Comparison of HDFC Home loan schemes with the other Banks

PROJECT REPORT

(A Report submitted in Partial Fulfillment of the Requirements for the award of degree of
Master of Business Administration in
Pondicherry University)

Submitted by
Mr. Madhan laal KR
Enrolment No: 0217370221
MBA FINANCE

Under the guidance of

Professor Mr.S. Govardhan,M.sc.,M.phil

DIRECTORATE OF DISTANCE EDUCATION

PONDICHERRY UNIVERSITY

PONDICHERRY – 605 014

April 2019
 CERTIFICATE OF THE GUIDE

This is to certify that the project work titled “Comparison of HDFC Home loan
schemes with the other Banks” is a bonafide work carried out by Mr. Madhan
laal KR Enrolment no: 0217370221 carried out in partial fulfillment for the award
of degree of MBA Finance of Pondicherry University under my guidance. This
project work is original and not submitted earlier for the award of any Degree
Diploma or associateship of any other University / Institution.

Signature of the Guide

Name and Official Address of the Guide

Place: Chennai

Date:
 STUDENT’S DECLARATION

I, Mr. Madhan laal KR hereby declare that the project work titled
“Investor analysis towards online trading” is the original work done by
me and submitted to the Pondicherry University in partial fulfillment of
the requirements for the award of Master of Business Administration in
Finance. This is a record of original work done by me under the
supervision of Mr.S.Govardhan.,M.sc,M.phil visiting faculty of PULC
Twinning Program.

Enrollment No: 0217370221

Date:

Signature of the Student

 ACKNOWLEDGEMENTS

I would like to thank Pondicherry University and Loyola College for providing all
guidance and valuable support to do and complete the project work successfully.

I take this opportunity to convey my heartfelt thanks to my guide Mr.S.Govardhan

for providing all the valuable guidance to improvise and timely completion of the
project to the best of my ability.

I sincerely thank the authors who have published journals, reference materials in the
internet which helped a lot in guiding me for the improvisation of the project.

I am very much thankful to my entire colleagues& managers for sharing their

experience and knowledge which helped me immensely in completion of the
project.

I convey my thanks to my beloved parents, friends and all my faculties who helped
me in bringing this project successfully.
 LIST OF TABLES

S.NO TITLE OF TABLES PAGE

NUMBER
1 Fees Details 31

2 Comparative statement of Home Loan 49

4 Sanction Documents 62

5 Document for the Salaried 62

6 Document for the Self-employed 63

7 Disbursement Documents 65

8 Tenure Interest Type Interest Rate 66

9 Pre payment charges 73

10 Part-payment Charges 74

11 Rate of Interest in Punjab National 74

Bank
12 Eligibility Criteria & Documentation 81
required for SBI Home Loan
 LIST OF CHARTS

S.NO TITLE OF CHARTS PAGE NUMBER

1 Modern Banking Structure in India 11

2 Stages of Home Loan 33

3 Top 10 Housing Finance Companies 50

4 Market shares of Indian banks 52

5 Housing Finance Companies share 53

trend in last 5 years

6 ICICI Interest Rate of last 5 years 68

7 Rate of Interest for Men and Female 76

8 SBI Home loan Portfolio 82

 INDEX

CHAPTER TITLE PAGE NO

NO
8
INTRODUCTION
1.1 INTRODUCTION 9
1.2 HISTORY OF HOUSING 9
1.3 HISTORY OF LOAN 10
I 1.4 EVOLUTION OF BANKS IN INDIA 10
1.5 EVOLUTION OF HOME LOANS IN INDIA 12
1.6 OBJECTIVE OF THE STUDY 12
1.7 HOME LOAN 14
1.8 BENEFITS OF TAKING A HOME LOAN 15
1.9 TYPES OF LOANS AVAILABLE 16
18
COMPANY PROFILE
2.1 INTRODUCTION
19
2.2 COMPANY PROFILE
19
II 2.3 HDFC LOAN SCHEME PURPOSE
23
2.4 ABOUT THE PRODUCT
26
2.5 FLEXIBLE REPAYMENT SCHEMES
28
2.6 SAFE DOCUMENT STORAGE FACILITIES
30
III REVIEW OF LITERATURE 34
45
RESEARCH MYTHODOLOGY
4.1 INTRODUCTION 46
IV RESEARCH DESIGN
4.2 46
4.3 SOURCES OF DATA 46
48
DATA ANALYSIS & INTERPRETATION
5.1 ANALYSIS OF DATA 49
5.2 COMPARITIVE STATEMENT OF HOME LOAN 49
V
5.3 COMPARISON OF MAJOR PLAYERS 51
5.4 SWOT ANALYSIS OF HOUSING FINANCE 56
INDUSTRY
5.5 SWOT ANALYSIS OF HDFC HOME FINANACE 57
VI FINDINGS & CONCLUSIONS 83

VII BIBLIOGRAPHY & ANNEXURE 86

 CHAPTER I
INTRODUCTION
 CHAPTER I
INTRODUCTION

1.1 INTRODUCTION

Every one of us needs a place of our own, which we call as HOME. The term “shelter,”
which is often used to define housing, has a strong connection to the ultimate purpose of
housing throughout the world. The mental image of a shelter is of a safe, secure place that
provides both privacy and protection from the elements and the temperature extremes of the
outside world. The roof over one’s head and ground beneath one’s feet count as the bare
necessities of life. There’s nothing quite like owing a home, however humble to give that
warm and glowing feeling. But when one buys a home, one has much more than a feel good
purchase in mind! It’s also a crucial investment decision, perhaps the biggest spending
decision of one’s life. There are ample opportunities today for young salaried investors to
plan their moves early and buy a house at right time- and at right price. In the process, not
only do they fulfill that cherished dream of owing a house, but also put themselves on the
path to acquiring property that would meet the needs and aspirations of their growing family,
even as it leads to wealth creation. Every individual aspires to own a home. But many either
spend a lifetime saving to purchase a house or exhaust money on monthly house rents.

Take a house loan and let the monthly rent (easily converted into affordable EMI’s)
build dream home.

1.2 HISTORY OF HOUSING

During the seventeenth and eighteenth centuries, The first North American homes were very
small, one room structures that were based on the European building techniques brought by
settlers and eventually adapted to the building materials, climatic conditions, and topography
of the new World.
During the nineteenth century, the rectangular street layouts, and the narrow but deep
building lots prevalent in most American cities admirably suited the application of the
townhouse concept. With the mounting pressure for effective land utilization, townhouses
became narrower and deeper over time - two 25 feet lots were divided into three.
During twentieth century, tendency as to seclude bedrooms further by isolating them from
one another and grouping them at a distance from other parts of the home. In many cases this
meant locating the sleeping area upstairs, in others, placing entrances to bedrooms in a
hallway rather than a living or dining room.
Historically speaking, it was found while going through the relevant literature that one of the
oldest houses remains in St. Augustine (USA) which was said to have been built in 1564. By
1960, already three million acres of high quality Californian farmland was lost to urban
areas. One third of the prime agricultural land was gone by 1980 and predictions for the year
2020 show that more than fourteen million acres of the southern state's highest quality
farmland will have disappeared.

1.3 HISTORY OF LOAN

Before discussing the history of loan, let us understand what is exactly meant by the term
‘loan’. A loan is money, property or other material goods given to another party in exchange
for future repayment of the loan value amount, along with interest or other finance charges. A
loan may be for a specific, one-time amount or can be available as an open-ended line of
credit up to a specified limit or ceiling amount. Loans can come from individuals,
corporations, financial institutions and governments. They offer a way to grow the
overall money supply in an economy, as well as open up competition and expand business
operations. The interest and fees from loans are a primary source of revenue for many
financial institutions, such as banks, as well as some retailers through the use of credit
facilities.
There is no certainty about how the loans started, but one can easily assume that ever since
the concept of ownership came into existence, people have been practicing lending and
borrowing. Various forms of lending were found to be existing in ancient Greek and Roman
times and even the Bible mentioned monetary loan. However, the modern history of loan
started much later. In the history of loans the “Indentured loan” was one of the earliest forms
of lending which was practiced in the Middle Ages till the 19th century by the land owners
and rich people who allowed poor people in need of money to borrow in exchange of
indentured servitude. The borrowers had to work for several years to clear their debt.

1.4 EVOLUTION OF BANKS IN INDIA

Banking in India originated in the first decade of 18th century. The oldest bank in existence
in India is the State Bank of India, which originated from the "The Bank of Bengal" in
Calcutta in June 1806. The three presidency banks merged in 1925 to form the Imperial Bank
of India, which, after India's independence, became the State Bank of India. For many years
the Presidency banks acted as quasi-central banks, as did their successors. The Reserve Bank
of India formally took on the responsibility of regulating the Indian banking sector from
1935. After India's independence in 1947, the Reserve Bank was nationalized and given
broader powers.
By the 1960s, the Indian banking industry became an important tool to facilitate the
development of the Indian economy. The Government of India nationalized 14 largest
commercial banks with effect from the midnight of July 19, 1969. A second dose of
nationalization of six more commercial banks followed in 1980. The reason stated for the
nationalization was to give the government more control of credit delivery. With the second
dose of nationalization, the GOI controlled around 91% of the banking business of India.
After 1990s, the policy of liberalization geared up the banking sector in India, which has seen
rapid growth with strong contribution from all the three sectors of banks, viz. government
banks, private banks and foreign banks. All this led to the retail boom in India. People
demanded not just more from their banks but also received more. At present, banking in
India is generally fairly mature in terms of supply, product range and reach, although
reaching in rural India still remains a challenge for the private sector and foreign banks. In
terms of quality of assets and capital adequacy, Indian banks are considered to have clean,
strong and transparent balance sheets relative to other banks in comparable economies in its
region. The Reserve Bank of India is an autonomous body, with minimum pressure from the
government. With the growth in the Indian economy expected to be strong for quite some
time-especially in its service sector- the demand for banking services, especially retail
banking, mortgages and investment services is expected to be strong. The Reserve Bank of
India regulated all the Commercial Banks, Specialized Banks, Institutional Banks and Non
Banking Financial Institutions.

Modern Banking Structure in India

1.5 EVOLUTION OF HOME LOANS IN INDIA

Banking in India is very old. Nationalized banks are in existence since 1969. However,
Home Loans are a comparatively new product. In the 1970s, there was no concept of Home
Loans in India. HDFC was the only organized player in the Home Loan market.
In the past, the mentality of the people was to save and purchase. People used to dip into their
Provident Fund savings and retirement benefits to raise money for constructing houses.
HDFC started the trend of Home Loans in 1978. Banks were reluctant to finance Home
Loans because there was no recovery mechanism in place. The only recourse available to
banks was to file a civil suit in the court of law. The litigation expenses were higher than the
actual loan amount.
It can surprise you that the Home Loan interest rates were around 11-14% up to 1994.The
average age of the Home Loan borrower was about 42 years with the average amount of loan
being 39,000 (Source HDFC).
With the opening of the economy in 1991, banks started to enter the Home Loan market.
ICICI Ltd (later on merged with ICICI Bank) ventured into the Home Loan market in 1999.
The year 2000 saw the introduction of the floating rate concept by ICICI Bank. The rates
started plummeting from around 2003-04 when floating rates for Home Loans were in the
range of 7% to 7.25%. The fixed rates were around 7.5-8%.
State Bank of India entered the market in a big way and introduced the teaser rate concept.
They could afford to do so because of the high proportion of CASA (Current Account
Savings Account) deposits. Other banks did not have this advantage. They resorted to
measures like maintaining high Loan to Value (LTV) ratios to attract customers.
Before 2002, there were no regulations to deal with defaults on home loans. There was a
need for strong legislation. The introduction of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act (SARFAESI) in 2002 gave banks
the power to deal with Home Loan defaults. This Act encouraged the banks to foray into the
home loan sector.

1.6 OBJECTIVE OF THE STUDY

The main objective of the study is to find out the tariff changes charges by other
banks in comparison to HDFC Bank.

The aim of the study is to help HDFC to know where it lacks in loans and how for the
performance of other banks is better so that HDFC figure out the common problems
being faced by the customers while dealing in the loan department so that further
HDFC can improve its services and schemes offered by them to their customers.
1.6.1 PROFITABLE PROPOSITION

“The overall demand in residential sector has grown by about 7-8% in the past few months as
compared to the same period last year. The growth is on account of two main factors:

➢ One, income tax exemption.

➢ Two, with no similar rebates available for individuals in the high income
group, they are creating a second asset.

Add to this the stable property prices over the last year and plunging interest rates, planning
for dream home could not have been better timed. Rock-bottom interest rates, standardization
of periodicity of interest calculation across lenders (which make it easier to compare loans),
lower interest charges, waiver of loan application processing fee and a customer friendly
attitude is reason enough to celebrate the ascension of the home loan consumer as the king.

In response, private players like ICICI Bank, IDBI Bank, Standard Chartered Bank and few
others too lowered their rates.

Market leader HDFC also brought down its interest rate to 8.75% very recently, to participate
in the interest rate war. If one is still not satisfied with the lowered loan rates there’s more.
Some industry watchers believe that the floating home loan rate will slip to 8% for long term
loans another two or three years.

Most banks have changed the way the interest is calculated from annual rest to monthly rests.
Under the annual rest method, the EMI’s (equal monthly installment) one pay through a year,
are factored in as part-repayment of the principal component only at the end of each year. In
other words one has to pay interest even on the installments one has paid until they are
reduced from the principal at the end of each year. Under monthly rests, the principal is
lowered by the appropriate amount each month. The thumb rule being that the more
frequently interest is calculated, the better for the creditor.

HDFC added monthly rests on its fixed interest loans apart from annul rests. As a result the
fall in the EMI’s on fixed interest loans (where the interest rate is constant for the entire
tenure of the loan, irrespective of the changes in the lending rates) is more pronounced than
on floating rate loans (where the loan interest rate varies with the changes in the interest rate).
For example, the EMI on a fifteen year fixed interest loan for Rs. 15 lakh has come down by
Rs. 15 lakh has come down by Rs. 840, the corresponding fall in the EMI on a floating rate
loan is only 4165. Apart from lowering the cost of one’s loan, the switchover to monthly
rests has another advantage: it makes it easier to compare loans.

1.7 HOME LOAN

Home loans are loans you have access to, depending on whether you want to buy or build a
house and can also be used to repair or extend an existing house.

1.7.1 WHO CAN AVAIL OF THESE LOANS?

According to lending institutions, any Indian resident who is over 21 years of age at the
beginning of the loan and below 60 at its maturity can avail of the loan. Salaried Employees
as well as Self- Employed citizens can apply. NRI Salaried and RBI Self Employed, under
RBI guidelines, can approach only nationalized banks and other private banks for loans.

1.7.2 WHY SHOULD ONE OPTION FOR A LOAN TO BUY A HOUSE?

Taking a loan seems like a good option when the money at hand is insufficient to buy the
house of your dreams. Consider couples in their twenties and thirties. They enjoy a good
income currently, buy their accumulated capital isn’t enough to purchase a house. Whereas a
home loan can give them access to capital their current earnings.

Also, if you take a 10 years old loan when you are thirty, you could repay it by the time
you’re forty. So you don’t have to be burdened with the interest and are free to plan your
retirement savings.

1.7.3 THE QUANTUM OF LOAN THAT ONE CAN AVAIL OF

Loan sanctioned depend on your repayment capacity – which is based on your current
income and your future repayment capacity. You would include your spouse’s name to
enhance the loan amount. The maximum loan can be sanctioned varies with each
bank/institutions and ranges from Rs.10 lakhs to Rs. 5 crores.
1.8 BENEFITS OF TAKING A HOME LOAN

A home loan is very different from a personal loan like a car loan for instance. You can
utilize a home loan for financing an asset that will hold its value and even appreciate over the
period of the loan. Though its price could fluctuate in the short terms, Total Estate will show
capital appreciation over the years. The value of your house generally while the loan remains
constant. If you had opted to wait, save up and buy a house, it would, in the long run cost you
much more; home loans also come with many tax benefits.

1.8.1 TAX BENEFITS OF TAKING A HOME LOAN

The income tax authorities look with favor upon those servicing a housing loan from
specified financial institutions. And, it is up to you to be wise enough to take advantage of
this.

(i) Section 24 of the Income Tax Act, 1961:

Section 24 of the Income Tax Act lets homeowners claim a deduction of up to Rs. 2 lakhs
(Rs. 1,50,000 if you are filing returns for last financial year) on their home loan interest under
section 23/24(1) of the Income tax act.

(ii) Section 88 of Income Tax Act, 1961:

Section 88 of the Income Tax Act allows tax rebate from the amount of tax payable in respect
of sums paid or deposited towards the life insurance premium, contribution to provident
fund, etc. up to a specified limit of Rs 70,000 which stands enhanced to Rs 100,000 in
respect of investments in certain specified equity shares, debentures or units of mutual fund.

1.8.2 FINANCIAL IMPLICATIONS OF AVAILING A LOAN (SMALL OR BIG)

There are several expenses involved apart from repayment of the actual loan amount:
Processing fees- A processing fee (PF) is charges at the time of submission of the
application form and covers expenses incurred for processing the application form. This fee
has to be paid upfront by the customer – in some cases, it is non-refundable.
Administration fees- This fees is to meet operating expenses.
Pre-EMI- A simple interest calculated on the disbursement amount in case of a plot under
construction.
EMI- The EMI is an abbreviated form of the equated money installment and is simply
referred to as monthly installment in common parlance. And, being a self-explanatory term
that is exactly what it is. The amount you will have to pay you financier every month when
repaying your loan. Being a monthly payment, at the end of the year, you would have paid 12
EMIs.

1.9 TYPES OF LOANS AVAILABLE

Broadly two types- fixed rate and variable rate loans; while the former deals with a fixed rate
of interest over the entire duration of the loan, the latter has the rate of interest changing
according to the fluctuations in the market.

1.9.1 LOAN THAT ONE CAN AVAIL

Up to 85-90% of the total cost based primarily upon the individual’s payback capacity.

1.9.2 GENERAL CONDITIONS THAT GOVERN A HOME LOAN

These are likely to vary with respect to the different types of housing loans:

✓ The maximum period of the loan is normally fixed by HFIs. However, HFIs do
provide for different tenors with different terms and conditions.
✓ The Installment that you pay is normally restricted to amount 45% of your monthly
gross income.
✓ You will be eligible for a loan amount, which is the lowest as per your eligibility.
This is calculated on the basis of your gross income and payback capabilities.
✓ Some HFIs insist on guarantees from other individuals for due repayment of your
loan. In such cases you have to arrange for the personal guarantee before the
disbursement of your loan tasks place.
✓ Most HFIs have a panel of lawyers who go through your property documents to
ensure that the documents are clear and are not misrepresented. This is an added
benefit that you get when you avail of a loan from an HFI.
✓ You repay the loan either through Deduction against Salary, Post dated cheques, and
standing instructions or by Cash/DD.
1.9.3 WHAT ALL ONE CAN TAKE THE LOAN FOR?

There are different types of home loan tailored to meet ones needs here’s all some of them.

✓ Home purchase loan: This is the basic home loan for the purchase of new home.
✓ Home improvement loans: These loans are given for implementation repair works &
renovation in a home that has already been purchased by the client.
✓ Home construction loan: This is available for the construction of new home.
✓ Home extension loan: This is given for expanding or extending an existing home for
e.g.: addition of an extra room etc.
✓ Home conversion loan: This is for those who have financed the present home with
home loan & wish to purchase& move to another home for which some extra funds
are required through home on version loan ,existing loan is transferred to the new
home including the extra amount required eliminating the pre payment of the
previous loan.
✓ Land purchasing loan: this loan is available for the purchasing of land for both
construction and investment purpose.
✓ Bridge loan: these are designed for those people who wish to sell the existing home
& purchase another one. The bridge loan help finance the new home, until a buyer is
found for the home.
 CHAPTER II
COMPANY PROFILE
 CHAPTER II
COMPANY PROFILE

2.1 INTRODUCTION

HDFC (Home Development Finance Corporation) Home Loan, India have been serving the
people for around 3 decades and providing various housing loan according to their varied
needs at attractive and reasonable interest rates. Owing to their wide network of financing,
HDFC Home Loans provide services at doorstep and helps you find a home as per your
requirements.

2.2 COMPANY PROFILE

It was founded in 1977 as the first specialized Mortgage Company in India. HDFC was
promoted by the Industrial Credit and Investment Corporation of India. Hasmukhbhai Parekh
played a key role in the foundation of this company. HDFC operates through almost 450
locations throughout the country. Housing Development Finance Corporation Limited or
HDFC is an Indian financial conglomerate based in Mumbai, India.. HDFC also has an
international office in Dubai, UAE with service associates in Kuwait. HDFC is the largest
housing company in India for the last 27 years.

HDFC was amongst the first to receive an in principal approval from RBI to set up a bank in
the private sector, as a part of the RBI’s liberalization of the Indian banking industry. It was
incorporated on 30th august 1994 in the name of ‘HDFC Bank Limited’, with its registration
office in Mumbai. HDFC began its operations as a scheduled commercial bank on 16th
January 1995.

It is a major provider of finance for housing in India. It also has a presence in banking, life
and general insurance, asset management, venture capital and education loans.

In 2000, HDFC Asset Management company launched its mutual fund schemes. In the same
year, IRDA granted registration to HDFC Standard Life Insurance, as the first private sector
life insurance company in India.
2.2.1 ABOUT THE PROMOTER

HDFC, the promoter, is India’s premier housing finance company and enjoy an impeccable
track record in India as well as in international markets.

Since its inception in 1997, HDFC has maintained a consistent growth in its operation and
profitability. Its outstanding loan portfolio covers over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segment and also
has a large corporate client base in relation to its housing related credit facilities and its
investment in portfolio.

With its tremendous brand equity, the strong reputation in the Indian and international
financial services market, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the

Indian environment. HDFC (together with its fully owned subsidiary HDFC Investment
Limited) owns about 31 % of the equity. They had started with a strategic alliance with the
NatWest group in UK with 20% equity, which has divested later on. The bank has also
signed a memorandum of understanding for strategic business collaboration with chase
Manhattan Bank in Feb. 2, 1999.

HDFC's distribution network spans 396 outlets (including 109 offices of HDFC's distribution
company HDFC Sales Private Limited) which cater to approx. 2,400 towns and cities spread
across India.[2] To cater to Non-Resident Indians, HDFC has offices in London, Singapore
and Dubai and service associates in Middle East countries.[2]
In addition, HDFC covers over 90 locations through its outreach programmes. HDFC's
marketing efforts continue to be concentrated on developing a stronger distribution network.
Home loans are also sourced through HDFC Sales, HDFC Bank Limited and other third
party direct selling Agents (DSA).
2.2.2 BUSINESS PHILOSOPHY

The mission of the HDFC Bank is to be world class Indian bank. This would imply a bank
that would meet various financial needs of its customers in a convenient and cost effective
manner at international standard of service.

The bank seeks to achieve the status of a “preferred organization” among its major
constituents- customers, shareholders, regulators, employees, suppliers etc. while
maintaining the highest level of integrity and corporate governance.

The business philosophy at HDFC bank is based on four core values: operational excellence,
customer focus, and product leadership and people competitors.

The Bank faces the strong competition in all of their principal lines of business. Their
primary competitors are large public sector banks, other private sector banks, foreign banks
and in some product areas, non-banking financial institutions.

2.2.3 WHOLESALE BANKING

Principal competitors in wholesale banking are public and new private sector banks as well
as foreign banks. The large public sector banks have traditionally been the market leaders in
the commercial lending. Foreign banks have focused primarily on serving the needs of
multinational companies and the Indian corporations with cross- border financing
requirements including trade, transactional and foreign exchange services, while the large
public sector banks have extensive branch networks and large local currency funding
capabilities.

2.2.4 RETAIL BANKING

In retail banking, their principal competitors are the large public sector banks, which have
much larger deposit bases and branch networks,, other new private sector banks and foreign
banks in case of retail loan products. The retail deposit shares of the foreign banks are quite
small in comparison to the public sector banks, and have also declined in the last five years,
which we attribute principally to the competition from new private sector banks. However,
some of the foreign banks have a significant presence among non-resident Indians and also
compete for non-branch based products such as auto loans and credit cards. They face
significant competition primarily from foreign banks. In provision of debit cards and also
expect to face competition from foreign banks when we begin offering credit cards. In mutual
fund sales and other investment related products, their principal competitors are brokers and
foreign private banks.

2.2.5 TREASURY

In treasury advisory services for corporate clients, the compete principally with foreign
banks in foreign exchange and derivatives trading as well as SBI and other public sector
banks in the foreign exchange and money market business.

2.2.6 LOANS

HDFC brings back you a wide range of loans to cater your financial needs.
The bank offers the following loans:

1) Personal loans.
2) Consumer loans.
3) Auto loans
4) Loans against shares
5) Loans against RBI bonds
6) Loans against insurance policy
7) E- Instant loans give the facility of loans approval in the 60 second on the internet.
8) HDFC has offices spread all over the country. This extensive network helps HDFC in
providing services to large and well spread out clients. This network of
interconnected offices (on data circuits) helps HDFC to process application for
purchase of property anywhere in India. HDFC has further established an office in
Dubai and service associates in Kuwait, Oman and Quarter to make to easier for
Middle East based non-resident Indians to apply for loan to HDFC-India.
9) HDFC is pioneer of housing finance in India and has been a leader in business for the
last 23 years. HDFC has vast experience and a very committed and skilled staff to
handle housing loan applications and solving customer problems.
2.3 HDFC LOAN SCHEME PURPOSE

HDFC Limited offers loans for the following purposes:

✓ Land purchase
✓ Home construction/purchase
✓ Home extension
✓ Home improvement loans
✓ Short-term bridge loans
✓ Non-resident premises loans for professionals.

2.3.1 LOAN AMOUNT

You can avail of maximum of up to 85% of the cost of the property, including the cost of the
land.

2.3.2 LOAN TENURE

You can repay the loan over a maximum period of 20 years under both FRHL and ARHL.
Repayment will not ordinarily extend beyond your age of retirement (if you are employed) or
on your reaching 65 years of age, whichever is earlier. However, HDFC will endeavor to
determine the repayment period to suit your convenience.

2.3.4 RATE OF INTEREST

The rate of interest of HDFC is 8.75%.under the monthly rest option, interest is calculated on
monthly rests. Principal repayment is credited at the end of every month.

At HDFC you have the choice between the normal FRHL and the innovative ARHL.
Alternatively you can also avail the part of the loan under FRHL and balance under ARHL.
HDFC also offers you the option to switch between schemes for the nominal fee. Interest
rates on ARHL will be linked to HDFC’s Retail Prime Lending Rate (RPLR) which currently
is 13.75% .The rate on your loan will be revised every three months from the date of first
disbursement, if there is a change in RPLR, i.e. the interest rate on your loan may change.
However, the EMI on the home loan disbursed will not change. (if the interest rate increases,
the interest component in an EMI will increase and the principal component will reduce,
resulting in an extension of the term of the loan, and vice versa when the interest rate
decreases).customer will be provided with an annual statement indicating the details of the
interest and principal payment made during the year.

2.3.5 SECURITY

Security for the loan normally is first mortgage of the property to be financed and/or such
other collateral security as may be necessary. Interim security may be required, if the
property is under construction. Collateral or interim security could be assigned to HDFC of
life insurance policies, the surrender value of which is at least equal to the loan amount,
guarantees from sound and solvent guarantors, pledge of shares and such other investments
that are acceptable to the HDFC.

Loans from HDFC are available even if you are availing a housing loan from your employer.
HDFC has already entered into arrangements with several employers enabling employees to
avail of loans both from the employer as well as HDFC for the same property. Please do
ensure that the title of the property is clear, marketable and free from encumbrance. To
elaborate there should not be any existing mortgage, loan or litigation which is likely to
affect the title to the property adversely.

2.3.6 SUPPORTING DOCUMENTS TO BE ATTATCHED:

FOR ALL THE APPLICANTS:

1) Allotment letter of the o-operative society/association of the apartment owners.

2) Copy of approved drawings of proposed construction/purchase/extension.
3) Agreement for sale/sale deed/detailed cost estimate from architect/engineer for the
property to be purchased/constructed/extended/renovated.
4) If you have been in your present employment/business or profession for less than a
year, mention an a separate sheet details of the of the occupations for previous five
years, giving position held, reason for change and period of same.
5) Applicable processing fees.
6) Proof of residence: attested copy of any one of the following:
 a) Ration card
b) Passport
c) Driving license
d) Voters identity card
e) Current telephone bill/electricity bill/gas bill
7) Proof of identity: attested copy of ay one of the following:
a) Passport
b) Driving license
c) Voters identity car5d identity card issued by the employer (if employed in
state/central government)
d) PAN card
8) Certificate of loan outstanding issued by the lender (for refinance cases only)
9) Any other information regarding your repayment capacity that is necessary and will
assist HDFC in appraising the loan proposal.

2.3.7 ADDITIONAL DOCUMENTS

IF YOU ARE EMPLOYED

1) Verification of the employment form with only part I filled in.

2) Latest original salary slip/salary certificate showing all deductions.
3) If your job is transferable, permanent address where correspondence relating to the
application can be mailed.
4) A letter from your employer agreeing to deduct the EMI towards the repayment of the
loan from your salary. This will expedite the processing of your loan application.
5) Your updated original bank passbook/s or original bank statement/s showing salary
and saving entries for the last six months.
6) A photo-copy of your Form-16 (issued by your employer) for the last assessment
year.

IF YOU ARE SELF EMPLOYED

1) Balance Sheets and Profit & Loss Accounts of the business/profession along with
copies of individual income tax returns for the last three years certified by the
Chartered Accountant.
 2) A note giving information on the nature of your business/profession, form of
organization, clients, suppliers, etc.
3) Copies of individual tax challan’s for the last three years
4) Copy of advance tax challan's (if any)
5) Your updated original Bank PassBook/s or Original Bank Statement/s showing
savings entries for the last twelve months.

2.3.8 TAX BENEFIT

You are eligible for certain tax benefits on principal and interest components of a loan under
the Income Tax Act, 1961.

2.3.9 ELIGIBILITY

The repayment capacity as determined by the HDFC will help in deciding how much we can
borrow (the cost of the property or Rs.1crore whichever is lower). Repayment capacity takes
into consideration factors such as income, age, qualifications, number of dependents,
spouse’s income, assets, liabilities, stability and continuity of occupation and saving history.
And, of course, HDFC’s main concern is to make sure you can comfortably repay the amount
you borrowed.

2.4 ABOUT THE PRODUCT

HDFC’s Home Loans offers you various unique benefits and are easy to arrange and
repayable in easy monthly installments. The terms of the loan can be structured according to
the customer requirement.

Home loans can be applied for by either individually or jointly. Proposed owner of the
property, in respect of which the loan is being sought, will have to be co-applicants.
However, the co-applicants need not be co-owners. Loans can avail up to a maximum of 85%
of the cost of the property (including the cost of the land). HDFC lends up to a maximum of
Rs. 10000000 on a home loan to an individual. You can repay the loan over a maximum
period of 20 years. They determine the loan amount after evaluating the repayment capacity
of the individual. HDFC’s main concern is to help individuals comfortably repay the
borrowed amount.
2.4.1 SUPERIOR PROCESSING CAPACITY

HDFC has over the years invested substantially into the computer systems and training. This
has enabled HDFC to respond to customer needs and build up capabilities to approve loan on
the spot or disburse them fast.

2.4.2 BRANCH NETWORK

HDFC has offices spread all over the country. This extensive network helps HDFC in
providing service to large and well spread out clients. This network of interconnected offices
(on data circuits) helps HDFC to process applications for purchase of property anywhere in
India. HDFC has further established an office in Dubai and service associates in Kuwait,
Oman, Qatar, Bahrain and Saudi Arabia to make it easier for Middle east based non-resident
Indians to apply for the loan to HDFC-India.

2.4.3 EXPERIENCED TRAINED STAFF

HDFC is a pioneer of housing finance in India and has been a leader in the business for the
last 25 years. HDFC has vast experienced and very committed and skilled staff to handle
housing loan applications and solving customer problems.

2.4.4 FREE COUNSELLING

HDFC believes that it is in the business of providing solutions to an individuals need for
owing a house, and not just in the business of providing finance. Keeping this in mind HDFC
will provide free counseling to on how and where to buy a house in India (property services)
or what are the prices and trends in the real estate market or what precautions one should take
before buying a house. This service is offered at any of the HDFC’s offices.

2.4.5 LEGAL AND TECHNICAL GUIDANCE

HDFC has qualified legal and technical staffs who liaise with developer to collect and
scrutinize the property documents and permissions. We have master files of most projects
being developed by the reputed developers. It has always been HDFC’s endeavor to protect
the interest of the borrower, as we believe that the buying a house is one of the most
Important decisions in this life.
2.5 FLEXIBLE REPAYMENT SCHEMES

Keeping in mind the fact that each individual has unique problem requiring unique solution,
HDFC has developed various repayment options like Step Up Repayment Facility (SURF),
Flexible Loan Installment Plan (FLIP) Balloon Payment plan and Structured Repayment
Plan.

2.5.1 STEP UP REPAYMENT FACILITY

HDFC Ltd has a hitherto “with you, right through” .This statement HDFC proves time and
again by developing close relationship with individual customers and by constantly
Developing and marketing in the market new and innovative products that increase the
Comfort level of the customers. Along the same philosophy HDFC came up with Step-up
Repayment Facility which once again reassures customers that HDFC helps you achieve your
dream.

This facility is especially helpful to those customers who want to get a loan on an amount
that is not falling within the permissible limit of their repayment capacity. It also is in line
with HDFCs aim to provide greater degree of personalization in service and the tools. Hence
there can be the situation wherein the applicant is not in the position to pay the required EMI
which is calculated by the ILPS (Individual loan processing system).HDFC in this case offers
to let the applicant use one of the two plans to repay the loan amount.

2.5.2 THE EMI CHOOSER 1

In this plan the applicant gets the advantage from HDFC to select the amount that he wants to
pay as his fist EMI. This means that HDFC will let the applicant decide what amount he can
comfortably pay to HDFC in the first term of his Loan Repayment Schedule. The system will
calculate the next two EMIs for the next two terms

The customer can hence decide when he wants to repay the maximum amount of the Loan to
HDFC and when he wants to repay minimum leftover or remaining amount of the loan in the
form of still smaller EMIs.
2.5.3 THE EMI CHOOSER 2

This plan is an extension of the aforementioned plan .In this plan HDFC helps the Applicant
by letting him choose two EMIs .This means that the Applicant can select the amount that he
wants two pay for both the First and the Second terms of his repayment schedule. This
translates into more help and more convenience to the applicant. However the benefits of
these plans don’t stop here.

The Applicant can also allocate the term length for which he wants to pay what amount
This translates into a great advantage to the Applicant .He can now link

➢ His current salary

➢ The rate of average increment,
➢ His existing and expected obligations,
➢ His existing and expected expenses
➢ The length of the term among others.

HDFC can hence assist the Applicant in developing a much more personalized loan plan as
compared to its competitors in the Housing Loan market.

The Applicant can also save money by using these plans .This is because the total Outflow in
case of a regular plan is more as compared to these special plans. The Applicant will hence
obtain more benefit in case of Prepayment and elsewhere.

All Loans from HDFC Ltd are subject to Tax exemption and be treated as Rebate. Hence
HDFC lets the customer save their hard earned money.

2.5.4 FLEXIBLE LOAN INSTALMENT PLAN (FLIP)

Another First of its kind product from HDFC .This is also to assist the Applicant to easily
secure a loan in the following condition. FLIP is used when the applicant and co-applicant
want to jointly repay the loan. There is however a problem in the situation which would
otherwise not allow the loan to be sanctioned. There are two applicants hence two incomes
.Therefore in the joint payment they can combine their income to repay the loan .Let there be
Mr. A and B who want to take a loan for 14 years .A is the father and B is the son of A .Now
consider the situation in which A and B want to take a loan and jointly repay it .But A is 52
years old and B is only 25 .Hence A will retire after 8 years and will not be repaying the
EMI but B can continue to repay the loan. In that case although there will be a problem at
other places but in HDFC this is solved by taking different incomes in the terms. Hence the
income that will be considered earlier will be the father’s income and at his retirement or at
any other selected stage of repayment we will begin to consider only the income of the son.

The advantage of FLIP in terms of the Applicant is that of joint payment, personalization,
easy repayment, and freedom from many possible problems. In the Illustration the father is
going to pay only for 105 months and after that we are to consider the sons salary only for
the next remaining 60 months.

2.5.5 PARI PASSU/SECOND MORTGAGE ARRANGEMENT

HDFC has a tie-up with a large number if public sector organizations and banks which
enable us to offer loans to your employees with the flexibility of their spouse also availing a
loan from his/her own employer.

2.6 SAFE DOCUMENT STORAGE FACILITIES

HDFC has state of art storage facilities which are theft and fire proof, at various locations
where loan and property documents are stored. In this way valuable documents are stored
safely over the period of the loan and are released almost immediately after a customer repay
his loan.

2.6.1 ELECTRONIC MAIL

HDFC through its E-mail services can promptly respond to queries. In addition, HDFC can
promptly send its application form cum brochure and other detail on its loan products by e-
mail to interested individuals. For Non-resident Indians our interactive website offers another
means of contacting us. In our effort to reach out globally dispersed Non-resident Indians, we
will continuously enhance our website.
2.6.2 HOME CONVERSION LOAN

HDFC offer the option of a home conversion loan to its existing customer who are interested
in moving to a new house. Through this scheme the customer can apply to have their existing
loan transferred towards the purchase of the new home. Customers may also apply for an
additional loan amount for the purchase of the new house. This gives the customers the
option of selling t6heir existing house if they wish to, without having to repay their old loan

2.6.3 APPLICATION CAN BE MADE BEFORE SELECTING THE PROPERTY

Individuals may make an application for the loan even if the property has not been selected
or the construction has not commenced. HDFC can provide assistance in locating an
appropriate house to such customers.

2.6.4 HOME IMPROVEMENT LOANS

As an exclusive offer to its existing customers HDFC offers Home Improvement Loan up to
100% of the improvement cost as compared to the home improvement loans up to 70% of the
improvement cost offered to the general public.

2.6.5 FEE

A processing fee of 0.5% of the loan amount applied for rs.5 per rs.1000 of the loan applied
for is payable when the application form is submitted to HDFC. This fee is in the respect of
costs incidental to the application. For example:

Fees Details
Loan applied for Fees

Rs.20000 Rs.100
Rs.100000 Rs. 500

On approval of the loan, a loan offer is made to you on acceptance of the offer. You have to
pay an administrative fee of Rs.0.5% of the loan approved. You can also pay the processing
fee and administrative fee upfront i.e. 1% of the loan at the time of submission of the loan
application itself. This fee is in respect of the costs incidental to the application. Taxes as
applicable will be charged on the fees collected.
2.6.6 CHARGES

For Fixed Rate Home Loan (FRHL) an early redemption charge of 2% of the amount being
prepaid is payable, if the amount being repaid is more than 25% of the opening balance.
However under Adjustable Rate Home Loan (ARHL) option early redemption charges of 2%
is payable only in case of commercial refinance. You may be required to submit the copies of
your Bank Statements or any other documents that HDFC deems necessary to verify the
source of prepayment.

You can make payment for fees and charges by cheque marked “payee’s account only”
drawn on a bank in a city where HDFC has an office or by demand draft (payable at par to
HDFC).

2.6.7 HOW TO APPLY

Customer can either download (in PDF format) the application form or get the application
form by E-mail. Alternately the customers can collect the application form from any of your
nearest HDFC offices. Customer need to submit it along with supporting documents and
processing fee at any HDFC office that is convenient to the customer. Customers can make
payments by the cheque marked “payee’s account only” drawn on a bank in a city where the
HDFC has an office, by demand draft (payable at part to HDFC) or by cash. Customer can
make an application at any time after they have decided to acquire a house even when the
house has not been selected or construction has not commenced.

HDFC will consider your application, make enquiries as it deems necessary and convey its
decision to you. On acceptance of the offer, you will have to pay an administrative fee for the
loan approved. Customer can take the disbursement of the loan after the property has been
completed and you have invested your own contribution in full (own contribution is the total
cost of the property less HDFC’s loan). The loan will be disbursed in full or in suitable
installments (normally not exceeding three in number)taking into account the requirement of
the funds and the progress of the construction, as assessed by HDFC and not necessarily
according to the builder’s agreement.
2.6.8 STAGES OF HOME LOAN

Data Entry
Application
Munirka
HUB Login Scanning

DISBURSE
The Loan Double Checking
Fix Over (DCOVR) Recommendation
Chrg Over (ROVR)
es
 CHAPTER III
REVIEW OF LITERATURE
 CHAPTER III
REVIEW OF LITERATURE

Ben R. Craig had studied about the Federal Home Loan Bank Lending to Community Banks,
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. Three possible reasons for the extension
of this selective credit subsidy to community banks and thrifts are examined, including the
need to: subsidize community depository institutions, stabilize the Federal Home Loan
Banks, and address a market failure in rural markets for small enterprise loans. They
empirically investigate whether funding constraints impact the small-business lending
decision by rural community banks. Specifically, they estimate two empirical models of
small-business lending by community banks. The data reject the hypothesis that access to
increased funds will increase the amount of small-business loans made by community banks.

In December 2006 Fulbag Singh and Reema Sharma had studied about the housing Finance
in India. Housing, as one of the three basic needs of life, always remains on the top priority
of any person, economy, government and society at large. In India, majority of the population
lives in slums and shabby shelters in rural areas. From the last decade, the Government of
India has been continuously trying to strengthen the housing sector by introducing various
housing loan schemes for rural and urban population. The first attempt in this regard was the
National Housing Policy (NHP), which was introduced in 1988. 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 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. Moreover, for the
salaried section, the tax rebates on housing loans have been introduced. The paper is based on
the case study of LIC Housing Finance Ltd., which analyzes region-wise disbursements of
individual house loans, their portfolio amounts and the defaults for the last ten years, i.e.,
from 1995-96 to 2004-05 by working out relevant ratios in terms of percentages and the
compound annual growth rates. A relevant chart has also been prepared to highlight the
results.
In May 18, 2007 Michael LaCour-Little had studied about the Economic Factors Affecting
Home Mortgage Disclosure Act Reporting. The public release of the 2004-2005 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. Here we assess three possible explanations for the observed increase in
2005 over 2004: (1) changes in lender business practices; (2) changes in the risk profile of
borrowers; and (3) changes in the yield curve environment. Results suggest that after
controlling for the mix of loan types, credit risk factors, and the yield curve, there was no
statistically significant increase in reportable volume for loans originated directly by lenders
during 2005, though indirect, wholesale originations did significantly increase. Finally, given
a model of the factors affecting results for 2004-2005, 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.

In May 1991 Stephen F. Borde had studied about the “Is the Savings and Loan Industry
Facing Extinction?” This article tells about the saving and loan crisis. Proposed solutions are
discussed in the context of the industry as it currently stands. With a somewhat similar
liability structure to that of banks (mainly short-term deposits), the asset structure of S&Ls is
quite different. Whereas banks assets consist of short-term loans, S&L assets consist largely
of long-term loans, such as home ownership mortgages. Therefore, in the absence of
adequate hedging measures, S&Ls are more vulnerable to interest rate risk, which can lead to
lower profits when interest rates rise.

In June 29, 2001 Joshua Rosner had studied about the Housing in the New Millennium: A
Home without Equity is Just a Rental with Debt. They studied about the prospects of the U.S.
housing/mortgage sector over the next several years. Based on our analysis, we believe there
are elements in place for the housing sector to continue to experience growth well above
GDP. However, we believe there are risks that can materially distort the growth prospects of
the sector. Specifically, 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. 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 over
appraisal/over-valuation problems If these trends remain in place, it is likely that the home
purchase boom of the past decade will continue unabated. Despite the increasingly more
difficult economic environment, it may be possible for lenders to further ease credit standards
and more fully exploit less penetrated markets. Recently targeted populations that have
historically been denied homeownership opportunities have offered the mortgage industry
novel hurdles to overcome. Industry participants in combination with eased regulatory
standards and the support of the GSEs (Government Sponsored Enterprises) have overcome
many of them. If there is an economic disruption that causes a marked rise in unemployment,
the negative impact on the housing market could be quite large. These impacts come in
several forms. They include a reduction in the demand for homeownership, a decline in real
estate prices and increased foreclosure expenses. These impacts would be exacerbated by the
increasing debt burden of the U.S. consumer and the reduction of home equity available in
the home. Although we have yet to see any materially negative consequences of the
relaxation of credit standards, we believe the risk of credit relaxation and leverage can't be
ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the
perception of credit health in the housing sector. In an effort to keep homeowners in the
home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or
modifying troubled loans. Such policy initiatives may for a time distort the relevancy of
delinquency and foreclosure statistics. However, a protracted housing slowdown could
eventually cause modifications to become uneconomic and, thus, credit quality statistics
would likely become relevant once again. 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.

In December 2002 Melissa B. Jacoby had studied about the Home Ownership Risk beyond a
Subprime Crisis: The Role of Delinquency Management. 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, to generate positive social-psychological states, and to develop stable
neighborhoods and communities. Homeownership and mortgage obligations do not
inherently further these objectives, however, and sometimes undermine them. The most
visible triggers of the recent surge in sub prime delinquency have produced calls for
emergency foreclosure avoidance interventions (as well as front-end regulatory fixes).
Whatever their merit, I contend that a system of mortgage delinquency management should
be an enduring component of housing policy. Furtherance of housing and household policy
objectives hinges in part on the conditions under which homeownership is obtained,
maintained, leveraged, and - in some situations - exited. Given that high leverage or trigger
events such as job loss and medical problems play significant roles in mortgage delinquency
independent of loan terms, better origination practices cannot eliminate the need for
delinquency management. One function of this brief essay is to identify an existing rough
framework for managing delinquency. 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, industry loss mitigation efforts, and third-party
interventions such as delinquency housing counseling. In terms of analyzing this framework,
it is tempting to focus on its impact on mortgage credit cost and access or on the absolute
number of homes temporarily saved, but my proposed analysis is based on whether the
system honors and furthers the goals of wealth building, positive social psychological states,
and community development. Because those ends are not inexorably linked to ownership
generally or owning a particular home, a system of delinquency management that honors
these objectives should strive to provide fair, transparent, humane, and predictable strategies
for home exit as well as for home retention. Although more empirical research is needed, this
essay starts the process of analyzing mortgage delinquency management tools in the
proposed fashion.

In 1999 Yoko Moriizumi had studied about the Current Wealth, Housing Purchase and
Private Housing Loan Demand in Japan. Japanese households accumulate wealth for down
payments at a high rate. Therefore, current wealth plays an important role in home
acquisition as public loans whose direct mortgage lending is a strong support for home
purchasers. 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. We use a
simultaneous equation Tobit estimation method. Wealth effects on private mortgage debt,
likelihood of borrowing, and housing consumption are not elastic. On the other hand, a
change in housing consumption affects the likelihood of borrowing elastically much more
than the private mortgage amount of borrowers. Housing and private mortgage markets
fluctuate very closely with the number of participants in the mortgage market. Therefore, the
number of housing starts is linked strongly to the private mortgage market.
Robert B. Avery and Allen N. Berger had studied about the Loan commitments and bank risk
exposure. They studied about theLoan commitments increase a bank's risk by obligating it to
issue future loans under terms that it might otherwise refuse. However, moral hazard and
adverse selection problems potentially may result in these contracts being rationed or sorted.
Depending on the relative risks of the borrowers who do and do not receive commitments,
commitment loans could be safer or riskier on average than other loans. the empirical results
indicate that commitment loans tend to have slightly better than average performance,
suggesting that commitments generate little risk or that this risk is offset by the selection of
safer borrowers.

Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studied about the Loan
commitments and private firms. They studied that, most loans are in the form of credit lines.
Empirical studies of line demand have been complicated by their use of data on publicly
traded firms, which have a wide menu of financing options. 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. We test Martin and Santomero's (1997) model, in which lines give
firms the speed and flexibility to pursue investment opportunities. Our findings are consistent
with their predictions. Firms facing higher rates and fees have smaller credit lines. Firms with
higher growth commit to larger lines of credit and have a higher rate of line utilization. Firms
experiencing more uncertainty in their funding needs commit to smaller credit lines. Almost
all firms convert unused credit line portions into spot loans and take out new lines.

Faik Koray and Eric T. Hillebrand had studied about the Interest Rate Volatility and Home
Mortgage Loans. They studied that The U.S. economy has experienced substantial
fluctuations in real and nominal interest rates since the 1970s. This paper investigates
empirically the relationship between home mortgage loans and volatility in mortgage rates
for the period 1971:02 through 2003:03. Contrary to common wisdom, we find a positive
relationship between mortgage rate volatility and home mortgage loans. Further investigation
indicates that this is due to volatility in the bond market. In times of high interest volatility,
households disinvest in government securities and invest in real assets, which yield a positive
relationship between mortgage rate volatility and home mortgage loans.

In november2000 Michelle J. White and Emily Y. Lin had studied about the Bankruptcy and
the Market for Mortgage and Home Improvement Loans. Theystudied that this paper
investigates the relationship between bankruptcy exemptions and the availability of credit for
mortgage and home improvement loans. 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. We test these predictions empirically and find strong and statistically significant
support when evidence from cross-state variation in bankruptcy exemption levels is used.
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.

In October 14, 2008 David P. Bernstein had studied about the Home Equity Loans and
Private Mortgage Insurance: Recent Trends & Potential Implications. They studied about the
impact of increased use of home equity lines and decreased private mortgage insurance
(PMI) on mortgage markets. 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. Multiple-mortgage financing packages as a percent of newly
originated mortgages (mortgages originated within the previous five years) went from 14.8%
in survey year 2001 to 21.5% in survey year 2007. The multiple-mortgage percentage for
seasoned mortgages (mortgages originated more than five years prior to the origination date)
also increased by a modest amount. 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. Data from the SCF was used to compare
five financial characteristics (credit card debt, installment loans, consumer credit, home-
owners equity, and liquid assets) for multiple-lien versus single-lien households. The
comparisons suggest single-lien households tend to have slightly stronger financial variables
than multiple-lien households. 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. This
change in lending and borrowing behavior is not a sub prime market problem.
In August 2007 Michael LaCour-Little had studied about the Home Purchase Mortgage
Preferences of Low- and Moderate-Income Households. Housing policy in the United States
has long supported homeownership, yet variation persists across income groups. This article
employs recent mortgage origination data to focus on the revealed preferences of low- and
moderate-income (LMI) households in home purchase mortgage choice. I identify the factors
associated with conventional conforming, FHA, nonprime and specially targeted programs.
Empirical results show that individual credit characteristics and financial factors, including
pricing, generally drive product choice, with some variation evident when loans are
originated through brokers. Results also indicate that targeted conventional programs
effectively compete with government-insured products in the LMI segment.

In 24 October 2008 David C. Wheelock had studied about the Government Response to
Home Mortgage Distress: Lessons from the Great. They studied about the Great Depression
was the worst macroeconomic collapse in U.S. history. Sharp declines in household income
and real estate values resulted in soaring mortgage delinquency rates. According to one
estimate, as of January 1, 1934, fully one-half of U.S. home mortgages were delinquent and,
on average, some 1000 home loans were foreclosed every business day. This paper
documents the increase in residential mortgage distress during the Depression, and discusses
actions taken by state governments and the federal government to reduce mortgage
foreclosures and restore the functioning of the mortgage market. Many states imposed
moratoria 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. The Home Owners Loan Corporation (HOLC)
was created in 1933 to purchase and refinance delinquent home loans as long-term,
amortizing mortgages. Between 1933 and 1936, the HOLC acquired and refinanced one
million delinquent loans totaling $3.1 billion. The HOLC refinanced loans on some 10
percent of all nonfarm, owner-occupied dwellings in the United States, and about 20 percent
of those with an outstanding mortgage. The Great Depression experience suggests how
foreclosures might be reduced during the present crisis.

In March 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about the Financial
Market Imperfections and Home Ownership: A Comparative Study. They explore the
determinants of the international pattern of home ownership using the Luxembourg Income
Study (LIS), a collection of microeconomic data on fourteen OECD countries. In most, the
cross-section is repeated over time and includes several demographic variables carefully
matched between the different surveys. This allows us to construct a truly unique
international dataset, merging data on more than 400,000 households with aggregate panel
data on mortgage loans and down payment ratios. After controlling for demographic
characteristics, country effects, cohort effects and calendar time effects, we find strong
evidence that the availability of mortgage finance - as measured by outstanding mortgage
loans and down payment ratios - affects the age-profile of home ownership, especially at the
young end. The results have important implications for the debate on the relationship
between saving and growth.

In 10 December 2007 Irina Paley and Chau Do had studied about the Explaining the Growth
of Higher-Priced Loans in HMDA: A Decomposition Approach. The period 2004-2005
showed a significant increase in Home Mortgage Disclosure Act (HMDA) rate spread
reporting. Following the Oaxaca (1973), Blinder (1973), and Fairlie (2005) decomposition
techniques, this study identifies the fraction of the increase due to the flattening of the yield
curve. Even after controlling for changes in borrower risk characteristics, the findings reveal
that during 2004-2006, the flattening of the yield curve explains a significant amount of the
increase in rate spread reportable loans. This is the case for both prime and sub prime
originations.

In Feb. 1 2009 Vincent W. 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 main question addressed is how much households borrow when
refinancing their current mortgage debt in a cash-out transaction. We also provide estimates
of the marginal effect of certain borrower characteristics. Results contribute both to the
literature on refinancing behavior and the role of house price appreciation in providing funds
that may be used for consumer spending or other purposes.

In august2004 Mark Carey and Greg Nini had studied about the Corporate Loan Market
Globally Integrated? A Pricing Puzzle. We offer evidence that interest rate spreads on
syndicated loans to corporate borrowers are economically significantly smaller in Europe
than in the U.S., other things equal. Differences in borrower, loan and lender characteristics
associated with equilibrium mechanisms suggested in the literature do not appear to explain
the phenomenon. Borrowers overwhelmingly issue in their natural home market and bank
portfolios display significant home "bias." This may explain why pricing discrepancies are
not competed away, but the fundamental causes of the discrepancies remain a puzzle. Thus,
important determinants of loan origination market outcomes remain to be identified, home
"bias" appears to be material for pricing, and corporate financing costs differ in Europe and
the U.S.

In July 2005 Gwilym B.J. Pryce and Patric H. Hendershott had studied about the Sensitivity
of Homeowner Leverage to the Deductibility of Home Mortgage Interest. Mortgage interest
tax deductibility is needed to treat debt and equity financing of homes equally. Countries that
limit deductibility create a debt tax penalty that presumably leads households to shift from
debt toward equity financing. The greater the shift, the less is the tax revenue raised by the
limitation and smaller is its negative impact on housing demand. 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. Taking this restriction into account
reduces the estimated financing response by 20 percent (a 32 percent decline in debt vs. a 40
percent decline). The estimation is based on 86,000 newly originated UK loans from the late
1990s.

In 1 NOVEMBER 2007 Marsha Courchane studied about The Pricing of Home Mortgage
Loans to Minority Borrowers: How Much of the APR Differential. 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. 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 sub prime mortgage, and annual percentage rate ("APR")
conditional on getting either a sub prime or prime mortgage. We find that up to 90 percent of
the African American APR gap, and 85 percent of the Hispanic APR gap, is attributable to
observable differences in underwriting, costing and market factors that appropriately explain
mortgage pricing differentials. Although any potential discrimination is problematic and
should be addressed, our analysis suggests that little of the aggregate differences in APRs
paid by minority and non-minority borrowers are appropriately attributed to differential
treatment.
In 1991 Susan M. Wachter and Paul S. Calemhad studied about the Community
Reinvestment and Credit Risk: Evidence from an Affordable Home Loan Program. 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. We
examine long-term delinquency in relation to neighborhood housing market conditions,
borrower credit history scores, and other factors. We find that likelihood of delinquency
declines with the level of neighborhood housing market activity. Also, likelihood of
delinquency is greater for borrowers with low credit history scores and those with high ratios
of housing expense to income, and when the property is unusually expensive for the
neighborhood where it is located.
 CHAPTER IV
RESEARCH METHODOLOGY
 CHAPTER IV
RESEARCH MYTHODOLOGY

4.1 INTRODUCTION

Research methodology is a way to systematically show the research problem. It may be

understood as a science of studying how research is done scientifically. It is necessary for the
researcher to know not only the research methods but also the methodology.

This Section includes the methodology which includes. The research design, objectives of
study, scope of study along with research methodology and limitations of study etc.

• To know the Customers perceptions about home loans of HDFC housing development
finance corporation LTD.
• To study the satisfaction level of customers about home loans.

• To study the problems faced by customers in obtaining the home loans.

To make comparative study of disbursement of home loans by commercial banks, the study
shall be conducted in the manner enumerated below-

4.2 RESEARCH DESIGN

This project is based on exploratory study as well descriptive study. It was an exploratory
study when the customer satisfaction level was studied to suggest new methods to improve
the services of HDFC LTD in providing home loans and it was descriptive study when
detailed study was made for comparison of disbursement of home loans by commercial
banks.

4.3 SOURCES OF DATA

The study of the consumer behavior is important because he is the king. The research process
is based upon survey method, so in order we go to service provider and services user which is
the customers.
The research involves the following steps:
✓ Define the problem and research objective: The problem and objective is to assess
the services offered by the various service providers and what the customer wants.
✓ Developing the research plan: The second stage of the research methodology is to
develop a research plan. The research plan designed to take the decision on the data
sources, research approaches, research instruments, sampling plan and contact
methods.
✓ Survey research: It was a descriptive research.
✓ Research instrument: The use of an effective research instrument is very important
because through this instrument we collect data in this project through observations
and personal interview were conducted.
✓ Personal interview :as we were doing direct selling we interacted with my customers
and asked about their views in selecting a service and what are their wants and
expectations from a service provider.
✓ Sampling plan: After finalizing the research approach and instruments asampling
must be designed.
✓ Sampling unit: Data have been collected from banks.
✓ Sampling size: It has been collected from four banks.
✓ Sampling procedure: what process should be used to collect the sample. So,
representation sample, convenience sampling is used.
✓ Collect the information: After completing all the steps, the data are collected from
different sources.
✓ Analyze the information: After the data is collected they are analyzed to know the
findings. The data is then tabulated to develop the frequency distribution.
✓ Present the findings: As the last step, the findings are presented that are relevant to
the major marketing decisions.
 CHAPTER V
DATA ANALYSIS AND
INTERPRETATION
 CHAPTER V
DATA ANALYSIS & INTERPRETATION

5.1 ANALYSIS OF DATA

The home loans provided by the banks are more or less same at the basic level. The banks
generally try to go ahead of other banks in terms of attracting number of customers to their
countries. For this they are trying to offer some unique services as per the unique
requirements of the unique important customers.

5.2 COMPARITIVE STATEMENT OF HOME LOAN

Home Loan Home Loan Interest Home Loan Prepayment

Provider Rates Processing Fees Charges
Up to 0.5% of loan
HDFC Bank 8.75% onwards amt NIL

0.5% of loan amt. or

Rs.10,000 whichever NIL for floating rate
YES BANK 9.35% onwards is higher (+GST) loans

SBI 8.75% onwards Rs. 0 – 10,000 NIL

0.5% – 1.00% of loan
ICICI Bank 8.95% onwards amt. NIL

IDFC Bank 8.90% onwards Rs 10000 NIL

IndiaBulls 8.80% onwards Up to 1% of loan amt NIL

For up to 1 Cr – Rs
LIC Housing 5000 , Above 1 Cr Rs
Finance 8.70% onwards 10,000 NIL
PNB Housing
Finance 9.05% onwards Up to 1% of loan amt NIL

DHFL 10.00% onwards Up to 1% of loan amt NIL

Axis Bank 8.85% onwards Up to 1% of loan amt NIL

IDBI Bank 8.70% onwards 0.5% of loan amount NIL

Tata Capital 8.80% onwards 0.2% of loan amt. NIL

Punjab National
Bank 9.05% onwards Nil NIL

Min. 1000 and Max.

Bank of India 8.70% onwards Rs. 20,000 NIL

Min. 500 to Max.

Syndicate Bank 9.85% onwards 5,000 NIL

Varies based on
Canara Bank 8.75% onwards applicant profile NIL

United Bank of Varies based on

India 8.65% onwards applicant profile NIL

0.75% of the loan

amount (minimum
IIFL 9.50% onwards Rs. 5,000) NIL
5.3 COMPARISON OF MAJOR PLAYERS

The markets for home loans have been sizzling in India. The spurt in growth in recent years
and the prospect of continued buoyancy in demand have attracted many players to the
industry which till a couple of years back had two major players- HDFC and LIC Housing
Finance. The result is cut-throat competition, which has benefited the loan seekers. The home
loan market has grown at a compounded rate of over 40% over the last four years. And from
what industry experts believe that there is a little chance that there will be any significant
decline in the growth rates going forward. So what have been the key factors in triggering of
this high growth period?
There are several reasons for the same on the demand side:-

✓ Faster raise income as compared to property prices, thus making housing more
affordable.
✓ Decline interest rates, which have greatly reduced the cost of borrowing (both o0n
interest and capital).
Then there are factors on the supply side too which have supported this growth:-

✓ More competition in the housing finance sector resulted in companies charging lower
interest rates, sometimes even at the cost of spread (i.e. profit margin)
 ✓ The fee for getting the home loan has reduced dramatically over the last couple of
years. From over 2% of the loan amount to as long as 0.25% (some companies are
known to wave of the fee entirely). Housing Finance Companies have introduced
several new products to meet the needs of wide variety of customers. One such
scheme, the Step up Loan, where EMI’s increases as the income of the individual
increases has been a big hit with the individuals just starting off with their careers.

✓ One other factor is increasing collaboration between Housing Finance Companies and
builders. Such partnership minimizes the service and funding related issues
significantly thus making it easier to buy property.

Market shares of Indian banks

One innovation in the housing finance sector has been the introduction of floating rate home
loan simply put the cost of such home loan or the interest rate not fixed during the tenure of
the loan. Instead interest rate is benchmarked against some index/ indicator. So as the
benchmark rate moves up or down, the cost of your loan too changes, at some predetermined
frequency (usually once a quarter).
Ideally loan seekers should opt for a floating rate home loan when it is expected that the
interest rate will decline going forward. Fixed rate loans should be preferred when the
interest rates are expected to rise.

But is the choice that simple? In today’s environment when there is a lot of talk about rising
interest rate, should investor shun floating rate home loan. Altogether is there still some merit
in this instrument? “In the last one year, there was a trend of floating rate home loans being
more popular as compared to the fixed rate loan. As of now, this trend is continuing” says
Mr. Suresh Menon ,GM (Mumbai region), HDFC Limited.

There are three important issues which one needs to consider before opting for one type of a
loan over the other:-
✓ First, an important determinant of what you go in for should be the long term
expectation of interest rate. For example if you (or the experts) expects the rates to
rise for the next one year, but then decline gradually over the next several years a
floating rate product may be preferable. The other option for going in for a fixed rate
product and then switching at the end of the year will entail costs (there could be
penalty of 1%-2% of the outstanding loan amount) and may not make financial sense.
Moreover floating rate home loans do not change the rate of interest every quarter
 (even though they review the rate every quarter). Mr. Menon points out “The
attraction of a floating rate home loan is that it does not attract a part prepayment
charge. This could appeal to individuals who get lump sum bonuses which they can
use to reduce their loan exposure.”

✓ Second, the issue whether fixed rate home loan are actually ‘fixed rate’. When
considering a fixed rate home loan over floating rate of home loan a strong selling
point is that if interest rate were to rise dramatically you will be protected.
Apparently the reality is somewhat different. It seems that companies that have given
out fixed rate home loans can revise their rates upwards in exceptional circumstances
(significant rise in interest rate for one) so if you think interest rate will remain rage
bound over the near term and decline over the long term, you are still better off with
the floating rate product.

✓ Third, a fixed rate loan is generally priced higher as compared to the floating rate
product. This holds true in the current environment where the fixed rate loan is at a
higher interest rate as compared to the floating rate loan. The difference is currently
about 0.25% to 21%. So if you expect that interest rate are likely to move up, but only
to the extent of this differential, then you should ideally be in different between the
two types of loan. The deciding factors then should be when you think the rates will
increase and also the long term expectations of interest rates.

As always there is no one answer to whether you should go in for floating or a fixed rate
home loan. If you are a person with very little appetite for risk or negative surprises, opt for
fixed rate home loan. But in case you can take on some risk a floating rate home loan is
worth a look.

Five steps to take a right loan:-

1) Gather data on interest rate. Get interest rate information from more than one source
and get the same information from each so you can compare the offers.
 2) Get information on fees. Find out about processing fees, administration charges and
other costs that may be involved in taking the home loan. A written statement of all
the fees from the housing finance companies will ensure that there will be no
surprises later on. Use the lowest amount of fees to negotiate with the other lenders.

3) Get pre-approval letter. This gives you substantial leverage as you are then seen as
serious buyer by the seller of the property. Also, having the letter in your hand will
set a limit to the amount of money you can commit to the property. This will help in
identifying the right property.

4) Bargain for a lower rate of interest. Housing finance will reduce their ‘rack’ rates for
customers with the good credit record. A bargain deal will easily fixed a home loan
at significantly lower rates (at times you can get a discount of as high as 0.50
percent). Here again get a confirmation of the rate (and for how long it will remain
fixed) via a letter.

5) Watch out for a predatory lending. Don’t include false information on your home
loan application to get quick approval. Also do not borrow more money than you
need or can afford.

A floating interest rate allows customer to take advantage of interest rate movements. They
get immunity from adverse movements and read the benefits of any fall in interest rate but a
floating rate loan makes sense only when interest rate are high so that they can take
advantage of possible fall. But predicting interest rate movement could confound even
seasoned market watchers.

If they are looking for a home loan, be prepared to cough up a pretty sum as down payment.
The RBI, in a recent meeting with the bankers cautioned banks against lending 100% of the
property value. That is because of increasing competition in home loan some banks have
been funding even 110% of the agreement value. This means your loan not only pay for the
property, it helps with the stamp duty and registration charges and even furnishing. Its being
sweet deals so for, as borrower not only need have no access to other funds, they also get tax
breaks.
The RBI’s position is that lending such sums will remain additional risk for the bank. In case
of default, the bank may not have sufficient collateral security to recover dues and may have
to write off the additional borrowings. However, the bankers do not seen unduly worried.
Nonperforming assets in the housing segment are quite low below 1% and that, say bankers,
is due to the higher asset quality.

5.4 SWOT ANALYSIS OF HOUSING FINANCE INDUSTRY

5.4.1 STRENGTHS

1) The industry has been witnessing very fast growth rate, which is 6% growth in the
first
2) Quarter of 2002-2003 as against 3-5% growth recorded in the first quarter of 2001-
2002
3) The market faces a high demand curve, thoroughly mismatched by a low supply
curve
4) Investment is based in assets that are securities & those that have historically
appreciate rapidly.
5) Tax benefit & other facilities provided on loan repayments.

5.4.2 WEEKNESSES

1) The foreclosure rules of court of law such as provision regarding the ownership of not
more than one house (in Delhi) binds the industry.
2) The healthy of an HFC depend upon its ability to mob up low cost funds.
3) AN HFC is unable to tap the rural market due to lack of proper retrieval procedures
so whilst
4) The rural market offers a higher rate of return; it has a higher risk & default rate.
5) Many legal impendent exist, deferring purchase of certain types of property beyond a
6) Certain extent thereby negatively impacting weak mortgage laws, resulting in an
increase in risk compo ending this.

5.4.3 OPPORTUNITIES

1) The housing industry faces a severe shortage of houses. The total demand for houses
is Expected to touch around 19.40 million units by the year 2003 of these 12.8 million
 2) Dwelling units (65-98%) would be in rural areas & 6.6 millions dwelling units
(34.02%) in urban areas.
3) While the loan facility is backed by the security of property this sector represent a low
margin But on the low margin but on the same line low risk segment. The address this
4) Market the ones lies on the HFCS to device bold & innovative alternatives like
mortgage Based securities use of method such as door to door collection of
installments assessing the Creditworthiness of the prospective client and providing for
group securities.
5) The roles of NHB in refinancing & providing regulation of housing finance system.
6) The government’s initiatives to promote the sector & its contribution in uplifting the
sector.

5.4.4 THREATS

The industry faces increased competition as more & more foreign backs & Housing
Finance Companies are providing loan facility.

5.5 SWOT ANALYSIS OF HDFC HOME FINANACE

5.5.1 STRENGTH

1) Save substantial interest.

2) Prepay whenever the customer.
3) Reduce their loan outstanding.
4) Access the surplus finds anytime.
5) Use surplus funds to invest when the right opportunities arises.

5.5.2 WEAKNESS

Product is very good but it is mainly suitable for higher income group & is not suitable for
the Middle income group

5.5.3 OPPORTUNITIES

There is ample scope for financing flats & apartments for the salaried class in the higher
income Group.
5.5.4 THREATS

1) Nationalized banks like SBI, Union Bank, PNB.

2) Private Banks likes HDFC & standard chartered & Citi Bank with its home credit scheme.

ICICI HOME FINANACE COMPANY LTD

Consumer friendly housing finance company

HISTORY

ICICI home finance company ltd was incorporated on May 28, 1999 as 100% subsidiary of
ICICI Personal Financial Services Limited (ICICI PFS). ICICI finance company Ltd was set
up with objective of providing long term housing loan to individual and corporate. The
company was registered on March 30’2000 with National Housing Act, 1987 in terms of
Housing Financing Companies (NHB) direction, 1989 with effect from May 3, 2002, ICICI
home finance has become a 100% subsidiary of ICICI bank Ltd.

OVERVIEW

ICICI home loans are at present available to customer in 150 cities/towns across the country.
Loans are offered for the purchase of new homes. Purchase of resale homes and home
improvement. Besides the companies also offers loans for commercial property and loans
against existing property. The loans are offers foe tenors up to 30 years. The company has
also introduced several customers friendly services such as ‘door step services’, ‘know your
loan on phone’ facility and ICICI home search free property brokerage services. ICICI
Personal Financial Services Limited(ICICI PFS) formerly ICICI credit was one of the first
four companies to obtain registration as non banking financial banking companies(NFBC)
from the reserve bank of India (RBI)on sep 10, 1997 under the new section 45 I A of the
RBI act ,1939.
During the year 1998-1999, there was a significant shift in the company’s operations from
leasing and hire purchase to distribution and servicing the all the retail products for ICICI,
including two auto loans, consumer durable finance & another financial products. The
company has become a critical part of ICICI’s retail strategy aims at offering a
comprehensive range of products &services to retail customers. In view of this reorientation
of the business, the name of the company was changed from ICICI Corporation Limited to
(ICICI PFS) effective march 22, 1999.

ICICI commenced its custodial services business in 1992 & played a pioneering role in the
business when it accepted the custodian role for the first ever GDR issue by an Indian
corporate (reliance industry Ltd). ICICI has a major market share in the segment act as
custodian of 41 ADR/GDR issues & in the process, has established the relationship will all
the major overseas institutional investors including foreign institutional investors (FII’s) &
as on the June 30,1999, the value of asset held in our custody exceeded us 2 billion. At
present, ICICI offers a full range of custodial services for primary and secondary market
operation pertaining to debt,equity,money market instruments GDR/EURO issues conversion
& GDR arbitrage to:
1) Overseas institutional investors like

a) FIIS
b) OCBS
c) OFFSHORE FUNDS
d) VENTURE FUNDS
2) Overseas government agencies.
3) Institutional looking for proprietary investment.
4) Mutual funds
5) Private investment companies
6) Large corporate
7) High net worth individual

As a value added services ICICI custodial services division assist the client in preparation,
submission & follow up for various applications by FII’S/OCB with SEBI/RBI
APPLICATION PROCESS OF YOUR HOME LOAN

Your search for the perfect home loan ends here at ICICI Bank Home Loans, even before
your have found the perfect property.

The moment you decide to buy a home, you can put in your application for a home loan. Yes,
you can apply for a home loan even before you have selected the property.

The property need not even be in the same city where you are residing. The only condition
being that ICICI Bank has Home Loans operations in both the cities.

Should there be a change in your financial status or plans, you can withdraw your sanction
within 6 months of approval of your home loan.

However, we are always ready to assist our customers in the event of legitimate problems.
And, we might reconsider this if we find that there are satisfactory reasons for the delay.
And, neither would we charge you extra for this delay.

If it is refinancing you are interested in, it is possible within 6 months from the date of
purchase of property.

PERSONAL BANKING

At ICICI bank they are committed to making banking a pleasure. This commitment is
manifested in services they offer a wide range of account, investment scheme & facilities.
Each services offer their customer security, flexibility of operations & maximum returns.
The various services provided under this is as follow:
1) Maximum cash-saving account
2) Quantum fixed deposits
3) Quantum optima –value added saving account
4) Money plus-current act
5) ATM
6) Treasure chest –cocker facility
7) Power pay roll
8) Retail treasury instruments

CORPORATE BANKING

MOBILE COMMERSE

ICICI bank now brings back account & ICICI credit card to customers fingertips .with
mobile commerce customer can perform a wide range of query –based transaction from their
orange tm (Mumbai) & Airtel (DELHI) mobile phone , without even making a call.

1) Access multiple accounts

2) Balance inquiry to the linked account
3) Cheque book request
4) Mini statement –listing of last three transactions5) Request for account statements (by
mail or fax)

ICICI

1) Attractive IR
2) Door step service from enquiry stage till the final disbursement.
3) No guarantor required.
4) Can transfer your existing high interest rate loan.
5) Special 100% funding for special properties.

FACTORS AFFECTING YOUR LOAN AMOUNT

With ICICI Bank Home Loans, you can get a home loan suited to your needs. The home loan
amount depends on your repayment capability and is restricted to a maximum of 80% of the
cost of the property or the cost of construction as applicable. A number of factors are taken
into account when assessing your repayment capacity. Repayment capacity takes into
consideration factors such as income, age, qualifications, number of dependants, spouse's
income, assets, liabilities, stability, continuity of occupation and savings history. However,
there are ways by which you can enhance your eligibility.
If your spouse is earning, put him/her as a co-applicant. The additional income shall be
included to enhance your loan amount. In case of any co-owners they must necessarily be
co-applicants.

The final amount to be sanctioned will depend on your repayment capacity. However, what
you ultimately are entitled to will have to conform within the limits fixed for each loan.

Also, when the company looks at the total cost, registration charges, transfer charges and
stamp duty costs are included.

DOCUMENTS REQUIRED FOR HOME LOAN SANCTION

ICICI Bank Home Loans, India’s leading Home Loans Provider, offers attractive interest
rates and unbeatable benefits to ensure that you get the best deal. Keeping your convenience
in consideration, we ask you for minimal mandatory documents for the sanctioning of your
home loan, to keep the process totally hassle-free.

We require the following documents to sanction your home loan:

Sanction Documents Completed application form

Photograph
Fee Cheque
Photo Identity Proof
Age Proof
Signature Verification Proof
Residence Address Proof
Document for the Salaried
Last 3 months’ Salary Slip
Form 16
Bank Statement for the last 6 months from Salary Account
Repayment Track record of existing loans / Loan closure letter
Document for the Self-employed
Income Tax Return / Computation of Total Income / Auditors Report / Balance Sheet / Profit
& Loss Account certified by Chartered Accountant for last 2 years (3 years for Home Equity)
(both for business and personal of partners/directors)
Bank statement for the last 6 months from operating account
Repayment Track record of existing loans / Loan closure letter
Board Resolution in case of a company
Proof of existence
Office Address Proof
• Photo Identity Proof, Residence Address Proof, Signature Verification Statement for
all the main partners / directors.

HOME LOAN

1) Customer must be at 21 year of age when the loan is sanctioned.

2) The loan must terminate before or when you twin 65 year of age or before retirement,
Whichever is earlier.
3) Customer must be employed or self employed with regular source of income

LOAN AMOUNT

✓ A number of factors are taken into account when assessing repayment capacity.
✓ Customer income, age, number of dependents, qualification, asset &liabilities,
stability and continuity of customer employment. Business is one of them. However
there are ways by which you can enhance your eligibility.
✓ If the customer spouse is earning put he/she as a co-applicant. the additional income
shall be included to enhance the loan amount. Incidentally, if there are any co owners
they must necessarily be co-applicant customer fiancée’s income can also be
considered sanctioning the loan on your combined
✓ Income .the disbursement of the loan, however will be done only after the submit
proof of Marriage. Providing additional security like bonds, fixed deposits&LIC
policies may also help to enhance Eligibility.
 ✓ While there is no need for guarantor, it could be that having one might enhance your
credibility with us. If so, our loan officer would provide customer with positive
necessary details.
✓ The final act to be sanctioned will depend on your repayment capacity. However,
what customers ultimately are entitled to will have to conform within the limits fixed
for each loan.
✓ Also when the company looks at the total cost, registration charges, stamp duty,
transfer charges are also included.

HOMELOAN

We at ICICI bank understand the value of owing your house. Our affordable home loans can
make all the difference to their dreams of owing home.

FIND THE RIGHT HOME

Provide facility for search of free online property. A one stop shop for all their Real Estate
needs.

WHAT YOU GET

0% brokerage on first sale properties access the entire market under our roof site visits to the
properties short listed by you. Help in negotiating the best price. Help the legal
documentation.

LISTINGS BELOW ARE THE STEP INVOLVED IN AVAILING OF A HOMELOAN

✓ A person applies for a home loan

✓ The executive meets the applicant & briefs him the entire loan process, requirements
& the various options available.
✓ The applicant chooses a housing finance company (HFC) &handover the income
✓ Document to the executive are the income documents are headed over to the HFC for
eligibility & approval.
✓ The HFC verifies the documents & checks the repaying capacity, saving habits,
tenure of services etc. of the applicant & approves the loan amount.
✓ After approval an offer letter is given to the applicant by the HFC, along with list of
original title documents that have to hand over to the HFC.
✓ The applicant gives the original property title document to the HFC
 ✓ The HFC scrutinizes the legal & the technical aspects of the original title document.
✓ If the HFC is satisfy as to the legal & technical aspect of the document then the
applicant is called to sign the loan agreement
✓ The loan disbursement schedule is decided by the HFC according to the stage of
construction (If property under construction) or a onetime payment is made if
property is ready for Possession.
✓ The applicant gets possession of the property depending upon the level of completion
of the property.
✓ The applicant can start paying the EMIs.

DISBURSEMENT

Customer loan will be disbursed after you identify & select the property or the home that
customer are purchasing and on their submission of the requisite legal documents.
While the customer may be under impression that the list of documents asked for it is rather
extensive. Each and every single document asked for will be verified & check to ensure their
safety. This may take some time but the banks want to ensure a clear title and will complete
all the legal & technical verification to ensure that they have full right to their home.
The 230 a clearance of the sellers or 371 clearance from the appropriate income tax
authorities (if applicable) is also needed on satisfactory completion of above, on registration
of conveyance deed and on the investment of your own contribution, the loan amount (as
warranted by the stage of construction) will be disbursed by ICICI.
The disbursement will be in favor of the builder/seller.

At ICICI Bank Home Loans, we disburse the loan amount after you identify and select the
property or home that you are purchasing and submit the requisite legal documents.
While you may be under the impression that the list of documents asked for is rather
extensive, please note that it is for your own good. Each and every single document asked for
will be verified and checked to ensure your safety.
This may take some time but we want to ensure a clear title and will complete all the legal
and technical verifications to ensure that you have full rights to your home.
Your loan will be disbursed after you identify and select the property or home that you are
purchasing and on your submission of the requisite legal documents.

The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax
authorities (if applicable) is also needed.
On satisfactory completion of the above, on registration of the conveyance deed and on the
investment of your own contribution, the loan amount (as warranted by the stage of
construction) will be disbursed by ICICI Bank.
Disbursement Documents

Property documents (as per P&D for respective states and as asked by empanelled lawyers
for individual cases)
Facility Agreement
Disbursal Request Form
Cheque Submission Form – for Pre EMI and EMI cheques
ECS or Auto Debit for ICICI Bank account holders or Post Dated Cheques for EMI / Pre
EMI
Personal Guarantor’s Documents (PG Form, Photograph, Identity Proof, Address Proof,
Signature Verification and Income documents, if applicable)

In case of property is owned by a company

✓ Memorandum of Entry
✓ Form 8
✓ NOC

AMOUNT

This largely depend on a no. of facts like ones age ,profession, salary, the city one reside is
among other such factors. it varies between 2.1lakh to 1crore depending on the lender- as the
rule of the thumb, depending on HFC one have to cough up 15% - 20% of the loan amount as
the down payment. For smaller amount, this may not be much. But for figure remaining into
lakh this could make loads of difference. For e.g. an apartment of costing Rs 10 lakh may get
85% financing, so one will have to arrange for remaining Rs 15 lakh. If one takes this into
amount the additional thousands will definitely put a strain on ones finances
.

TENURE

Generally the maximum tenure of home loans is 15 years, with a few lenders offering tenure
of 20 years or more. ICICI offers 15 year loan. The longer the tenure, the more one pay in
total interest but ones monthly payment will be less. So depending ones earning potential &
bank balance one can choose an appropriate tenure. An important requirement of most of the
banks/ HFCs is that one pays up the entire loan before one retires. One can always prepay
ones entire loan amount before it is due. There is a trend to do away with the pre-payment
penalty being imposed by some lenders. So its best one checks on this as well.
INTEREST RATE

Without doubt the most important parameter to factor into ones calculations. The interest
rates may vary from institution to institution. Repayment is in the form of EMI’s (equated
monthly installment). The longer the tenure, the more one pays in interest, but ones monthly
payment will be less. The interest rate of ICICI is

Tenure Interest Type Interest Rate

.15 -20 Fixed 13.75 %

10 -15 Fixed 16 %
5 - 10 Fixed 16 %
1-5 Fixed 16 %
1-5 Floating 16 %
5 - 10 Floating 11.25 %
10 - 15 Floating 16 %
15 - 20 Floating 16 %

REFINANCE

This is concept that is yet to catch on in the home loan market but is bound to be a major
service in the months to come. Under this facility, one can take a new loan from another
bank/HFC to pay back another loan before its natural tenure. It gives one the opportunity of
prepaying ones high cost debt and get a lower cost one. In today’s falling interest rate
scenario one should use this vehicle to lower ones debt payment as much as possible. The
lender facilitates the shift by paying the outstanding and transferring the asset to other
portfolio.

MISCELLANEOUS CHARGES

The interest rates and EMI’s are not only the cost factor. Never underestimate how much the
processing fee and administration fees amount to. A 0.5% administration fees and 0.5%
processing fee on say, a Rs.500000 loan would be Rs.5000. other time sit could be just one
fee (either administration or processing but could yet work out to be much more if it is
considerably higher at, say, 2.5% or 3%. The various other fees, which one is required to pay
along with the margin amount are:
INTEREST TAX:

This is tax payable on the interest paid on a home loan and not the principal. This is
sometimes included in the interest rate of the loan, or may be charged separately as interest
tax.

PROCESSING CHARGE

It is the fee payable to the lender on applying for a loan. It is either a fixed amount not linked
to the loan or may be a percent of the loan amount. The loan amount received by you can be
less than processing fee.

PREPAYMENT PENALTIES

When the loan is paid back before the agreed duration a penalty is charged by some banks or
companies, which is usually between 1% and 2% of the amount being prepaid.

OTHERS

It is quite possible that some lends may levy a documentation or consultant charge.

ICICI BANK ANNOUNCES ITS BASE RATE, VALID FROM JULY 1, 2010

ICICI Bank has announced a shift in the existing benchmark rate from Floating Reference
Rate (FRR)/ I-BAR the Base Rate (I-Base). The same will be effective for all its mortgage
products from July 1, 2010.
The ICICI Bank Base Rate (I-Base) has been fixed at 7.50%. This is the minimum rate that
ICICI Bank will charge to its new customers.

BENEFITS
✓ Some of our key benefits are:
✓ Guidance through out the process
✓ Home loan amounts suited to your needs
✓ Home Loan tenure upto 20 years
✓ Simplified documentation
✓ Doorstep delivery of home loan papers
✓ Sanction approval without having selected a property.
✓ Free Personal Accident Insurance (Terms & Conditions)
✓ Insurance options for your home loan at attractive premium
 ICICI Interest Rate of last five years

PUNJAB NATIONAL BANK

INTRODUCTION

PNB has over 4500 branches and offices bringing the Punjab National Bank to your
doorstep. Around 2400 offices come under the network of Centralized Banking Solution or
CBS. 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, Pune, Chennai, Mumbai, Ahmedabad, Chandigarh, Gurgaon, Hyderabad,
Jalandhar, Kolkata, Ludhiana, Nodal and Bangalore. Internet Banking Services are provided
to all customers in the CBS branches. A branch and ATM locator is also available on the
official website of Punjab National Bank. For an overview of the annual report or the bank
profile, the site can be resourceful. The website also provides info on the careers and
recruitments at PNB and the exam results. The careers at nationalized banks like PNB are the
most sought after one and candidates are selected on the basis of their exam result. PNB
topped the Best Paying Commercial Bank category with an overall rating of 87.45% as
evaluated by the SSS Retirement, Death & Funeral Benefits Program.
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.

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 in 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.

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.
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 industry-
leading 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 integration of 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.20

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 to further 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 powerful capabilities. India is a
strategic market for Finacle and we look forward to closely collaborating with Punjab
National Bank for their future growth plans.”
REGULAR HOUSING FINANCE SCHEME FOR PUBLIC

PNB reaches out to you with fast, friendly and most convenient home loans for:

✓Construction or purchase of house/ flat.

✓Purchase of house/ flat on First Power of Attorney basis from the original allottee
✓Carrying out repairs/ renovations/ additions/ alterations to existing house/ flat
✓Special Feature- To cover the loan outstanding, life Insurance cover is also available
on payment of one time premium which can also be financed by the Bank.
PRODUCTS

PNB Apna Ghar Yojana home loans are meant for construction or for acquisition/purchase of
house/flats. The minimum loan amount would be Rs.50000 and maximum loan amount
depends on the repayment capacity of the borrower. In case of joint application, income of
borrowers /co-borrowers is clubbed together for calculation of loan eligibility. The loan
repayment is in Equated Monthly Installments (EMI) over a maximum period of 20 years.
PNB Ghar Sudhar Yojana home loans are offered for up gradation, renovation or repair of
house/flat. It includes among others, internal and external repairs, water proofing, roofing,
flooring, electrical, woodwork etc. The loan amount ranges from a minimum of Rs 50,000 to
a maximum of Rs. 1000000. Borrower's minimum contribution will be 25% of the estimated
cost of repairs/renovations

INDIVIDUAL
For construction/purchase of house/flat: - 75% of the cost of construction of house or
purchase of house/flat. Cost of car parking up to the maximum extent of 5% of the cost of
flat/house can also be included in the cost of the project. For carrying out repairs/
renovations/ additions/ alterations: - 75% of the estimated cost subject to maximum of Rs. 20
lacs.

Loan is available up to Rs. 20 lacs for purchase of Land/ Plot.Loan is available maximum up
to Rs. 2 lacs for furnishing

PRODUCT RANGE OF COMPANY/INDUSTRY:

The products and services provided by the PNB are in various fields, such as:

• NRI services
• International banking
• Corporate banking
• Agricultural banking
• International banking
ELIGIBILITY

Age of the applicant must be less than 60 years.

Existing home loan borrower can also apply provided their loan account is regular and no IR
irregularity persist.

DOCUMENTS NEEDED

1. Proof of identity
2. Proof of income
3. Proof of residence
4. Bank statement or Pass Book where salary or income is credited.
5. Education Certificate
6. Photos
7. Salary slips& form 16
8. Income tax return last 3 years along with balance sheets.
9. Assets liabilities statements.
10. Documents of property.
11. Estimate of construction.
12. Guarantor

FREEHOLD AND LEASEHOLD PROPERTY

The loan can be granted both for freehold and leasehold property.

In case of leasehold, loan can be granted on the basis of power of attorney basis from original
allotted where DDA/PUDA/HUDA permit conversion of leasehold into freehold property
otherwise advance is not permitted against plot purchased on Power of Attorney basis.

EXTENT OF LOAN

For construction/purchased of house/flat 75% of the cost of construction or purchase of

house/flat.For carrying out repairs/renovation/additions/alternation: - 75% of the estimated
cost subject to maximum of Rs. 20 lacs. Loan up to Rs. 20 lacs for purchase of land/plot
Loan is available maximumup to Rs. 2 lacs for furnishing

CHARGES

Pre payment charges 2%

Balance Transfer Charges

(incase of refinance)
2%
 Part-payment Charges Nil

Switching Charges
(Fixed to Floating or vice-a-versa)
Nil

SPEED OF SANCTION OF LOAN

The loan will be sanctioned within 7 working days.

TENURE:

You can repay the loan over a maximum period of 25 years under both FRHL and ARHL in
SBI . Repayment will not ordinarily extend beyond your age of retirement (if you are
employed) or on your reaching 65 years of age, whichever is earlier.

RATE OF INTEREST

Fixed Option Floating Floating Option

Fixed Option for
for loans(Above Option for for
For repayment period loans(Upto 20
20 loans(Upto 20 loans(Above 20
lac)
lac) lac) lac)
i) Upto 5 years 9.25 10.00 8.75 9.50
ii) Above 5 & upto 10
10.00 10.25 9.00 9.50
years
iii) Above 10 & upto 20
10.50 10.75 9.25 9.75
years
iv) Above 20 yrs & upto
10.75 11.00 9.50 10.00
25 yrs.

The interest rate can be fixed or floating

Option can be changed from fixed to floating and vice versa with flat charges of 2% fee on
balance outstanding.
Fixed interest rate be reset after a block of 5 year in respect of loans disbursed on or after
1.08.2006

DOCUMENTATION CHARGES
Rs. 1350 + Service Tax
UPFRONT FEE

For loans up to Rs. 300 lacs = 0.50% of the loan amount with a cap of Rs. 20,000/-
For loans above Rs. 300 lacs =0.90% of the loan amount

REPAYMENT

1. Loan is to be repaid in equated monthly installments within a period of 25 years or before

the borrower attains the age of 65 years.

2. Repayment of loan for repair/ renovation/ addition/alteration has, however been restricted
to 10 years. Father/Mother can also be made co-borrower in cases property is in single name
of his /her son and also clubbing of their income is permitted for determining eligibility
criteria. Minimum 24 advance cheque should be obtained as and when, 6 cheques remain,
fresh lot to be obtained out of 24, 23 cheques should be of the amount equal to the balance.
Loan is to be repaid in EMI within a period of 25 years or before the borrower attains the age
of 65 years.

SECURITY

Mortgage of property for which finance is being given

In case of purchase of house/ flat from housing board/ society where mortgage cannot be
created immediately, a tripartite agreement shall be executed amongst the housing board/
society, borrower and the Bank
In case of purchase of house/ flat on first power of attorney, additional security equal to
125% of the loan amount by way of mortgage of some other property or pledge of bank's
FDR/ LIC policy/ Govt. Securities, NSCs, KVPs, IVPs, / PSU Bonds etc. has to be provided

FEATURES

Loan can be sanctioned by branch/hub near to the present place of work/posting /residence of
the borrower.
Loan can be sanctioned even if property is in the name of wife/parents provided that the
owner is made co-borrower.
Loan can be granted for 2nd house in the same city.
Loan can be granted for purchase of house for rental purpose
For take over, permission of higher authority is not required.

IMPORTANT CONDITIONS LOAN CANNOT BE GRANTED:

✓ For construction in Un-authorized colonies.

✓ If property is to be used for commercial purpose.
✓ Without approved Map.
PRE- PAYMENT CHARGES

✓ Nil- In cases where the loans are prepaid by the borrower from their own sources
✓ Nil- In cases where the borrower shifts to other bank within 30 days from the date of
issuance of circular for upward revision in the rate of interest to be charged in his
account or change in other terms of sanction.
✓ 2 % - In cases where the account is taken over by some other Bank/ Financial
institutions by way of a ailment of loan from such bank/ financial Inst

DISBURSEMENT FOR HOME LOAN

a. For outright purchase of house/flat, the loan amount will be paid in lump sum to the
vendor.
b. For house/flat under construction, the loan amount will be dispersed in stages as per
progress of construction/demand by selling agency.

Rate of Interest for Men and Female

STATE BANK OF INDIA

INTRODUCTION

State Bank of India (SBI) is India's largest commercial bank. 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. The State Bank
Group includes a network of eight banking subsidiaries and several non-banking subsidiaries
offering merchant banking services, fund management, factoring services, primary dealership
in government securities, credit cards and insurance. The eight banking subsidiaries are: State
Bank of Bikaner and Jaipur (SBBJ),State Bank of Hyderabad (SBH).State Bank of India
(SBI),State Bank of 13 Indore (SBIR),State Bank of Mysore (SBM),State Bank of Patiala
(SBP),State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT). 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.

PROFILE

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 ‘Parivartan’ 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.

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.

SBI RECENT ACHIVEMENTS AND MILESTONES:

AWARDS:
SBI has been the proud recipient of the ICRA Online Award - 8 times, CNBC TV – 18, Crisil
Award 2006 - 4 Awards, The Lipper Award (Year 2005-2006) and most recently with the
CNBC TV - 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.

SBI Card reaches three million milestones:

SBI Card, a joint venture between State Bank of India and GE Money, announced yet
another landmark achievement of crossing the three million cardholders-marks. Roopam
Asthana, CEO-SBI Card, said, "This milestone is even more remarkable as we have added
one million cardholders in just ten months. Our objective is to accelerate the pace of growth
by extending the benefits to a broader range of consumers in Tier II cities, along with
improved value propositions for the urban affluent customers." SBI Card recently signed up
Indian cricketer Yuvraj Singh as its brand ambassador.

SBI joins Chinese bank to touch 10,000 branches:

Public sector State Bank of India on Sunday became only the second bank in the world to
have 10,000 branches when Union Finance Minister P Chidambaram inaugurated its latest
branch here. Speaking on the occasion, Chidambaram said China's ICBC Bank was the other
bank to have 10,000 branches. Opening 10,000 branches was a great feat. "It is not an easy
milestone though the SBI was the bank of the government and Indian people even before
other banks were nationalised," he said. People all over the world, including the Chinese,
would now know about this small village where the 10000th branch of the SBI had been
opened, he said adding they would be amazed by the bank's growth. The bank should be
proud of the achievement he said and wished that the bank opened one lakh branches. The
Minister said out of the over 100 crore people, seventy 75 per cent did not have any type of
insurance. Similarly, 50 per cent of the 11 crore farmers did not have bank account. Banks
should go to the people and enroll them as account holders. 'That is what economists say is
financial inclusion,' he said.

Main SBI Home Loan Schemes

✓ SBI Realty : Purchase of plot of land

✓ SBI Optima : Loan to existing home loan borrowers
✓ SBI Green Home Loan : For homes that fight against the adverse climate change,
SBI offers 0.25% concession in interest rate and waiver of processing fees
✓ SBI Flexi : Combination of floating and fixed interest rate, in a pre determined ratio
✓ NRI Home Loans : Loans for NRIs and PIOs
✓ SBI Freedom : Pledging other financial security than mortgaging the house
✓ SBI Max Gain : Operate your home loan account like your SB or Current Account

PRODUCT RANGE OF COMPANY/INDUSTRY:

The products and services provided by the SBI are in various fields, such as:
• Banking services
• NRI services
• International banking
• Corporate banking
• Agricultural banking
• International banking

SBI HOUSING LOAN

Features
✓ SBI Home Loan provides no cap on maximum loan amount for the
purchase/construction of house/flat.
✓ There is an option to club the income of the applicant's spouse and children to
compute the eligible loan amount.
✓ The bank provides free personal accident insurance cover.
✓ A complimentary international ATM cum Debit card is also provided by SBI.
✓ On the spot "in principle" approval is a special provision for the applicant.
✓ If all the required documents are submitted by the applicant, SBI Home Loan is
sanctioned within 6 days of the date of submission.
✓ The applicant can also consider SBI's Home Loan as a Term Loan or as an Overdraft
facility, in case he/she wants to save on interest and maximize gains.
✓ SBI Home Loan also provides free personal accident insurance cover up to Rs 40
Lakhs.
✓ Repayment is permitted up to 70 years of age, which is an added advantage of SBI
Home Loan.
SCHEMES PROVIDED BY SBI

The Most Preferred Home Loan provider SBI Bank offers a Home Loan with Attractive
Interest Rates with Latest Schemes and Benefits. SBI also provides a Housing loan with
different schemes. Schemes Are:-

1. SBI Easy Home Loan

2. SBI Advantage Home Loan
3. SBI Housing Finance Scheme
4. SBI Happy Home Loans
5. SBI Life Style Loan
6. SBI Green Home Loan
7. SBI Home Plus
8. SBI Home Line
9. SBI MY HOME CAMPAIGN

PRODUCTS

'SBI-Flexi' Home Loans are designed to enable borrowers to hedge their Home Loan against
unfavorable movement in interest rates and gives the customers a one time irrevocable option
to choose one of the three customized combinations of fixed and floating interest rates.
'SBI-Freedom' Home Loans are customized for high net worth individuals and offer benefits
such as 100 per cent finance of the project and no mortgage of the property, provided the
individual could show liquid securities such as LIC policies or NSCs.

ELIGIBILITY

The minimum age of the applicant is 18 years, on the date of the sanction of the loan. The
maximum age limit for a Home Loan applicant is 70 years. It is the maximum age limit,
within which the loan should be fully repaid. The applicant should consist of sufficient,
regular and continuous source of income for repaying the loan.

DOCUMENTS

Completed Application Form with one Passport Size Photograph

Identity Proof - the applicant can make use of his/her PAN Card/Voter ID/ Passport/Driving
License, for the purpose.
Residence Proof - the applicant can make use of his/her Recent Telephone Bill/ Electricity
Bill/Property tax receipt/Passport/Voters ID
Proof of business address in respect of businesspersons/ industrialists
Sale Deed, Agreement of Sale, Letter of Allotment, Non Encumbrance Certificate,
Land/Building Tax paid receipt etc.
Copy of Approved Plan and approval from the Local Body
Statement of Bank Account/ Pass Book for last 6 months
INTEREST RATE (SBAR is currently 11.75%)

Year 1 - 8% fixed
Year 2 & 3 - 9% fixed
Year 4 onwards - For loans up to 50 lakhs, 9.25% floating.
For loan amount over 50 lakhs, 9.75% floating

Eligibility Criteria & Documentation required for SBI Home Loan

Salaried Self employed

Age 21years to 60years 21years to 70years
Income Rs.1,20,000 (p.a.) Rs.2,00,000 (p.a.)
Loan Amount
5,00,000 - 1,00,00000 5,00,000 - 2,00,00000
Offered
Tenure 5years-20years 5years-20years
Current
2years 3years
Experience
1) Application form with 1) Application form with photograph
photograph 2) Identity & residence proof
2) Identity & residence proof 3) Education qualifications certificate &
3) Last 3 months salary slip proof of business existence
Documentation
4) Form 16 4) Business profile,
5) Last 6 months bank salaried 5) Last 3 years profit/loss & balance sheet
credit statements 6) Last 6 months bank statements
6) Processing fee cheque 7) Processing fee cheque

Other Products from SBI (State bank of India)

1) SBI Personal Loan

2) SBI Card
3) SBI Home Loan
4) SBI Housing Loan

LOAN TENURE

You can repay the loan over a maximum period of 25 years under both FRHL and ARHL in
SBI. Repayment will not ordinarily extend beyond your age of retirement (if you are
employed) or on your reaching 65 years of age, whichever is earlier.
PROCESSING FEE

FEES RUPEES

Upto 5 lakh Rs. 1000

5lakh-10lakh Rs. 2000
10lakh-20lakh Rs. 5000
20lakh-50lakh Rs. 7000
50lakh-1crore Rs.8000
1crore-5crore Rs.10, 000
Above 5 crore Rs.20, 000

PREPAYMENT CHARGES

If paid from own source- Nil,

In other cases- 2% on principal amount prepaid

LATE PAYMENT CHARGES

If paid from own source- Nil,

In other cases- 2% on principal amount prepaid
 CHAPTER VI
FINDINGS AND CONCLUSIONS
 CHAPTER - VI
FINDINGS AND CONCLUSIONS

FINDINGS

1. HDFC LTD having good brand image in the minds of customers.

2. Majority of the people got loans from HDFC LTD only
3. Most of the customers are not aware of the products of HDFC home loans
4. Some of the customer’s felt that the interest rates are some what high
5. Some of the customer not having good faith on private banks like Standard chartered
bank, HSBC bank etc.
6. Most of the people are directly go to HDFC to apply a home loan
7. Some of the customer of HDFC already benefited through HDFC home loan products
and services
8. Customer awareness is medium about HDFC products.
9. HDFC LTD providing good services to their customers.

RECOMMENDATIONS

The following suggestions are strongly recommended:

✓ To broaden the customer base the vast middle income strata should be fully exploited.
✓ Simplify the procedure, reduce service charges & demand only the basic essential
proof.
✓ Most banks are reluctant to advance loan to the service class. E.g. law years, police
officers etc. this aspect must be exploited.
✓ Adoption of flexible & more lenient penalty should the
✓ Customer fails to deposit the payment on time. The penalty should be case to case
basis rather than the same for the entire customer base.
✓ Restriction to be reduced to bare minimum for loan advances & for repayment. For
e.g. offers Long term repayment facilities & have no age restriction to choosing
repayment. The maximum age for repayment could be increase to 65-70 years of age.
Such facility will grow fast retail segment of the bank.
✓ Offer multiple repayment loans services. Class to be exploited by offering special
reduced.
 ✓ Rates & linking the repayment from the source where the pay cheque to the employee
is issued. This need to undergo special contract with government organization to
ensure implementation.

CONCLUSION

1) In my study we came to know that many peoples are interested to take a home loan from
HDFC LTD to construct their homes.
2) Home loans have long period when compare to other personal loans and other loans. So
peoples are confused to take a home loan.
3) Even though the interest rates are high peoples are willing to take a loan from HDFC LTD
due to some reasons.
4) The interest rates also some what high when compare to other banks
5) The loan sanction process is low when compare to other banks.
6) For disbursement process is also it will take low time when compare to other banks
Finally the whole research was carried out in a systematic way to reach at exact
results. The whole research and findings were based on the objectives. However, the study
had some limitations also such as lack of time, lack of data, non-response, reluctant attitude
and illiteracy of respondents, which posed problems in carrying out the research. But proper
attention was made to Carry out research in proper way and to make accurate conclusion for
the HDFC LTD which may beneficial for banks to enhance their customer base.
CHAPTER VII
ANNEXURE
 BIBLIOGRAPHY

REFERENCES
➢ Berstain David(2008), “Home equity loans and private mortgage insurance: Recent
Trends & Potential Implications”, Vol.3 No.2, August 2008, Pp. 41 - 53
➢ Dr. Rangarajan C. (2001), “A Simple Error Correction Model of House Price”.Journal
of Housing Economics Vol. 4, No. 3,pp 27 – 34
➢ Fanning (1982), “The Demand for Home Mortgage Debt” Journal of Urban
Economics, Vol 11 No 2, November, pp. 770-774
➢ Godse (1983), “looking a fresh at banking productivity”, Journal of Real Estate
Literature, Vol. No. 13, Page 141 to 164.
➢ Haavio, Kauppi(2000) , “Residential Lending to Low-Income and Minority Families:
Evidence from the 1992 HMDA Data," Federal Reserve Bulletin,Vol no 80(2),
December 2000 Pp-79-108
➢ Kulkarni (1979), “Development responsibility and profitability of banks” Journal of
Economic Perspectives, Vol 9 No 1 ,pp. 26-32.
➢ La courr, Micheal(2007) , “Economic Factors Affecting Home Mortgage Disclosure
Act Reporting” The American Real Estate and Urban Economics Association, Vol.2
No. 2 May 18, 2007, Pp. 45 -58
➢ La cour Micheal(2006) , “The Home Purchase Mortgage Preferences Of Lowand-
Moderate Income Households”, Forthcoming in Real Estate Economics , Vol 18, No
4 , December 20, 2006, p. 585.
➢ Vandell ,kerry D(2008), “Subprime lending and housing bubble:tail wag
dog?”International Journal of Bank Marketing, vol 21,no 2, pp. 53-7
➢ Brochure on home loans from HDFC LTD

NEWS PAPERS
➢ The Times of India
➢ Financial Express

WEB PAGES
http://www.hdfcindia.com/

http://www.hdfcindia.com/others/popup/news/hdfc_fin_result_june_30_08.html

www.hdfc.com

http://www.iloveindia.com/real-estate/housing-finance- companies/hdfc.html

http://www.loansnews.info/Home-loan/hdfc-home-loans/

http://www.hdfcindia.com/loans/hm-loan-documents.asp

http://www.thinkplaninvest.com/2009/01/hdfc-will-cut-home-loan-rates/
http://www.suncorp.com.au/suncorp/personal/home_loans/tips/faq.aspx

http://investing.businessweek.com/research/stocks/people/people.asp?ric=HDFC.BO
http://www.economywatch.com/companies/forbes-list/india/housing-development-
finance-corporation.html

http://www.hdfcindia.com/loans/home-loan.asp

http://docs.google.com/gview?a=v&q=cache:woJTMDV1HLYJ:www.hdfc.com/pdf/32A
GM%2520speech.pdf+hdfc+housing+finance+development+product&hl=en&gl=in

http://www.munichre.com/en/press/press_releases/2007/2007_10_30_profile_hdfc.aspx

http://www.hdfc.com.mv/faq.htm

http://ayaanbayaan.com/hdfc-ltd-financial-results-indian-gaap-for-the-period-april-to-
june-2009/

http://www.valuenotes.com/press/pr_HDFC_250ct05.asp?ArtCd=70013&Cat=C&Id=100
 QUESTIONNAIRE
Dear Sir/ Madam

I am Madhan laal KR doing MBA from Pondicherry University. I am preparing a project on

A STUDY ON HOME LOANS. For this I have designed a Questionnaire to know your
views and satisfaction level of home loans .please fill the given as per your thinking and
experiences with this. I will be thankful to you for this.

Name: ………………………………………………………………………..

Address: ……………………………………………………………………..

Contact No :®………………( O)……………… (M)………………………

City: ………...............Pin: ………………….State: ……………………….

1. Name: ____________________

2. Age:
(a) Below 30 (b) 30-40 (c) 40-50 (d) Above 50

3. Occupation:
(a) Professional (b) Self-employed (c) Salaried
(e) Others

4. Which income group do you belong? (Per annum)

(a) Below 2 lakhs (b) 2-4 lakhs
(c) 4-6 lakhs (d) 6 lakhs and above

5. Have you ever taken Home loan before?

(a) Yes (b) No

6. If yes, from which Bank/company?

(a) ICICI (b) HDFC (c) UTI

(d) Centurion bank of Punjab (e) others

7. Are you satisfied with the services provided? (on 5 point scale)

Highly dissatisfied Neutral satisfied highly

dissatisfied dissatisfied
8. While taking loan, which things attract you the most?
(a) Interest rates (b) Service Provided
(c) Payback period (d) Schemes
(e) Others

9. Even if the Interest rate is high for the personal loans, you will go for it?
(a) Yes (b) No

10. How much loan amount you took?

(a) Less than 1 lakhs (b) 1-5 lakhs
(c) 5-10 lakhs (d) more than 10 lakhs

11. Even if the Interest rate is high for the Home loans, you will go for it?
(a) Yes (b) No

12. Do you own a home…?

Yes [ ] No [ ]
If Yes, then, Proceed………

13. Have you get it financed?

Yes [ ] No [ ]
If Yes, then, proceed……..

14. What is reason for getting it financed?

1. Non availability of funds [ ]
2. Reluctance to pay cash in on go [ ]
3. Tax benefit [ ]
4. Any other (please specify) .........................................

15. From which of the following banks/ company you have got if financed?
Standard Chartered Bank [ ] State Bank of India [ ]
ICICI Bank [ ] HDFC LTD [ ]
Any other (please specify) ...........................................

16. From where have you got information about home loans scheme?
(Check list)…………………..
Newspapers [ ] Magazines [ ]
Hoarding/banners [ ] Word of mouth [ ]
Any other (please specify)...........................................

17. What problems did you face while getting home loans?
a. Lack of knowledge
b. Procedural delays and non cooperation
c. Any other (please specify) ........................................
18. Did you face any problem after sanction of loan?

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

19. What suggestions do you want to give for improvements in home loans Scheme?

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

THANKS