A comparative study of housing finance services provided by

Selected public sector banks of the India

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce

By

Anchal Pramod Maurya

Under the Guidance of

Prof. Namrata pathak

RSET’s
Ghanshyamdas Saraf College
of Arts and Commerce
Affiliated to University of Mumbai
S.V. Road, Malad (W)
Mumbai – 400064

MARCH 2023
 REST’S
Ghanshyamdas Saraf College
of Arts and Commerce
Affiliated to University of Mumbai
S.V. Road, Malad (W)
Mumbai – 400064

CERTIFICATE

This is to certify that Ms. Anchal pramod Maurya has worked and duly completed
her Project Work for the degree of Bachelor in Commerce (Accounting & Finance)
under the Faculty of Commerce in the subject of Accounting & Finance and her/his
project is entitled, “ A comparative study of housing finance services provided by
selected public sector banks of India” under my supervision.
I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any Degree or Diploma of any
University.
It is her own work and facts reported by her/his personal findings and investigations.

__________________________ _____________________
Project Guide Principal
Prof. Namrata pathak

___________________________
External Examiner
Date :
 DECLARATION

I the undersigned Miss Anchal pramod Maurya hereby, declare that the work
embodied in this project work titled “A comparative study of housing finance
services provided by selected public sector banks of India”, forms my own
contribution to the research work carried out under the guidance of Prof. Namrata
Pathak is a result of my own research work and has not been previously submitted to
any other University for any other Degree/ Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.
I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

___________________
Student
Ms. Anchal P Maurya

Certified by

_____________________
Project Guide
Prof. Namrata Pathak
 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, Dr. Ashwat Desai for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Course Co-ordinator, Prof. Mamta Chhajer for
her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof.
Namrata Pathak whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
 ABSTRACT

Home is the basic necessity of each and every individual. It serves as a living place
for families. As home is a basic necessity and is useful in the future, many people
invest in purchasing a house. But nowadays, purchasing a house for a middle class
family is very difficult, as it is not affordable. So for the convenience of people, the
Government has provided the house loan facility at a lower rate of interest to every
individual. Basically, a housing loan is to purchase the home on loan in which an
individual pays an amount of installments every month at a particular interest rate.
The loan is provided to an individual with the terms and conditions of banks like
eligibility of the person, income of the person. Nowadays, many banks provide the
facility of loan at different interest rates. The main point in loaning is the interest rate.

For this purpose we have taken four banks namely SBI, BOB, PNB and LIC(HFL)
Bank. In the research Methodology a sample size of 68 respondents has been taken
through random sampling. For the study we have collected both primary data as well
as secondary data. Finally the Whole research was carried out in a systematic way to
reach an exact result. The whole research and findings were based on the Objectives.

KEYWORDS: Home Loans, public sector Banks, customers.

 INDEX

Chapter Title of the Chapter Page

No. No.

1 Introduction
1.1. Introduction
1-39
1.2. Home Loan
1.3. Characteristics of home loan
1.4. There are different types of home loan
1.5. Advantages of home loan
1.6. Disadvantages of home loan
1.7. Charges applicable to avail home loan
1.8. Finding out cost of the house
1.9. Points to remember about a home loan
1.10. Home loan procedure in India
1.11. Fees/Charges associated with home loan before and
after the loan disbursement
1.12. Tax benefits
1.13. Terms and conditions for availing tax benefits on
home loan
1.14. Major housing finance companies in India
1.15. Introduction of Banks
1.16. Government scheme of housing
2 Research Methodology
2.1 Title
40-43
2.2 Objective of study

2.3 Scope of the Study

2.4 Method of Data collection

2.5 Technique of Data analysis

2.6 Limitation of the study

3 Literature Review 44-50

4 Data Analysis and Interpretation 51-77

5 Conclusion and Suggestions 78-80

Bibliography

Appendix (Questionnaire)
 List of tables

Sr. No Title of table Page number

1 Age 54
2 Gender 53
3 What is your occupation 55
4 From how many years you are associated 58
with this Bank
5 From which of the following Bank you 56
have taking housing loan
6 How do you come to know about the Home 59
Loan scheme of that bank
7 Are you aware of these type of home loan 60
8 Are you aware of all the terms and 61
conditions of home loan
9 Are you satisfied with the Interest rate 62
charged by your bank
10 Which type of service does your bank offer 63
11 Do you agree that your bank loan 64
processing is fast
12 Do you agree that the Home loan services 65
provided by your bank are best as
compared to other bank
13 Is the cost of home loan is appropriate 66
according to your demand
14 Does the bank gives any discount upon 67
loan services
15 How would you rate your bank regarding 68
home loan facilities
16 Are you aware about Pradhan Mantri 69
Awas Yojana scheme
17 Have you availed Pradhan Mantri Awas 70
Yojana
18 What is the mode of payment of 74
installment
19 Types of Interest charged on home loan 71
20 Types of problems faced during 72
documentation
21 Have you face any difficulty during taking 73
the loan
22 Are you satisfied with the employee 75
behavior of the bankers
 List of Graphs

Sr. No Title of table Page number

1 Age 54
2 Gender 53
3 What is your occupation 55
4 From how many years you are associated 58
with this Bank
5 From which of the following Bank you have 57
taking housing loan

6 How do you come to know about the Home 59

Loan scheme of that bank
7 Are you aware of these type of home loan 60
8 Are you aware of all the terms and 61
conditions of home loan
9 Are you satisfied with the Interest rate 62
charged by your bank
10 Which type of service does your bank offer 63
11 Do you agree that your bank loan 64
processing is fast
12 Do you agree that the Home loan services 65
provided by Your bank are best as
compared to other bank
13 Is the cost of home loan is appropriate 66
according to your demand
14 Does the bank gives any discount upon loan 67
services
15 How would you rate your bank regarding 68
home loan facilities
16 Are you aware about Pradhan Mantri Awas 69
Yojana scheme
17 Have you availed Pradhan Mantri Awas 70
Yojana
18 What is the mode of payment of installment 74
19 Types of Interest charged on home loan 71
20 Types of problems faced during 72
documentation
21 Have you face any difficulty during taking 73
the loan
22 Are you satisfied with the employee 75
behavior of the bankers

Abbreviations used:

Sr.no Particular Full form

1 SBI State Bank of India

2 PNB Punjab National Bank

3 BOB Bank of Baroda

4 LIC (HFL) LIC housing finance

5 EMI Equally monthly

installment
6 HFC Housing finance
companies
 CHAPTER NO 1

INTRODUCTION

INTRODUCTION- 1.1
A home is a comfort zone for each and every individual. It is not only the comfort
zone of every individual, but it’s a place where one wishes to live every day.
Nowadays, home loans are in high demand, as middle class people are unable to
purchase a home. To fulfill this increasing demand of people, many banking sectors
and financial institutes are providing housing loan facilities. The home is the basic
necessity of every individual so the home loans are available at lower interest rates,
for meeting the demand of every individual. When an individual purchases a home,
he/she is unable to pay the whole amount and some people pay a very little amount,
so to fulfill the demands of people the home loan facility is provided.

Housing Finance plays a vital role as an engine of equitable economic growth

through the reduction of poverty and prevents slum proliferation in the economy. The
demand for housing has increased rapidly day by day. Therefore, to meet with the
growing housing demand is the aim of the government. To achieve this aim it is
required to provide the finance for housing to the people. The liberalization of the
financial sector of the economy has also become possible by housing finance. Home
Loan is the funds a buyer has to borrow usually from a bank or other financial
institutions to purchase a property, generally secured, by a registered mortgage to the
bank over the property being purchased. A mortgage loan is a debt owed on a home;
the mortgage rate is the interest rate charged to the homeowner for the use of the
loan. Housing finance or Home loan is a broad topic, the concept of which may vary
across continents, regions and countries, particularly in terms of the areas it covers.

The purpose of a housing finance system is to provide the fiends which homebuyers
need to purchase their homes. This is a simple objective, and the number of ways in

1
which it can be achieved is limited. Notwithstanding this basic simplicity, in a
number of countries, largely as a result of government action, very complicated
housing finance systems have been developed. However, the essential feature of any
system, that is, the ability to channel the funds of investors to those purchasing their
homes, must remain.

The sun at home warms better than the sun elsewhere. True isn't it, where else do you
find that comfort that makes you feel so special every day. Undoubtedly owning a
house is the most important phase in one’s life. Not long ago, turning this dream into
a reality was a daunting task for the common man with property rates going north all
the time. But now, thanks to the proliferation of home loans and housing finance
companies, one can aspire to own a roof over one's head. Many think it is an
expensive affair and beyond reach. Well, that's not always true. It takes a little
planning and awareness to get to that home you want to call your own. Buying a
home for the first time can be daunting to any person but in today’s time various
banks are Lending a helping hand to the people to purchase their dream house. Thus,
people look forward to Choosing a home loan.

The primary concern of a housing finance company is to determine the loan amount
That the borrower is comfortably able to repay. The most popular method of
financing a home purchase is with a mortgage. This is a loan that is secured over the
home. There are a number of different mortgage suppliers and people will have to
shop around in order to get the best deal.

Home Loan is one of the fastest growing retail and mass banking areas. It forms an
important part of The country’s priority in 5year plans. Almost all public and private
sector banks are offering home loans at attractive rates for purchasing their dream
home. Home loans usually cover a variety of types. All Banks have Come out with
home loan products with features and value additions that make the schemes not only
attractive but also serve as a substantial source to the borrowers for owning their
dream home. Banks as financial service providers aim at providing financial support

2
from the banking system to the needy for purchasing a home to the resident Indians
as well as non-resident Indians. The main emphasis is That every needy person is
provided with an opportunity to pursue home loan with the financial support from
The banking system with affordable terms and conditions.

The home loan is taken for the purchase of the house which is the dream of every
individual. The duration of this loan is longer. The home loan is granted for the 80%
of the property and in some cases it reaches to 85-90%.Furthermore in India, there
are two types of banks: Public sector banks and Private sector banks. Public sector
banks are defined as the banks in which more than 50% are owned by the
Government. The nationalized banks are the Public sector banks. Private sector
banks are defined as the banks in which stake belonged to the Private Shareholders.
In India, there are 29 Private sector banks and 27 Public sector banks.

Public Sector Banks: The banks that are controlled by the Central Government are
known as public sector banks. Nationalized banks are also known as public sector
banks. The formation of a nationalized bank is done by combining a bank with its
assets into public ownership.

Private sector banks: They are owned by the private lenders. The private banks are
also operated by private promoters who are given the power to control according to
the market forces. Generally, the private banks are seen as multinational
organizations with overseas operations. These banks avail loans at low interest rates.
There are 21 private banks in India at present. The private banks are controlled by
the private owners. All the private banks have to register themselves under the Indian
Companies Act. Private banks are having the latest technologie Home loans work
like any other debt. That is, loans are simply specific money that we borrow from a
bank, a private lender, or some other type of lender. Afterwards, we must repay our
debts with interest. However, unlike other types of loans, home loans are different in
several aspects. Owning a piece of land or property is a lifetime dream for every
individual.

3
 1.2- HOME LOANS

Virtually every young family in India aspires to own a home. A Home loan is a great
way to part finance the dream home that you always wanted to own. Here are the top
6 factors to keep in mind before applying for a home loan:

1) Get your own credit report

Apply online at http://www.cibil.com/accesscredit.htm and follow the instructions

given there to get a copy of your own credit report. Check your credit report
thoroughly to spot errors. If need be, use our advisory services on CIBIL Report to
get any errors corrected. Remember any errors in your credit report can reduce your
chances of getting a good home loan offer.

2) Finalize property first before you finalize your home loan lender

Lenders reserve their best rates for immediate disbursement customers and hence
customers who have finalized property get the best possible home loan offers. Also,
if they have any issues with your property it will get highlighted before you incur too
much effort and costs. Some lenders may not be comfortable with you buying a plot
and self-constructing it. Some lenders will not fund under construction property
unless the developer is pre-approved with them. A lot of lenders can have issues if
the property you are buying is more than 15-20 years old.

3) Be prepared for the processing fee

Most companies charge a non-refundable processing fee which will not be refunded
even if you decide not To use the loan sanction. The lenders incur costs for
sanctioning your loan and hence in most cases this is nonrefundable. If anybody is
promising you that the processing fee cheque will not be put in without your prior
Approval or that the processing fee will be refunded if you do not accept the sanction
the chances are that he Is lying.

4
4) Fixed rates are rarely fixed

Understand the interest rates chargeable to you. The fixed costs quoted are normally
fixed only for a period Of 12 to 60 months and can be revised thereafter. There are
also the money market clauses in certain Agreements.

5) Make a provision for higher down payment

Lenders carry out an independent valuation of the property being bought and they
will find around 80-85% of the valuation amount as determined by their valuers.
These independent valuers normally are Conservative and value the property
(especially property bought on resale) much lower than what you might Actually be
paying for it. While you can ask for a second valuation (at your cost off course) you
should be Prepared to shell out the difference between the actual price being paid by
you and the valuation made by the Bank over and above the 15-20% down payment
required from you.

6) Insuring the Home loan

Make sure to review your insurance requirement when you take on a home loan. If
you are underinsured Make sure you buy a term policy (it is anyway cheaper than a 7
so called loan cover policy) for the entire Amount of loan so that the family can pay
off the loan in the event of the borrower’s death during the loan Tenure. Also
consider buying a critical illness rider that will pay off the loan in the event of the
borrower Suffering from critical illnesses such as Kidney failure, paralytic stroke,
cancer, etc.

Do not sign blank application forms or documents and keep a copy of all documents
submitted to the Lender for your future reference. Any promise made by the DSA or
even an official of the lender has no value unless it is in writing or at least on email.
So, if you are basing your decision on any such promise make sure you get it in
record in some form

5
Since the new class of buyers are a relatively younger set of customers who are more
aware about legal documentation and approvals, buyers are now more ‘end-users’
rather than investors; the property markets in India undergo transformation to align
itself with global standards with an increased emphasis on quality & cost control and
documentation methods. In the current economy of India, the real estate sector has
the maximum propensity to generate income and demand for materials, equipment
and services. It can be said that housing finance companies were formed for
co-existing with buyer’s requirements of housing loans for investing in properties.
Home loans are made available by financial institutions to both Indian and
NRIcustomers at floating and fixed rate of interest and also at attractive EMI options.

1.3 - CHARACTERISTICS OF HOME LOAN

• Home Loans are the consumer loans.

• Home loans are long term loans provided by various banks.

• These are large loans which provide financial support to the people who want to
purchase their Dream home.

• Home loans are secured loans.

• The borrowers get to own their dream home and pay for it in easy and affordable
installments.

• Banks and Financial Institutions offer home loans at cost-effective rates.

6
• Tax concessions make home loans more attractive than other loan products.

• The borrowers can get tax deduction on repayment of the principal amount of a
loan taken to buy or Construct a house.

• The interest paid on a loan is deductible from ‘income from property’, even if it has
not been paid during The year.

1.4 -THERE ARE DIFFERENT TYPES OF HOME LOAN

⮚ Home purchase loans

⮚ Home improvement loans
⮚ Home construction loans
⮚ Home Extension loans
⮚ Home Equity loans
⮚ Land purchase loans
⮚ Bridge loan
⮚ Top up loan

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

7
Home improvement loan: Home improvement loans are used to finance
improvements and add on to the existing set of beauty on your owned house,
recently purchased property or rented accommodation. Home improvement loans are
used to maintain or enhance the value of your house.

In general it includes: repairs, remodeling, energy-related items (permanent in

nature), repairs, a new kitchen, a new bathroom, terrace, an extension or general
property improvements. Luxury items and fireplaces are generally not eligible,
though. Many improvements in landscape and even swimming pools are nowadays
considered to be a part of home improvement.

Home construction loan: Home construction loans are used to finance the
construction of our newly acquired home or if we are planning to build a home.

The factors included in calculations for house building costs?

● Design of the house

● Construction cost
● Financing Cost
● Buildable site

All the above mentioned costs will help us to determine the amount we may need to
borrow. For example, besides calculating the construction costs, we may also be
required to consider the total expenditures to develop the site in order to build. Each
site is unique requiring different expenditures so this specific rupee amount will vary
from site location to site location.

Payment: Before the house starts getting built, we will be required to pay a deposit to
your builder as well as paying a deposit for the land if we are buying land. As work
progresses you will need to make payments to the builder. Certain loans can be
structured for progress payment to be made during construction.

8
Home extinction loan:

Home extension loans are used by customers to get loans from the banks to extend
their houses, by adding more rooms, kitchens, wash rooms, terraces, or any other
rooms for your growing family. It may also be used to enclose open balcony/terrace
space, or construct a Puja ghar.

Maximum Amount of Home Extension Loans:

Banks generally offer about 70-85% of the total amount of home extension as a loan.
The amount of loan sanctioned also depends on a number of factors such as the age
of the applicant at the time of loan, tenure of the loan, repayment capacity of the
borrower and his/her credit history.

Home equity loan:

Home equity loans help customers to encash the market value of the commodity by
taking a loan by mortgaging the property. So, Home equity loans are availed by
customers, who wish to mortgage his/her property to the bank for taking some loan
for some other purpose. Then, it's up to the bank's discretion to consider the market
value of the property and accordingly decide how much to pay to the customer.

Both the residential as well as non residential property can be considered for the
approval of the loan, provided the mortgagor is a licensed title holder and the land is
free from any kind of dispute. Home equity loans don't restrict one to use the loan
money in specific investments. It might also be used in marriage, higher education,
medical expenses, etc. However it should not be used for any illegal or speculative
purposes.

land purchase loan:

Land Purchase loans are used by customers who wish to purchase a plot of land for
commercial or residential purposes. Everyone has his/her dream perfectly sketched
in his souls and so is his ambition to get his house erected on the exact location he

9
dreams to be. If you have found and shortlisted the piece of land, and have arrived
here for finance, you have come to the best place you could have arrived on the web.
Now that you have decided to purchase land as an investment or for your own dream
home, you will realize that a land purchase loan is one you will cherish.

Loans that are strictly for land purchase can be as scarce as good residential plots.
While many lending firms around the nation compete to provide mortgages for the
purchase of a house on a lot, only local institutions typically will be interested in
lending for an empty lot.

Bridge loan:

Bridge loans are designed for people who wish to sell the existing home and
purchase another one. The bridge loans help finance the new home, until a buyer is
found for the home.

Bridge loans are used by customers as an effective vehicle to capitalize on a purchase

opportunity. It can be considered as a short term financing scheme which is generally
expected to be paid back, within the range of 6-36 months, till the time the borrower
gets more permanent and lower cost financing.

Top up loans: Enhancing the investment in a house without having to dispose it off
to fund various needs related to Higher Education, Purchase of Furniture and
Business Requirements. The maximum term of the loan is 10 years. Top up loans can
be given after 1 to 2 years of the final Disbursement of the existing loan or upon
possession/completion of the existing financed Property.

10
1.5- ADVANTAGES OF HOME LOAN

a. Attractive interest rate:- The various banks over attractive interest rates
to boost and help their customers. Many banks provide loans on fixed or
fluctuating rates to facilitate customers as per their needs.

b. Help in owning a home:- The home availed by a person with the help of a
bank because they provide technical and financial assistance to customers
for owning their dream House.

c. Capital Appreciation: For each one of us who has seen property prices
boom over the last five years, the prospect of mouth-watering capital
appreciation is the biggest argument for buying a home. Construction
costs alone, which account for more than 70 per cent of the flat’s cost,
have risen at 15 per cent annually in the past decade. Rents too seem to
keep up with inflation; making a home one of the few investments can
shield you from inflation for the long term.

d. Tax benefit on home loan: Your home loan principal and interest
repayment fetch you attractive tax breaks. And remember, renting
actually is more expensive than just the rent you pay. Your cost is higaher
since you are not earning any interest on the deposit amount paid to the
landlord (which is quite high in premium locations) throughout the lease
term.

e. Loan period:- There are many banks which provide maximum loan tenure
of 15-20 years based on the loan amount and credibility of the customers
.This relieves the customers to repay loan amount till a long period.

11
 f. For accidental death insurance: Some banks provide free accidental death
insurance with housing loans which is also beneficial to the
customers.These benefits or advantages of home loan are responsible for
making it so popular among customers that a person who doesn't have a
home would like to buy and they do it with home loan.

1.6- DISADVANTAGES OF HOME LOAN

1. Delay in processing:- Many times there is a huge delay in processing of

providing home loan because various formulations to be fulfilled in this
process. Due to these delays customers feel mentally and financially weak.

2. Problem of disbursement:- There are many problems with the home loan
disbursement amount. There are some delays in disbursement of loan amount
to the customers due to legal formalities. This causes problems to the
customers.

3. High cost:-The public sector bank charges high processing fees for home loan
sanctioning. They are force to pay serious charges at various stage

4. To fulfill their requirements. Some customers are not able to pay such charges
so such people cannot avail the benefits of home loan.

5. Fluctuating interest rates:- Some banks give home loans at floating rates
which fluctuate at different intervals due to some reasons. These changes may
some time lead to increase in interest rate which will increase the cost of
home loans to the customers.

12
 1.7 - CHARGES APPLICABLE TO AVAIL HOME LOAN

Processing fees:

First of all is the processing fee. This is a charge that is levied by most housing
finance institutions or Banks. It is a percentage of the sanctioned loan amount and is
normally paid when the application form is Submitted. Instead of a percentage, some
home loan financial institutions also charge a particular fee according to the loan
amount. The fees paid in excess is adjusted at the time of submission of application
with the charges, when a lower amount is sanctioned, which one makes to the
financial institutions. The Processing fee is refunded by most of the financial
institutions, in case of rejection of the loan application.

Administrative fees:

Administrative fee is a percentage of the approved loan amount. Housing finance

institution/banks or Collects this amount for issuing interest certificates, maintaining
customer’s records, technical and legal charges, etc throughout loan’s tenure. This
charge is paid by the customer on receipt of offer letter from Housing finance
institution/banks. This payment is made before availing the disbursement amount.

Rate of interest:

Rate of interest is applicable throughout the loan amount’s tenure and is charged on
the principal monthly reducing manner. Customers are given an option to choose the
rate of interest from either a fixed or a variable rate by most housing finance
institution/banks

13
Legal Charges:

Legal charges are levied by some housing finance institutions/banks mainly Public
Sector Banks which they incur on their panel of lawyers on getting the property
documents vetted.

Technical Charges:

To meet their cost on visit to the customer’s property for ensuring quality of
construction and according to the norms of the respective approval authority, certain
Housing Finance Institutions/Banks levy technical charges.

Stamp Duty and Registration Charges:

The Stamp Duty and Registration Charge are levied on to customers by housing
finance institutions/banks, in case of registered mortgage, which varies from state to
state depending on the state laws where one buys a property.

Charges on Personal Guarantee:

Housing finance institutions/banks demand for personal guarantees from the

customers. Charges on stamping of personal guarantee given by the customer are
also recovered from the customer

Cheque Bounce Charges:

Housing finance institutions/banks levy a nominal charge on the customer whenever

a cheque, through payments made to housing finance institutions/banks, get
dishonored.

14
Delayed payment charges:

If the customer delays the payment of installments beyond the due date, housing
finance institution/bank Charges for the delayed payment from the customer.

Additional charges:

Most housing finance institutions charge a particular percentage on the delayed

payment. When a customer Fails to clear the dues within a stipulated time frame
these charges are levied.

Incidental charge:

When a representative from a housing finance institution/banks is sent for collection

of outstanding dues, Incidental charges are payable from the customer which is
normally charged at an even rate per visit. Most Housing finance institutions/banks
levy these charges.

Prepayment Charges:

When a customer makes a part prepayment or a full repayment of the loan, the
penalty of prepayment charges is Charged by the housing finance institution/banks.
This is levied only on round sum payments and not on the EMIs that are paid by the
customer. This charge is not levied on the entire outstanding principal, but only on
The amount prepaid. These charges are levied by most Housing Finance Institutions
and Banks while Granting home loans to the customer’s .

15
 1.8 - FINDING OUT COST OF THE HOUSE

Buying a home involves many financial considerations. Some home buying expenses
are one time costs and Others are ongoing commitments. In addition, there are other
costs that the borrowers should take into Consideration in calculating the cost of the
house. Below is a checklist of additional expenses that the Borrowers need to keep in
mind when purchasing a home.

Home Buying costs:

• The Down Payment: A minimum down payment of 15% is required for a Normal
Housing loan. The Government offers Tax incentives for homebuyers.

• The Payment: A Home Loan Security is security for a loan on the property the
borrower owns. It is Repaid in regular monthly payments which are combined
payments. This means that the payment Includes the principal (amount borrowed)
plus the interest (the charge for borrowing money).

• Checklist of Additional Expenses: Additional expenses need to be incurred after

one has moved in.

• Maintenance costs: These costs are incurred to cover the costs of anticipated or
unexpected repairs or Replacement of such things as the painting or household
appliances.

• Renovation and repairs costs: These costs are incurred in cases where the need
arises to repair the House. A home inspection may indicate that the home needs
major structural repairs.

16
• Property taxes: Property taxes are always a certainty and need to be taken into
account when one Plans to purchase a home.

• Property insurance: It is imperative for the borrowers to take insurance of the

house they plan to Purchase. Additional expenses go into insuring the house like
premium expenses, legal expenses, etc.

1.9 - POINTS TO REMEMBER ABOUT A HOME LOAN

1)The monthly installment or the EMI: The housing loan is normally repaid by a
monthly installment. Usually, the monthly installment is an EMI (equated monthly
installment), an equal amount that, if paid every month over the tenure of the loan,
results in fully paying off the loan taken. Part of the monthly installment is interest
(calculated at the loan interest rate on the principal outstanding for that month) and
the remaining part is accounted for as principal repaid. Principal repaid in the
previous month is reduced from the outstanding principal amount every month.
Interest is calculated in the above fashion on reducing principal. At the end of the
loan tenure, the principal reduces to zero.

2) The loan tenure: Longer repayment tenure would mean more interest payments
on the loan. Before one sets out to complete the paperwork for a loan, the calculation
of the Equated Monthly Instalments (EMI) is important to know how much one is
expected to pay and whether the borrower has the capacity to pay that in time.

3) How is the net monthly income calculated: For a salaried individual, the net
monthly income is calculated as salary minus all the statutory deductions. Statutory
deductions are items like insurance premiums, tax deductions, PF contributions,
which have to be deducted from the salary of an individual. In the case of

17
self-employed people, lenders look for cash earnings. Therefore, they add a portion
of the depreciation claimed by the applicant to the applicant’s annual net profit. This,
divided by 12, gives the net monthly income for a self-employed person. Not all
lenders consider depreciation, though. So, the loan amount may be less than what
one thought it would be if the lender does not consider depreciation in the
computation of net annual income.

4) Monthly/Annual repayments: It is important to know whether interest is being

calculated on a monthly or annual basis. The reason is that the borrower pays more
as interest over the years in case of annual rests as compared to monthly rests, even if
the interest rate is the same. How does this happen? The answer lies in a small but
important difference in the manner in which principal repaid by the borrower as part
of the monthly installment is accounted for by the bank.

In case of monthly rests, principal repaid in the previous month is reduced from the
outstanding principal amount every month. Interest is calculated in the above fashion
on reducing principal.

On the other hand, in case of annual rests of principal, principal repayment every
month is not accounted for at the end of every month but only credited at the end of
the year. This results in more payment of interest by the borrower. If one bank quotes
interest on annual rests basis and other quotes on monthly rests basis, even if the
interest rate is the same, effectively, the annual rests rate in monthly reducing terms
would be higher. So, when banks give a rate of interest, asking them the method of
computation would be helpful.

5) Fixed or floating rate of interest: The borrowers are often faced with a choice
between whether the loan Should be at a fixed rate or a floating rate. There are
advantages to both. A fixed rate loan means that one will Have certainty of payments
and even if interest rates rise in the future the borrower will still be paying the Older,
lower rate. The right time to pick a fixed rate loan is at the bottom of the interest rate
cycle form where It looks like the rates have only one way to go. And that is up. On

18
the other hand, the right time to pick a Floating rate is when interest rates are at their
highest and the interest rates look like they are on their way Down.

6) Total financing costs: Apart from knowing how the interest rate is calculated, it is
important to understand The impact of processing and administrative costs on the
loan cost. They add to the costs as they have to be Paid upfront. The total financing
cost determines what the loan really costs the borrower. Hence, a thorough Study of
the total costs is important.

7) Co-applicant: Sometimes the income of the borrower may not be enough to

secure the loan amount Required by him. In that case, one can consider applying for
the loan with a co-applicant. Clubbing an applicant's income and applying jointly can
help get one a higher loan amount. When property is jointly Owned, most banks
insist that joint owners have to be co-applicants for a loan against such a property.
Also, Sometimes, the loan officer might have a view that the borrower doesn’t have
much of a chance of getting the Desired loan on his own strength and also is not
convinced of the regularity and sustainability of the applicant’s Income. In that case,
clubbing a co-applicant’s income might just put that loan within one’s reach.

8) Tax advantages: A housing loan comes with some tax benefits. These benefits
further reduce the cost of borrowing. There are two heads under which a borrower
can claim tax benefits. One is an exemption for Interest paid on a housing loan. This
exemption is available up to an interest paid of PRs 1 lakh per year. And The other is
a 20 per cent rebate on principal repaid in the year subject to a maximum rebate of
Rs 4,000. That Is, a 20 per cent rebate is available on a maximum principal repaid of
Rs 20,000.

9) Identification of the property: It is not always necessary for the property to be

identified when the application Process for the loan starts. In fact, both the processes
can be conducted simultaneously. When the borrower is Clear about the value of the

19
property to be financed and has zeroed in on the bank, he can get a pre-approval On
the loan. The loan pre-approval is a process where the bank conducts the credit
evaluation and sanctions a Loan amount for which the borrower is eligible. The
sanction is generally valid for six months, during which Period the borrower has to
identify the property and execute the property documents; the payment will be
Released after this. Pre-approval saves time and improves the bargaining position
with the seller.

10) Pre-payment dilemma: If the borrower decides to repay the loan before the
stipulated period, he will be Prepaying the loan. Few banks charge a 0.5-2% of the
amount the borrower is pre-paying as prepayment Penalty. Some banks don’t have a
prepayment penalty provided the borrower is not paying off the entire loan Amount.
That means when the loan is pre-paid partly; there may not be any penalty or
charges. Therefore, it is Advisable to borrow from a bank wherever the prepayment
clause or Loan Redemption charge is not harsh.

1.10 - HOME LOAN PROCEDURE IN INDIA

With the increasing competition in the market for offering Home Loans, the process
of availing loans has gone through a tremendous change in recent years. However,
there is still some process involved in the procurement of Home loans. It is advisable
for one to first look at the different stages required for obtaining a Home Loan. The
followings are the step by step procedure of getting home loan:

STEP 1: Application Form - The first step involved in applying for a home loan is
the procurement of an application form the HFC of one’s choice. The Performa of
application of every HFC (Housing Finance Companies) is different from the other
but about 80% information required to be furnished is the same. Along with the
application form, necessary documents like address proof, age proof, proof of
income, bank balance etc. Are also to be attached with the application form before it

20
is submitted to the HFC. Along with all these documents HFCs also ask for
processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.

STEP 2: Personal Discussion - After successfully filling the application form and
submitting it to the authority the next step is face to face with a bank or HFC where
one has applied for the home loan. The bank first evaluates the papers submitted and
summons the applicant for the personal discussion regarding the home loan applied
for. It is advisable that one should carry all its original documents which were
submitted with the application form.

STEP 3: Bank’s/HFC’s Field Investigation – The next step is the field

investigation done by the HFC or banks. They sent their representatives to the
existing residence of the applicants or their offices for the validation of the
documents submitted. This is the essential part for the banks/HFC to establish the
trust with the applicants.

STEP 4: Credit Appraisal By The Bank/HFC and Loan Sanction - This is the
make or break stage of the process. The bank or HFC will establish repayment
capacity based on one’s income, age, qualifications, experience, employer, nature of
business etc. to access their credential. The bank can refuse the loan application if
any discrepancy is found at this stage.But if everything goes according to the
conditions negotiated by the parties, then the bank or HFC sanction the loan that may
be unconditional or with some conditions levied.

STEP 5: Offer Letter - After the sanction of the Home Loan, the applicant gets
offer letter from the bank or HFC with the following details:

o Loan amount
o Rate of Interest
o Fixed or variable ROI
o Tenure of the loan

21
 o Mode of repayment
o General terms and conditions of the loan

Special conditions ,if any of the terms and conditions are agreed the applicant has to
sign the duplicate copy of the offer letter and that is to be submitted to the
Bank/HFC.

STEP 6: Submission of Legal Documents and Legal Check - The bank or the
HFC now asks for the legal documents of the property involved for applying for a
home loan. All the legal documents of the property involved have to be submitted.
The bank does all the legal checks on the property. The documents remain with the
bank until the repayment of the Home loan.

STEP 7: Technical/ Valuation Check - The Banks or HFC then go about the
technical valuation of the property. The experts of the bank visit the site that has to
be purchased and value it as per the existing rules and regulations. The valuation of
the property is the most important aspect that the bank/HFC considers before
financing any property.

STEP 8: Registration of Property Documents - After the legal and technical

valuation of the property the draft documents have to be cleared by the lawyer and
stamping and registration of the documents is needed.

STEP 9: Signing of Agreements and Submitting the Post-dated cheques - Now it

is time to sign the final agreement of the home loan. After the signing of the
agreement a bunch of Post dated cheques are to be submitted as agreed on the
agreement paper.

STEP 10: Disbursement - It is time for the final Disbursement of the Home Loan.
After the bank or HFC ensures financing the property involves no risk they pay the

22
 final amount that is agreed upon. The mode of payment varies from full to part
payment. In the case of under construction property the mode is part payment and in
the case of ready possession properties disbursement is full and final.

1.11-FEES/CHARGES ASSOCIATED WITH HOME LOAN

BEFORE AND AFTER THE LOAN DISBURSEMENT

BEFORE THE LOAN DISBURSEMENT:

1. Processing fee- Most of the lending institutions would charge home loan processing
fee along with the application fee, which is non-refundable.

2. Legal & Technical charge – Before approving the home loan, lenders do the legal
and technical verification of the property. The cost involved in it can be recovered by
the lender From the applicant.

3. Stamp duty- One would be required to pay stamp duty to the government on the
purchasing of houses. Many lenders also recover stamp duty from the applicant
which is Paid at the time of registration of the agreement.

AFTER THE LOAN DISBURSEMENT:

1. Foreclosure charges- Foreclosure charges will be applicable when one will repay the
Entire home loan amount before the actual tenure. Nowadays, banks are levying
these charges only when one is doing the home loan balance transfer from one lender
to another And not when they are foreclosing out of their own funds.

23
2. Duplicate loan statement charges- Every year, the lending institution will send the
applicant a statement detailing the loan amount that one has paid during the year. The
amount can be Broken into interest paid and the principal amount. However, if the
applicant loses this Statement then their lender might charge them for issuance of the
duplicate statement.

3. Delayed EMI payment and cheque bounce charges- The lender can levy delayed
EMI Payment charges if one will make the payment after the due date. If any of the
post dated Cheques get bounced then applicants may be required to pay cheque
bounce charges also.

1.12 - TAX BENEFITS

1) FOR RESIDENT INDIAN:

There are certain tax benefits for the resident Indians based on the principal and
interest component of a loan Under the Income Tax Act, 1961. It may help one get
tax benefit up to Rs. 50,490 p.a. (approx.) if interest Repayment of Rs. 1. 50.000 p.a.
is paid. In addition to this, one also is eligible for getting tax benefits under Section
80C on repayment of Rs. 1,00,000 p.a. that further reduces the tax liability by
Rs.33.660 p.a.

These deductions are available to assesses, who have taken a loan to either buy
or build a house, under Section 24(b). However, interest on borrowed capital is
deductible up to Rs. 150.000 if the following conditions are Fulfilled:

1. Capital is borrowed for acquiring or constructing a property on or after April 1, 1999.

2. The acquisition and construction should be completed within 3 years from the end of
the financial year In which capital was borrowed

24
3. The person, extending the loan, certifies that such interest is payable in respect of the
amount advanced For acquisition or construction of the house.A loan for refinance of
the principal amounts outstanding under an earlier loan taken for such Acquisition or
construction

If the conditions stated above are not fulfilled, then the interest on borrowed
capital is deductible up to Rs 30,000 though the following conditions have to be
satisfied:

1. Capital is borrowed before April 1, 1999 for purchase, construction, reconstruction

repairs or renewal of a house property.

2. Capital should be borrowed on or after April 1, 1999 for reconstruction, repairs or

renewals of a house Property.

3. If the capital is borrowed on or after April 1, 1999, but construction is not completed
within 3 years From the end of the year, in which capital is borrowed.

In addition to the above, principal repayment of the loan capital borrowed is eligible
for a deduction of up to Rs 100,000 under Section 80C from assessment year
2006-07.

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 1.13 - TERMS AND CONDITION FOR AVAILING TAX
BENEFITS ON HOME LOAN

1. Tax deductions can be claimed on housing loan interest payments, subject to an

upper limit of Rs 150,000 for a financial year. Interest on the fresh loan can be
claimed as a deduction, subject to the stated upper limit.

2. An additional loan for extension/addition to the same house and the person’s
deductions on the existing loan are less than Rs 150,000; he can claim further
benefits from the additional loan taken, subject to the upper limit of Rs 150,000 for a
financial year

3. Tax benefits under Section 24 and deduction under section 80C of the Income Tax
Act can be claimed Only when the payment is made. If a person fails to make EMI
payments, he cannot claim tax benefits For the same.

4. According to the Income Tax Act, only the person who has taken the loan can claim
tax rebates.

5. The interest on home loans taken for repairs, renewals or reconstruction, also
qualifies for the deduction of Rs 150,000.

6. A husband and wife, both of whom are tax-payers with independent income sources,
get tax deduction Benefits, with respect to the same housing loan; to the extent of the
amount of loan taken in their own Respective name.

7. If a person buys a house and sells it within the same year/after 3 years, and if any
profit is made, then a capital gains tax liability arises on the same for which the
individual is liable to pay short-term capital gains tax since the sale took place in the

26
 same year. But, if the sale had taken place after 3 years, then A long-term capital
gains tax liability would have arisen.

8. If it is proved that the home loan is simply an arrangement between the loan-seeker
and the builder or with a third party for the purpose of claiming tax benefits, then tax
benefits will not be allowed and benefits, previously claimed, will be clubbed to the
income and taxed accordingly.

9. Tax benefits on interest on housing loans are allowable only for the original loan and
for a second Loan Taken to repay the first loan and not for subsequent loans. This
means that if you have already availed Of one loan to refinance the original loan and
want to now avail a third loan to refinance the second Loan, tax rebate on interest
payments will not be permissible. This is because the Section 24 (1) only Talks of the
second loan and not of subsequent loans. Even if you take the second loan at a rate of
Interest higher than the original loan, you will be eligible for a tax rebate on the
second loan.

10. Those individuals who obtain a loan between April 1, 2013 and March 31, 2014 will
be able to secure This tax benefit if applying for a loan below 25 lakhs. The Union
Budget 2013-14 has proposed a Deduction of Rs 1 lakh on housing loan interest
under section 80EE. This would be in addition to the Existing tax benefit of Rs 1.5
lakh under section 24. Also, property value shouldn’t exceed 40 lakhs.

2) FOR NON-RESIDENT INDIAN:

NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the
nation where they work and earn. Moreover, the borrowers need to file tax returns to
become eligible for home loans. However, if they Pay tax in India, they can claim a
tax rebate for the home loan.

27
1.14-MAJOR HOUSING FINANCE COMPANIES IN INDIA

28
29
1.15 - INTRODUCTION OF BANKS

STATE BANK OF INDIA : Is an Indian multinational public sector bank and

financial services statutory body headquartered in Mumbai, Maharashtra. SBI is the
49th largest bank in the world by total assets and ranked 221st in the Fortune Global
500 list of the world's biggest corporations of 2020, being the only Indian bank on
the list. It is a public sector bank and the largest bank in India.with a 23% market
share by assets and a 25% share of the total loan and deposits market. It is also the
fifth largest employer in India with nearly 250,000 employees.

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 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

30
 Foreign Offices division, the Foreign Department and theInternational service
division.

BENEFITS OF TAKING A HOME LOAN FROM STATE BANK

Of INDIA:

1. Interest rate starting at just 8.15% p.a. for women borrowers. 0.05% concession in
the interest rates for women borrower

2. SBI helps you choose the right property from various pre-approved projects
according to your budget, location and amenities through its home search portal.

3. LOW EMIs (Equated Monthly Installments) for SBI Home Loans start at just INR 744 per
lac for a home loan of Rs.30 lakh with a tenure of 30 years at interest rate of 8.15% p.a.

4. In case you have not finalized a home, you can opt for a Pre-Approved Home Loan
from SBI. This gives you an estimate of the budget within which you can search for
a property.

5. Interest calculation on the daily -reducing balance.

❖ SERVICES PROVIDED BY BANK:

1. Retail banking
2. Corporate banking
3. Investment banking
4. Mortgage loan
5. Private banking
6. Wealth management
7. Credit card
8. Finance and insurance

31
PUNJAB NATIONAL BANK : Is an Indian public sector bank based in New
Delhi. The bank was founded in May 1894 and is the third largest public sector bank
in India, both in terms of its business volumes and its network. The bank has over
180 million customers, 12,248 branches, and 13,000+ ATMs. PNB has a banking
subsidiary in the UK (PNB International Bank, with seven branches in the UK), as
well as branches in Hong Kong, Kowloon, Dubai, and kabul.

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
Programme.

32
 BENEFITS OF TAKING A HOME LOAN FROM PUNJAB
NATIONAL BANK :

1. High LTV ratio(loan to value)

At PNB, a high LTV ratio of up to 90% means you must pay a minimal amount from
your pocket. PNB Home Loan helps borrowers keep their savings intact for
emergencies while meeting their home finance requirements.

2. Flexible Repayment
PNB Housing allows borrowers to get a Home Loan with flexible repayment terms
of up to 30 years. The loan company does not force its borrowers to repay the loan
amount at go. Since borrowers have the freedom to choose a loan term, they do not
feel any monetary pressure for repayment. And with access to the PNB Home Loan
EMI calculator.

3. Minimal PNB Home Loan Interest Rates The interest rate makes a Home Loan
expensive. A PNB Home Loan interest rates are low(8.75% per annum onwards),
enabling people to return the loan at a minimal additional cost.

4. Different Types of Home Loans Available

A single Home Loan scheme might only suit some people's needs. Some want a
Home Loan to purchase a readymade house, while others want funds to construct it
from scratch. That is why PNB offers different types of Home Loans that people can
borrow according to their unique needs. These include Home Loans for construction,
extension, improvement, plot loan, and loans for NRIs.

5. Tax Benefits
Many prospective homebuyers have sufficient funds to pay the property's cost
upfront, but still, they take a PNB Home Loan to avail of the tax benefits. Paying for

33
 real estate from savings is not the smartest move, as it consumes most of the
emergency funds and causes a financial crunch.

❖ SERVICES PROVIDED BY BANK:

i. Credit card
ii. Consumer Banking
iii. Corporate banking
iv. Investment banking
v. Mortgage loan
vi. Finance and insurance
vii. Private banking
viii. Private equity
ix. Wealth management

BANK OF BARODA :

Bank of Baroda is an Indian public sector bank headquartered in Vadodara, Gujarat.

It is the second largest public sector bank in India after State Bank of India, with 132
million customers, a total business of US$218 billion, and a global presence of 100
overseas offices. Based on 2019 data, it is ranked 1145 on Forbes Global 2000 .

India first Life Insurance company is a joint Venture between BANK OF BARODA
(44%) and fellow Indian public sector banks Andhra Bank (30%) and UK’s financial.
And Investment company legal and general. It was incorporated in November 2009
and has its headquarters in Mumbai. The Government of India nationalized the Bank
of Baroda, along with 13 other major commercial banks of India, on 19 July 1969
and the bank was designated as a profit-making public sector undertaking.

34
 BENEFITS OF TAKING A HOME LOAN FROM BANK OF
BARODA:

1. Rate of interest on the savings account is zero.

2. Borrower can deposit maximum savings in the account to avail maximum interest
benefit from the home loan account

3. Credit available at the end of the day in the linked savings account will be accounted
as credit in the home loan account

4. Home loan will be linked the savings bank account and EMIs will be recovered from
the linked account

5. No hidden fees or charges.

❖ SERVICES PROVIDED BY BANK:

1. Assets management
2. Commercial banking
3. Finance services
4. Investment banking
5. Mortgage loan

35
6. Private banking
7. Private equity
8. Retail banking
9. Savings
10. Securities
11. Wealth management

LIC HOUSING FINANCE LTD:

LIC housing finance limited is one of the largest Housing finance companies in
india.Registered and corporate office at Mumbai.LIC HFL is a subsidiary company
of LIC. It was founded 19 June 1999. The main objective of the company is to
provide long-term financing to individuals for the purchase or construction of houses
or flats for residential purposes. The company also finances for the purpose of repair
and renovation of existing flats and houses.

The NBFC also provides financing on existing property for business and personal
needs and gives loans to professionals for purchase or construction of Clinics,
Nursing Homes, Diagnostic Centres, Office Space and also for purchase of
equipment. The Company is very well known for providing long term financing to
individuals engaged in the business of construction of houses or flats for residential

36
 purposes. LIC of India also holds promoter and controller status in IDBI Bank Ltd.
from January 2019.

BENEFITS OF TAKING A HOME LOAN FROM LIFE

INSURANCE COMPANY:

1. Low interest rates

2. Low processing fees

3. Less paperwork

4. No prepayment penalties

5. No hidden costs and administrative charges

6. Balance home loan transfer

❖ SERVICES PROVIDED BY BANK:

1. Home loan or mortgage loan

37
1.16 - GOVERNMENT SCHEME OF HOUSING :-Within the capacity as a
facilitator for the housing development, the central government has developed
various housing schemes in order to wipe out the housing shortage in the country.
The table shows the various housing programmes launched by the government of
India since independence. From the above table, it is clear that there is a gradual
decrease in the number of schemes introduced by the Central Government year after
year. The important housing schemes launched by the Central government, which
were proved to resolve the issue of housing shortage in the country, are briefly
discussed below.

IMPORTANT HOUSING PROGRAMMERS OF THE

GOVERNMENT OF INDIA SINCE INDEPENDENCE

Sr.No. Name of the program Year of launch

1 Integrated subsidized Housing scheme for 1952
Industrial workers and Economically
weaker sections
2 Low Income Group Housing scheme 1954
3 Subsidized housing scheme for plantation 1956
workers
4 Middle Income group housing scheme 1959
5 Rental Housing scheme for State 1959
Government Employees
6 Village Housing project scheme 1959
7 Provisions of House sites of Houseless 1971
workers in Rural areas
8 Environmental Improvement of Urban 1972
slums
9 Sites and Services scheme 1980
10 Indira Awash yojana 1985

38
11 Night shelters scheme for pavement 1990
Dwellers
12 National slums Development program 1996
13 2 million housing program 1998
14 Pradhan Mantri Gramodaya 2001
Yojana
15 Jawaharlal Nehru National Urban Renewal 2005
mission

39
 CHAPTER NO 2

RESEARCH OF METHODOLOGY

2.1- TITLE

A comparative study of housing finance services provided by selected public sector

banks of India.

2.2 - OBJECTIVE OF STUDY:

1. To study the cost of a home loan provided by the bank.
2. To know which bank provides batter loan schemes.
3. To analyze the home loan scheme by SBI and PNB and BOB and LIC
housing finance limited.
4. To gain knowledge about various home loan products.
5. To identify whether any procedure problem was faced by the customer while
taking the loan.

2.3 - SCOPE OF THE STUDY:

a. This is a study of home loans provided by public sector banks of India i.e SBI
and BOB and PNB and LIC HFL

b. It is helpful in analyzing the home loan services provided by the customer

and their comparison .

c. Primary data was collected from the existing loan customers and also non
existing customers; secondary data was collected from websites. The study
has come out with valuable suggestions on the basis of concrete facts, which
help to frame its plan and strategies to increase satisfaction level of the loan
customers.

40
 d. It helps in understanding why customers preferred the SBI and BOB and
PNB and LIC housing finance limited.

e. This study is limited to the persons within the limit of Mumbai city.

2.4 - METHOD OF DATA COLLECTION:

There are two major methods of collecting information for any purpose. It is
primary sources and secondary Sources of information. Based on these two
approaches to information gathering data are categorized as Primary and secondary
data collection techniques:

1.Primary Data : Primary information is very frequently called the first-hand

data collected by the one that needs to use it for the aim of his/her study. This
information is incredibly specific and is collected by analysis, a search, an Inquiry, a
quest, a pursuit, a probe, an exploration, a groundwork, a hunt, a research
specifically for a research study. Primary data/information is original in nature and
directly associated with the problem and it is current information/data. Primary data
is the info that the research worker has collected through numerous strategies like
interviews, surveys, questionnaires etc.

Primary data has been collected by making a questionnaire via Google forms.

Population: The study aimed to include the customers of SBI and PNB and BOB
and LIC housing finance limited to make a comparative analysis of home loans
schemes of these four banks.

Sample Size: A Sample size of 68 respondents will be taken for the current study
because it is not possible to cover the whole universe in the available time period. So

41
it is necessary to take the sample size. Respondents from PNB and SBI and BOB
and LIC housing finance limited. The sample will be the peoples of age group lying
between 20 to more than 60 years. The sample will be taken in the form of
strata(level) based on Age, Sex, and Occupation.

Sampling technique: The sampling technique will be probabilistic sampling

more specifically the random convenient and judgemental sampling will be used. As
in probabilistic Sampling the select unit for observation with known probabilities so
that statistically sound assumptions are supported from the sample to the entire
population so that we had a positive probability of being selected into the sample. I
will go for stratified random sampling as we are interested in studying the home loan
by SBI and PNB and BOB and LIC housing finance limited.

So we will make the strata on the basis of age, occupation, gender. And from each
strata we will go for random sampling.

Secondary data: They are collected from various research papers, internet, and
magazines.The secondary data has collected from respective banks records i.e
Annual reports, books, articles in newspapers and websites etc. Secondary data has
been used for the study purpose. It is collected from relevant websites available on
the Internet.

2.5 - TECHNIQUE OF DATA ANALYSIS:

The Technique and tool used for data collection for surveying was questionnaire and
statically tool used was pie chart, table.

pie charts and tables are very useful tools for every research to show the result in a
clear, simple way. Because I used pie charts and tables in my project for Showing
data in a systematic way. So it is not necessary for any observer to read all the
theoretical detail, simply on seeing the charts of anybody that knows what is being
said.

42
2.6 - LIMITATION OF THE STUDY:

1. This research study was time bound and only certain criteria were taken up
for Study.

2. Lack of data was also another limitation of the study as some banks do not
have proper data on the topic.

3. There was a limitation of time to conduct such a big survey in the limited
available time.

4. Ignorance and reluctant attitude of customers was also a major limitation in

this study.

5. There are currently 12 public sector banks and 21 private sector banks in
India. However, the study covered only the selected public sector.Therefore
additional investigation is required to examine all the banks of public sector
trends to follow different housing loan facilities.

6. Due to paucity of time, only important factors have been analysed and
discussed.

43
 CHAPTER NO 3

REVIEW OF LITERATURE

1. Birla Institute of Scientific Research (1981) in its study makes a comparative

assessment of the performance of public sector banks and major private sector banks
since nationalization. They find that the performance of public sector banks is not
satisfactory in rural development activities when compared to the private sector
banks.

2. Thirumann. R.M. (1981) attempted to study the role of Cooperative societies in

lending housing finance in Chennai city. The study has covered the Importance of
housing, its Components, housing shortage in urban and rural areas, the Role of
Government, and the role of the private and public sector In housing. He also
discussed the problems of housing and Housing finance in India.

3. Susan M. Wachter and Paul S. Calemhad (1991) 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 the 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.

4. R Jayakumar (1993) in his study of “Performance of private sector banks in

Kerala” makes a comparative examination of performance of public sector banks and

44
 private sector banks in Kerala. He finds that in Kerala private sector banks perform
better than their public sector counterparts.

5. Sharma,A.K.(1996) highlights the fact that the challenges of homelessness and

urban slums are largely the spill over problems of inadequate rural habitat. He stated
that the housing is closely connected with growth of population, modernisation,
poverty, development and information and the poor people of India, lack all basic
facilities as they are incapable of meeting the rising cost of building materials. He
also 14 opined that Indians cannot solve the housing problem without a strong
political will and properly designed strategies.

6. R.R.Krishna and V.S.Krishna Mouthy (1999) Stress in their article entitled “Trend
and policy Issues of Housing finance in India”, that Simplified procedures and
speedy sanction of Housing loans will give a boost to the Constructing houses.

7. Vidhayavathi. K (2002): found out in her research of the Performance of housing

finance institutions on some of the selected business factors and by the means of an
opinion Survey on the home loan seekers and concluded that apart from interest rate
advertisement, service quality, Courtesy and speed of various other important sectors
affecting the growth of housing finance industry.

8. M .Mahadeva (2004) research article entitled “Housing Problem and Public Action:
Continued Incompatibility Experience from a South Indian State”. In this article, the
author has analyzed the nature and distribution of the housing problem in Karnataka
and examined how the state has addressed this issue. In particular, it considers the
strategies adopted during the 90s and identifies a number of failures including the
task force on housing. Some of the major weaknesses, pertaining to 51 incidences by
type and by rural-urban areas, on approaches, on financial requirements and issue of
development and redevelopment are examined to propose alternative policy
strategies to effectively address the housing problem in the state.

45
9. Rao K.N. (2006) in “Housing Finance – A Global Perspective” states that there has
been a remarkable growth of Housing Loans in India since the last more than a half
decade. He has also stated that the factors which have been contributing to this
growth are reduced rate of interest, easy EMIs , less formalities and also some tax
benefits on interest payments as well as repayment of principal amount of loan. As
other authors, Mr. Rao also in the similar view that LICHFL and HDFC both are the
key market players in Home Loans who have initiated to lends Loans for a longer
period of 20 or more years, and also they usually sanction loans upto 85% of the total
amount of security.

10. Fulbag Singh and Reema Sharma (2006) In December had studied 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,
the majority of the population lives in slums and shanty 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
populations. The first attempt in this regard was the National Housing Policy (NHP),
which was introduced in 1988.

11. Rajasekhar D. Et al. (2008), the objectives of the study were to analyze the trend in
the growth and Structure of LICHFL in Chennai city and to evaluate the relative
performance of LICHFL in providing housing Loans in Chennai city. One hundred
respondents have been selected on the basis of random sampling technique.
Researchers used conventional statistical tools like percentage and average for
analyzing perception of the Borrowers about the LICHFL. Likert scaling test was
used. The study revealed that in Chennai, 34% of the respondents have reported That
the institution provides loan at low rate of interest, 33% have reported easy
installments, 31% reported that They approached for simple procedure and
formalities and only a negligible 2%) of the respondent represents Located near to
their house.

46
 So, it may be concluded from the above Result that the majority of the respondents
preferred to pay their loan amount through the Electronic Clearing System.
A large majority of sample respondents reported that there is delay in sanction and
Disbursement of loan amounts.

12. Chaubey M. (2009) in “Housing Finance in India – Problems and Prospectus” states
that according to his study, it was revealed that the customers of home loans selected
to take loan due to low interest rate firstly, easy installment schemes secondly, simple
procedure thirdly and so on. About 92% of the Home Loan customers opted for
floating rate of interest whereas about 60% of the total home loan customers opted
for more than 15 years and about 70% accepted that the approval and disbursement
of loan is generally delayed as per its time schedule. It was also suggested that the
details of the loan accounts of the customers must be available online for more
transparency in dealing and EMIs should be available not only monthly but also
quarterly and half yearly

13. Bhalla et al. (2009) showed that the main business of housing finance in India is
concentrated Around a few players like banks and major housing finance companies.
The HHI Index as an Indicator of market concentration shows an increasing trend
both on the basis of market share of Individual players in disbursement of loans as
well as on asset base. It shows decreasing Competitive ability of small players. Small
housing finance companies are losing the battle to the Bigger players. Small players
in the sector are facing threats from the banks to capture their share Because of their
wider network and reach. Growing concentration of major share of housing Loans
disbursements in the hands of larger banks and giant housing finance companies has
forced The small housing finance institutions to identify the challenging areas in this
field to capture the Future market and ensure their remarkable place. Another aspect
regarding the competitive Dynamics in housing finance is that the indicators showing
HFCs and other players as luring Customers to get housing finance are not mainly
because of the stiff competition but because of The need to change the attitude of the
Indian people towards the phenomenon of loan and to bring Them into the formal
system of housing finance. In India, even today 60 per cent of the Households

47
 approach informal sources or financiers to borrow funds, which mean an untapped
Market for housing finance (Analysts 2001). Housing finance institutions particularly
housing Finance companies (HFCs) have to spread out geographically while
ensuring consistency in the Processing and service standards to compete with the
banking sector. The performance of these Institutions has been influenced by more
than just customer demand. Stricter NPA norms, rising Interest rates, and stiff
competition in mobilizing low-cost deposits have all affected the supply side factors,
which in turn has influenced the performance of these institutions in terms of Volume
and competitiveness (NHB 2005).

14. Sangwan P. And Bhan K. (2012) in “A Comparative Analysis on Home Loans of

Public & Private Sector Banks in India'' state that the dream of a man which
represents the Labors, giving up luxuries in present for the purpose of generating
funds altogether for fulfillment Of the dream is owning a Home. For this he has to
opt for Home Loans. With this study, the Authors have compared Public & Private
Sector Banks and concluded that the people are Attracted to lesser interest rates,
formalities and paper work of Private Sector Banks leading to Less popularity of
Public Sector Banks wherein suggested that the Public Sector Banks must Adopt
more attractive schemes for Home Loan Customers.

15. Sangwan and Bhan (2012) this study can find out the satisfaction level of customers
and Problems faced by them in obtaining home loans. For this purpose, we have
taken four Commercial Banks in Chandigarh city namely H.D.F.C. Bank, Punjab
National Bank(P.N.B.), Union Bank of India and Industrial Credit and Infrastructure
Corporation Of India(I.C.I.C.I). Bank. It includes two public sector banks and two
private sector Banks. In the research methodology a sample size of 200 respondents
has been taken Through random sampling. They have taken both primary data as
well as secondary data, In the primary data questionnaire has been used to check the
satisfaction level of Customers about home loans. In the secondary data, the annual
reports of RBI, Commercial banks and brochures of these banks have been studied.
Finally the whole Research was carried out in a systematic way to reach exact
results. The whole research And findings were based on the objectives. Some of the

48
 limitations faced in collecting the Data were Lack of time, lack of data,
non-response, reluctant attitude and illiteracy of Respondents, which posed problems
in carrying out the Research.

16. Rajalkshmi S. et al (2013) in their research paper entitled “A study on Housing

Loan Borrowers of Public and Private Sector Banks in Thoothukudi area” state that
today‟s youngsters have the very first priority in their life is to acquire a house. For
the same. One must go for the Housing Loan which is entitled to follow certain
formalities for the evaluation of the eligibility of the borrower.The authors have
considered the interest rate as one of the most essential advantages of taking a home
loan. They have concluded that the Home Loan market has witnessed the growth rate
of 40% in the past four years. They have also concluded that as compared to rise in
Property Prices, the incomes of the people have been rising faster which has resulted
in more affordability of Home Loans.

17. Kumara swamy (2014) In this study discussed the importance of housing finance
and the institutions providing housing finance. A detailed discussion of the
marketing strategies adopted by financing institutions have been discussed by taking
into account the loan criteria eligibility, loan amount, interest rate, security, loan
tenure, margin and processing fee. Finally the paper highlights the performance of
the housing sector, major findings and suggestions to improve the effective
marketing of housing finance for both public sector banks and private sector banks.

18. PATNAIK B.C.M et al (2017) The title of the journal is “Home loan portfolio- A
Review of Literature” this paper contains only Review of Literature where 18 journal
papers have been Analyzed in this journal with regard to Home loan industry. And it
concludes that the various Variables identified as financial basics are behind drop in
home cost, interest rate plays an Important role, paper work, decrease in profitability,
awareness among the prospective. Customers, poor are not getting the budgetary
help, re-arrangement of housing policy of Government, service quality, speed of

49
 providing services and implementations of schemes Should match the economic
profile of the borrowers.

19. MANJULA BAI H (2018) The title of the journal is “Customer Perception towards
Home Loan with special reference to SBI- A Study” This paper provides a platform
to understand The prospects and problems of Housing Finance faced by an individual
while dealing with a Home loan. So in order to collect this information a researcher
has selected 50 respondents Who have availed Home Loan of SBI bank in various
branches in Shimoga. It particularly focused on the problems or The benefits availed
from the housing loan provided by SBI bank. All levels of customers Were surveyed
by using questionnaire and the level of satisfaction or dissatisfaction from The loan
availed was studied. Finally, the detailed information about the benefits they had
Received were also considered. A small attempt has been made to understand the
benefits Of the home loan and also the level of stress the individual faced.

20. S.V. SATYANARAYANA et al (2019), The title of the journal is “A Comparative

Study Between Public and Private Housing Finance Companies (HFCs) in India”.
The housing Sector has led to an increase in the number of banking and non-banking
financial Institutions providing different types of housing finance services. In this
regard, the public (HFCs) and private HFCs are operating at different levels to
provide housing finances to all sections of society. The present study is an attempt to
comparatively analyze the Financial performance of five public HFCs and five
private HFCs in India for the period of 2009-2018. The collected data were analyzed
using descriptive statistics in the form of Means and a student t-test was conducted to
compare the performance of public and Private HFCs with regard to various financial
ratios. The result showed that profitability, And operating ratios significantly
influenced the financial performance of public and Private HFCs. The present study
calls for regulatory measures and policy reforms to Improve the profitability and
operating efficiency of both public and private HFCs. This Study has an implication
in improving the housing finance sector from the perspective of Indian HFC

50
 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

Comparison between State Bank of India and Punjab National Bank

and Bank of Baroda and life insurance corporation (HFL)

Particular SBI PNB BOB LIC

Interest rate 8.60% p.a – 8.80% p.a- 6.50% p.a- 8.30% p.a-
9.50% p a 9.60% p a 7.95% p.a 9.25% p a
Processing 0.40%. of Loan amount Contact the 0.25%
fees loan amount of 0.35% bank To 0.50%
+ GST Minimum Of loan
Minimum amount:2500 amount
amount:10000 Maximum subject to
Maximum amount:15000 minimum
amount:40000 + amount:5000
Documentation Maximum
charge of 1350 amount:15000
+ GST
Loan Tenure 30 years 30 years 30 years 30 years
Employment Salaried, Salaried, Salaried, Salaried,
types Individual, Self-employed, Self-employe Self-employed
Non- salaried, professional, d, , Business
Business farmers, professional, Owner,
people or Entrepreneur, Agriculture Professional,
Professional. Staff members NRI, Self –
of Bank employed not
eligible
Eligibility Resident Minimum 18 Resident Resident
Indian age Indian and Indian and
between 18 to Maximum 70 NRI NRI
years of age -salaried

51
 70 years of -self
age employed
-professional

Pre payment Nill Nill Nill Nill

charges
Penal 2% 2% Contact the Up to 2%p.m
interest rate bank On defaulted
Installment
Loan Up to 90% of As per the Contact the 90% of the
amount Property borrower’s bank property
value eligibility value up to Rs
30 lakhs.
80% of the
property
value from Rs
30 lakhs to 75
lakhs.
75% of the
property
value is more
than 75 lakh.
Loan to 80% - above 75% of loan 75% of loan Up to 90%
value 20 lakhs above RS 75 above RS 75
lakhs lakhs
90% - up to
Rs 20 lakhs 80% between 90% up to
30 lakhs to 75 Rs 30 lakhs
lakh

52
The data after collection has to be processed and analyzed in accordance with the
outline laid down for the Purpose of the time developing the research plan, data
analysis refers to the computation of a certain major along with searching for
patterns of relationship that exist among the group.

Total Respondents: 68 respondents

1) Gender wise classification of respondents

Table no 4.1 Gender wise classification of respondents

Sr.no Parameter Frequency Percentage

1 Male 27 29.7

2 Female 41 60.3

Chart no 4.1 Following chart showing gender wise classification of respondents

INTERPRETATION:
Above table and chart shows that 60.3% of respondents are from the female group
and 39.7% are from male group.
It shows that most of the respondents are female.

53
 2 ) Age wise classification of respondents

Table no 4.2 age wise classification of respondents

Sr.no Parameter Frequency Percentage

1 20-30 42 61.8

2 30-40 7 10.3

3 40-50 12 17.6

4 Above 50 7 10.3

Chart no 4.2 Following chart showing age wise classification of Respondents

INTERPRETATION:
Above table and chart shows that 61.8% of respondents are from 20 years to 30 years
of age.
10.3% of respondents are from 30 years to 40 years of age.
17.6% of respondents are from 40 years to 50 years of age.
10.3% respondents are from above 50 years.

54
 3)Occupation wise classification of respondents

Table no 4.3 classification of occupation

Sr.no Parameter Frequency Percentage

1 Business man 9 13.2

2 Government 3 4.31
employee

3 House wife 7 10.3

4 Services 11 16.2

5 Professional 6 8.8

6 Other 32 47.1

Chart no 4.3 Following chart showing occupation wise classification of

Respondents.

55
INTERPRETATION:

3 of the Respondents were government employees .

9 of our Respondents were Businessmen.

7 of our Respondents were Housewives.

11 None of our respondents belonged to the category of others.

11 of our respondents were services

6 of respondents were professional

4)From which of the following Bank you have taking housing loan

Table no 4.4 show From which of the Bank you taking loan

Sr. no Parameter Frequency Percentage

1 SBI 15 22.1

2 BOB 9 13.2

3 PNB 5 7.4

4 LIC 15 22.1

6 Other 24 35.3

56
 Chart no 4.4 following chart showing respondents of Bank

INTERPRETATIO

15 of the respondents are State Bank of India.

5 of the respondents are Punjab National Bank.

9 of the respondents are Bank of Baroda.

15 of the respondents are Life insurance corporations (Housing finance limited).

24 of the respondents are from other banks.

In our survey we conclude that most of the people prefer housing loans in state bank
of india and life insurance corporation (HFL).

57
 5) From how many years you are associated with this Bank.

Table no 4.5 show respondents of Bank

Sr.no Parameter Frequency Percentage

1 Less than 1 year 19 27.9
2 1-5 year 26 38.2
3 More than 5 year 23 33.8

Chart no 4.5 following chart showing respondents of how many years associated
With Bank.

INTERPRETATION:

19 person Are Associated less than 1 years

26 person Are Associated 1-5 years

23 person Are Associated more than 5 years

58
 6) How do you came to know about the Home Loan scheme of that bank

Table no 4.6 show respondents of knowing about home loan scheme

Sr.no Parameter Frequency Percentage

1 Newspaper 10 14.7
2 Television 18 26.5
3 Internet 22 32.4
4 Other resources 18 26.5

Chart no 4.6 following chart showing are respondents of knowing about home loan
scheme

INTERPRETATION:

11 people came to know from newspapers .

18 persons came to know from television

22 persons came to know from internet

18 persons came to know from other resources

As We can see that the internet gives more information regarding home loan.Internet
spreading more information about housing loans.

59
 7) Are you aware of these type of home loan

Table no 4.7 shows respondents of aware of type of home loan

Sr.no Parameter Frequency Percentage

1 Home purchase 29 42.6
loan
2 Home construction 2 2.95
loan
3 Home Equity loan 2 2.95
4 Land purchase 8 11.8
loan
5 All of the above 27 39.7

Chart no 4.7 following chart showing respondents of awareness of type of home

loan

INTERPRETATION :

Only 2 people know about home equity loans.

Many people know about home purchase loans.

Only 2 people know about home construction loans .

27 people are known about all of the above .

60
 8) Are you aware of all the terms and conditions of home loan

Table no 4.8 shows respondents about aware about term and conditions of home
loan

Sr no Parameter Frequency Percentage

1 Yes 48 70.6
2 No 20 29.4

Chart No 4.8 following chart showing about aware about term and conditions of
home loan

INTERPRETATION:

Many people know all terms and conditions of home loan i.e. 48 People.

20 people did not know properly about all terms and conditions.

61
 9) Are you satisfied with the Interest rate charged by your bank

Table no 4.9 show respondents of interest rate charged by bank

Sr.no Parameter Frequency Percentage

1 Yes 44 64.7
2 No 24 35.3

Chart no 4.9 following chart showing interest rate charged by bank

INTERPRETATION:

Many people are satisfied with the interest rate charged by the bank i.e. 44.

24 people were not satisfied with the interest rate charged by the bank .

62
 10) Which type of service does your bank offer

Table no 4.10 show respondents of service offer by bank

Sr.no Parameter Frequency Percentage

1 Mobile banking 32 47.1
2 Net Banking 31 45.6
3 Forex Banking 5 7.4

Chart no 4.10 following chart showing about services offer by bank

INTERPRETATION:

32 people said that banks offer mobile banking services.

31 people said that banks offer net banking services.

Only 5 people said that banks offer forex banking services.

63
 11) Do you agree that your bank loan processing is fast

Table no 4.11 show respondents about Bank loan processing is fast

Sr.no Parameter Frequency Percentage

1 Strongly agree 15 22.1
2 Agree 41 60.3
3 Strongly Disagree 1 1.4
4 Disagree 11 16.2

Chart no 4.11 following chart showing respondents about Bank loan processing is
fast

INTERPRETATION:

15 Persons strongly agree that bank home loan processing is fast.

41 people agree that bank home loan processing is fast.

11 people disagree that bank processing is fast.

1 person strongly disagrees that bank loan processing is fast.

64
 12) Do you agree that the Home Loan services provided by your bank are
best as compared to other banks?

Table no 4.12 show respondents about home loan services provided by your bank
are best compared to other Bank

Sr.no Parameter Frequency Percentage

1 Strongly agree 18 26.5
2 Agree 40 58.8
3 Strongly Disagree 4 5.9
4 Disagree 6 8.8

Chart no 4.12 following chart showing respondents about which bank services
provided by best

INTERPRETATION:

18 among all consumers are strongly agreed by after sale services of The bank. 40
among all consumers are agreed by after sale services of the bank

6 among all consumers are disagreed by after sale services of the bank

4 among all consumers are strongly disagreed by after sale services of The bank

65
 13) Does the cost of a home loan be appropriate, according to your demand?

Table no 4.13 show respondents about cost of home loan appropriate to your
demand

Sr. no Parameter Frequency Parameter

1 Yes 41 60.3
2 No 27 39.7

Chart no 4.13 following chart showing about cost of home loan appropriate to your
demand

INTERPRETATION :

41 persons said that home loan is appropriate according to their

demand.

27 persons said that home loan is not appropriate according to their

demand.

66
 14) Does the bank give any discount upon loan services?

Table no 4.14 show respondents about Bank give discount upon loan services

Sr.no Parameter Frequency Percentage

1 Yes 38 55.9
2 No 30 44.1

Chart no 4.14 following chart showing about Bank give discount upon loan services

INTERPRETATION :

38 person said that bank gives discount upon loan services

30 person said that bank gives discount upon loan services

67
 15) How would you rate your bank regarding home loan facilities of your bank.

Table no 4.15 show respondents about Rate your Bank regarding home loan
facilities of your bank

Sr.no Parameter Frequency Percentage

1 Excellent 16 23.5
2 Good 32 47.1
3 Average 20 29.4
4 Below Average 0 Nill

Chart no 4.15 following chart showing about Rate your bank regarding home loan
facilities

INTERPRETATION :

16 persons give excellent grades to the bank.

32 people give good grades to the bank.

20 people give an average grade to the bank.

No one gives below average grades to the bank.

68
 16) are you aware about Pradhan Mantri Awas Yojana scheme

Table no 4.16 show respondents aware about Pradhan Mantri Awas Yojana

Sr.no Parameter Frequency Percentage

1 Yes 50 73.5
2 No 18 26.5

Chart no 4.16 following chart showing awareness about Pradhan Mantri Awas
Yojana

INTERPRETATION :

50 people said that they are aware about Pradhan Mantri Awas Yojana.

18 people said that they are not aware about Pradhan Mantri Awas Yojana.

About 73.5% of the respondents are aware about the Pradhan mantri awas yojana
scheme provided by the government. This scheme is provided for the mid income
people who can have the house of their own besides the economically weaker section
and low income group people. The government provides a loan up to 12 lakhs rs with
up to 4% interest.

69
 17) Have you availed Pradhan Mantri Awas Yojana

Table no 4.17 show respondents about availed Pradhan Mantri Awas Yojana

Sr.no Parameter Frequency Percentage

1 Yes 17 25
2 No 51 75

Chart no 4.17 following chart showing availed Pradhan Mantri Awas Yojana

INTERPRETATION :

17 person said that they are availed Pradhan Mantri Awas Yojana.

51 person said that they are not availed Pradhan Mantri Awas Yojana.

70
 18) Types of Interest rate charged on home loan

Table no 4.18 show respondents about payment of installment

Sr no Parameter Frequency Percentage

1 Fixed Interest rate 54 79.4
2 Fluctuating 14 20.6
Interest rate

Chart no 4.18 showing respondents about payment of installment

INTERPRETATION:

It is seen from the above table that home loans are normally charged at fixed interest
rates. Fixed interest refers to the respondent having to pay an equal or fixed amount
of installment to the bank for the amount borrowed from the bank. About 79.4% of
the respondents pay interest at fixed interest.

71
 19) Types of problems faced during documentation.

Table no 4.19 show respondents about problem faced by documentation

Sr no Parameter Frequency Percentage

1 Rejection at first 11 16.2
stage
2 Processing fees not 7 10.3
refunded
3 Desired loan not 19 27.9
sanctioned
4 High rate of 11 16.2
Interest
5 Other 20 29.4

Chart no 4.19 following chart showing respondents of problems faced by

documentation

INTERPRETATION :

Majority of the problems faced by the respondents as shown in the above table is
rejection at first stage, desired loan not sanctioned and because of high interest rate.
Desired loan not sanctioned may be because the value of asset given for mortgage by
the respondent is not sufficient for the loan amount to be passed.

72
 20) Have you faced any difficulty during taking the loan

Table no 4.20 show respondents about difficulty during taking the loan

Sr.no Parameter Frequency Percentage

1 Yes 24 35.3
2 No 44 64.7

Chart no 4.20 following chart showing respondents about difficulty during taking
loan

INTERPRETATION :

24 person faced the difficulty during taking the loan

It observed that from the above table that difficulty in taking the loan did not create
any problem . about 44 of the respondents say that it.

73
 21) What is the mode of payment of installment.

Table no 4.21 show respondents about mode of payment of installment

Sr .no Parameter Frequency Percentage

1 Monthly 44 64.7
2 Quarterly 16 23.5
3 Yearly 8 11.8

Chart no 4.21 following chart showing respondents about mode of payment of

installment

INTERPRETATION:

About 44 of the respondents pay installments of home loans on a monthly basis .

EMI is the installment money which is paid by the respondent on the amount of
home loan borrowed from the bank .

Some of the banks preferred a quarterly and yearly basis of installment.

74
 22) Are you satisfied with the employee behavior of the bankers

Table no.4.22 show respondents about employee behavior of the Bankers

Sr.no Parameter Frequency Percentage

1 Strongly agree 14 20.6
2 Agree 45 66.2
3 Strongly Disagree 2 2.9
4 Disagree 7 10.3

Chart no 4.22 following chart showing respondents about behavior of employee

INTERPRETATION :

14 people strongly agree with the employee behavior of the bank.

45 persons Is Agree with the employee behavior of the bank.

7 people disagree with the employee behavior of the bank.

2 person is disagree with the employee behavior of the bank

75
 FINDING OF THE STUDY:

1. The Sample was dominated by Female i.e 60.3%

2. About 61.8% of the respondents are in the age 20 to 30 years.

3. Exactly 47.1% of the respondents were other occupations and 16.2% are services.

4. Mostly people prefer taking housing loans in state bank of india and life insurance
corporation (housing finance limited). Because this Bank gives less rate of Interest
rate than other banks.

5. 42.6% of the respondents are aware about home purchase loans.

6. 70.6% Of respondents are satisfied with the terms and conditions of the bank.

7. The finding of a survey shows that people prefer mobile banking services
(47.1%)compared to net banking and forex banking.

8. 58.8% of the respondents are easy to understand services of home loan.

9. 64.7% of respondents are satisfied with the Interest rate charged by.

10. To find the consumer like a home loan is a fixed Interest rate charged by the bank. To
pay an equal or fixed amount of installment to the bank.

76
11. 73.5% of respondents are aware about Pradhan Mantri Awas Yojana scheme. This
scheme is provided by medium income people and low income groups.

12. Consumers faced the problem during documentation of desired loans not sanctioned
and other problems.

13. 40 people said that they agree that the home loan services provided by our bank are
best compared to other banks.

77
 CHAPTER NO 5

CONCLUSIONS AND SUGGESTIONS

CONCLUSIONS:

The housing sector is one of the booming sectors which are beneficial for every
related financial institution. In India, affordable housing is very helpful for the
bottom of the Pyramid people.

It can be concluded that selected public Sector banks of India truly deserve to be the
leading banks in the home loan sector. The Services offered by them are very
competitive. Most people prefer public sector banks for Home loans, especially
because they believe that it is a more secure bank and interest rate is lower ,less
processing fees, benefit of tax,etc. Public sector banks' rules are very strict and
stringent.

The findings of the survey were that people prefered housing loans in state bank of
india and life insurance corporation (housing finance limited) .Because LIC gives the
lowest rate of Interest compared to the other banks.

Different banks offer the same product but their way of service is different. The
customer’s choice of the schemes which they feel are good and better for them and
the capacity to repay it on a specified time period.

Every problem has its own solutions so research on its own level gives suggestions
about what is observed practically. It’s difficult to suggest anything to such a big
institution but some small suggestions are there for betterment in future.

78
SUGGESTIONS:

1. Banks should use easy / simple procedures for the sanctioning of home loans
to the customers.

2. The banks need to improve on the customer satisfaction level due to stiff
competition among the banks.

3. Bank employees who deal with customers should have complete knowledge
about the Home loans.

4. More personal attention should be given to the customers and working

efficiency should be increased.

5. The bank should improve their customer Service. The services provided by
banks need to be automated

6. The loan passing process should be quicker by a public sector bank like a
private sector Bank.

7. Rate of interest should be competitive and free accident insurance cover for
home loan customers should be provided.

8. For customer’s awareness banks should also distribute booklets and advertise
attractive advertisements for the awareness of the customer on different
housing loan schemes.

79
9. The number of staff handling loan affairs should be increased.

10. To respect the customers by giving them individual attention and also help
them to know the bank Better.

11. There should be lesser formalities for providing the home loans.

12. Banks should be providing different housing loan schemes with attractive
features like rate of interest, margin etc. For attracting more and more people
in rural areas.

80
REFERENCE:

Prof. S.V. Satyanarayan and Mrs. Srilakshmi Ramu(2019)Study of Comparison

Between Public and Private Housing Finance Companies in India

Prof. Rekha. D. M and Gangamma. S.E(2019) A Study on Housing Loan

Evolution and Performance in India.

Prof Raju kaur, kajal Chaudhary (2017) A comparative Study of home loan of
HDFC and SBI. An empirical Study of Bathinda Punjab.

WEBLIGOGRAPHY:

https://en.m.wikipedia.org/wiki/state_bank_of_india

https://en.m.wikipedia.org/wiki/panjab_national _Bank

https://en.m.wikipedia.org/wiki/life_Insurance_corporation_houseing_finance_l
imited

https://en.m.wikipedia.org/wiki/Bank_of_Baroda

https://www.academia.edu/35822196/A_PROJECT_REPORT_ON_A_COMPA
RARTIVE_STUDY_ON_HOUSING_LOAN_OF_PUBLIC_SECTOR_AND_P
RIVATE_SECTOR_BANKS_KALYAN_AREA

https://www.researchgate.net/publication/334313811_A_Comparative_Study_be
tween_Public_and_Private_Housing_Finance_Companies_HFCs_in_India

https://www.academia.edu/8315910/Summer_Internship_Project_Report_ANA
LYSIS_OF_CURRENT_TRENDS_AND_PRACTICES_IN_HOUSING_LOAN
_AT_RELIANCE_HOME_FINANCE_LTD

https://www.academia.edu/6296677/COMPARATIVE_STUDY_OF_HOME_L
OANS_OF_PNB_AND_SBI_BANK

https://www.creditmantri.com/lic-housing-finance-home-loan/
https://newsable.asianetnews.com/business/5-advantages-of-taking-a-pnb-home-
loan-in-india-rnos2l

https://www.bankbazaar.com/home-loan/bank-of-baroda-home-loan-advantage.
html

https://www.bankbazaar.com/home-loan/sbi-bank-vs-pnb-bank.html

https://www.researchgate.net/publication/334123841_A_Study_on_Housing_Lo
an_Evolution_and_Performance_in_India

http://shodh.inflibnet.ac.in:8080/jspui/bitstream/123456789/6940/3/03_review%
20of%20literature.pdf

http://shodh.inflibnet.ac.in:8080/jspui/bitstream/123456789/1360/5/rol.pdf

https://www.thehindu.com/brandhub/14-reasons-to-choose-sbi-for-your-home-lo
an/article30077867.ece/amp/
APPENDIX:

Name:_____________

Age:____________

Gender:___________

1)What is your occupation?

Business man / Government employee / Housewife / professional / service /

other

2)From how many years you are associated with this Bank

Less than 1 year. / 1-5 year / more than 5 year

3)Which of the following banks do you have taking housing loans?

SBI / PNB / BOB / LIC HFL

4)How did you come to know about the Home Loan scheme of that bank?

Newspaper / Television / Internet / other resources

5)Are you aware of these types of home loans?

Home purchase loan / Home construction loan / Home equity loan / land
purchase loan/ all of the above

6)Are you aware of all the terms and conditions of a home loan?

Yes / No
7)Are you satisfied with the interest rate charged by your bank?

Yes / No

8)Which type of service does your bank offer?

Mobile banking / Net banking/ Forex Banking

9)Do you agree that your bank loan processing is fast?

Strongly agree/ Agree / strongly Disagree / Disagree

10) Do you agree that the Home Loan services provided by your bank are best
as compared to other banks?

Strongly agree/ Agree / strongly Disagree / Disagree

11) Does the cost of a home loan be appropriate, according to your demand?

Yes/ No

12) Does the bank give any discount upon loan services?

Yes/ No

13) How would you rate your bank regarding home loan facilities?

Excellent / good/ Average / Below Average

14) Are you aware about Pradhan Mantri Awas Yojana scheme?

Yes/ No
15) Have you availed Pradhan Mantri Awas Yojana scheme?

Yes/ No

16) What is the the mode of payment of installation

Monthly / Yearly / Quarterly

17) Types of Interest charged on home loan.

Fixed Interest rate / Fluctuating Interest rate

18) Types of problems faced during documentation

Rejected on first stage / processing fees not refunded/ Desired loan not
sanctioned/

High rate of Interest/ other

19)Have you faced any difficulty during taking the loan?

Yes/ No

20) Are you satisfied with the employee behavior of the bankers?

Strongly agree / Agree / strongly Disagree / Disagree

21) Any suggestions would you suggest about your bank_______________