CHAPTER VII

ANALYSIS OF BORROWER SATISFACTION

7.1 Introduction

The success and survival of any business organisation mainly depend

on its ability to attract and retain its customers. Now, companies are fighting

for shares in the fading market due to the changing demographics, slow

economic growth and severe competition. Hence, the costs of attracting new

customers are rising. The cost of attracting a new customer is estimated to be

five times the cost of keeping the current customer happy1P. So, beyond

designing strategies to attract new customers and creating transactions with

them, companies give priority to retaining current customers and building up

lasting relationships with them. The better approach to strengthen customer

retention is offering maximum customer satisfaction. This is made possible by

understanding their expectations and designing and delivering products or

services to suit their requirements.

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Financial service sector has emerged as one of the most promising but

at the same time challenging sectors in India, especially during the post

liberalization era. Because of intense competition in the sector, the players in

the sector have to become more customer oriented. They must provide quality

services to their customers and ensure that customers are satisfied with their

experience. For delivering quality service, it must identify the gaps between

the perceived service quality the customer receive and what they expect. The

quality of a service or product depends on how well it meets the expectations

of the customers. This is a condition of satisfaction. So, satisfaction is the

condition of a customer when experience with a product at least equals his

expectation.

In this study an attempt is made to evaluate the satisfaction level of

borrowers of HDFC and LICHFL. To assess the level of satisfaction of the

respondents, twelve factors relating to housing finance were identified. They

are: rate of interest, security requirements, other fees, loan sanctioning time,

product flexibility, repayment schedule, dealing of the staff, accessibility to the

institution, customer service, grievance redress mechanism, documents

required and eligibility norms. An evaluation of borrower satisfaction helps the

organization to evolve out and to come up with suitable policies for making

their customers more happy and loyal.

Five point rating scale was used to measure the satisfaction level of

beneficiaries. The options given were: highly satisfied, satisfied, no opinion,

not satisfied and highly dissatisfied. The values were converted into
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percentage to assess the satisfaction level of beneficiaries of HDFC and

LICHFL in respect of the identified factors. Chi-square test was applied to

verify whether there is any significant difference in the satisfaction level of

borrowers of the selected HFIs with regard to each factor.

The details of analysis of beneficiaries’ satisfaction about the various

features of home loan products of selected HFIs are as follow:

1. Rate of Interest and Level of Satisfaction

The rate of interest is the basic factor considered by people for

selecting the loan provider. Naturally, people compare the interest rate of

other agencies before finalising one. However, the comparison becomes

difficult as the interest rate varies on the basis of the loan amount as well as

the loan tenure. Further, the softening of interest rate after availing loan by

beneficiaries might have influenced their satisfaction level. The response of

the borrowers as to their level of satisfaction with the interest cost charged by

their HFIs is given in Table 7.1.

Table 7.1

Rate of Interest and Level of Satisfaction

HDFC LICHFL Total

Rate of Interest
No. % No. % No. %
Highly satisfied 3 0.8 0 0 3 0.5
Satisfied 220 61.1 228 84.4 448 71.1
No Opinion 127 35.3 42 15.6 169 26.8
Not satisfied 7 1.9 0 0 7 1.1
Highly dissatisfied 3 0.8 0 0 3 0.5
Total 360 100.0 270 100.0 630 100.0
Source: Survey results
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As shown in Table 7.1, 71.1 percent beneficiaries stated that they were

satisfied with the rate of interest charged by their lenders on home loans.

Such a high level of satisfaction was due to the fact that people who had

already taken loan at higher rate of interest might have rescheduled their loan

with the same organization. Due to stiff competition among the market players

of Housing Finance Industry, the firms operating in the market tried to retain

their market share through softening the rate of interest charged on their

existing loans which is found effective to a great extent to control the outflow

of their existing customers looking for refinancing facilities or taking over

offers made by the competitors,. However, 26.8 percent of the total

beneficiaries were neutral and they fall under ‘no opinion’ category.

Institution-wise analysis revealed that 61.1 percent respondents of

HDFC and 84.4 percent respondents of LICHFL were satisfied with the rate of

interest. Such a difference in level of satisfaction of beneficiaries as to rate of

interest charged on home loans by their HFIs indirectly reflects the

discrepancy in the capability of the lending organizations to adjust their

lending rates in line with the changes in market rate. In that sense LICHFL-

being a public sector lending institution -is proved more customer centered

than its private sector rival HDFC in imparting flexibility to its interest rates in

such a way as to create more satisfied customer base.

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2. Security Requirements and Level of Satisfaction

Financing agencies sanction loan only after obtaining suifficient

security against the loan. Since the loan is granted mainly for construction or

purchase of house property, submission of title deed is the basic requirement.

The beneficiary is also required to submit necessary certificate to prove his

income so that the lending agency can assess his repaying capacity. Apart

from these, the HFIs obtain advance cheques towards 12 to 24 EMIs. In

addition, LICHFL insists third party guarantor and assignment of sufficient

insurance policy (usually equal to loan amount). However, security

requirements, other than mortgage title, may be relaxed in certain cases

where the estimated value of the property is much higher than the loan

amount or in case where the repayment capacity of the borrower is higher.

Sometimes, borrowers may find it difficult to fulfil all the security requirements

as demanded by the lender.The borrowers’ response in this regard is given in

Table 7.2.

Table 7.2

Security Requirements and Level of Satisfaction

Security HDFC LICHFL Total

Requirements No. % No. % No. %
Highly satisfied 10 2.8 0 0 10 1.6
Satisfied 310 86.1 256 94.8 566 89.8
No Opinion 40 11.1 14 5.2 54 8.6
Not satisfied 0 0 0 0 0 0
Highly dissatisfied 0 0 0 0 0 0
Total 360 100.0 270 100.0 630 100.0

Source: Survey results

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Of the total, 89.8 percent respondents were satisfied with the security

requirements stipulated by their HFIs. The agency-wise analysis showed that

94.8 percent beneficiaries of LICHFL and 86.1 percent beneficiaries of HDFC

were satisfied with the security requirements.

The higher satisfaction level may be due to the fact that the security

requirement norms are almost the same for most of the financing agencies in

the industry. In case of additional loan from the same agency there is no need

to furnish additional securities. Further, the beneficiaries of the selected HFIs

were relieved of the botherations of title clearance and other legal formalities

which were done by the lender.

3. Other Fees Charged and Satisfaction Level

Over and above the rate of interest charged, most HFIs levy certain

charges such as processing fee, administration fee etc., as up-front charges

to meet expenses in connection with legal charges, and other expenses.

Further, other expenses such as early redemption charges, charges for

delayed payment, charges for rescheduling and transferring loan etc. are also

imposed. This is an additional burden to customers and may affect their

satisfaction negatively. Table 7.3 contains the details of beneficiaries’

response in this regard.

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Table 7.3

Other Fees Charged and Satisfaction Level

HDFC LICHFL Total
Other Fees
No. % No. % No. %
Highly satisfied 3 0.8 0 0 3 0.5

Satisfied 114 31.7 113 41.9 227 36.0

No Opinion 232 64.4 157 58.1 389 61.7

Not satisfied 8 2.2 0 0 8 1.3

Highly dissatisfied 3 0.8 0 0 3 0.5

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

Only 36 percent of the total respondents were satisfied with regard to

other fees charged. The responses of majority (61.7 percent) of respondents

were ‘no opinion’. This is because certain borrowers availed themselves of the

benefit of waving off such fee as special offer and some others were partially

aware or unaware of such charges. Hence, they stand neutral. Only a very

few respondents expressed their dissatisfaction with such incidental charges

levied by their HFIs. The agency-wise break up showed that 31.7 percent

respondents of HDFC and 41.9 percent those of LICHFL were satisfied with

other fee charged.

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4. Loan Sanctioning Time and Level of Satisfaction

In a fast moving world people seldom prefer to wait for anything;

instead they want to get everything fast or at the earliest. Further, they have

wide choices of owning anything. This is also true in the case of availing home

loans. So, the quality of loan products as well as the efficiency of the loan

provider can best be evaluated in terms of the timely sanctioning of loan.

However, the level of satisfaction on sanctioning loan differs from person to

person depending on their urgency of getting finance.The response of

borrowers as to their satisfaction in this regard is given in Table 7.4.

Table 7.4

Loan Sanctioning Time and Level of Satisfaction

Loan Sanctioning HDFC LICHFL Total

Time No. % No. % No. %
Highly satisfied 20 5.6 7 2.6 27 4.3
Satisfied 333 92.5 263 97.4 596 94.6
No Opinion 7 1.9 0 0 7 1.1
Not satisfied 0 0 0 0 0 0
Highly dissatisfied 0 0 0 0 0 0
Total 360 100.0 270 100.0 630 100.0
Source: Survey results

Out of the total respondents 94.6 percent were satisfied with the time

taken for sanctioning loan. There were 4.3 percent highly satisfied

respondents. The institution-wise analysis revealed that 92.5 percent

borrowers of HDFC and 97.4 percent those of LICHFL were satisfied with the
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time taken for sanctioning loan. The highly satisfied group accounted for 5.6

percent in HDFC and 2.6 percent in LICHFL. This is due to the fact that both

the institutions have well equipped computerized offices with qualified staff

and sales force. On-line approval facility is also available with these

institutions. This has resulted in the speedy sanctioning of loan and enhanced

customer satisfaction.

5. Product Flexibility and Level of Satisfaction

In a competitive market, customers can be satisfied by providing

innovative products to suit their changing needs and requirements. Now, HFIs

are competing with each other in designing and implementing innovative

products with a view to maximising customer satisfaction. The twin reasons

for this are the ongoing liberalisation process in the financial sector and the

changing demands/ requirements of customers.

Traditionally, HFIs were providing fixed rate loan only where the

borrowers have to pay the fixed rate as agreed upon for the entire loan period.

But, even after introducing new schemes, borrowers have no option to switch

over from the existing schemes to the new ones. To enjoy the benefit of

interest rate reduction and other facilities people began to transfer their loan

to other institutions that are ready to take over such loans at reduced rate of

interest. Realising this situation many HFIs provide rescheduling facility to

existing borrowers to their advantage. The response of the borrowers as to

their satisfaction with regard to product flexibility is given in Table 7.5.

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Table 7.5

Product Flexibility and Level of Satisfaction

HDFC LICHFL Total
Product Flexibility
No. % No. % No. %
Highly satisfied 11 3.1 0 0 11 1.7

Satisfied 324 90.0 253 93.7 577 91.6

No Opinion 19 5.3 13 4.8 32 5.1

Not satisfied 0 0 0 0 0 0

Highly dissatisfied 6 1.7 4 1.5 10 1.6

Total 360 100.0 270 100.0 630 100.0

Source: survey results

Table 7.5 shows that 91.6 percent of total respondents were satisfied

with regard to product flexibility. The percentage of satisfied respondents

accounted for 90 percent in HDFC and 93.7 percent in LICHFL. In HDFC

there were 3.1 percent highly satisfied respondents. These results indicate

that both HFIs are equally efficient in imparting flexibility to their loan products

in tune with the changes in market conditions.

6. Repayment Mode and Level of Satisfaction

The borrowers are given wide options to repay the loan installments at

their convenience. These include direct remittance, deduction from salary,

payment through demand draft, depositing post dated cheques and so on.

Borrowers can make at least one installment in advance in order to avoid

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unexpected delay in repaying any EMI and to avoid penalties consequent

upon it. The views of the respondents in this regard are detailed in Table 7.6.

Table 7.6

Repayment Schedule and Level of Satisfaction

Repayment HDFC LICHFL Total

Schedule No. Percent No. Percent No. Percent
Highly satisfied 8 2.2 0 0 8 1.3

Satisfied 343 95.3 257 95.2 600 95.2

No Opinion 9 2.5 9 3.3 19 2.9

Not satisfied 0 0 0 0 0 0

Highly dissatisfied 0 0 4 1.5 4 0.6

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

Table 7.6 revealed that more than 95 percent beneficiaries of both the

institution were satisfied with regard to repayment schedule. There were 2.2

percent highly satisfied beneficiaries in HDFC. Both the institutions are able to

give wider choice to customers in deciding the mode of payment of installment

according to their convenience.

7. Dealings of Staff and Level of Satisfaction

Better dealings of organizational staff are very important particularly in

service organization in a highly competitive market. The dealings of the staff

will have great influence on borrowers which is reflected in their level of

satisfaction. It is the cementing force which makes the customers stick on to

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the organisation. The level of satisfaction of borrowers with regard to the

dealings of the staff of their HFIs is shown in Table 7.7.

Table 7.7

Dealings of Staff and Level of Satisfaction

HDFC LICHFL Total
Dealings of Staff
No. % No. % No. %
Highly satisfied 17 4.7 11 4.1 28 4.4

Satisfied 324 90.0 241 89.3 565 89.7

No Opinion 13 3.6 15 5.6 28 4.4

Not satisfied 3 0.8 3 1.1 6 1.0

Highly dissatisfied 3 0.8 0 0 3 0.5

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

As shown in Table 7.7, the respondents who were satisfied with the

dealing of the institution’s staff accounted for 90 percent in HDFC and 89.3

percent in LICHFL. The percentage of highly satisfied respondents in HDFC

and LICHFL were 4.7 and 4.1 respectively. So, the staff of both the institutions

under study is giving due care and vigilance in extending maximum customer

service and ensuring cordial and warm dealings with them.

8. Accessibility to HFI and Level of Satisfaction

Accessibility of the lending institution to the borrower is a decisive

factor in the selection of lender. In order to examine whether this may

influence borrower satisfaction, their responses were obtained and shown in

Table 7.8.
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Table 7.8

Accessibility to HFI and Level of Satisfaction

Accessibility to HFI HDFC LICHFL Total

No. % No. % No. %
Highly satisfied 9 2.5 4 1.5 13 2.1
Satisfied 335 93.0 262 97.0 597 94.7
No Opinion 10 2.9 4 1.5 14 2.2
Not satisfied 3 0.8 0 0 3 0.5
Highly dissatisfied 3 0.8 0 0 3 0.5
Total 360 100.0 270 100.0 630 100.0

Source: Survey results

Out of the total respondents 94.7 percent were satisfied with the

accessibiliry of HFIs. The institution wise analysis revealed that 93 percent

borrowers of HDFC and 97 percent those of LICHFL were satisfied with the

accessibiliry of the lending institution. The highly satisfied respondents

constituted 2.5 percent in HDFC as compared to 1.5 percent in LICHCL.

9. Customer Service and Satisfaction Level

Customer service is a broad concept and is a continuous process. It

starts even before a person becomes a customer and continues even after a

customer quits the organization. Thus, it is related to past, present and

prospective customers. In the case of HFIs, customer service is concerned

not only with providing finance in time but also covers all activities connected

with housing and financing. These include giving assistance to customers in

the selection of house sites, selection of builders, in getting necessary

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documents, loan counseling, counseling on tax benefits and the like. Thus,

the overall efficiency of an HFI is evaluated by the customers on the basis of

the extent and quality of services rendered by it. This will have a positive

impact on the satisfaction of customers. Borrowers’ response in this regard is

shown in Table 7.9.

Table 7. 9

Customer Service and Satisfaction Level

HDFC LICHFL Total

Customer Service
No. % No. % No. %
Highly satisfied 9 2.5 15 5.6 24 3.8

Satisfied 307 85.3 238 88.1 545 86.5

No Opinion 35 9.7 17 6.3 52 8.3

Not satisfied 6 1.7 0 0 6 1.0

Highly dissatisfied 3 0.8 0 0 3 0.5

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

With regard to customer service, 88.1 percent borrowers of LICHFL

and 85.3 percent those of HDFC were satisfied. The highly satisfied

customers accounted for 5.6 percent in LICHFL as compared to 2.5 percent in

HDFC.

10. Grievance Redress Mechanism and Level of Satisfaction

Wherever divergent groups exist, grievance may arise naturally.

However, the organization’s efficiency depends on how quickly and smoothly

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it is resolved. So, in every organization there should be an authority to

patiently hear the customers’ complaints and to redress it at the earliest. Now,

many organizations have formed redress cells to resolve customers’

complaints. “Most of the customers do not complain when they experience

problems. These customers simply opt out and take their business else

where”2. Therefore, a good redressal mechanism will have a positive impact

on the satisfaction of borrowers. ‘Customers whose problems have been

tactfully resolved tend to stay loyal and work as part-time marketers through

good word of mouth.3 Table 7.10 gives the details of satisfaction level of

borrowers with regard to grievance redress mechanism.

Table 7.10

Grievance Redress Mechanism and Level of Satisfaction

Grievance Redress HDFC LICHFL Total

Mechanism No. % No. % No. %
Highly satisfied 6 1.7 0 0 6 1.0

Satisfied 97 26.9 143 53.0 240 38.0

No Opinion 119 33.1 49 19.1 168 26.7

Not satisfied 5 1.4 10 3.7 15 2.4

Highly dissatisfied 133 36.9 68 25.2 193 31.9

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

The satisfied respondents constituted only 38 percent of the total

sample. The percentage of satisfied respondents was higher in LICHFL (53

percent) than in HDFC (26.9 percent). The highly dissatisfied respondents

accounted for 36.9 percent in HDFC and 25.2 percent in LICHFL. This should
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be seriously looked into. Even though LICHFL- a public sector undertaking-

gives more importance to the interests of customers than HDFC in resolving

their complaints, it is not fully successful.

11. Documents Required and Level of Satisfaction

The documents required to be submitted for availing housing loan are

almost the same in most HFIs. However, the services rendered in connection

with obtaining the documents vary among specialized HFIs, commercial

banks and co-operative institutions. Specialized HFIs undertake the task of

obtaining the different documents such as legal opinion certificates, stage /

valuation certificate and the like. This will relieve the beneficiaries of the

botherations of obtaining them thereby saving their valuable time and effort.

The details of beneficiaries’ satisfaction with regard to this are given in Table

7.11.

Table 7.11

Documents Required and Level of Satisfaction

Documents HDFC LICHFL Total

Required No. Percent No. Percent No. Percent
Highly satisfied 12 3.3 0 0 12 1.9

Satisfied 288 80.0 237 87.8 525 83.3

No Opinion 44 12.2 17 6.3 61 9.7

Not satisfied 0 0 0 0 0 0

Highly dissatisfied 16 4.4 16 5.9 32 5.1

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

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Out of the total respondents 83.3 percent were satisfied with the

number of documents required. The institution wise analysis revealed that 80

percent borrowers of HDFC and 87.8 percent those of LICHFL were satisfied

with the same. There were 3.3 percent respondents who were highly satisfied

with HDFC. However, the highly dissatisfied category constituted very nominal

fractions of 4.4 percent in HDFC and 5.9 percent in LICHFL. This draws

attention to the fact that there is opportunity to improve the services of the

organization. Proper documentation for sanctioning of loan is a part of prudent

financial practices that should be pursued by financial institutions in India

under the directives of the Central bank of the country for ensuring healthy

financial system which is a prerequisite for the well- being of both lenders and

borrowers. Home loan beneficiaries might be aware of this fact and even if

they have to put in much effort for getting the necessary documents stipulated

by the lender for sanctioning of loan, they do not feel dissatisfied with this

aspect of borrowings.

12. Eligibility Norms and Level of Satisfaction

The beneficiaries can avail the loan up to the eligible amount as per the

eligibility norms prescribed by HFIs. The eligible amount of loan is ascertained

on the basis of the value of property mortgaged and also the repaying

capacity of the borrower. The responses of the beneficiaries as to their

satisfaction in respect of eligibility norms are shown in Table 7.12.

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Table 7.12

Eligibility Norms and Level of Satisfaction

Eligibility Norms HDFC LICHFL Total

No. % No. % No. %
Highly satisfied 14 3.9 0 0 14 2.2

Satisfied 311 86.4 244 90.4 555 88.1

No opinion 15 4.2 6 2.2 21 3.3

Not satisfied 0 0 0 0 0 0

Highly dissatisfied 20 5.6 20 7.4 40 6.3

Total 360 100.0 270 100.0 630 100.0

Source: Survey results

Table 7.12 shows that 88.1 percent of the total respondents were

satisfied in respect of loan eligibility norms. The percentage of satisfied

respondents in LICHFL was 90.4 and that of HDFC was 86.4. There were 7.4

percent highly dissatisfied respondents in LICHFL as compared to 5.6 percent

in HDFC. Such a relatively small fraction of the dissatisfied group in the total

sample indicates that for most of the borrowers the loan amount sanctioned

by their lending institutions was sufficient for meeting the purpose for which it

was given. Only a very few among the sample felt that they are getting less

than what they are actually eligible. Hence, there is no need of relaxing the

norms by HFIs and they could continue their operations with strict adherence

to the lending principles - safety and security.

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Beneficiaries’ Level of Satisfaction towards Selected Loan Factors –

Inferential Statistical Analysis

Non parametric test form of independence of samples from a

population - Chi-square test - at 1 percent level of significance was

administered to know the significance of difference in satisfaction level of

beneficiaries of HDFC and LICHFL towards twelve identified loan factors and

the results of the test were summarized in Table 7.13.

Table 7.13

Difference in Beneficiaries’ Level of Satisfaction towards Selected

Loan Factors – Inferential Statistical Analysis

Sl No Selected Loan Factors X2 d.f P value

1 Rate of interest charged 40.889 1 0.000*
2 Security requirements 8.489 1 0.004*
3 Other fees charged 2.589 1 0.108
4 Loan sanctioning time 7.278 1 0.007*
5 Flexibility of products 3.798 1 0.051
6 Repayment mode 0.003 1 0.957
7 Dealings of staff 0.662 2 0.718
8 Accessibility to HFI 5,082 2 0.079
9 Customer service 2.432 2 0.296
10 Grievance redress mechanism 47.156 3 0.000*
11 Documents required 16.382 3 0.001*
12 Eligibility norms 13.361 3 0.004*

*Significant at 1 percent level

The analysis found significant differences between the two HFIs in

terms of customer satisfaction towards only six loan factors which include rate
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of interest charged, security requirements, loan sanctioning time, grievance

redress mechanism, documents required and eligibility norms. In the case of

remaining six factors difference is found, though their descriptive analysis was

proved not statistically significant in its inferential analysis process. So, each

organization should take into account the relative advantages that its

competitor offered to their customers and how those advantages help them

make additional benefits in the form of enhanced sales and increased

customer base when they make redesign of their existing plans and policies.

7.2 Overall Satisfaction Level of Respondents

Mean Satisfaction of Various Factors

Satisfaction level of beneficiaries was evaluated in terms of 12 factors

which were related to loan schemes of selected institutions. For measuring

the satisfaction level of beneficiaries five point rating scale was used, where a

score of five represents ‘highly satisfied’, four represents ‘satisfied’ three

represents ‘no opinion / neutral’, two represents ‘dissatisfied’ and one

represents ‘highly dissatisfied’ customer or beneficiary. At first the customers’

satisfaction towards each factor is measured and then its mean satisfaction

score is obtained. Then, based on the mean satisfaction score of individual

factor, mean score of the overall level of satisfaction has been computed.

Mean satisfaction scores were interpreted by following the pattern used by

Sreevasthava; A.K. and Singh, A.P. (1981)4 in their study. If all the selected

respondents expressed high level of satisfaction towards all the twelve

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identified factors then maximum mean satisfaction score shall be 60. Then 70

percent of the maximum score – 42 was taken as the standard mean for

measuring overall satisfaction level of respondents towards selected loan

factors. If the mean satisfaction score is greater than 42, it is interpreted that

the satisfaction level of the respondents is high and if it is less than 24 (40

percent of maximum score), it will be taken as the customers’ high degree of

dissatisfaction.

Table 7.14

Mean Satisfaction of the Respondents of HDFC and LICHFL

HDFC LICHFL Total

No. 360 270 630
Mean 44.68 45.62 45.09
Std deviation 3.18 2.54 2.96

The test value of mean = 42 (70 percent of the maximum score)

The mean satisfaction score of the total respondents under study is

45.09 with standard deviation of 2.96 which was more than the standard test

value mean of 42. This indicates that overall satisfaction level of home loan

beneficiaries towards various aspects of their loan was very high. Institution

wise descriptive analysis of mean scores gave a similar result that overall

satisfaction level of beneficiaries of both the institutions - HDFC and LICHFL-

in this aspect is high as their respective mean satisfaction scores of 44.68 and

45.62 are higher than the standard test value mean.

Student’s t - test was applied to test the hypothesis that the mean

satisfaction score of both HDFC and LICHFL is higher than the standard test
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value mean of 42. It was also used to ascertain whether there is any

significant difference in the overall satisfaction levels of the beneficiaries of

the two selected institutions towards their home loans. The test results are

reported in Table 7.15 and Table 7.16.

Table 7.15

Comparison between Mean Satisfaction Score and Test Value Mean

Score of HDFC and LICHFL – t test

Institution N Mean Std deviation t P value

HDFC 360 44.68 3.18 8.84 0.001*
LICHFL 270 45.63 2.54 15.70 0.001*

Test value mean = 42 *Significant at 1 percent level

Analysis of the test results shows that the mean satisfaction score of

both HDFC and LICHFL is higher than the standard test value mean of 42.

The test found its significance at lowest significance level of 1 percent which

helps the researcher to make an inference that the beneficiaries of both

HDFC and LICHFL are highly satisfied with various aspects of the home loan

products availed by them.

Table 7.16

Difference between Mean Satisfaction Scores of HDFC and LICHFL –

t-test
Institution N Mean Std. Deviation t P value

HDFC 360 44.68 3.18

4.02 0.000 *
LICHFL 270 45.63 2.54
*Significant at 1 percent level
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Analysis of Table 7.16 reveals that the mean satisfaction score of the

respondents of LICHFL (45.63) is more than that of HDFC (44.68). This gives

an impression that satisfaction level of customers of LICHFL is higher than

that of HDFC. When such difference is statistically tested, it is found

significant at 1 percent level. So, it leads to a conclusion that the overall

satisfaction level of customers of public sector HFI like LICHFL is higher than

the overall satisfaction level of customers of private sector HFI like HDFC.

7.3 Borrower Attributes and Satisfaction

The satisfaction level of customers varies with the quality of service

rendered as well as the nature of loan products provided to them by the firms.

So, in order to measure the satisfaction level of borrowers of the selected

HFIs, twelve aspects of home loan products were identified. They include:

rate of interest, security requirements, other fees, loan sanctioning time,

product flexibility, repayment schedule, dealing of the staff, accessibility to the

institution, customer service, grievance redressal mechanism, documents

required and eligibility norms. Percentage analysis was done to measure the

satisfaction level of borrowers of the two identified HFIs in terms of the various

factors. Chi-square test was applied to verify whether there is any significant

difference in the satisfaction level of borrowers of the two identified institutions

with regard to each factor. To measure the overall satisfaction level of

beneficiaries, mean satisfaction has been computed with scores obtained by

the borrowers in terms of various factors of housing loan. Standard test value

is taken as 70 percent of the maximum score. If the mean satisfaction of

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borrowers is more than the standard test value, they are considered having

high satisfaction. Student’s t test was applied to test whether there was any

significant difference between actual mean satisfaction score and test value

mean score of beneficiaries of HDFC and LICHFL.

7.3.1 Factors Influencing Satisfaction Level

Several socio- economic attributes influence the satisfaction level of

borrowers on various aspects of home loan products. Among these, five

attributes which normally influence customer behaviour, such as age, sex,

educational qualifications, occupation and monthly income, were selected to

examine their association with borrowers’ satisfaction. Borrowers have been

stratified into different groups based on different attributes. Mean satisfaction

has been measured with scores obtained for the borrowers of different

groups.

Test of equality of means (parametric tests) has been administered to

find out whether the mean satisfaction of various groups of borrowers

significantly differs or not. Then, pair wise multiple comparisons using Tukey’s

Honestly Significant Difference test at 5 percent significance level was made

to determine the means of which groups differ significantly.

1. Age and Satisfaction

The satisfaction level of borrowers may vary in relation to their age.

For making a comparison of satisfaction level of different age groups of

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borrowers of both institutions, their mean satisfaction scores have been

computed and the details are given in Table 7.17.

Table 7.17

Age and Mean Satisfaction Level

HDFC LICHFL Total

Age
No. Mean No. Mean No. Mean
Up to 30 2 45.00 0 0 2 45.00

31 - 40 70 44.66 48 46.27 118 45.31

41 - 50 196 44.23 178 45.41 374 44.79

Above 50 92 45.66 44 45.82 136 45.71

Total 360 44.68 270 45.63 630 45.09

Source: Survey results

From the analysis, it is obvious that, in HDFC, borrowers in the ‘above

50’ age group had the highest mean satisfaction score of 45.66 and the

lowest mean satisfaction score of 44.23 were obtained by ‘41-50’ age group.

The mean satisfaction score of beneficiaries in the ‘31-40’ age group was

44.66.

In LICHFL, the highest mean satisfaction of 46.27 was marked in the

‘31-40’ age group and the lowest 45.41 in the ‘41-50’ age group. Respondents

in the ‘above 50’ year group formed 16.3 percent of the sample whose mean

satisfaction score was 45.82. It is very interesting to note that the major

stratum in terms of age i.e. ‘41-50’ group expressed the lowest level of

satisfaction in both cases.

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In the total sample, the mean satisfaction was the highest in ‘above 50’

year group (45.71) and the lowest in ‘41-50’ age group (44.79). The mean

satisfaction was 44.79 with beneficiaries in the ‘41-50’ age group.

In order to ascertain whether the mean satisfaction of borrowers of

various age group differs significantly or not, F test has been applied. The

result of the test is given in Table 7.18.

Table 7.18

Age and Mean Satisfaction Level – One way ANOVA

Institution d.f F value Significance Level

HDFC 3, 329 4.359 0.005*

LICHFL 2,269 2.334 0.099

Total 3, 629 3.543 0.014**

* Significant at 1 percent level. **Significant at 5 percent level

The results of ANOVA reveal that the difference in the mean

satisfaction scores of HDFC borrowers belonging to different age groups is

statistically significant at 1 percent level. But, there is no age-wise difference

in the mean satisfaction scores of borrowers of LICHFL. In the total sample of

borrowers such difference is found significant, but only at 5 percent level.

Since there exists statistically significant difference in the mean

satisfaction of borrowers of different age group in HDFC, pair wise multiple

comparisons using Turkey’s HSD test was conducted to determine mean

scores of which groups differ significantly. The results of the test reported in
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Table 7.19 show that difference in satisfaction level was significant at 1

percent level only between the age groups of ‘41-50’ and of ‘above 50’, the

largest and the second largest age groups respectively in the sample.

Table 7.19

Multiple Comparisons of Age and Satisfaction Scores of Borrowers:

HDFC and Total Sample - Tukey’s HSD Test

HDFC Total Sample

Age Groups Between Mean Significance Mean Significance
Difference Level Difference Level

Up to 30 and 31- 40 0.3429 0.999 -0.3136 0.999

Up to 30 and 41- 50 0.7704 0.986 0.2086 1.000

Up to 30 and above 50 -0.6630 0.991 0.7132 0.986

31- 40 and 41- 50 0.4276 0.762 0.5221 0.335

31-40 and above 50 -1.0059 0.182 -0.3997 0.702

41-50 and above 50 -1.4335 0.002* -0.9218 0.010*

* Significant at 1 percent level.

2. Sex and Satisfaction

Generally, house properties are acquired by the head of the family who

is naturally a male member. As the number of women in employment /

professional sectors increases, the practice of acquiring house property in

their own names also increases. So, there might be gender wise difference in

the satisfaction level of borrowers. So, in order to analyse such difference,

mean satisfaction scores of the gender groups have been computed.

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Table 7.20

Sex and Mean Satisfaction Level

HDFC LICHFL Total

Sex
No Mean No Mean No Mean
Male 296 44.66 215 45.40 511 44.97
Female 64 44.80 55 46.55 199 45.61
Total 360 44.68 270 45.63 630 45.09

Source: Survey results

It is known from Table 7.20 that the mean satisfaction scores of female

borrowers were higher as compared to that of male borrowers in both

institutions. But, in HDFC, the difference in such scores between female

(44.80) and male borrowers (44.66) was negligible. The mean satisfaction

scores of female borrowers and male borrowers of LICHFL were 46.55 and

45.40 respectively. Moreover, the mean satisfaction scores of both gender

groups were higher in LICHFL.

The results of inferential statistical analysis of significance of difference

at the level of satisfaction between the gender groups given in Table 7.21 also

justify the finding of descriptive analysis that the gender difference in

satisfaction level of borrowers was absent in HDFC.

Table 7.21

Gender- wise difference in Satisfaction Level of Borrowers

Institution t value Sig.(2-tailed)
HDFC 0.314 0.753
LICHFL 3.039 0.003*
Total 2.117 0.035**
* Significant at 1percent level **Significant at 5 percent level
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3. Educational Qualification and Satisfaction

In order to find out whether there is any education-wise difference in

satisfaction level of borrowers; the mean satisfaction scores have been

computed separately for borrowers of different educational groups. Then, by

using ANOVA the difference in satisfaction level, if any, between the groups

was tested for judging its statistical significance.

Table 7.22

Educational Qualification and Mean Satisfaction Level

Educational HDFC LICHFL Total

Qualification No Mean No Mean No Mean
Below graduation 34 44.74 4 47.00 38 44.97

Graduates 197 44.72 93 45.74 290 45.05

Post graduates 114 44.44 130 45.38 244 44.94

Professionals 15 45.93 43 46.02 58 46.00

Total 360 44.68 270 45.63 630 45.09

Source: Survey results

Table 7.22 shows that, in HDFC, beneficiaries with professional

qualification were the most satisfied group as they had the highest mean

satisfaction score of 45.93 among the sample. Borrowers having qualification

below graduation became the next satisfied group with mean satisfaction

score of 44.74, followed by graduates with 44.72 and post graduates with

44.44.
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But, in LICHFL, borrowers having qualification below graduation had

obtained the highest mean satisfaction score of 47.0, which is followed by

beneficiaries having professional qualification with 46.02, graduates with

45.74 and post graduates with 45.38.

For the total sample, mean satisfaction was the highest among

professional group (46.0) and lowest in post graduate groups (44.94).

Table 7.23 unfolds the facts that could be inferred from ANOVA used

for testing the statistical significance of difference in mean satisfaction level of

borrowers from different educational backgrounds. Test results showed no

statistical significance of difference between borrowers in this regard in any of

the selected HFIs which further led to a conclusion that the level of education

of borrowers is not a factor which decides the level of their satisfaction with

the service profile of their HFIs.

Table 7.23

Educational Qualification and Mean Satisfaction level –

One way ANOVA

Significance
Institution d.f F value Level
HDFC 3, 359 1.008 0.389
LICHFL 3, 269 1.222 0.302
Total 3, 629 2.088 0.101

4. Occupation and Satisfaction

For getting some glimpses of the impact of the nature of employment of

the borrowers on their satisfaction level, the borrowers have been classified
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into four groups based on their occupation and then their mean satisfaction

scores have been computed for each group. The details are given in Table

7.24.

Table 7.24

Occupation and Mean Satisfaction

Occupation HDFC LICHFL Total

No Mean No Mean No Mean

Employment 336 44.68 240 45.64 576 45.08

Business 10 43.20 7 44.43 17 43.71

Profession 12 45.92 23 45.87 35 45.89

Agriculture 2 45.00 0 0 2 45.00

Total 360 44.68 270 45.63 630 45.09

Source: Survey results

As shown in Table 7.24, in both HDFC and LIHFL, the mean

satisfaction scores were highest for borrowers who are professionals (45.92

for HDFC and 45.87 for LICHFL) and business group reported least level of

satisfaction (43.2 for HDFC and 44.43 for LICHFL) with the service schemes

of their HFIs. But, mean satisfaction score of employee borrowers of LICHFL

(45.64) is higher than that of HDFC (44.68).

ANOVA test was applied for ascertaining whether the mean

satisfaction scores of borrowers of various occupation groups differ

significantly or not. The test found no significant difference among the groups

in terms of their level of satisfaction in both HFIs at any level. Hence, it can be

inferred that level of satisfaction does not depend upon the nature of
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occupation of the borrower. The snapshot of the results has been explained

in Table 7.25.

Table 7.25

Occupation and Mean Satisfaction Level of Borrowers –

One way ANOVA

Institution d.f F value Significance Level

HDFC 3, 359 1.335 0.263

LICHFL 3, 269 0.885 0.414

Total 3, 629 2.084 0.101

5. Monthly Income and Satisfaction

Normally, income level of a borrower makes an influence on his level of

satisfaction with the loan product he enjoys and the financial institution that

provides such product. This is because the income is the prominent factor

which decides his amount of borrowings and repayment capacity. To find out

whether there is such relationship between monthly income and satisfaction

level of the borrowers, the mean satisfaction scores of different income

groups has been computed and the statistical significance of difference in

those mean scores is analysed with the help of one way ANOVA.
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Table 7.26

Monthly Income and Mean Satisfaction

Monthly income (Rs) HDFC LICHFL Total

No. Mean No. Mean No. Mean
Up to 5,000 0 0 0 0 0 0

5001 - 10,000 24 44.21 16 47.75 40 45.63

10001 - 15000 111 44.86 30 46.97 141 45.31

15001 - 20000 128 44.79 62 46.13 190 45.23

Above 20,000 97 44.46 162 44.98 259 44.79

Total 360 44.68 270 45.63 630 45.09

Source: Survey results

Table 7.26 gives the details of mean satisfaction scores computed for

borrowers of both HFIs who belong to different income groups. Analysis

shows that in HDFC, beneficiaries belonging to ‘Rs.10001–15000’ income

group have the highest mean satisfaction scores with 44.86 and those who

belong to ‘Rs.5001-10,000’ income group have the lowest satisfaction score

with 44.21. Beneficiaries under ‘Rs.15001-20,000’ category have mean

satisfaction score of 44.79 and for those with monthly income ‘above

Rs.20000’, the mean score was 44.46. One important thing to be noticed here

is that the range of highest scores and lowest scores was very narrow which

creates an impression that HDFC is able to design and deliver their products

and services in tune with the diverse home loan requirements of varied

income groups.
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In the case of LICHFL, beneficiaries who belong to the lowest income

group of ‘Rs.5001-10000’ had the highest mean satisfaction score of 47.75.

The least satisfied borrowers belong to highest income group of ‘above

Rs.20000’ and their mean satisfaction score is 44.98. The mean scores for

‘Rs.10001-15000’ income category and ‘Rs.15001-20,000’ income group were

46.97 and 46.13 respectively. Such differences in values of these mean

scores could be taken as an indication of LICHFL’s due consideration, while

designing their loan products, to basic parameters that a low income earner

usually exposed to when he goes for a home loan.

In the total sample, mean satisfaction is the highest in ‘Rs.5001-10000’

income group (45.63) and lowest in ‘above Rs.20000’ income group (44.79).

Table 7.27

Monthly Income and Mean Satisfaction Level of Borrowers–

One way ANOVA

Institution d.f F value Significance level

HDFC 3, 359 0.485 0.693

LICHFL 3, 269 12.118 0.001*

Total 3, 629 1.723 0.161

y Significant at 1 percent level

From the result of ANNOVA given in Table 7.27, it is inferred that, only

in LICHFL, there is significant difference in the mean satisfaction of borrowers

belonging to different income groups at 1 percent level. Since, there existed

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difference in means satisfaction level of borrowers of different income group in

LICHFL, pair wise multiple comparisons using Tukey’s HSD test was

administered to determine mean satisfaction scores of which of the income

groups which differ significantly. The result is exhibited in Table 7.28.

Table 7.28

Multiple Comparisons of Income Level and Satisfaction Scores of

Borrowers of LICHFL - Tukey’s HSD Test

Mean Significance
Monthly Income between
difference Level
5001-10000 and 10001-15000 0.7833 0.717

5001-10000 and 15001-20000 1.6210 0.078

5001-10000 and above 20,000 2.7685 0.000*

10001-15000 and 15001-20000 0.8376 0.397

10001-15000 and above 20,000 1.9852 0.000*

15001-20000 and above 20,000 1.1476 0.008*

*Significant at 1 percent level

Tukey’s test shows that in LICHFL, the difference in mean satisfaction

scores of the highest income group and lowest income group (the income

groups of ‘Rs.5001-10,000’ and ‘above Rs.20000’) is found statistically

significant at 1 percent level. Similarly such difference in satisfation level was

found significant at the same probability level between income groups of

‘Rs.10001-15000’ and ‘above Rs.20000’, and also between ‘Rs.15001-20,000’

and ‘above Rs.20000’.

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7.4 Conclusion

Thus, in terms of the level of satisfaction of borrowers with the loan

products rendered by their HFIs, the position of public sector HFI- LICHFL- in

the minds of its borrowers is much higher than that occupied by its rival, in

their customers’ minds. Such difference in satisfaction level happens mainly

due to the difference in the gap between the borrower expectations and

performance perceived by them. However, borrower attributes did not

contribute much to such difference.

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REFERENCES

1. Mathew Emmanuel, Marketing Management, (Kottayam, Current Books,

2006), p.87.

2. M.K. Rampal,and S.L. Gupta, Service making- concepts, applications

and cases, ( New Delhi, Galgotia publishing Company, 2002), p. 289.

3. ibid. p. 435.

4. A.K. Sreevasthava, and A.P. Singh, Manual of Occupational Stress

Index, (Agra: National Psychological Corporation, 1981).