land if we are buying land. his/her credit history etc. As work progresses you will need to make payments to the builder. The amount of loan sanctioned also depends on a number of factors such as the age of the applicant at the time of loan. terraces.Home construction loan: Home construction loans are used to finance for the Construction of our newly acquired home or if we are planning to build a home. who wish to mortgage his/her property to the bank for taking some loan for some other purpose. tenure of the loan. wash rooms. we may also be required to consider the total expenditures to develop the site in order to build. it's up to the bank's discretion to consider the market value of the property and accordingly decide how much to pay to the customer. Home equity loan: Home equity loans helps customer to encash the market value of the commodity by taking a loan by mortgaging the property. besides calculating the construction costs. Payment: Before the house starts getting build. repayment capacity of the borrower. For example. Both the residential as well as non residential property can be considered for the approval of the loan.Home equity loans don't restrict one to use the loan money . kitchens. by adding more rooms. So. Then. or constructing a Puja ghar. provided the mortgager is a licensed title holder and the land is free form any kind of dispute. or any other rooms for your growing family. Each site is unique requiring different expenditures so this specific rupee amount will vary from site location to site location. Maximum Amount of Home Extension Loans: Banks generally offers about 70-85% of the total amount of home extension as loan. Certain loans can be structured for progress payments to be made during construction. Home extinction loan: Home extension loans are used by customers to get loans from the banks to extend their houses.

etc. you will realize that a land purchase loan is one you will cherish. Now. If you have found and shorlisted the piece of land. Loans that are strictly for land purchase can be as scarce as good residential plots. medical expenses. Everyone has his/her dream perfectly sketched in his souls and so is his ambition to get his house erected on the exact location he dreamt that to be. Bridge loan: land purchase loan: Land Purchase loans are used by customers who wish to purchase a plot of land for commercial or residential purpose. that you have decided to purchase a land as an investment or for your own dream home. you have come to the best place you could have arrived in the web. and have arrived here for finance.in specific investments. However it should not be used in any illegal or speculation purposes. . higher education. It might also be used in marriage.

occupation.  y Secondary objective:.2 Section  Primary objective: -  To analyze the home loan scheme by PNB and SBI banks. A population of peoples who take home loan from these banks will be considered for this study. And from each strata we will go for random sampling. It is helpful in analysing the home loan service provided to the customer and their comparison. .1. and income group. Sampe place : Indore Sampling Method:-The sampling method will be probabilistic sampling more specifically the random convenient and judgemental sampling will be use. The sample will be taken in the form of strata based on age. As in probabilistic sampling the select unit for observation with known probabilities so that statistically sound assumptions are supported from the sample to entire population so that we had positive probability of being selected into the sample. of PNB and SBI. gender. In 100 respondents 50 respondents from PNB and 50 from SBI. Effort will be made to throw light on most of the factors which have either indirect or direct effect on the behavior of the consumer. To know that which bank provide batter loan schemes. I will go for stratified random sampling as we are interested to study the home loan by SBI and PNB banks. To study the cost of home loans provided by the bank. so we will make the strata on the basis of age. The sample will the peoples of age group lying between eighteen to thirty years. y To know the consumer perception about the home loan of PNB and SBI. So it is necessary to take the sample size. income level. y SCOPE OF THE STUDY: This study is analysis and comparison of home loans provided by the SBI and PNB banks. RESEARCH METHODOLOGY Design of Research: The research will be exploratory in nature. sex. I will also explore the impact of home loans on the market share of the banks. SAMPLING PLAN Sample Size: A Sample size of 100 respondents will be taken for the current study because it is not possible to cover the whole universe. I will try to explore about the home loans which would make a difference in the behavior of the consumer. .

State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. Gurgaon.State Bank of India (SBI). Around 2400 offices come under the network of Centralized Banking Solution or CBS. Ludhiana. STATE BANK OF INDIA: State Bank of India (SBI) is India's largest commercial bank. The website also provides info on the careers and recruitments at PNB and the exam results.45% as evaluated by the SSS Retirement. PNB topped the Best Paying Commercial Bank category with an overall rating of 87. Today. Death & Funeral Benefits Program.State Bank of Hyderabad (SBH). SBI has a vast domestic network of over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits and loans of all scheduled commercial banks in India. Chandigarh. Kolkata. The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries offering merchant banking services. factoring services. For an overview of the annual report or the bank profile. Chennai.State Bank of Mysore (SBM).State Bank of Patiala (SBP). Mumbai. primary dealership in government securities. the site can be resourceful. the Foreign Department and the Internationl Services division.The eight banking subsidiaries are:State Bank of Bikaner and Jaipur (SBBJ). SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings . credit cards and insurance. . The careers at nationalized banks like PNB are the most sought after one and candidates are selected on the basis of their exam result. fund management. Nodal and Bangalore. A need for centralized banking system prompted PNB to go computerized and what followed was the establishment of CBS in Punjab National Bank branches in all the leading cities like Delhi.State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT). Ahmedabad. Internet Banking Services are provided to all customers in the CBS branches.State Bank of Indore (SBIR).1 Section INTRODUCTION TO COMPANY: PUNJAB NATIONAL BANK : PNB has over 4500 branches and offices bringing the Punjab National Bank to your doorstep.CHAPTER 2 2. Jalandhar. A branch and ATM locator is also available on the official website of Punjab National Bank.the Domestic division. Pune. the Foreign Offices division. Hyderabad.

The Reserve Bank of India is the foremost monitoring body in the Indian Financial sector. despite the foray of foreign banks in the country. etc. The Indian banking system can be classified into nationalized banks. was established.2. While some brokers like to practice with individual clients others work for institutions. assessor. Opportunities The Banking sector is considered the most lucrative option in today¶s job market. after the nationalization of banks in 1969. As a result. In the Financial Services. loan processing officer. home loan agent. private banks and specialized banking institutions. profitability projections. compare financial results. But the industry changed rapidly and drastically. Brokers who work for institutional investors are often called securities traders. This is primarily due to the size of the banks and the penetration of the networks. Investment Banking and Retail Banking. survey the industry as a whole and on the basis of the available information. mortgage loan underwriter. 223 banks are in the public sector and 51 are in the private sector. even today. home loan officer. Security analysts are those who advise companies on floatation¶s of shares as they are expected to have sound knowledge of capital markets. The beginning of this industry can be traced back to 1786. However. personal loan officer. Many prefer to work as dealers. a position in Treasury or Forex is considered right on top and this is followed by careers in Private Banking. loan manager. probationary officer. accountant. In the industry. Then came the much-talked-about liberalization and economic reforms that allowed banks to explore new business opportunities and not just remain constrained to generating revenues from mere borrowing and lending. banking officer. Equity Analysts do jobs similar to investment analysts and research the equity markets and make predictions. Investment analysts are the backbone of the financial services sector. and customer service executive among others. assess various statistical information. These private sector banks include 24 foreign banks that have begub their operations here. the public sector banks began experiencing numerous positive changes and enormous growth. The industry is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. They study the financial reports of companies. It is a centralized body that monitors discrepancies and shortcomings in the system. and finally conclude to a decision. rural banks. The specialized banking institutions that include cooperatives. loan officer. product marketing and sales executive. nationalized banks continue to be biggest lenders in the country. Bank of Bengal. some of the important jobs include that of a stockbroker who is essentially a person who buys and sells securities on behalf of individuals and institutions for some commission. Industry estimates indicate that out of 274 commercial banks operating in the country. One could work in a variety of areas in banking industry including Recurring Deposit account. advisors and securities analysts. when the country¶s first bank. This provided the Indian banking scenario a remarkable facelift that only continues to get better with time. . form a part of the nationalized banks category.2 Section OVERVIEW OF THE INDUSTRY: HISTORY: Banking in India has a long and elaborate history of more than 200 years.

In order to help banks in India to understand the market and competition and plan future strategies. the limit for foreign institutional investment in private banks is 49%. said. Reforms have changed the face of Indian banking and finance.4% in 2005-06 to touch Rs 3. which has recorded the highest incremental growth in home finance segment in recent past. venture capitalists. ICICI Bank.2006 edition. Echoing a similar view. grew at a robust rate of 44. MAJOR PLAYERS: The financial sector in India has become stronger in terms of capital and the number of customers. Exposure to worldwide competition and deregulation in Indian financial sector has led to the emergence of better quality products and services. we have just come out with an Industry Insight on Indian Retail banking . It has become globally competitive and diverse aiming. In the first half of fiscal 2007. PNB Bank is a leading home loan lender of the country with about 30% market share. 2005. In addition.Growth: The limit for foreign direct investment in private banks has been increased from 49% to 74%.538 billion. Besides it profiles 21 major players in the retail banking space and their strategies. of which the home loan lending is about 50%. declined to disclose the bank¶s current home loan growth rate. post offices. The banking sector has improved manifolds in terms of capital . The report also paints a future outlook for the market. The home loan industry is experiencing a growth of 25% this year. Liberalization and globalization have created a more challenging environment in the banking sector as well as in the other segments of the financial sector such as mutual funds. Retail lending comprises 70% of the total loan portfolio of the bank.´ He added that the bigger impact had come from real estate prices. but obviously interest rates hikes will also have an impact. 2006' to their offering. With tightening of interest rates by the RBI and a simultaneous increase in real estate prices in a few markets. a senior official of State Bank of India (SBI) said the home loan market is showing some signs of slowing down. etc. at higher productivity and efficiency. capital markets. the banking sector is witnessing a decline in the growth of its home loan portfolio. senior general manager. It grew by a whopping 44. Home loan growth has reduced to 25% from its earlier growth rate at 30% and since we are an integral part of the industry. Research and Markets has announced the addition of 'Indian Retail Banking.35% during 2005-06. there will be some impact on us too. This leap was despite the increase in risk weight by RBI for housing and real estate loans during August. However. Housing Development Finance Corporation (HDFC) said the housing finance market for the middle class segment was growing at a healthy pace. another major player. the bank experienced total home loan disbursements of Rs 13. He. Finally. which has resulted in the fall in growth rates for home loans for the banking industry. Rajiv Sabharwal. as against 30% growth in home loans earlier. Indian Retail Banking continues to redefine the credit growth in the country. along with issues and challenges. it seems Reserve Bank of India's (RBI) flurry of measures to restrain the home finance market is paying off. Non Banking Finance Companies. which constitutes more than 52% of all retail loans. Housing.400 crore. ³The real estate prices have become very high in few markets. This report analyses the retail banking market and its segments in India and presents the key trends. however.

asset classification.adequacy. HDFC Standard Life Insurance . provisioning. Kotak Mahindra Bank Sundaram Bank Oriental Bank of Commerce TOP 10 PLAYERS IN INSURANCE           Life Insurance corporation of India Bajaj Allianz General Insurance ICICI Prudential Life Insurance ICICI Lombard General Insurance Birla Sunlife Insurance Tata AIG General Insurance New India Assurance Co. etc. TOP 10 PLAYERS IN BANKING & FINANCE           State Bank of India HDFC bank Citibank ICICI Bank Punjab National bank UTI Bank Hongkong & Shanghai Banking Corp. investment fluctuation reserve. income recognition. Iffco Tokio General Insurance Oriental Insurance Co. profitability. risk management. exposure limits.

2.3 Section

PROFILE OF THE ORGANISATION:
PROFILE OF PNB:
The profile of the PNB shows superior banking services in corporate, personal and international banking, industrial and agricultural finance and finance of trade. Punjab National Bank boasts of a varied clientele consisting of small and medium industrial units, exporters, multi-national companies, Indian conglomerates and NRI. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked, today it offers the largest banking network to the Indian customer. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking, etc.The objectives of the Company are in line with objectives laid down by RBI for the Primary Dealers: Strengthen the infrastructure in the government securities market in order to make it vibrant, liquid and broad based. Ensure the development of underwriting and market making capabilities for Government Securities . Improve secondary market trading system, which would contribute to price discovery, enhance liquidity and turnover and encourage voluntary holding of Government securities amongst a wider investor base . Become an effective conduit for conducting open market operations.

PROFILE OF SBI:
The SBI¶s powerful corporate banking formation deploys multiple channels to deliver integrated solutions for all financial challenges faced by the corporate universe. The Corporate Banking Group and the National Banking Group are the primary delivery channels for corporate banking products. The Corporate Banking Group consists of dedicated Strategic Business Units that cater exclusively to specific client groups or specialize in particular product clusters. Foremost among these a specialized group is the Corporate Accounts Group (CAG), focusing on the prime corporate and institutional clients of the country¶s biggest business centers. The others are the Project Finance unit and the Leasing unit.The National Banking Group also delivers the entire spectrum of corporate banking products to other corporate clients, on a nationwide platform. The bank is also looking at opportunities to grow in size in India as well as Internationally. It presently has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries in India ± SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming a formidable group in the Indian Banking scenario. It is in the process of raising capital for its growth and also consolidating its various holdings. Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all employees together on this exciting road to Transformation. In a recently concluded mass internal communication programme termed µParivartan¶ the Bank rolled out over 3300 two day workshops across the country and covered over 130,000 employees in a period of 100 days using about 400 Trainers, to drive home the message of Change and inclusiveness. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme.

2.4section

COMPANY HISTORY:
PNB HISTORY:
Punjab National Bank of India was established by Lala Lajpat Rai in the pre-independence India in 1895 in Punjab, with Lahore as its head office. Today it is the second largest public sector bank in India. It was nationalized in 1969 along with 13 other major commercial banks. The privatization started in 1989 when 30 per cent of its shares were offered to the public and it was listed on the stock exchange.In 1992, PNB became the first Philippine bank to reach P100 billion n assets. Later that year, privatization continued with a second public offering of its shares. In August 2005, PNB was fully privatized. The joint sale by the Philippine government and the Lucio Tan Group of the 67% stake in PNB was completed within the third quarter of 2005. The Lucio Tan Group exercised its right to match the P 43.77 per share bid offered by a competitor and purchased the shares owned by the government. The completion of sale is expected to speed up the development of PNB¶s franchise and operational competitiveness.

SBI HISTORY:
The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of Parliament as successor to the Imperial Bank of India. Today, State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. SBI's International Banking Group delivers the full range of cross-border finance solutions through its four wings - the Domestic division, the Foreign Offices division, the Foreign Department and the International Services division.

2.5 Section

RECENT ACHIVEMENTS AND MILESTONES:
PNB Recent achievements and milestones
Punjab National Bank (PNB), has announced that it has completed 100% core banking implementation at all its 4604 branches and extension counters through the Finacle Universal Banking Solution from Infosys, on Sun infrastructure and the Oracle Database setting a significant milestone for themselves and a new benchmark for the Indian banking industry. Completed in November 2008, 4 months ahead of schedule, the bank implemented industryleading Finacle core banking solution from Infosys across its operations running a flexible, and scalable database platform from Oracle and innovative servers from Sun Microsystems With an increasingly dynamic business and regulatory environment, PNB sought to not only achieve automation, but also centralize operations, standardize branch processes, achieve high scalability for future business growth, provide flexibility of creating innovative banking products to its lines of business, and at the same time, reduce overall costs. The visionary zeal and the futuristic view of the Bank¶s top management in the year 2007-2008 incubated the idea of introduction of a Centralised Banking solution. The bold and innovative thought culminated into the CBS architecture with Finacle application on Oracle Database and Sun hardware platform with Solaris Operating System. With Finacle¶s agile and future proof technology, the bank today has over 22,500 concurrent users. The solution¶s scalability has also enabled the bank¶s scalability to be the best in the country with the number of peak transactions at 3.5 million. Finacle core banking platform also provides the bank with exceptional agility for product innovation and improved flexibility of operations. With seamless integrationof delivery channels such as ATM and internet banking solutions, PNB is able to provide 24X7 services to customers at a reduced transaction cost. PNB¶s choice of the Oracle Database has provided the bank¶s IT infrastructure with robustness, management features, security and scalability as well as performance requirements to service 3.5 million transactions and 22500 concurrent users ± a significant achievement in the Indian banking industry. In addition, the Oracle Database will help PNB take control of its enterprise information, gain better business insight, and quickly and confidently adapt to an increasingly changing competitive environment. With secure, highly available and scalable grids of low-cost servers and storage, Oracle customers can tackle the most demanding transaction processing, data warehousing, business intelligence and content management applications. The 100% implementation of Finacle Core Banking Solution shall enable PNB tofurther reduce operational costs and revenue leakage while improving productivity of branches, introduction of new and innovative products and visibility of business. The anywhere anytime banking facility will enable the bank to offer products for every segment of the customer. PNB long-standing and progressive partnership also highlights Finacle¶s leadership in large scale banking transformation, the solution¶s future proof technology and

The Lipper Award (Year 2005-2006) and most recently with the CNBC TV . Similarly.8 times.4 Awards. CNBC TV ± 18." SBI Card recently signed up Indian cricketer Yuvraj Singh as its brand ambassador." he said.powerful capabilities. Opening 10. along with improved value propositions for the urban affluent customers. The Minister said out of the over 100 crore people. People all over the world.´ SBI RECENT ACHIVEMENTS AND MILESTONES: AWARDS: SBI has been the proud recipient of the ICRA Online Award .18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes. India is a strategic market for Finacle and we look forward to closely collaborating with Punjab National Bank for their future growth plans. a joint venture between State Bank of India and GE Money. including the Chinese. SBI joins Chinese bank to touch 10. Banks should go to the people and enroll them as account holders. "It is not an easy milestone though the SBI was the bank of the government and Indian people even before other banks were nationalised. would now know about this small village where the 10000th branch of the SBI had been opened. "This milestone is even more remarkable as we have added one million cardholders in just ten months. SBI Card reaches three million milestone: SBI Card.000 branches. The bank should be proud of the achievement he said and wished that the bank opened one lakh branches. said. Our objective is to accelerate the pace of growth by extending the benefits to a broader range of consumers in Tier II cities.000 branches: Public sector State Bank of India on Sunday became only the second bank in the world to have 10. Speaking on the occasion. seventy 75 per cent did not have any type of insurance.000 branches was a great feat.' he said. he said adding they would be amazed by the bank's growth.6 Section PRODUCT RANGE OF COMPANY/INDUSTRY: The products and services provided by the SBI and PNB are in various fields. ] 2. Roopam Asthana. CEO-SBI Card. 'That is what economists say is financial inclusion. 50 per cent of the 11 crore farmers did not have bank account. Chidambaram said China's ICBC Bank was the other bank to have 10. such as: ‡ Banking services ‡ NRI services ‡ International banking ‡ Corporate banking ‡ Agricultural banking ‡ International banking . Crisil Award 2006 . announced yet another landmark achievement of crossing the three million cardholdersmark.000 branches when Union Finance Minister P Chidambaram inaugurated its latest branch here.

2008 approving the plan to merge the two banks. PNB¶s consolidated total asset size remained strong at P242 Billion. This performance bucks industry trends for the 1st quarter of 2008 based on published income reports.7 billion versus end-2007. PNB continues to reap the benefits from its efforts to strengthen core businesses. PNB still managed to reflect a 136% growth in foreign exchange gains year-on-year. A relentless focus in generating low-cost funds from deposits and other funding sources led to a reduction in total interest expense by as much as 27%.5 billion. both in the large and SME categories. and effectively in-source core overseas operations to its global data center in the Philippines. 2008. With the significant strengthening of its balance sheet over the past few years. Total deposits closed firm at P180 billion. The contribution from the consumer finance business has likewise continued to register accelerated growth. reduce non-performing assets and manage costs. Singapore. PNB has been able to concentrate on generating new client relationships in the corporate segment. Combined new bookings for the 1st quarter 2008 already reached the half-billion mark. Hongkong and United States branches as well as the London subsidiary have already been converted and the rest of the Bank is expected to go live soon. As of March 31. up P2. The Bank has recently implemented a new generation core banking system: Flexcube ± an end-to-end solution designed to automate both corporate and retail banking businesses. PNB is going to the capital markets to raise a minimum of P3 billion of Tier 2 Capital in preparation for its maturing subordinated notes in February 2009.51%. As of March 31. Even as the operating environment proved volatile where negative trends are expected. Net Income for the 1st Quarter of 2008 registered P457 million. from P242 million to P571 million. PNB¶s Capital Adequacy Ratio under Basel II remained formidable at 18.2. up 25% from end-2007. This transaction is subject to the approval of shareholders and regulatory authorities and is expected to be completed by the 3rd quarter of 2008. up 48% from P308 million of the same period last year. PNB¶s Japan. PNB¶s Net Loans and Receivables closed P77 billion.3 billion.7 Section PERFORMANCE OF COMPANTY IN LAST FIVE YEARS: PNB performance in last five years: 1st Quarter Net Income UP 48% Year-on-Year Taking-off from a breakthrough performance in 2007 with a registered net income of P1. still way above the 10% ratio required by the Bangko Sentral ng Pilipinas. Operating expenses were down 23% despite investments made in systems enhancement and upgrading of facilities. The respective Board of Directors of PNB and ABC passed resolutions last April 30. PNB will emerge as the 4th largest domestic bank in the country in terms of asset size once its planned merger with Allied Banking Corporation (ABC) is completed. 2008. . Subject to appropriate approvals and clearances. Total consumer loans portfolio stood at P3.

51 crore.13 lakh." SBI said in that statement. managing directors TS Bhattacharya and Yogesh Agarwal and top office bearers of its officers and employees associations.42 crore. Our vast network is failing to attract the new and demanding young customers. On the other hand. respectively. the country's largest and oldest bank has offered an exit option scheme (EOS) to its employees. The bank has some 2. 2.66 lakh and Rs 2. To address these issues.99 crore of business per employee." SBI had recently said in a joint statement issued by the management and unions. Canara Bank has a business per employee (BPE) of Rs 4. They have appealed to the bank's staffs to go flat out to increase its customer base. both the management and unions have agreed to work hand in hand. "Over the years. out of which nearly 1. "Our business per employee and profit per employee is one of the lowest in the industry. Let us expand our customer base. These are according to their respective annual reports for 2005-06. Canara Bank's profit per employee (PPE) is also on the higher side at Rs 3. The bank has nearly 37 lakh savings bank accounts in the Bengal circle itself. For instance. while its profit per employee is just about Rs 2. we have been steadily losing our marketshare from about 35% in 1970s to around 16% in 2006. which is addressed to all SBI officers and employees and aimed at changing their attitude towards customers." the statement read. these two parameters are among the lowest in the industry.02 lakh.8 Section FINANCIAL STATUS OF THE ORGANISATION: PNB financial status for last five years: . By contrast. the bank is trying to reduce its staff strength which would eventually improve the ratios.Meanwhile. the bank is also going flat out to increase its customer base.SBI performance in last five years: State Bank of India (SBI) is all geared up to increase its business per employee and profit per employee as it thinks that for SBI.1 lakh staffs.SBI's generates Rs 2. while Union Bank of India's BPE is at Rs 4. The PPEs of Union Bank and BoB are at Rs 2.17 lakh."Let us be conscious of the customer's overall needs rather than only the transaction at hand. but on the other. On one hand.4 lakh are clerical and subordinate employees. The statement was jointly signed by chairman OP Bhatt.36 crore and Bank of Baroda's (BoB) Rs 3. majority of the large public sector banks are better in terms of both these parameters.

77 2.85 7.537.24 3.699.15 8.149.265.98 48.154.584.21 7.11 4.006.21 3.99 Gross profit 4.459.94 Operating profit 10.730.91 4.84 45.04 4.06 4.3 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Uses of funds Fixed assets Gross block 3.029.64 2.022.86 6.86 EPS (Rs) 64.64 .84 Interest 8.056.74 5.230.65 44.683.917.72 41 Balance sheet Balance sheet Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Sources of funds Owner's fund Equity share capital 315.707.39 4.874.02 11.48 9.120.453.Annual results year Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Sales 14.721.778.

384.237.69 910.85 302.3 315.93 Share application money Preference share capital Reserves & surplus 10.467.38 312.65 1.535.35 9.076.70 293.3 265.31 Less : revaluation reserve 1.08 Net block 779.83 715.92 1.12 1.645.3 315.49 321.74 2.04 Less : accumulated depreciation 1.92 1.826.98 .3 2.247.42 746.106.875.315.

916.47 Capital work-in-progress Loan funds Secured loans Unsecured loans 1.68 7.457.125.39.31 50.19.03.8.50 4.84 87.166.80 .23 1.74 578.189.672.533.89 Net current assets Current assets.71 45.67 1.758.859.40 3.84 652.991. loans & advances Investments 727.92 1.380.684.055.66.81 53.83 42.980.425.84 41.49 4.

114.093.197.51 9.48 Total net current assets -10.762.261.23 10.3.44 3.71 -5.178.38 -6.756.14 -9.194.93 12.798.101.30 Miscellaneous expenses not written - .79 3.417.80 8.853.36 -4.18 Less : current liabilities & provisions 14.518.

0 9 186. 82 2. 54 23.121.16 Total 44. 76 Mar ' 06 9.88 1.20 37.Total 1.6 2 3.10 36.797.185.758.694.764.85 1. 25 2.350.712.239.15 941.69 92.38 - 3.850.732. 45 18.232.462.6 7 2.352.6 5 - 0 - 2.617.5 3 59.001.85 2.31 1.12 - - 2.01 42. 22 Mar ' 04 9.354.11. 23 19.47 - 3.2 3 131.654.77 - 3.791.63 - - 2.360.656. 51 1.34 - 1.607.429. 08 Mar ' 07 12.076.6 9 2.5 4 1. 38 - .015.77.114.6 - 3. 77 Mar ' 05 9.90 1.28.027. 06 10.5 3 470.247.16 933.50.073.032.708.461.28 1. 97 20.2 4 - - 2.928.092.925.104. 99 2.03 1.99 year Operatin g income Materia l consum ed Manufactu ring expenses Person nel expens es Sellin g expe nses Adminstra tive expenses Expenses capitalise d Cost of sales Operati ng profit Other recurr ing incom e Adjust ed PBDI T Mar ' 08 15. 33 3.4 6 231.91 - 3.15 39.731.536.

63 1.410.57 - 63.9 3 1.9 6 1.9 9 170.436.66 1.53 183. 73 1.1 2 - 69.223.154.6 Profit loss Cash flow Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Profit before tax 3.8 9 189.3 9 4.409.12 - 23.31 1.9 4 1.1 8 106.28 409.24 1.8 6 6. 33 1.108.472. 50 1.410.12 1.8 629.65 412.1 2 2.8 5 2. 66 1.1 8 174.022.76 2.723.69 - 13.13 2.212.250.341.91 .83 2.064.05 0.295.69 1.047.9 7 194.1 1 4.108.65 1.247.31 - 26.49 0.523.584. 57 1.Financi al expens es Depreciat ion Adjuste d PBT Tax charges Adjust ed PAT Non recur ring items Reported net profit Earnigs before appropria tion Equit y divide nd Prefere nce dividen d Divid end tax Retain ed earnin gs 8.8 9 409.742.453.539.917.28 495.439.76 1.9 1 4.79 0.108.45 660.15 2.48 181.540.08 1.62 1. 45 1.730. 46 988.048.439.11 186.910.23 3. 60 1.

activity 1.756.904.157.34 14.68 Net cashflow-operating activity 1.873.961.033.44 1.53 529.13 2.46 -159.13 1.74 1.57 -793.87 1.544.169.20 Netcash used in fin.144.2.83 -176.13 -10.54 1.073.64 -349.81 .29 Net cash used in investing activity -444.41 -465.768.

69 11.52 24.089.51 SBI financial status for last five years: .820.645.52 24.03 8.268.146.702.19 Cash and equivalnt end of year 18.66 2.21 -9.791.791.830.33 Cash and equivalnt begin of year 15.089.24 Net inc/dec in cash and equivlnt 3.72 15.645.69 11.51 8.390.03 8.17 13.185.51 743.820.077.

36 21.44 0.3 21.35 -0.03 24.35 EPS (Rs) -16.9 0.24 -4.66 Operating Interest profit 0.29 21.63 -18.19 -14.13 -13.17 -3.67 21.79 -21.17 -20.42 -12.Annual results Year Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Sales 0.06 -0.58 Balance sheet Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 .3 Gross profit -24.

00 Share application money Preference share capital Reserves & surplus .00 15.00 15.Sources of funds Owner's fund Equity share capital 15.00 15.00 15.

64 -265.56 -276.64 .56 -291.-309.32 -286.66 -245.32 -271.35 Loan funds Secured loans Unsecured loans Total -294.

-250.57 0.57 0.10 0.24 0.86 Less : revaluation reserve Less : accumulated depreciation 0.24 .66 -230.72 2.35 Uses of funds Fixed assets Gross block 0.10 0.72 0.

48 0.48 1. loans & advances 11.27 Capital work-in-progress Investments Net current assets Current assets.59 Net block 0.1.44 .48 0.48 0.

79 -272.04 -276.12 -251.62 Miscellaneous expenses not written - .77 Total net current assets -295.16.30 23.09 296.52 263.38 32.15 Less : current liabilities & provisions 306.14 -231.98 24.10 275.47 293.

Total -294.64 -250.35 Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities 0.22 .66 -230.56 -276.32 -271.

00 150.00 150.40 10.40 Number of equity sharesoutstanding 150.00 .0.22 10.21 0.00 150.00 150.

(Lacs) Profit loss account Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Income: Operating income 1.66 10.90 Expenses Material consumed .02 0.44 0.90 0.

03 Personnel expenses 0.09 0.12 0.14 0.72 Selling expenses - .Manufacturing expenses 0.20 0.

44 0.29 0.0.41 0.45 Expenses capitalised Cost of sales 0.20 Operating profit 0.51 0.48 12.03 Adminstrative expenses 0.68 13.58 .29 0.44 0.

35 21.11 0.03 -2.16 0.30 Financial expenses 21.79 Adjusted PBDIT 3.30 Other recurring income 2.66 .0.55 0.01 -0.39 0.36 21.11 12.36 21.10 0.76 -2.53 12.30 28.

80 -21.02 1.26 -20.56 -31.98 Tax charges 0.Depreciation 0.24 -8.01 .01 0.02 Other write offs Adjusted PBT -18.

0.56 -31.27 -20.13 0.81 -21.27 0.01 Adjusted PAT -18.08 -2.65 Reported net profit .17 9.01 0.25 -8.95 Other non cash adjustments 4.98 Non recurring items 0.

40 -268.29 Earnigs before appropriation -312.25 -4.32 -294.99 -20.31 -25.67 -20.-18.08 -289.11 Equity dividend Preference dividend - .42 -248.

40 -268.32 -294.Dividend tax Retained earnings -312.08 -289.11 Cash flow Mar ' 08 .42 -248.

98 -21.06 -25.29 .24 -4.Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Profit before tax -18.67 -20.

85 29.Net cashflow-operating activity -4.89 5.08 -7. activity -0.65 0.65 0.01 0.46 Netcash used in fin.02 88.09 .19 Net cash used in investing activity 0.46 -131.50 Net inc/dec in cash and equivlnt -4.89 5.

-6.9 Section FUTURE PLANS: PNB future plans: PNB has initiated various steps in a bid to expand its operations in the state of Kerala.42 17.85 Cash and equivalnt begin of year 16.06 2. PNB currently has 71 CBS branches in Kerala and has registered good growth from this region.51 10. These include opening new branches and increasing the number of its core banking solutions branches. the company is planning to set up offices in UK.16 10.91 Cash and equivalnt end of year 11. Singapore. PNB in looking at increasing its international presence and in line with this. The Canada office is likely to open very soon. Hong Kong and Canada. .27 16. while the other locations are likely to commence operations by end of this fiscal year.64 -13.06 30.16 10.42 17.51 10.

the size of SBI¶s balance sheet will cr-oss Rs 12. SBI drawn up a home-grown strategy to carry out the merger programme and we may take up such mergers one by one.The Bank has started to leverage our vast SHG network for various services beyond credit delivery.000 crore and its profitablity will increased. . The State Bank of India (SBI) has formulated a ³home-grown strategy´ to merge its six associated banks with it within this fiscal.Post-merger.00. or two at a time or in a phased manner. SBI want the future mergers to be as smooth as the merger. SBI future plans: SBI has set for itself an ambitious target of credit linking 1 million SHGs up to March 2008.PNB unvieled its plans to raise additional capital of Rs.000 million to fund its business expansion plans for this current fiscal. 21.

always remains on the top priority of any person. The main objective of the bank is to promote and establish the housing financial institutions in the country as well as to provide refinance facilities to housing finance corporations and scheduled commercial banks.e. . The paper is based on the case study of LIC Housing Finance Ltd.CHAPTER 3 REVIEW OF LITERATURE: 1) In august 2001 James B. economy.. The data reject the hypothesis that access to increased funds will increase the amount of small-business loans made by community banks. In India. The first attempt in this regard was the National Housing Policy (NHP). Craig had studied about the Federal Home Loan Bank Lending to Community Banks.. government and society at large. their portfolio amounts and the defaults for the last ten years. From the last decade. 2) In December 2006 Fulbag Singh and Reema Sharma had studied about the housing Finance in India. They empirically investigate whether funding constraints impact the smallbusiness lending decision by rural community banks. the tax rebates on housing loans have been introduced. Housing. i. Specifically. as one of the three basic needs of life. they estimate two empirical models of small-business lending by community banks. and address a market failure in rural markets for small enterprise loans. Moreover. from 1995-96 to 2004-05 by working out relevant ratios in terms of percentages and the compound annual growth rates.are Targeted Subsidies Necessary? The Gramm-Leach-Bliley Act of 1999 amended the lending authority of the Federal Home Loan Banks to include advances secured by small enterprise loans of community financial institutions. for the salaried section. A relevant chart has also been prepared to highlight the results. stabilize the Federal Home Loan Banks. including the need to: subsidize community depository institutions. Thomson and Ben R. The National Housing Bank (NHB) was set up in 1988 as an apex institution for housing finance and a wholly-owned subsidiary of Reserve Bank of India (RBI). the Government of India has been continuously trying to strengthen the housing sector by introducing various housing loan schemes for rural and urban population. which analyzes region-wise disbursements of individual house loans. which was introduced in 1988. majority of the population lives in slums and shabby shelters in rural areas. Three possible reasons for the extension of this selective credit subsidy to community banks and thrifts are examined.

(2) changes in the risk profile of borrowers. there was no statistically significant . 2007 Michael LaCour-Little had studied about the Economic Factors Affecting Home Mortgage Disclosure Act Reporting. Results suggest that after controlling for the mix of loan types. and the yield curve. credit risk factors.3) In May 18. Here we assess three possible explanations for the observed increase in 2005 over 2004: (1) changes in lender business practices. The public release of the 20042005 Home Mortgage Disclosure Act data raised a number of questions given the increase in the number and percentage of higher-priced home mortgage loans and continued differentials across demographic groups. and (3) changes in the yield curve environment.

Therefore. wholesale originations did significantly increase.S. 4) In may 1991 Stephen F. Borde had studied about the ³Is the Savings and Loan Industry Facing Extinction?´ This article tells about the Saving and loan crisis.increase in reportable volume for loans originated directly by lenders during 2005. such as home ownership mortgages. Specifically. though indirect. given a model of the factors affecting results for 2004-2005. S&L assets consist largely of long-term loans. Despite the increasingly more difficult economic environment. in the absence of adequate hedging measures. Such easing includes: * The drastic reduction of minimum down payment levels from 20% to 0% * A focused effort to target the "low income" borrower * The reduction in private mortgage insurance requirements on high loan to value mortgages * The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as "current" * Changes in the appraisal process which has led to widespread overappraisal/overvaluation problems If these trends remain in place. which can lead to lower profits when interest rates rise. it is likely that the home purchase boom of the past decade will continue unabated. Based on our analysis. They studied about the prospects of the U. it may be possible for lenders to further ease credit standards and more . Finally. Proposed solutions are discussed in the context of the industry as it currently stands. Whereas banks assets consist of short-term loans. With a somewhat similar liability structure to that of banks (mainly short-term deposits). it appears that a large portion of the housing sector's growth in the 1990's came from the easing of the credit underwriting process. S&Ls are more vulnerable to interest rate risk. 5) In June 29. housing/mortgage sector over the next several years. 2001 Joshua Rosner had studied about the Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt. we predict that 2006 results will continue to show an increase in the percentage of loans that are higher priced when final numbers are released in September 2007. we believe there are elements in place for the housing sector to continue to experience growth well above GDP. we believe there are risks that can materially distort the growth prospects of the sector. the asset structure of S&Ls is quite different. However.

Although we have yet to see any materially negative consequences of the relaxation of credit standards.S. credit quality . consumer and the reduction of home equity available in the home. a decline in real estate prices and increased foreclosure expenses. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. holders of mortgage assets are currently recasting or modifying troubled loans. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them.fully exploit less penetrated markets. In an effort to keep homeowners in the home and reduce foreclosure expenses. If there is an economic disruption that causes a marked rise in unemployment. a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. These impacts come in several forms. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. These impacts would be exacerbated by the increasing debt burden of the U. They include a reduction in the demand for homeownership. a protracted housing slowdown could eventually cause modifications to become uneconomic and. the negative impact on the housing market could be quite large. we believe the risk of credit relaxation and leverage can't be ignored. However. Importantly. thus.

but my proposed analysis is based on whether the system honors and furthers the goals of wealth building. 7) In 1999 Yoko Moriizumi had studied about the Current Wealth. They studied that Public investment in and promotion of homeownership and the home mortgage market often relies on three justifications to supplement shelter goals: to build household wealth and economic self-sufficiency. humane. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures. positive social psychological states. industry loss mitigation efforts. a system of delinquency management that honors these objectives should strive to provide fair. I contend that a system of mortgage delinquency management should be an enduring component of housing policy. to generate positive social-psychological states. better origination practices cannot eliminate the need for delinquency management. however. this essay starts the process of analyzing mortgage delinquency management tools in the proposed fashion. Housing Purchase and Private Housing Loan Demand in Japan. Whatever their merit. 6) In dec 2002 Melissa B.statistics would likely become relevant once again. it is tempting to focus on its impact on mortgage credit cost and access or on the absolute number of homes temporarily saved. transparent. Japanese households accumulate wealth for downpayments at a high rate. Legal scholarship should no longer discuss mortgage enforcement primarily in terms of foreclosure law and instead should include other debtor-creditor laws such as bankruptcy. Homeownership and mortgage obligations do not inherently further these objectives. Jacoby had studied about the Home Ownership Risk Beyond a Subprime Crisis: The Role of Delinquency Management. The most visible triggers of the recent surge in subprime delinquency have produced calls for emergency foreclosure avoidance interventions (as well as front-end regulatory fixes). Furtherance of housing and household policy objectives hinges in part on the conditions under which homeownership is obtained.exited. One function of this brief essay is to identify an existing rough framework for managing delinquency. maintained. and sometimes undermine them. and to develop stable neighborhoods and communities. Given that high leverage or trigger events such as job loss and medical problems play significant roles in mortgage delinquency independent of loan terms. Therefore. Although more empirical research is needed. Because those ends are not inexorably linked to ownership generally or owning a particular home. and . and community development. In terms of analyzing this framework. . and thirdparty interventions such as delinquency housing counseling. leveraged.in some situations . and predictable strategies for home exit as well as for home retention.

likelihood of borrowing. However. Berger had studied about the Loan commitments and bank risk exposure. moral hazard and adverse selection problems . and housing consumption are not elastic. They studied about the Loan commitments increase a bank's risk by obligating it to issue future loans under terms that it might otherwise refuse. We use a simultaneous equation Tobit estimation method. On the other hand. the number of housing starts is linked strongly to the private mortgage market. Avery and Allen N. Therefore. 8) Robert B.current wealth plays an important role in home acquisition as public loans whose direct mortgage lending is a strong support for home purchasers. a change in housing consumption affects the likelihood of borrowing elastically much more than the private mortgage amount of borrowers. Wealth effects on private mortgage debt. Housing and private mortgage markets fluctuate very closely with the number of participants in the mortgage market. We estimate the wealth effect on private mortgage debt as well as housing consumption by applying a model where mortgage debt demand is derived from house purchase decisions and is determined jointly with housing consumption.

potentially may result in these contracts being rationed or sorted.Souphala Chomsisengphet and John C. economy has experienced substantial fluctuations in real and nominal interest rates since the 1970s. 9) Sumit Agarwal. households disinvest in government securities and invest in real assets.S. Our findings are consistent with their predictions. . they studied that The U. commitment loans could be safer or riskier on average than other loans. Hillebrand had studied about the Interest Rate Volatility and Home Mortgage Loans . Firms facing higher rates and fees have smaller credit lines. which yield a positive relationship between mortgage rate volatility and home mortgage loans. Firms with higher growth commit to larger lines of credit and have a higher rate of line utilization. Most loans are in the form of credit lines. Firms experiencing more uncertainty in their funding needs commit to smaller credit lines. Contrary to common wisdom. which have a wide menu of financing options. Empirical studies of line demand have been complicated by their use of data on publicly traded firms. Almost all firms convert unused credit line portions into spot loans and take out new lines. the empirical results indicate that commitment loans tend to have slightly better than average performance. We test Martin and Santomero's (1997) model. They studied that. we find a positive relationship between mortgage rate volatility and home mortgage loans. Depending on the relative risks of the borrowers who do and do not receive commitments. Further investigation indicates that this is due to volatility in the bond market. In times of high interest volatility. Driscoll had studied about the Loan commitments and private firms. 10) Faik Koray and Eric T. We avoid this problem by using a unique proprietary data set from a large financial institution of loan commitments made to 712 privately-held firms. suggesting that commitments generate little risk or that this risk is offset by the selection of safer borrowers. in which lines give firms the speed and flexibility to pursue investment opportunities. This paper investigates empirically the relationship between home mortgage loans and volatility in mortgage rates for the period 1971:02 through 2003:03.

They studied about the the impact of increased use of home equity lines and decreased . 2008 David P. 12) In October 14. Bernstein had studied about the Home Equity Loans and Private Mortgage Insurance: Recent Trends & Potential Implications.11) In nov 2000 Michelle J. We develop a combined model of debtors' decisions to file for bankruptcy and to default on their mortgages and show that the theory predicts positive relationships between both the homestead and personal property exemption levels and the probability of borrowers being denied mortgage (secured) and home improvement loans. They studied that This paper investigates the relationship between bankruptcy exemptions and the availability of credit for mortgage and home improvement loans. We test these predictions empirically and find strong and statistically significant support when evidence from crossstate variation in bankruptcy exemption levels is used. Lin had studied about the Bankruptcy and the Market for Mortgage and Home Improvement Loans. Applicants for mortgages are 2 percentage points more likely to be turned down for mortgages and 5 percentage points more likely to be turned down for home improvement loans if they live in states with unlimited rather than low homestead exemptions. These relationships also hold when we introduce state fixed effects into the model. White and Emily Y.

consumer credit. with some variation evident when loans are originated through brokers. The comparisons suggest single-lien households tend to have slightly stronger financial variables than multiple-lien households. The data confirms that in the years leading up to the mortgage crisis home buyers and lenders have aggressively used piggyback loans to avoid taking out PMI on first mortgages.5% in survey year 2007. 14) In 24 oct 2008 David C. FHA. They studied .private mortgage insurance (PMI) on mortgage markets. Data from the SCF was used to compare five financial characteristics (credit card debt. The data does not support the view that homeowners with multiple liens are less risky and should therefore be allowed to avoid PMI. The reduced use of PMI and the increased use of home equity loans increased mortgage holder risk in several different ways and was a contributing factor to the 2008 mortgage and financial crisis. installment loans. Housing policy in the United States has long supported homeownership. Wheelock had studied about the Government Response to Home Mortgage Distress: Lessons from the Great. including pricing. home-owners equity.8% in survey year 2001 to 21. Results also indicate that targeted conventional programs effectively compete with government-insured products in the LMI segment. I identify the factors associated with conventional conforming. and liquid assets) for multiple-lien versus single-lien households. This change in lending and borrowing behavior is not a subprime market problem. The multiple-mortgage percentage for seasoned mortgages (mortgages originated more than five years prior to the origination date) also increased by a modest amount. This article employs recent mortgage origination data to focus on the revealed preferences of low.and Moderate-Income Households. nonprime and specially targeted programs. Empirical results show that individual credit characteristics and financial factors.and moderateincome (LMI) households in home purchase mortgage choice. Multiple-mortgage financing packages as a percent of newly originated mortgages (mortgages originated within the previous five years) went from 14. Further comparisons reveal a large decrease in the proportion of mortgages with PMI with the largest decreases in PMI coverage occurring among newly originated multiple-lien packages. 13) In aug 2007 Michael LaCour-Little had studied about the The Home Purchase Mortgage Preferences of Low. yet variation persists across income groups. generally drive product choice.

home mortgages were delinquent and.S.about the The Great Depression was the worst macroeconomic collapse in U. Between 1933 and 1936. Sharp declines in household income and real estate values resulted in soaring mortgage delinquency rates. Although moratoria reduced farm foreclosure rates in the short run. on average. Many states imposed moratoria on both farm and nonfarm residential mortgage foreclosures. owner-occupied dwellings in the United States. fully one-half of U. 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. as of January 1. they appear to have also reduced the supply of loans and made credit more expensive for subsequent borrowers. some 1000 home loans were foreclosed every business day. amortizing mortgages. 1934. the HOLC acquired and refinanced one million delinquent loans totaling $3. The Home Owners Loan Corporation (HOLC) was created in 1933 to purchase and refinance delinquent home loans as long-term. and discusses actions taken by state governments and the federal government to reduce mortgage foreclosures and restore the functioning of the mortgage market. The HOLC refinanced loans on some 10 percent of all nonfarm. and about 20 percent of those with an outstanding mortgage.1 billion. The Great Depression experience suggests how foreclosures might be reduced during the present crisis.S. history. According to one estimate. . This paper documents the increase in residential mortgage distress during the Depression.

The period 2004-2005 showed a significant increase in Home Mortgage Disclosure Act (HMDA) rate spread reporting. 16) In 10 dec 2007 Irina Paley and Chau Do had studied about the Explaining the Growth of Higher-Priced Loans in HMDA: A Decomposition Approach. a collection of microeconomic data on fourteen OECD countries. Results contribute both to the literature on refinancing behavior and the role of house price appreciation .15) In march 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about the Financial Market Imperfections and Home Ownership: A Comparative Study. The main question addressed is how much households borrow when refinancing their current mortgage debt in a cash-out transaction. After controlling for demographic characteristics. the cross-section is repeated over time and includes several demographic variables carefully matched between the different surveys.000 households with aggregate panel data on mortgage loans and down payment ratios. This is the case for both prime and subprime originations. In most.as measured by outstanding mortgage loans and down payment ratios . the flattening of the yield curve explains a significant amount of the increase in rate spread reportable loans. Following the Oaxaca (1973). 17) In feb 1 2009 Vincent W. this study identifies the fraction of the increase due to the flattening of the yield curve. They explore the determinants of the international pattern of home ownership using the Luxembourg Income Study (LIS). Even after controlling for changes in borrower risk characteristics. country effects. merging data on more than 400. and Fairlie (2005) decomposition techniques. we find strong evidence that the availability of mortgage finance .affects the age-profile of home ownership. Yao and Eric Rosenblatt and Michael LaCour-Little had studied about the unique paired loan dataset containing information on multiple conventional conforming mortgage loans of households to examine home equity extraction decisions over the period 2000-2006. the findings reveal that during 20042006. cohort effects and calendar time effects. This allows us to construct a truly unique international dataset. We also provide estimates of the marginal effect of certain borrower characteristics. The results have important implications for the debate on the relationship between saving and growth. Blinder (1973). especially at the young end.

Borrowers overwhelmingly issue in their natural home market and bank portfolios display significant home "bias. loan and lender characteristics associated with equilibrium mechanisms suggested in the literature do not appear to explain the phenomenon. important determinants of loan origination market outcomes remain to be identified. Thus. home "bias" appears to be material for pricing.in providing funds that may be used for consumer spending or other purposes. 18) In aug 2004 Mark Carey and Greg Nini had studied about the Is the Corporate Loan Market Globally Integrated? A Pricing Puzzle. Hendershott had studied abot the The Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage Interest. but the fundamental causes of the discrepancies remain a puzzle.. We offer evidence that interest rate spreads on syndicated loans to corporate borrowers are economically significantly smaller in Europe than in the U. 19) In july 2005 Gwilym B.S. Pryce and Patric H." This may explain why pricing discrepancies are not competed away.S. other things equal. The greater the shift. Countries that limit deductibility create a debt tax penalty that presumably leads households to shift from debt toward equity financing. the less is the tax revenue raised by the limitation and smaller is its .Mortgage interest tax deductibility is needed to treat debt and equity financing of homes equally.J. and corporate financing costs differ in Europe and the U. Differences in borrower.

20) In 1 nov 2007 Marsha Courchane studied about The Pricing of Home Mortgage Loans to Minority Borrowers: How Much of the APR Differential. and 85 percent of the Hispanic APR gap. Calemhad studied about the Community Reinvestment and Credit Risk: Evidence from an Affordable Home Loan Program.000 newly originated UK loans from the late 1990s. and when the property is unusually expensive for the neighborhood where it is located. Although any potential discrimination is problematic and should be addressed. 21) In 1991 Susan M. costing and market factors that appropriately explain mortgage pricing differentials.negative impact on housing demand. and annual percentage rate ("APR") conditional on getting either a subprime or prime mortgage. We find that up to 90 percent of the African American APR gap. Wachter and Paul S. We examine long-term delinquency in relation to neighborhood housing market conditions. and other factors. our analysis suggests that little of the aggregate differences in APRs paid by minority and non-minority borrowers are appropriately attributed to differential treatment. The estimation is based on 86. We find that likelihood of delinquency declines with the level of neighborhood housing market activity.This study examines the performance of home purchase loans originated by a major depository institution in Philadelphia under a flexible lending program between 1988 and 1994. borrower credit history scores. The public releases of the 2004 and 2005 HMDA data have engendered a lively debate over the pricing of mortgage credit and its implications regarding the treatment of minority mortgage borrowers. Taking this restriction into account reduces the estimated financing response by 20 percent (a 32 percent decline in debt vs a 40 percent decline). We provide a unique empirical assessment of this issue by using aggregated proprietary data provided to us by lenders and an endogenous switching regression model to estimate the probability of taking out a subprime mortgage. is attributable to observable differences in underwriting. Measuring the financing response to a legislative change is complicated by the fact that lenders restrict mortgage debt to the value of the house (or slightly less) being financed. likelihood of delinquency is greater for borrowers with low credit history scores and those with high ratios of housing expense to income. . Also.

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.CHAPTER 4 INTERPRETATION: SBI: NO. o None of our Respondent belonged to the category of others.50 1) What is your occupation? Business man 15 Student 0 Government Employee 22 Other 0 House wife 9 Interpretation:0510152025BUSINESSMANGOVERNMENTEMPLOYEEHOUSE WIFESTUDENTOTHERSeries1Series2Series3 o Total Number of Respondents was 46. o 9 of our Respondents were Housewives. o 0 of our Respondents was Students. o 22 of the Respondents were into government employees o 15 of our Respondents were Businessman.

o 4 respondents did not answer. .

o 3)How do you come to know about the home loan schemes ofthat bank? News paper18Television 14 .2)From howmany years you are associated with this bank? Less than 1 year101-5 years 24More than 512 051015202530Less than year1-5 yearmore then 5Series1Series2 Interpretation:oTotal Number of Respondents was 46 o10persons are associated less than 1 year o24persons are associated from 1-5 years. o12persons are associated frommore than 5 years.

Internet 10other resources 4 02468101214161820News paperTelevisionInternetOtherresourcesSeries1Series2 Interpretation:oTotal Number of Respondents was 46 o18persons came to know from newspaper o14persons came to know from television o10persons cameto know from internet o4persons came to knowfrom other resources 4)Are you aware of thesetype of home loans? Home purchaseloan 9Home constructionloan 18Homeimprovementloan 6Home equityloan4Land purchase loan9 .

5)Are you aware all termsand conditions of home loans? Yes 40No 6 .02468101214161820Homepurchase loan Homeconstructionloan Home improvement loan Home equityloanLand purchase loanSeries1 Interpretation:oTotal Number of Respondents was 46 oOnly 4 persons know home equity loan. oMany of peoples know home construction loan. o6 peoples knowhome improvement loans. o9 peoples know home purchaseloan.

o6 persons had not know properly about all termsand conditions.051015202530354045YesNoSeries1 Interpretation:oTotal Number of Respondents was 46. 6)Are you satisfy with theinterestratecharges by your bank? Strongly agree12Agree30Disagree4strongly disagree0 . 40. oMany of persons know all terms and conditions of home loan i.e.

o30among all consumers are agreed by interestrate of the bank o4among all consumers are disagreed by interestrate of the bank o0 among all consumers are strongly disagreed by interest rate of thebank 7)Your bank offer which type of services? Mobile banking24Net banking15Forex banking7 .0246810121416Strongly agree AgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 46 o12among all consumers are strongly agreed by interest rate of the bank.

o15 said thatbank offer net banking services. 8)Do you agree that your bank loanprocessing is fast? Strongly agree8Agree26Disagree9strongly disagree 3 . oOnly 7 persons said that bank offer forex banking services. o24 persons said that bank offermobile banking services.051015202530Mobile bankingNet bankingForex banking Series1 Interpretation:oTotal Number of Respondents was 46.

9)Do you satisfy with the after home loan services provided by your bank arebest as compare to other bank? Strongly agree12Agree30Disagree4strongly disagree0 . o26 persons agree that bank home loan processing is fast. o9 persons disagreethat bank processing is fast. o8 persons strongly agreethat bank home loan processing is fast.051015202530Strongly agreeAgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 46. o3 persons strongly disagree that bank processing is fast.

o30among all consumers are agreed by after sale services of the bank o4among all consumers are disagreed by after sale services of the bank o0 among all consumers are strongly disagreed by after sale services ofthe bank 10)Does the cost of homeloan is appropriate. according to your demand? Yes 33No 13 .05101520253035Strongly agreeAgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 46 o12among all consumers are strongly agreed by after sale services ofthe bank.

o33 persons said thathome loan is appropriate according to theirdemand. 11)Are you satisfy with the employees behaviour of the bank? Strongly agree19Agree23Disagree4strongly disagree0 .05101520253035YesNoSeries1 Interpretation:oTotal Number of Respondents was 46. o13 personssaid that home loan isnot appropriate according to theirdemand.

o19 persons very satisfied with the employee behaviour of thebank. o23 persons satisfied with the employee behaviour of the bank. o4 persons disagree with the employee behaviour of the bank. oNo one is disagree with the employee behaviour of the bank.0510152025Strongly agree AgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 46. o 12)Does the bank give any discount upon loan services? Yes 40No 6 .

051015202530354045YesNo Series1 Interpretation:oTotal Number of Respondents was 46. o40 persons said that bank give discount upon loan services. oOnly 6 persons said that bank does not give any discountupon loan services. 13)Are you satisfy by the time taken in sanctioning the loan? Yes 34No 12 .

o34persons are satisfied by the time taken o12persons are not satisfied by the time taken 14)Have you face any difficulty during taking theloan? Yes 39No 7 .0510152025303540YesNoSeries1 Interpretation:oTotal Number of Respondents was 46.

o39 persons face difficulty during taking the loan. 15)Which grade you want to give of home loan schemes of the bank? Excellent24Good 18Average4below average0 . oOnly 7 persons does not face any difficulty during taking the loan.051015202530354045YesNoSeries1 Interpretation:oTotal Number of Respondents was 46.

oOnly 4 persons give average grade to the bank. o24 persons give excellent grade of the bank. o18 persons gove good grade to the bank. PNB:NO.50 1)Whatis your occupation? Business man 17Student0Government Employee23Other 0House wife 7 .051015202530ExcellentGood Average belowaverage Series1 Interpretation:oTotal Number of Respondents was 46. oNo none give below average gradeto the bank.

o0of our Respondents was Students.0510152025Businessman StudentGovernment EmployeeOtherHousewife Series1 Interpretation:oTotal Number of Respondents was 47. o7of our Respondents were Housewives. o23of the Respondents were into government employees o17of our Respondents were Businessman. 2)From howmany years you are associated with thisbank? 3) Less than 1 year171-5 years 19More than 511 . oNone of our Respondentbelonged to the category of others. o3respondents did notanswer.

02468101214161820Less than 1year1-5 yearsMore than 5 Series1 Interpretation:oTotal Number of Respondents was 47 o17persons are associated less than 1 year o19persons are associated from 1-5 years. o11persons are associated frommore than 5 years. 3) How do you come to know about the home loan schemes of that bank? News paper12Television 22Internet 9other resources 4 .

0510152025NewspaperTelevision InternetotherresourcesSeries1 Interpretation:oTotalNumber of Respondents was 47 o12persons came to know from newspaper o22persons came to know from television o9persons came to knowfrom internet. o4 persons came to know from other resources. 4) Are you aware of these type of home loans? Home purchaseloan 9Home constructionloan 19Homeimprovementloan 9Home equityloan2Land purchase loan8

02468101214161820Homepurchase loan Homeconstructionloan Home improvement loan Home equityloanLand purchase loanSeries1 Interpretation:oTotal Number of Respondents was 47. oOnly 2 persons know home equity loan. oMany of peoples know home construction loan. o9 peoples know home purchaseloan. o9 peoples knowhome improvement loans. 5)Are you aware all terms and conditions of home loans? Yes 34No 13

0510152025303540YesNoSeries1 Interpretation:oTotal Number of Respondents was 47. oMany of persons know all terms and conditions of home loan i.e. 34. o13 persons had not know properly about all terms and conditions. 6)Are you satisfy with the interest rate chargesby your bank? Strongly agree11Agree34Disagree2strongly disagree0

0510152025303540Stronglyagree AgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 47. o11among all consumers are strongly agreed by interest rate of the bank. o34among all consumers are agreed by interestrate of the bank o2among all consumers are disagreed by interestrate of the bank o0 among all consumers are strongly disagreed by interest rate of thebank 7)Your bank offer which type of services? Mobile banking26Net banking13Forex banking8 .

oOnly 8 persons said that bank offer forex bankingservices. o26 persons said that bank offermobile banking services. o13 said thatbank offer net banking services.051015202530MobilebankingNet bankingForex banking Series1 Interpretation:oTotal Number of Respondents was 47. 8)Do you agree that your bank loan processing is fast? Strongly agree4Agree21Disagree13strongly disagree9 .

o4 persons strongly agreethat bank home loan processing is fast. o9 persons strongly disagree that bank processing isfast. o13 persons disagree thatbank processing is fast. o21 persons agree that bank home loan processing is fast. 9) Do you satisfy with the after home loan services provided by your bank are best as compare to other bank? Strongly agree14Agree29Disagree4strongly disagree0 .0510152025StronglyagreeAgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 47.

o14among all consumers are strongly agreed by after sale services ofthe bank.05101520253035StronglyagreeAgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 47. o29among all consumers are agreed by after sale services of the bank o4among all consumers aredisagreed by after sale services of the bank o0 among all consumers are strongly disagreed by after sale services ofthe bank 10) Does the cost of home loan is appropriate. according to your demand? Yes 29No 18 .

11)Areyou satisfy with the employees behaviour of the bank? Strongly agree16Agree25Disagree6strongly disagree0 .05101520253035YesNoSeries1 Interpretation:oTotal Number of Respondents was 47. o18 personssaid that home loan is not appropriate according to theirdemand. o29 persons said thathome loan is appropriate according to theirdemand.

051015202530Stronglyagree AgreeDisagreestronglydisagree Series1 Interpretation:oTotal Number of Respondents was 47. o16 persons very satisfied with the employee behaviour of thebank. o25 persons satisfied with the employee behaviour of the bank. o6 persons disagree with the employee behaviour of the bank. 12)Does the bank giveany discount upon loan services? Yes 35No 12 . oNo one is disagreewith the employee behaviour of the bank.

13)Are you satisfy by the time taken in sanctioning the loan? Yes 30No 17 . oOnly 12 persons said that bank does not give any discountupon loan services.0510152025303540YesNoSeries1 Interpretation:oTotal Number of Respondents was47. o35persons said that bank give discount upon loan services.

o30persons are satisfied by the time taken o17persons are not satisfied by the time taken 14)Have you face any difficulty during taking the loan? Yes43No 4 .05101520253035YesNoSeries1 Interpretation:oTotal Number of Respondents was 47.

05101520253035404550YesNoSeries1 Interpretation:oTotal Number of Respondents was 47. 15)Which grade you want to give of home loan schemes of the bank? Excellent18Good 20Average8below average1 640510152025ExcellentGood Average belowaverage Series1 . oOnly 4 persons does not face any difficulty duringtaking the loan. o43 persons face difficulty during taking the loan.

SBI peoples much know about home loans then PNB. . which could hamper the final results to a certain extent. No. 2. CHAPTER 5 5. 1. Hence findings would not be relevant to other cities.2 Section LIMITATIONS Although best of the efforts were made to conduct a prefect survey but still it faces certain limitation.The survey was conducted only on 100 respondents.1 Section CONCLUSION: All the people are availing loan facility from both the banks. o 20 persons gove good grade to the bank. 3. 5. o Only 8 persons give average grade to the bank. From all this I conclude that SBI bank provide good home loan services as compare to PNB and many peoples are very satisfied from SBI. of respondents of SBI were 46 and 47 of SBI Bank. Peoples related with SBI is more satisfy with the employee behaviour as compare to PNB. Following were certain limitation of this project.Some of the respondents did not answer all the questions.Interpretation:o Total Number of Respondents was 47. Processing of SBI is fast then PNB.The study confines itself to the respondents of ³NAWANSHAHAR´ region only. After home loan services of PNB is good as compare to SBI. o 18 persons give excellent grade of the bank. o 1 person give below average grade to the bank. Both PNB and SBI mostly offer mobile banking services.People are more satisfied by SBI for time taken for sanctioning the loan. Peoples are relating with PNB more satisfy with the interest rate as compare to SBI.

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17) From how many years you are associated with this bank? Less than 1 year . Home equity loan . 3) How do you come to know about the home loan schemes of this bank? News paper . Internet . Student . House wife . Home construction loan . Other . 25-35. Other resources . Government employee .CHAPTER 7 QUESTIONNAIRE: Name____________ Qualification_________ Age 18-25 . Land purchase loan . 5) Are you aware all terms and conditions of home loans? . Television . Home improvement loan . Gender_________ 16) What is your occupation? Business man . Home extention loan . Above . More than 5 year . 1-5 . 35-40. 4) Are you aware of these type of home loans? Home purchase laon .

.Yes . 6) Are you satisfy with the interest rate charges by your bank? Strongly agree . Agree . No .

Forex banking . Disagree . Net banking . 11) Are you satisfy with the employees behaviour of the bank? Strongly agree . Agree .Strongly disagree . Disagree . No . 7) Your bank offer which type of services ? Mobile banking . Disagree . 9) Do you satisfy with the after home loan services provided by your bank are best as compare to other bank? Strongly agree . according to your demand? Yes . . Agree . Strongly disagree . Strongly disagree . Strongly disagree . Agree . 10) Does the cost of home loan is appropriate. Disagree . 8) Do you agree that your bank loan processing is fast? Strongly agree .

No . If yes then specify___________________________ 15) Which grade you want to give of home loan schemes of your bank? Excellent . 13) Are you satisfy by the time taken in sanctioning the loan? Yes . . Good . No .12) Does the bank give any discount upon loan services? Yes . No . 14) Have you face any difficulty during taking the loan? Yes .

16) Any suggestions that you want to give___________________________________ _____________________________________________________________________ .Average . Below average .

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