CONTENTS

S.NO.

PARTICULARS

1.

Background

2.

PAGE. NO.

1.1 Introduction

1.2 Industry Profile

5-6

Statement of the Problem

2.1 Objectives of the Study

2.2 Importance of the study

2.3 Scope of the Study

2.4 Limitations of the Study

3.

Research Methodology

9-10

4.

Literature Review

11-12

5.

Chapter Outline

13-15

Conclusion

16

Suggestions

17

Bibliography

18

1. BACKGROUND
1

1.1 Introduction to Home Loan

The roof over ones head and ground beneath ones feet count as the bare
necessities of life. Theres nothing quite like owing a home, however humble to give
that warm and glowing feeling. But when one buys a home, one has much more
than a feel good purchase in mind! Its also a crucial investment decision, perhaps
the biggest spending decision of ones life. There are ample opportunities today for
young salaried investors to plan their moves early and buy a house at right timeand at right price. In the process, not only do they fulfill that cherished dream of
owning a house, but also put themselves on the path to acquiring property that
would meet the needs and aspirations of their growing family, even as it leads to
wealth creation. Every individual aspires to own a home. But many either spend a
lifetime saving to purchase a house or exhaust money on monthly house rents.

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

ICICI HOME FINANACE COMPANY LTD.

ICICI Bank is an Indian multinational banking and financial services company
headquartered in Vadodara. As of 2014 it is the second largest bank in India in
terms of assets and market capitalization. It offers a wide range of banking products
and financial services for corporate and retail customers through a variety of
delivery channels and specialized subsidiaries in the areas of investment
banking, life, non-life insurance, venture capital and asset management. The Bank
has a network of 3,800 branches and 11,162 ATMs in India, and has a presence in
19 countries.
2

ICICI Bank is one of the Big Four banks of India, along with State Bank of
India, Punjab National Bank and HDFC. The bank has subsidiaries in the United
Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong
Kong, Sri Lanka, Qatar and Dubai International Finance Centre; and representative
offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia
and Indonesia. The company's UK subsidiary has also established branches in
Belgium and Germany.
In March 2013, Operation Red Spider showed high-ranking officials and some
employees of ICICI Bank involved in money laundering. After a government inquiry,
ICICI Bank suspended 18 employees and faced penalties from the Reserve Bank of
India in relation to the activity.

PUNJAB NATIONAL BANK

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

STATE BANK OF INDIA

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic
network of over 9000 branches (approximately 14% of all bank branches) and

commands one-fifth of deposits and loans of all scheduled commercial banks in

India. The State Bank Group includes a network of eight banking subsidiaries and
several

non-banking

subsidiaries

offering

merchant

banking

services,

fund

management, factoring services, primary dealership in government securities,

credit cards and insurance. The eight banking subsidiaries are: State Bank of
Bikaner and Jaipur (SBBJ),State Bank of Hyderabad (SBH).State Bank of India
(SBI),State Bank of 13 Indore (SBIR),State Bank of Mysore (SBM),State Bank of
Patiala (SBP),State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT).
Today, State Bank of India (SBI) has spread its arms around the world and has a
network of branches spanning all time zones. SBI's International Banking Group
delivers the full range of cross-border finance solutions through its four wings - the
Domestic division, the Foreign Offices division, the Foreign Department and the
International Services division.

1.2 Industry Profile

Indian Banking sector is dominated by Public Sector Banks (PSBs) which accounted for 72.6%
of total advances for all the Scheduled Commercial Banks (SCBs) as on 31st March 2015. PSBs
have rapidly expanded their foot prints after nationalization of banks in India in 1969 and further
in 1980. Although there is a restrictive entry/expansion for private and foreign banks in India,
these banks have increased their presence and business over last 5 years. Peculiar characteristic
of Indian banks unlike their western counterparts such as high share of household savings in
deposits (57.4% of total deposits), adequate capitalization, stricter regulations and lower leverage
makes them less prone to financial crisis, as was seen in the western world in mid FY11.
SCBs in India have shown an impressive growth from FY 08 to the mid of FY12. Total deposits,
advances and net profit grew at CAGR of 19.6%, 27.4% and 20.2% respectively from FY05 to
FY11. Banking sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and
half decades and credit growth in excess of 30% for three consecutive years from FY09 to FY12,
which is best in the banking industry so far. Increase in economic activity and robust primary and
secondary markets during this period have helped the banks to garner larger increase in their fee
based incomes. A significant improvement in recovering the NPAs, lowest ever increase in new
4

NPAs combined with a sharp increase in gross advances for SCBs translated into the best asset
quality ratio for banking sector in last two decades. Gross NPAs to gross advances ratio for SCBs
decreased from the high of 14% in FY2006 to 2.3% in FY12.
Within the group of banks, foreign and private sector banks grew at higher rate than the industry
from FY 06 to FY12 primarily because of lower base effect and rapid expansion undertaken by
these banks. In FY12, overall growth in credit and deposits was led by PSBs. However, growth
of private and foreign banks was significantly lower in FY12 due to their high exposure to
stressed sectors and problem at parent level for foreign banks. Unsecured bank credit has risen
over the years and stood at 23.3% of bank credit in FY 08 as compared to just 10.9% in FY2008.
Lending to sensitive sector has also grown at CAGR of 46.1% from FY09 to FY12. In the
backdrop of the economic downturn, CARE Research feels that the excellent performance seen
in last five years ended FY11 will be difficult to repeat in coming years.
CARE Research expects that with the downturn in the economy, credit and deposit
growth will moderate in coming years. Credit growth will be led by spending on the
infrastructure while retail credit will show a moderate growth. Margin pressures due
to lag effect of rate cuts between interest rate on deposits and advances, lower
treasury gains and core fee income and increasing in provisions for NPAs is likely to
put pressure in the bottom line of the banks. Going forward, PSBs which are close
to the required lower level of government stake and have concentrated presence in
particular region are likely to consider its merger with other PSB as an important
option if they want to sustain the growth seen in past. With the downturn in the
economy, CARE Research expects that credit and deposit growth will moderate in
coming years. Credit growth will be led by spending on the infrastructure while retail
credit will show a moderate growth. Margin pressures due to lag effect of rate cuts
between interest rate on deposits and advances, lower treasury gains and core fee
income and increasing in provisions for NPAs is likely to put pressure in the bottom
line of the banks.

2. STATEMENT OF THE PROBLEM

2.1 Objectives of the Study

To study the main objective is to find out the tariff changes charges by other banks
in comparison to HDFC bank.
The overall demand in the residential sector as grown by about 7-8% in past few
months as compared to the same period last year
To study the variety of loan as compared to other banks, as they should promote
their bank loan in agriculture and rural sector with minimum documentation.
There should be easy repayment schedule which would help the HDFC bank to
make their recognize itself in financial.

2.2 Importance of the Study

The study is to help HDFC to know where it lack in loans, performance and
other facilities as compare to other banks and figure out the problem faced
by the customer while transaction.
Comparison of loan schemes with four banks HDFC, ICICI, SBI and PNB.
To promote their other facilities or extra service provided by HDFC Bank
To reduce the documentation while opening A/c or while loan disbursement

2.3 Scope of the Study

1.)

SCOPE OF THE STUDY

Scope of the study can be measured in two terms : ----

Geographical Scope

: This implies the area or region from where we are going to draw our
sample i.e. area where we going to conduct our research.
The study was constrained to the NCR region. This region was chosen because of the
convenience of location.

Time Scope : This implies the time we have at our disposal to conduct our study. The
time limit specified is approximately 5 months.

Secondary data time

: Secondary data has been collected from various sources. They

are : Articles are collected from newspapers like Economics Times, Times of India. The
articles collected are latest so that they are relevant.

Relevant articles from Journals like Business Today, Business India, Business World, and
India Today. The articles collected are from journals published after 2000 because of paucity
of resources. These articles were chosen as they were the most relevant for the study being
conducted.

Relevant articles and other data from internet.

2.4 Limitations of the Study

The questionnaire was filled by the Bank employees who because of certain apprehensions might
not have given correct details. For instance if the customer complained of the indifferent attitude
of the employees at the bank the employee but obvious will not tell this.
A recent experience ( good/bad ) might influence, the perception of the respondents and induce a
bias in their ratings
Example: a recent bad experience with the employee might change the beneficiaries
perception towards the organization
The sample size selected (banks and customers) might not depict a true picture of the population
The extent of the project was restricted to NCR only, which might not represent a true picture
It is difficult to get appointments from banks senior executives
Bank employees may give biased answers which may lead to incorrect results
Time available for the completion of the project was limited
Survey was mostly based on human perceptions related to various factors, which may lead to a
subjective result.

3. RESEARCH METHODOLOGY
A research methodology defines what the activity of research is, how to proceed, how to measure
progress, and what constitutes success.
Research methodology is an important part of every project. Because it helps in
knowing how to select the representative sample from the world or the general
population, the right research tools and techniques to complete the research.
The study of the consumer behavior is important because he is the king. The
research process is based upon survey method, so in order we go to service
provider and services user which is the customers.
The research involves the following steps:

Define the problem and research objective: The problem and objective
is to assess the services offered by the various service providers and what

the customer wants.

Developing the research plan: The second stage of the research
methodology is to develop a research plan. The research plan designed to

take the decision on the data sources, research approaches, research

instruments, sampling plan and contact methods.

Survey research: It was a descriptive research.
Research instrument: The use of an effective research instrument is very
important because through this instrument we collect data in this project

through observations and personal interview were conducted.

Personal interview: as we were doing direct selling we interacted with my
customers and asked about their views in selecting a service and what are

their wants and expectations from a service provider.

Sampling plan: After finalizing the research approach and instruments a

sampling must be designed.

Sampling unit: Different Professional, Charted Accounts, Tax consultants,

Lawyer, Business man, Professionals and Housewives.

Sampling Technique: Random sampling.
Research Instrument: Structured Questionnaire.
Contact Method: Personal Interview.
Sampling size: My sample size for this Project was 200 respondents.
Sampling procedure: what process should be used to collect the sample?

So, representation sample, convenience sampling is used.

Collect the information: After completing all the steps, the data are

collected from different sources.

Analyze the information: After the data is collected they are analyzed to
know the findings. The data is then tabulated to develop the frequency

distribution.
Present the findings: As the last step, the findings are presented that are
relevant to the major marketing decisions.

Primary Data: - All the people from different professions were personally visited
and interviewed. They were the main source of primary data. The method of
collecting primary data was direct personal interview through a structured
questionnaire.
Secondary Data: - It was collected from the internal sources. The secondary data
was collected on the basis of organization files, newspaper, official records,
magazines and the website of the company.

4. LITERATURE REVIEW
Berstain David (2009)
Examined in his study taken from 2001 to 2008 that in this period there is increase use of
home loans as compared to private mortgage insurance (PMI).he have divided his
study into four sections. Section 1 describes why people are going more for home loans
than PMI. the main reason for this that now home loans market provide Piggybank loans for
those people who dont have 20% of down payment. Section2 tells the factors responsible for the
growth of home loans and the risks on shifting toward home equity market without any PMI
coverage. PMI can protect lenders from most losses u p t o 8 0 % o f L T V a n d t h e
a b s e n c e o f P M I w i l l r e s u l t i n c o n s i d e r a b l e l o s s e s i n a n environment.
Section 3 tells the measures in changes of type of loans. For this he have taken the
data from the 2001 and 2007 AHS a joint project by HUD and Census The results of this analysis
presented in Table One reveal a sharp increase in the Prevalence of owner-occupied properties
with

multiple

mortgages

among

properties

with

Newly

originated
10

firstm o r t g a g e s . S e c t i o n 4 d e s c r i b e t h e F i n a n c i a l s t a t u s o f s i n g l e - l i e n a n d
multiple-lienhouseholds and for this he have taken the survey of consumer
f i n a n c e a n d s h o w t h a t financial position is more weaker in multiple loans than the single
loans.
Vandell, Kerry D (2008)
In his analysis the sharp rise and then suddenly drop down home prices f r o m t h e p e r i o d
1998- 2008. changes in prices are for the reasons as such economic
fundamentals , the problem was not subprime lending per se, but the Feds
d r a m a t i c reductions, then increases in interest rates during the early- mid-2000 , the housing
boom was concentrated in those markets with significant supply-side restrictions, which tend
to be more price-volatile; he problem was not in the excess supply of credit in
aggregate, or the increase in subprime per se, but rather in the increased or reduced presence of
certain other mortgage products.
La courr, Micheal (2007) analysis in his study the factors affected the increase in the level of
Annual percentages rates (APR) spread reporting during 2005 over 2004. the three
mainf a c t o r s a r e c h a n g e s i n l e n d e r b u s i n e s s p r a c t i c e s ; ( 2 ) c h a n g e s i n
t h e r i s k p r o f i l e o f borrowers; and (3) changes in the yield curve environment.
The result show that after controlling for the mix of loan types, credit risk factors, and the
yield curve, there was no

statistically

significant increase in reportable volume

for loans originated directly by lenders during 2005, though indirect, wholesale
originations did significantly increase. Finally, given a model of the factors affecting
results for 2004-2005, we predict that 2006results will continue to show an increase in the
percentage of loans that are higher priced when final numbers are released in September
2007.
La cour Micheal (2006)
He examined the home purchase mortgage product preferences of LMI households.
Objectives of his study to analysis the factors that determined factors their choice of
mortgage product, is different income groups have some specified need for particular product.
The role pricing and product substitution play in this segment of the market and do results
11

vary when loans are originated through mortgage brokers? For this they have use
the regression analysis and the results are high interest risk reduce loan value. Self
employed borrower chooses reduce documented loans than salaried workers use of this
product type seems to be more prevalent among borrowers with substantial funds for
down payment and better credit scores. In case of pricing Multi families requires price premium
and larger loans carry lower rate. And the role of time, particularly, the time
required for the loan to proceed from application to closing it is find that
government.Lending taking the longest time and Nonprime loans the short
e s t t i m e . M u l t i f a m i l y properties take longer time in closing. And during peak
season take longer time to close. An d f o r l a s t o b j e c t i v e i t i s f i n d t h a t b r o k e r
o r i g i n a t e d l o a n s c l o s e f a s t e r. T h e e f f e c t o f mortgage brokers on pricing and
other market outcomes is fertile ground for additional research.

5. CHAPTER OUTLINE
The main objective of this finance project on comparison of home loan scheme is to find out the
tariff changes charges by other banks in comparison to HDFC bank.
The aim of the study is to help HDFC to know where it lacks in loans and how for the
performance of other banks is better so that HDFC figure out the common problems being faced
by the customers while dealing in the loan department so that further HDFC can improve its
services and schemes offered by them to their customers.
LOAN AMOUNT OF HDFC
You can avail of maximum of up to 85% of the cost of the property, including the
cost of the land.
LOAN TENURE

12

You can repay the loan over a maximum period of 20 years under both FRHL and
ARHL. Repayment will not ordinarily extend beyond your age of retirement (if you
are employed) or on your reaching 65 years of age, whichever is earlier. However,
HDFC will endeavor to determine the repayment period to suit your convenience.
RATE OF INTEREST
The rate of interest of HDFC is 8.75%.under the monthly rest option, interest is
calculated on monthly rests. Principal repayment is credited at the end of every
month.
At HDFC you have the choice between the normal FRHL and the innovative ARHL.
Alternatively you can also avail the part of the loan under FRHL and balance under
ARHL.
HDFC also offers you the option to switch between schemes for the nominal fee.
Interest rates on ARHL will be linked to HDFCs Retail Prime Lending Rate (RPLR)
which currently is 13.75% .The rate on your loan will be revised every three months
from the date of first disbursement, if there is a change in RPLR, i.e. the interest
rate on your loan may change. However, the EMI on the home loan disbursed will
not change. (If the interest rate increases, the interest component in an EMI will
increase and the principal component will reduce, resulting in an extension of the
term of the loan, and vice versa when the interest rate decreases).customer will be
provided with an annual statement indicating the details of the interest and
principal payment made during the year.
Upto and including Rs 30 lakhs 10.25% - 10.75 %
Above Rs 30 lakhs 10.50%- 11.00 %
3.2 SWOT ANALYSIS OF HOUSING FINANCE INDUSTRY
STRENGTHS:

The industry has been witnessing very fast growth rate, which is 6% growth
in the first Quarter of 2014-2015 as against 3-5% growth recorded in the first
quarter of 2013-2014.

13

The market faces a high demand curve, thoroughly mismatched by a low

supply curve
Investment is based in assets that are securities & those that have

historically appreciate rapidly.

Tax benefit & other facilities provided on loan repayments.

WEEKNESSES:

The foreclosure rules of court of law such as provision regarding the

ownership of not more than one house (in Delhi) binds the industry.
The healthy of an HFC depend upon its ability to mob up low cost funds.
AN HFC is unable to tap the rural market due to lack of proper retrieval

procedures so whilst
The rural market offers a higher rate of return; it has a higher risk & default

rate.
Many legal impendent exist, deferring purchase of certain types of property

beyond a
Certain extent thereby negatively impacting weak mortgage laws, resulting in
an increase in risk compo ending

OPPORTUNITIES:

The housing industry faces a severe shortage of houses. The total demand for
houses is expected to touch around 19.40 million units by the year 2016 of

these 12.8 million

Dwelling units (65-98%) would be in rural areas & 6.6 millions dwelling units

(34.02%) in urban areas.

While the loan facility is backed by the security of property this sector
represent a low margin But on the low margin but on the same line low risk

segment. The address this

Market the ones lies on the HFCS to device bold & innovative alternatives like
mortgage Based securities use of method such as door to door collection of
installments assessing the Creditworthiness of the prospective client and

providing for group securities.

The roles of NHB in refinancing & providing regulation of housing finance

system.
The governments initiatives to promote the sector & its contribution in
uplifting the sector.

THREATS
14

The industry faces increased competition as more & more foreign backs &
Housing

Finance Companies are providing loan facility.

CONCLUSION
.

The Indian customer has come a long way from purchasing to fulfilling their
needs from buying a house customers now grab everything that comes their
way but they do their own survey of optimum loans; same is the case with
banks & housing loans.
15

With innumerable choices before him, the customer is needed then king.

It is therefore imperative that if the bank has to succeed in competitive world,

it should be technological starry.

Customer centric progressive driven by highest standard of cooperative

governance & guided by sound ethical values & above all should have
personalized customer services.

There is scope of exploiting the vast middle income group by releasing loans
with special interest rate, which would be beneficial to both parties.

RECOMMENDATIONS

To broaden the customer base the vast middle income strata should
be fully exploited.

Simplify the procedure, reduce service charges & demand only the
basic essential proof.
16

Most banks are reluctant to advance loan to the service class. E.g. law
years, police officers etc. this aspect must be exploited.

Adoption of flexible & more lenient penalty should the Customer fails
to deposit the payment on time. The penalty should be case to case
basis rather than the same for the entire customer base.

Restriction to be reduced to bare minimum for loan advances & for

repayment. For e.g. offers Long term repayment facilities & have no
age restriction to choosing repayment. The maximum age for
repayment could be increase to 65-70 years of age. Such facility will
grow fast retail segment of the bank.

Offer multiple repayment loans services. Class to be exploited by

offering special reduced Rates & linking the repayment from the
source where the pay cheque to the employee is issued. This need to
undergo special contract with government organization to ensure
implementation

BIBLIOGRAPHY

MAGAZINES:Banking Finance, Editor R.G Agarwal and Associates march 2013.

17

NEWSPAPERS:Business standard.
Economic Times.

WEBSITES:www.hdfc.com
www.HDFCBANK.com
www.personalfn.com
www.PNB.com
www.SBI.com
www.ICICI.com
Search engine- www.google.com

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