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INTRODUCTION Owning a piece of land or property is a lifetime dream for every individual.

There are many home loans provider in the market to make our dream come true. But before we opt for any home loan provider, we need to consider certain factors related to property that we are interested in buying and also about the salient features offered by a home loan provider. The Indian housing finance industry has grown by leaps and bound in few years. Total home loans disbursements by banks have risen which witnessed phenomenal growth from last 5 years. There are greater numbers of borrowers of home loans. Today many banks provide home loans whether commercial banks or financial institutions to the people who want to have a home. The housing sector plays an important role in the economic development of the country. By this study we will be finding out satisfaction level of customers and problems faced by them in obtaining home loans. Research methodology to be used for study will be both primary and secondary data and based on that we will be drawing our recommendations and conclusion.

INTRODUCTION TO HOME LOANS Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above all gathering funds little by little to afford ones dream. Home is one of the things that everyone one wants to own. Home is a shelter to person where he rests and feels comfortable. Today many banks are providing home loans whether commercial banks or financial institutions to the people who want to have a home. Many banks are providing home loans at cheapest rate to attract consumers towards them. The more customer friendly attitude of these banks, currently offer to consumers cheapest loan over homes. We can take different types of home loans like Home construction Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc. for different schemes available in the market. There are different types of home loans tailored to meet our needs. The main reason for boom in home loan market is the change in government policies. It is our governments motivation that the home loan interest rates in India have fallen considerably. Lot many banks are offering home loans and this is available at low EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending rate is in the range of 7.5 to 15 %. Today HDFC Bank and Standard chartered bank has become the first player in this sector to announce a housing loan for a 20 years period. No doubt it will enhance the end cost people to plan their house over longer duration now; it has been made easy for a person to buy that dream house which he dreamt of long ago.

OBJECTIVES

The main objectives of the study are as follows:

To know the ideas of customers about home loan products and services. To study the satisfaction level of customers about home loans. To study the problems faced by customers in obtaining the home loans. To make comparative study of Disbursement of home loans by Commercial banks. To study the home loan schemes by different banks.

RESEARCH METHODOLOGY

The purpose of the Research methodology is to describe the research procedure. This includes overall research design, the sampling procedure, the data collection method, and the analysis procedures and methods. In this COMPARATIVE STUDY & ANALYSIS OF HOME LOANS descriptive type of research will be used for collecting the primary data. It includes surveys, Questionnaires and fact finding enquiries of different kinds & secondary data is collected from secondary sources such as Internet, Books, Journals, Newspapers, etc. 1. Primary Data: Primary data is collected in the form of survey of the public/investors based on the Questionnaires formulated & by personal Interview. Primary data: Questionnaires & Personal Interview 2. Secondary Data: For secondary data collection method, the help of various reference books, journals have been taken and data is also collected by way of surfing through various websites. Secondary data: Internet, Books & Journals. 3. Sample Size: A sample size of 100 is taken for this study. Random Sampling technique is used for the survey.

REVIEW OF LITERATURE

1. Bank Management Vasant Desai Himalaya Publishing House. ( First Edition 2009) Banks are in the forefront of economic development. They are the heart of Indian Financial System. Banks in India have been playing a unique role in mobilizing saving credit disbursement, investment & providing other services. According to the latest figures released by the Reserve Bank of India, commercial bank, Deposits touched Rs 30,75,224.33cr, outstanding bank credit amounted to Rs. 22, 72,602.73 cr, Investment touched Rs9,86,052.21 cr on march 14, 2008. The ability of the banking system to perform its task efficiently & in harmony with our neds & economic goals depends in a large measure on its efficient management. The banking system must be managed prudently , safely & profitably if we are to have a strong, growing & adaptable banking system capable of meeting the demand of society. 2. Theory & practice of banking K K Upadhyay Pearl Books ( First Publish 2008) Although Banking is an old Activity and has its roots in economics, finance, and commerce, the word banking technology is of recent origin. To many people banking technology means the use of computers and related hardware to streamline and automate banking operations. This book attempts to demystify the word banking technology and offers much broader meaning and more realistic and operationally sufficient perspective on banking technology. 3. Banking and its credit creation C.N Reddy Pearl Books ( First Publish 2008) In earlier times, lending and borrowing was mainly between individuals and what was meant by usury in these transactions was commonly known and understood. In money matters, any amount over and above the lent sum was defined as usury. The ill consequences of usurious lending the ruination of individuals and family were witnessed at the local level and therefore the community held the practitioner in contempt. But the need for capital and loans existed and in the absence on alternative solutions, the usurious lenders became an indispensable component of the society. They also exercise invisible power over their client resources. 4. In December 2006 Fulbag Singh and Reema Sharma had studied about the housing Finance in India. Housing, as one of the three basic needs of life, always remains on the top priority of any person, economy, government and society at large. In India, majority of the population lives in slums and shabby shelters in rural areas. From the last decade, the Government of India has been

continuously trying to strengthen the housing sector by introducing various housing loan schemes for rural and urban population. The first attempt in this regard was the National Housing Policy (NHP), which was introduced in 1988. The National Housing Bank (NHB) was set up in 1988 as an apex institution for housing finance and a wholly-owned subsidiary of Reserve Bank of India (RBI). The main objective of the bank is to promote and establish the housing financial institutions in the country as well as to provide refinance facilities to housing finance corporations and scheduled commercial banks. The paper is based on the case study of LIC Housing Finance Ltd., which analyzes region-wise disbursements of individual house loans, their portfolio amounts and the defaults for the last ten years, i.e., from 1995-96 to 2004-05 by working out relevant ratios in terms of percentages and the compound annual growth rates.

5. Sumit Agarwal, Souphala Chomsis engphet and John C. Driscoll had studied about the Loan commitments and private firms. They studied that, Most loans are in the form of credit lines. Empirical studies of line demand have been complicated by their use of data on publicly traded firms, which have a wide menu of financing options. We avoid this problem by using a unique proprietary data set from a large financial institution of loan commitments made to 712 privatelyheld firms. Our findings are consistent with their predictions. Firms facing higher rates and fees have smaller credit lines. Firms with higher growth commit to larger lines of credit and have a higher rate of line utilization. Firms experiencing more uncertainty in their funding needs commit to smaller credit lines. Almost all firms convert unused credit line portions into spot loans and take out new lines. 6. In feb 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael LaCour-Little had studied about the unique paired loan dataset containing information on multiple conventional conforming mortgage loans of households to examine home equity extraction decisions over the period 20002006. The main question addressed is how much households borrow when refinancing their current mortgage debt in a cash-out transaction. Results contribute both to the literature on refinancing behavior and the role of house price appreciation in providing funds that may be used for consumer spending or other purposes.

INDUSTRY OVERVIEW Indian home loans Industry: Home loans in India have made people Buy Property in India in spite of the skyrocketing prices. Today, we find considerable Real Estate Investment in India, either in the field of Residential Property in India or Commercial Properties in India. Home Loans in India are disbursed by many Banks as Loan Banking is on of the most important function of the Financial Services in India. Property Dealers and Real Estate Consultants in India usually recommend that we undertake appropriate Home Loan or Mortgage Loan counseling so that we can Buy Apartment in India at an affordable Mortgage Rate. Purchasing the home of your dreams is not an easy task. Especially when you plan to buy a home on loan. Home loan means that you buy a house on installments. In simpler terms when you want to own a home and cant afford to pay the amount in lump sum, you can pay it in monthly installments with an interest rate. The interest rates of home loans are expected to go down even further according to analysts who foresee a cut down in the rates by the RBI in the wake of the decision taken by US Federal Reserve to cut its rates by a significant margin. There are number of companies offer cheap home loans at a low interest rate. You can avail loan against existing house for renovation or expansion etc. There are many nationalized banks that offer finance for affordable housing. India Housing has put together a comprehensive data to provide you with the cheapest Home Loans available in the market. We have listed all the important housing finance institutes and some of the top home finance banks providing lowest interest rates. In the last few years, housing loan scenario in India has changed drastically. It has taken a front seat and people are looking forward to owning their own houses. It is no more a dream that required lifetime saving and a difficult decision to make. Today the new home purchase loan is much easily available and is much cheaper than what was available earlier. Banks are now everywhere and the schemes are implemented even in villages and smaller towns. The housing loans are popular there too, however, the activity of building flats is little slow. It would not be

wrong to say that there has been a boom in the home loan market and with this boom; there is also a boom in the Number of home loans mortgage brokers in India. The main reason for this boom in home loan market is the change in government policies. It is our governments motivation that the home loan interest rates in India have fallen considerably. Lot many banks are offering home loans and this is available at low EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending rate is in the range of 7.5 to 15 %. Again, there are different types of home loans available today. The interest rate available is also of two different types. One is the fixed rate loan and the other is the floating rate loan. In the fixed rate loan, whatever interest is fixed on the start of loan is carried on for the complete period. However, in the other one, the interest rate is not fixed and as the interest rate goes up or low the effect is directly transferred to the person who is taking the loan. In the last few years the floating interest rate has been a favorite among most of the people taking home loans. There is also a trend to opt for home construction loan. This loan is available to those who want to design their homes according to their requirement and taste. In other words, this loan is meant for those who themselves want to construct their new home. As shared earlier, taking a loan is not a difficult task. However, before taking a loan, one must realize that the relationship with the bank will be for a longer period usually 15 to 20 years so one must ensure faith and integrity in bank. Apart from low rate of interest, the bank should also provide some value added services. The other thing is to look into is the property that is to be brought. Making sure that the builder has all sanctions and facility to build a good building is very important. Taking home loans these days has become simpler. With the RBI regularly bring down interest rates; taking home loans have become extremely easy. Housing loans which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down, people increasingly number apply to take these loans. Some of the leading banks offering home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank , Bank of Baroda, SBI, Standard Chartered Bank and Axis Bank . Indian Home loans industry is growing at a fast pace 30% per annum, this can be seen in the stats shown below with average ticket size (loan size) and Amount disbursed is rising every year the

opportunities have become more dominant for different organization in India. The demand drivers are fast growing middle class population, rise in working women workforce, bigger aspirations of youth, Tax saving, Transparency in the real estate market.

Impact of slowdown on home loan market in India: The fear of a recession looms over the United States. And as the clinch goes, whenever the US sneezes, the world catches a cold. This is evident from the way the Indian markets crashed taking a cue from a probable recession in the US and a global economic slowdown. U.S slowdown has affected almost all sectors not only in US but to all over the world. Indian economy has also been affected by this slowdown because India is a growing country and almost in all sectors various multinational companies have major contribution. So the role of this slowdown is a major issue to be discussed while talking about Home Loan Market in India. Bankers who were earlier falling over each other to dole out home loans, even for soft furnishings, have suddenly become choosy. Banks like SBI, ICICI Bank, UTI Bank, IDBI Bank and leading mortgage firm HDFC are now apparently making a conscious attempt to curb their aggression in the home loan market. Situation is like that if a customer who recently approached a private sector bank for a home loan of about Rs 10 lakh for a tenure of 15 years found, to his shock, that the eventual loan disbursement was just Rs 5 lakh. Most bankers aren't willing to confirm any slowdown in their home loan portfolio. On record, they attribute the marginal dip in home loan disbursements to the recent hike in interest rate. Privately, however, they have a different story to tell. "The slowdown in the home loan market for select players like ICICI Bank was evident from January. ICICI Bank's average home loan disbursement in a month is around Rs 2,500 crore in a month, which has come down to almost Rs 2,000 crore in March," said a private sector banker. ICICI Bank officials denied any slowdown in their home loan portfolio and they say that the recent dip in interest rates has had some impact on disbursals. However, in absolute terms, it is still low. Even this slowdown the deposit growth for the sector as a whole is around 17%, while credit is growing at almost 28%, forcing banks to become selective. Institutions now charge a floating rate of 8 to 8.25 per cent on home loans above Rs 20 lakh. Initial estimates by bankers suggest that the increase in rate for home loans and other
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segments would be around 25-50 basis points (0.25% to 0.5%). Even as the provisioning requirement has gone up around 60 basis points, the hike in interest rates may be lower as the impact would be felt for the first year. It would also depend on how well capitalized the banks are as the rise in provisioning and risk weightage would affect the return on equity for banks. Weaker banks and banks with a large portfolio of these loans are likely to be more affected and may hike rates first. Home loan growths of disbursals were at 20 per cent in 2007-08 according to a study by the credit rating agency CRISIL, a Standard & Poors company. This rate is lower than the 30 per cent annual increase seen in the past three years, but in absolute terms represents a substantial expansion. The slower growth reflects the impact of rising property prices and interest. Interest and market trends in year 2009-10: Home loan interest rates, especially on new home loan accounts, started softening from the beginning of this year when the Reserve Bank of India (RBI) announced sharp cuts in the repo rate and cash reserve ratio (CRR). The RBI started slashing the key policy rates since October last year, after taking into account the worsening liquidity situation of banks here. The central bank has reduced its key policy interest rates (repo and reverse repo) and reserve ratio (CRR) four times in the last six months. The cut in the repo rate meant commercial banks would have funds available at a lower cost. On the other hand, the cut in the CRR meant banks would have to keep less money with the RBI and hence they had more money to lend. Analysts believe that interest rates have not yet bottomed out and there will be further cuts in borrowing rates over the next few months. Following in State Bank of Indias (SBIs) footsteps, other state-run banks may also come out with scheme offering home loan at a fixed rate of 8%. The Indian Banks Association (IBA) would review the response of borrowers towards the SBI scheme after three weeks and if it finds that there has been a good response, other banks will follow suit. Last week, SBI had announced that it would offer home loans at a flat rate of 8% to all borrowers and would freeze this rate for one year. The chairman of one of the major banks, who asked not to be named, said SBI can afford to lend at such cheap rate as it has one of the best current and savings account (CASA) deposit ratio. CASA deposits are the cheapest source of funds for a bank

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and a high CASA deposit ratio brings down their average cost of funds. This in turn helps the bank in offering cheaper credit while maintaining their net interest margin (NIM). NIM is the difference between the rates at which banks borrow and lend. State-owned banks started cutting their home loan rates after country's largest lender; State Bank of India froze its new home loan rates at eight per cent for one year recently.

TYPES OF HOME LOANS Housing loans offered by banks are of different types:

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Home Purchase Loans Home Construction Loans Home Improvement Loans Home Extension Loans Home Conversion Loans Land Purchase Loans Stamp Duty Loans Bridge Loans Balance Transfer Loans Refinance Loans Loans to NRIs

Home purchase loans: This is the basic home loan for the purchase of a new home. If you want to buy a flat in some society or some already built house, banks and HFCs sanction you home purchase loans for this process. Home construction loans: This loan is available for the construction of a new home on a said property. The documents that are required in such a case are slightly different from the ones you submit for a normal Housing Loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFCs will include the land cost as a component, to value the total cost of the property. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility. Home improvement loans: These loans are given for implementing repair works and renovations in a home that has already been purchased, for external works like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility of a

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home improvement loan, after obtaining the requisite approvals from the relevant building authority. the following are coming under the home improvement loans:

External repairs Tiling and flooring Internal and external painting Plumbing and electrical work Waterproofing and roofing Grills and aluminum windows Waterproofing on terrace Construction of underground/overhead water tank Paving of compound wall (with stone/tile/etc.)

Home extension loans: An extension loan is one which helps you to meet the expenses of any alteration to the existing building like extension/ modification of an existing home; for example addition of an extra room etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite approvals from the relevant municipal corporation. Home conversion loans: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through a home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan. Land purchase loans: This loan is available for purchase of land for both home construction or investment purposes. Stamp duty loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.
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Bridge loans: Bridge Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home. Balance- transfer loans: Balance Transfer is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest. Refinance loans: Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you have taken drops over the years and you stand to lose. In such cases you may opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower. NRI home loans: This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or property in India. The HFCs offer attractive housing finance plans for NRI investors with suitable repayment options. On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs 1 crore, based on the repayment capacity, previous credit history and the cost of the property. The bank may provide a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land. Some of the leading banks offering home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank.

HOME LOAN PROCEDURE IN INDIA

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Submission of Application Form: After choosing a particular home loan, the customer submits the application form to the housing finance company (HFC) along with other relevant documents as required by the HFC. They comprise documents to establish income, age, residence, employment, investments, etc. The customer also needs to hand over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-1% of the loan amount to the HFC. Validation of the Information: In the next stage, HFCs validate the information provided by the customer on the application form. They usually conduct checks on the residential address of the customer, the place of employment of the customer, and credentials of the employer. Some HFCs may insist on a personal interview with the customer and perform a reference check on the references provided by the customer on the application form. Issue of Sanction Letter: After due appraisal of customer profile, a sanction letter is issued which contains details such as loan amount, rate of interest, annual / monthly reducing balance, tenor of the loan, mode of repayment and general terms and conditions of the loan. This is the actually the approval of the money lending procedure by the company. However, the money is sanctioned only after the documents and the property on behalf of which the loan is being granted is thoroughly verified.

Submission of Documents: Once the sanction letter is passed, the customer is required to leave the entire set of original documents pertaining to the property being purchased with the HFC as security for the loan amount sanctioned. These documents remain in the custody of the HFC till the time the loan is fully repaid. Once the documents are handed over to the HFC, they send all the documents for a thorough legal scrutiny. Validation of Property:

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Prior to disbursement, the HFC also conducts a site visit to the customer's property to ensure that all construction norms have been adhered to properly. Once the HFC is satisfied that the property is legally and technically clear, they disburse the loan amount. The disbursement from the HFI is on the basis of the stage of construction of the property. Payment Procedure: Once all the above mentioned process, the borrower is entitled to take the money from the lender party. Until such time that the entire sanctioned amount is not drawn, the customer is supposed to pay a simple interest on the Actual Amount drawn (without any principal repayments). The EMI payments commences only after the entire sanctioned loan amount is drawn

HOME LOANS INTEREST COMPARISON

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The table below illustrates the comparison between the interest rates from various Housing Finance Companies and banks. Finance Institution Loan Period Fixed (in years) Bank of Baroda Up to 5 6 to 10 11 to 15 16 to 20 State Bank Of India Up to 5 6 to 10 11 to 15 16 to 20 HDFC Up to 5 6 to 10 11 to 15 16 to 20 ICICI Bank Up to 5 6 to 10 11 to 15 16 to 20 LIC Housing Finance Up to 5 6 to 10 11 to 15 16 to 20 Up to 5 PNB Housing Finance 6 to 10 9.00 9.25 9.50 9.50 9.50 9.75 11 11 11 11 10.75 10.75 10.75 10.75 10.50 11 11 11 9.00 9.00 EMI/ Lakh Floating (INR) 2076 1230 1044 932 2100 1300 2175 1375 1137 1033 2162 1364 721 1016 2149 1373 1137 1032 2076 1267 8.00 8.25 8.25 8.50 8.75 9.25 9.25 9.75 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 10.50 10.50 EMI / Lakh (INR) 2028 1227 970 868 2064 1280 1029 949 2101 1294 1045 933 2101 1294 1045 933 2100 1294 1044 932 2150 1350

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11 to 15 16 to 20

9.25 9.50

1030 933

10.50 10.50

1106 999

It can be seen that if one wishes to go for floating loans, the bank which gives the best deal as far as the interest rate is concerned is HDFC followed by PNB Housing Finance and SBI with the lower rates.

COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS There are number of schemes and products, offered by commercial banks to attract the customers. The comparisons among different commercial banks which offer home loans in regard of Disbursement of home loans are as: Home loans distributed by HDFC and Commercial banks: (Rs. in crore) Years State Bank India Of HDFC LTD Punjab National Bank CITI Bank ICICI BANK

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2004-05

140.75

120.15

90.07

9.21

104.33

2005-06

192.43

183.26

120.00

11.55

123.24

2006-07

235.46

213.65

144.67

19.06

150.65

2007-08

252.27

240.87

180.33

27.09

176.75

2008-09 Total

282.56 1103.47

265.15 1023.08

240.00 775.07

30.10

224.00 97.01 778.97

Interpretation: There is no doubt that every bank tries to maximize its home loan disbursement. But on the basis of data it is concluded that SBI shows high loan grants of Rs. 1103.47 crore as compared to HDFC, ICICI, PNB & CITI bank respectively Rs.1023.08, Rs.778.97, Rs.778.97 and Rs.97.01 crores. On this analysis the SBI are higher loan providers as compared to other sector banks. Recovery of Home loans: Years State Bank India (Rs in crore) HDFC Of BANK Punjab National Bank CITI Bank ICICI BANK (Rs in crore)

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2004-05

90.05

97.28

63.05

5.27

98.12

2005-06

172.23

150.00

91.20

10.16

105.00

2006-07

185.30

185.86

127.31

14.35

133.46

2007-08

192.75

231.07

165.90

18.68

144.65

2008-09 Total

262.56 902.85

256.05 920.26

228.12 675.58

23.91 72.37 690.39

209.16

Interpretation: It is evident from the table that every bank whether public or private showed increase HDFC LTD has the greatest recovery of home loans thereafter SBI, ICICI and Punjab national bank recovered the sanction amount. The CITI Bank is having lowest recovery of their granted amount as home loans.

ANALYSIS & INTERPRETATION

Age wise classification:

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Age

9% 21%

21% 20-30 31-40 41-50 51-50 49%

Interpretation: From the chart above we find that 21% of the respondents fall in the age group of 20-30 years, 49% fall in the age group of 31-40 years, 21% fall in the age group of 41-50 years and 9% fall in the age group of 51-60.Therefore most of the respondents are relatively between the age group of 41-50 and 9% respondents age are 50 to above years.

Gender wise classification:

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G dr e e n

3% 3 Me a l Fm ea l e 6 7 %

Interpretation: From the above chart we can find that 67% are Male respondents and 33% are Female respondents. Therefore, most of the respondents are Male.

Taken Home loan

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8%

Yes N o

92%

Interpretation: From the above chart we found that majority of the respondents have taken loan.

Bank preferred to take loan

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30 25 20 15 10 5 0 PNB H DF C ICICI SBI CITI O T HER B A NK S e r ie s 1

Interpretation: The analysis showed that a large number of customers prefer SBI and HDFC LTD as compared to others. The reason is due to specialized services in home loans, more amounts of loans, and efficient query handling and also people consider these banks safer as compared to others.

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Source of information about home loans scheme

1 7%

3%

27%

Nespaper Hoardings Word of m outh T.V.

1% 1 42%

Other

Interpretation: From the above chart we found that majority of respondents(42%) got information about home loan schemes by word of mouth i.e. from friends, relatives, etc. 17% by Television, 27% by newspaper, 11% by hoardings and 3% by other medium.

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Things attracted customer

3% 7

2% 8

In re t ra te s te Se rvicep vid d ro e Pa b ckp rio y a e d Sch m s e e

1% 4 1% 4 7 %

All o th a o e f e bv

Interpretation: From the above chart we found that majority of respondents (37%) said all the above factors are important for them and 28% specifically said that interest rate provided by the bank plays an important role in making their decisions regarding home loans.

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Annual income

14%

8%

> 2 Lacs 2- 5 Lacs 36% 5-8 lacs 8 lacs & above 42%

Interpretation: From the fig. above it can be seen that 8% respondents annual household income is less than 2 lacs, 36% respondents annual household income is between 2 to 5 lacs, 42% respondents annual household income is between 5 to 8 lacs, 14% respondents annual household income is more than 8 lacs.

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Loan amount taken

17%

10% Less Than 1 Lacs 1 - 5 Lacs 5 - 10 Lacs 36% More than 10 Lacs

37%

Interpretation: From the fig. above it can be seen that 10% respondents are took the loan amount is less than 1 lacs, 36% respondents are took the loan amount is between 1 to 5 lacs, 37% respondents are took the loan amount is between 5 to 10 lacs, 14% respondents are took the loan amount is more than 10 lacs.

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Even if the Interest rate is high for the home loans, you will go for it?

22%

Yes No

78%

Interpretation: From the graph above it can be seen that 22% respondents are says that even if the interest rate is high for the home loans, they will go for it. 78 % respondents are says that if the interest rate is high for the home loans, they will not go for it.

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What are the reasons for taking a home loan?

43%

33%

Non availability of funds Reluctance to pay cash in on go Tax Benefit

24%

Interpretation: To interpret the response of the questions, the figures shows that most of the customers find the problem in availability of funds i.e. 33% and very more number of customers found problem in paying cash in one go is 23%, customers get housing loan for tax benefits is 43%.. On the basis of study, it is concluded that most of people lack of money in fulfilling their dreams and few of them were reluctant to pay cash in one go and wanted to pay their home loans slowly in installments.

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Types of home loan

6% 2%

7% 46%

Home Purchase Loan Home Construction Loan Home Improvement Loan Home Extension Loan Home Equity Loan Land Purchase Loan

21% 18%

Interpretation: From the graph above it can be seen that 46% of the respondents are taken home purchase loan, 18% are taken Home Construction Loan and 21% are taken Home Improvement Loan, 6% of the respondents are taken Home Extension Loan and 2% of the respondents are taken Home Equity Loan and 7% of the respondents are taken Land Purchase Loan. The data shows that most of the respondents prefer the Home purchase Loan which is more than other types of loans.

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Problems face while getting home loans

11% 41%

Lack of know ledge Procedural delays and non cooperation A ny other

48%

Interpretation: From the graph above it can be seen that 41% respondents does not have proper knowledge about different home loan products so they face problem in making a good deal. 48 % respondents are faced problems of procedural delays, which harass the customers lot. This will crush the curtsy of customers to avail the home loan. as well as the attitude of bank employees some times non cooperative and it creates a hurdle in building trust and Confidence among customers about banks. 11% respondents are faced other problems while getting home loans.

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Costumer satisfaction

1% 37% S a ti s f i e d A v er age 62% D i s s atis f i ed

Interpretation: From the graph above it can be seen that:- 37 % respondents are satisfied with the after home loan services provided by their bank whereas 62 % respondents are somewhat satisfied with same. Hardly 1% respondents are not satisfied with the after home loan services provided by their bank.

Does the cost of home loan is appropriate, according to your demand?

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31 % Yes No 69%

Interpretation: From the graph above it can be seen that 69 % respondents are says that the cost of home loan is appropriate, according to their demand, whereas 31 % respondents are says that the cost is not appropriate, according to their demand.

Are you satisfied by the time taken in sanctioning the loan?

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No 39% Yes 61%

Yes

No

Interpretation: From above analysis we come to know that 61% customers are satisfied by time taken in sanctioning the loan since; procedure for sanctioning the loan was done in proper time period where as 39% are not satisfied the sanctioning the loan since they have to face delay in procedure for sanctioning the loan.

Are you aware of all terms and conditions of home loans?

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Yes

No

No 17%

Yes 83%

Interpretation: From the graph above it can be seen that 83% people are aware of terms and conditions about the home loans provided by the respective banks as the banks are treating customers properly where 17% are not aware of terms and conditions since some banks are not communicating with the customers properly.

Which grade you want to give of home loan schemes of your bank?

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11%

17%

Excellent Very Good Good 26% 46% Satisfactory

Interpretation: From the graph above it can be seen that Majority of the respondents said that they were happy with the schemes which their banks are providing and 46 % of the respondents gave good grade to the home loan schemes and 11 % respondents are not satisfied with the schemes provided by their banks.

FINDINGS:

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1.

SBI having good brand image in the minds of customers and since it is a public The analysis showed that a large number of customers prefer SBI and HDFC LTD

sector bank people feel more secure as compared to the private banks. 2. as compared to others. The reason is due to specialized services in home loans, more amounts of loans, and efficient query handling
3.

Some of the customers felt that the interest rates are some what high and they will Some of the customer does not having good faith on private banks and they prefer Majority of respondents said that time taken in sanctioning the loan is very long and Most of the respondents were satisfied with the home loan schemes. Many respondents said that interest rate provided by the bank plays an important

choose the bank which offers minimum interest rate.


4.

public sector banks.


5.

the procedure is very long.. 6. 7.

role in making their decisions regarding home loans.

PROBLEMS FACED BY CUSTOMERS IN AVAILING HOME LOANS

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There are everything in the world has good or bad points. No doubt banking industry has made many efforts to enhance the customer satisfaction but customer still faced some problems. These are high lightened as below: There are procedural delays, which harass the customers lot. This will crush the curtsy of customers to avail the home loan. The attitude of bank employees some times non cooperative and it creates a hurdle in building trust and Confidence among customers about banks. The customer does not have proper knowledge about different home loan products so they face problem in making a good deal. The banks do not take into account the paying capacity of customers. So some customers are not able to get amount of loan needed by them. So above discussed are the problems which are faced by customers while availing home loans.

RECOMMENDATIONS AND SUGGESTIONS

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The Banks should use easy procedure, or say, less lengthy procedure for the sanctioning of loan to the customer. There should be less number of legal formalities, in case this exists, then, these should be completed in less time. This will be helpful in attracting more customers. To increase the customers, the banks should provide specialized services in this sector. These services can be such as proper guidance to the Customer regarding the processing of loans, especially for the customers who are illiterate.

To satisfy their customers and for good dealings in future, the banks should make prompt disbursement of loan amount to the customers so that they can buy or construct their dream home as early as possible.

Although the interest rates are on specific norms, yet customers seek less interest rate which can lower their cost of house. So banks should try to lower their interest rates. Needles to say, that the bank which having lower interest rates, have the maximum clients for loans.

The public sector banks should improve their overall services to increase the number of customers for home loans. They should recruit professionals to provide such services and to satisfy the customers.

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CONCLUSION The Indian housing finance industry has grown by leaps and bound in few years. Total home loans disbursements by banks have risen which witnessed phenomenal growth from last 5 years. There are greater numbers of borrowers of home loans. Today many banks provide home loans whether commercial banks or financial institutions to the people who want to have a home. The housing sector plays an important role in the economic development of the country. The interest rates of home loans are expected to go down even further according to analysts who foresee a cut down in the rates by the RBI in the wake of the decision taken by US Federal Reserve to cut its rates by a significant margin. By this study we have tried to find out satisfaction level of customers and problems faced by them in obtaining home loans. The whole research was carried out in a systematic way to reach at exact results. The whole research and findings were based on the objectives. From this comparative study on home loans we conclude that large number of customers prefers SBI and HDFC LTD as compared to other banks for home loans. The reason is due to specialized services in home loans, more amounts of loans, and efficient query handling. Some of the respondents felt that the interest rates are some what high and they will choose the bank which offers minimum interest rate.

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QUESTIONNAIRE 1. Have you taken home loan? (A) Yes (B) No

2. From which of the following bank have you taken loan? A. B. C. D. E. F. A). Newspaper C). Word of mouth E). Any Other ____________ Punjab national Bank HDFC ICICI SBI CITY BANK Other(Please Specify) ______________ B). Hoarding/banners D). Television

3. From where have you got information about home loans scheme?

4. While taking loan, which things attract you the most? A). Interest rates C). Pay back period E). All of the above 5. What is your annual income? A) C) >2 lacks 5-8 lacks B) D) 2-5 lacks 8 lacks and above B). Service Provided D). Schemes

6. How much loan amount you took? A). Less than 1 lacks C). 5-10 lacks B).1-5 lacks D). More than 10 lacks

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

8. What are the reasons for taking a home loan? A. Non availability of funds B. Reluctance to pay cash in on go C. Tax benefit 9. What types of home loan you are taken? A). B). C). D). E). F). Home purchase loan Home construction loan Home improvement loan Home extension loan Home equity loan Land purchase loan

10. What problems did you face while getting home loans? a. Lack of knowledge b. Procedural delays and non cooperation c. Any other (please specify) 11. Are you satisfied with the after home loan services provided by your bank? A). Satisfied B). Average C). Dissatisfied

12. Does the cost of home loan is appropriate, according to your demand? (A) Yes (B) No

13. Are you satisfied by the time taken in sanctioning the loan? (A) Yes (B) No

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14. Are you aware of all terms and conditions of home loans? (A) Yes (B) No

115. Which grade you want to give of home loan schemes of your bank? Excellent Very Good Good Satisfactory

16. What suggestions do you want to give for improvements in home loans Scheme? _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ ___________________________

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