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SUMMER TRANNING
PROJECT REPORT
ON
“COMPARATIVE ANALYSIS OF HOME
LOANS AND ITS OPEARTIONS”
U
SUBMITTED IN PARTIAL FULFILLMENT
OF THE
REQUIREMENT OF MASTER OF
BUSINESS ADMINISTRATION
(M.B.A)
2009-2011
SUBMITTED BY SUBMITTED TO
Abhishek sharma Mr.SurjitBishnoi
MBA II year (III SEM) H.O.D.
DECLARATION
I Abhishek sharma declare that this project report
“Comparative Analysis of Home Loans And It’s
Operations” is based on my project study. This project
report is my original work and this has not been used for
any purpose anywhere.
Abhishek Sharma
PREFACE
Realizing that the practical examination is an academic for all round development
of a personal. As a part of the course Curriculum Application, the student has to
undergo practical training for one and half month.
The object of training is to provide the student with an insight to the practical
aspects of organization working and environment. Such type of training helps
students to work on real industrial environment, and to gain practical
knowledge and build confidence.
It is with great of gratitude and happiness that I present a thoroughly made project on the
Comparative Market Analysis of Home Loans and its day to day operations offered by
UNION BANK and other major players in this sector.
This project is an insight into the current banking scenario of country in Home Loan
Division. In the completion of the project many people have worked with me to carry
forward my project. I express my deep sense of gratitude to all that have directly or
indirectly helped in the successful completion of the project.
There can possibly be no claim to the perfection in the project. In the case I request to
bear with any errors, omissions or discrepancies that may have crept in despite due care
and caution on my part.
Executive summary
Real estate in India is currently one of the hottest investments options in Asia. A recent
survey of the real estate scenario acknowledge the Indian metropolis of Mumbai,
Bangalore and New Delhi as the top three investors' choices for real estate investment in
Asia. But there were concerns mainly related to the availability of necessary funds for
investment and in the more recent times, the boom in the real estate market opened the
doors for a host of realty funds from financial institutions. Prior to five years, the real
estate segment in India was neither organized nor were there too many large institutions
in the construction industry. But now with an organized finance sector and with the
increase in transparency levels, it has become easier to create financing vehicles.
The decrease in housing loan interest rates and an increase of disposable income has
contributed largely to an increased demand in the residential segment. In spite of a rise in
home loans interest rates and qualitative sanctions being levied by the RBI on banks,
buying interest has not waned because home loans are still cheaper than ten years ago.
The retail markets are also undergoing a defining change with the introduction of larger
retailing formats. The financial institutions also wasted no opportunity in tapping the
fund requirement catering to the inflow of potential buyers in the retail sector. While
most funds were initially floated by financial Institutions or banks such as SBI, LIC,
HDFC, ICICI Bank, UNION Bank of India and IDBI Bank, and even retailers have
now entered the real estate sector for creating more retail facilities and have been hugely
successful.
As the realty prices in India skyrockets, housing complexes mushrooming and city
landscapes becoming unrecognizable, the growth across all real estate segments and
experts estimate that demand will remain steady at the currently high levels because of
the improving economic environment and the real estate sector is expected to grow 30%
every year. This rising property prices encourage banks and financial institutions to lend
more with the increase in collateral values. Although the home loan providers have hiked
their rates twice in less than three months, home loans continue to be nearly 45 per cent
cheaper than what they were in early 2001. Because if statistics are referred to, the
interest rates which now range between 9-10 per cent, are still much lower than what they
were ten years ago, at 16-17 per cent.
In addition to funds being raised by the Indian financial institutions like HDFC, ICICI
and IDFC abroad, the money could be used to develop business and IT parks and
townships. A study has revealed that as many as one million homes are financed every
year in India now with an estimated home mortgages market of US$ 10.7 billion -
contributing to India's phenomenal realty prospect.
Contents
INTRODUCTION...............................................................................................................
...................
ABOUT UNION BANK OF
INDIA...........................................................................................
MISSION AND CORE
VALUES.................................................................................................
SHAREHOLDING PATTERN………………………………………..
…………………………
BOARD OF
DIRECTORS………………………………………………………………………
MILESTONES……………………………………………………………………
……………...
INDUSTRY
SCENARIO........................................................................................................................
HOME LOAN IN INDIA………………………………………….
…………………………….
TYPES OF HOME LOANS……………………………………….
…………………………….
TAX BENEFITS ON HOME LOANS…………………………….
…………………………….
Questionnaire………………………………………………………………
…………...
The dawn of twentieth century witnesses the birth of a banking enterprise par
excellence- UNION BANK OF INDIA- that was flagged off by none other than the
Father of the Nation, Mahatma Gandhi. Since that the golden moment, Union
Bank of India has this far unflinchingly traveled the arduous road to successful
banking........ a journey that spans 88 years. We at Union Bank of India, reiterate
the objective of our inception to the profound thoughts of the great Mahatma...
"We should have the ability to carry on a big bank, to manage efficiently
crores of rupees in the course of our national activities. Though we have
not many banks among us, it does not follow that we are not capable of
efficiently managing crores and tens of crores of rupees."
The key to the success of any organization lie with its people. No wonder, Union
Bank's unique family of about 27,772 qualified / skilled employees is and ever will
be dedicated and delighted to serve the discerning customer with
professionalism and wholeheartedness.
Union Bank is a Public Sector Unit with 55.43% Share Capital held by the
Government of India. The Bank came out with its Initial Public Offer (IPO) in
August 20, 2002 and Follow on Public Offer in February 2006. Presently 44.57 %
of Share Capital is presently held by Institutions, Individuals and Others.
Over the years, the Bank has earned the reputation of being a techno-savvy and
is a front runner among public sector banks in modern-day banking trends. It is
one of the pioneer public sector banks, which launched Core Banking Solution in
2002. Under this solution umbrella, All 2805 Branches of the Bank have
been 1200 networked ATMs, with online Telebanking facility made available to all
its Core Banking Customers - individual as well as corporate. In addition to this,
the versatile Internet Banking provides extensive information pertaining to
accounts and facets of banking. Regular banking services apart, the customer
can also avail of a variety of other value-added services like Cash Management
Service, Insurance, Mutual Funds and Demat.
The Bank will ever strive in its endeavor to provide services to its customer and
enhance its businesses thereby fulfilling its vision of becoming “THE BANK OF
FIRST CHOICE IN OUR CHOSEN AREA BY BUILDING BENEFICIAL AND
LASTING RELATIONSHIP WITH CUSTOMERS THROUGH A PROCESS OF
CONTINUOUS IMPROVEMENT”.
Our Mission and Values
Our Mission
Core Values
•
DISTRIBUTION OF SHAREHOLDING HOLDING AS ON 30.06.2010
A. PROMOTER'S HOLDING
1PROMOTERS*
3INSTITUTIONAL INVESTORS
4OTHERS
a) Private Corporate Bodies 21640965
b) Indian Public 48364617
c) NRIs/OCBs 200002
d) Any other (please specify)-GDR
Sub Total 70205584
Note :-
Shareholding
Board of Directors
The Bank has 11 members on the Board. Dr. P. J. Nayak is the Chairman and CEO of the
Bank.
WORKMEN DIRECTOR
K.S. SREENIVASAN
SHRI N. SHANKAR
Director DEBASIS GHOSH
Government Nominee Director
SMT. RANI SATISH
under General Category
The Home loan sector in India is the pi-vital role player in the growth of the real estate
scenario in India. With tax incentives given to the housing finance sector in the annual
budget, transactions related to buying and selling of residential properties increased
considerably and was much higher as compared to previous years.
Since the new class of buyers are 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 market in India undergoes 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 NRI customers at floating and fixed rate of
interest and also at attractive EMI options.
No tax benefits are available for NRI customers unless you file returns and thereby
become eligible to avail of the tax benefits.
Besides home loans, Commercial property loans are also available and different
financial institutions in India provide commercial loans at different rates and different
upper limits.
Real estate loans are available to builders, promoters and real estate developers. The
experience and financial standing of the builders is taken into account before the loan is
granted which is to be returned with the minimum installments.
Today, the amount of money that a city dweller spends on rent is roughly the same, or
only slightly less than the amount he pays as an EMI on a housing loan. Earlier the home
loan sector in India was solely dependent on nationalized and public sector banks, but the
entry of public sector banks into the housing finance business marked the beginning of
the first round of interest rate cuts. And this reduction in interest rates has enhanced the
borrowing power of customers. Moreover, HFCs are offering incentives to attract
investors like
• Some companies sanction the housing loan without requiring you to identify
property as a pre-requisite for eligibility
The realty boom in India has given a new dimension to the finance sector in India - both
in Home Loans and Home Insurance segments. This has not only given a competitive
edge to the finance companies to provide attractive options to customers but has also
contributed to the increased investments in the real estate sector. This has resulted in 13
new institutions foraying into the housing finance business in the last three years.
A person seeking investments for house or a property opts for Home Loans for a variety
of purposes ranging from construction to renovation. The Housing Finance
Companies (HFCs) now offer individuals with various alternatives to choose from
while buying a home loan. And the availability of Home Loans offered is as varied as
their requirements.
• Refinance Loans
• Loans to NRIs
This is the basic home loan for the purchase of a new home.
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.
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 home improvement loan, after obtaining the requisite
approvals from the relevant building authority.
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.
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.
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.
Re-finance:
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.
Tax Benefits on Home Loans
As the Indian real estate market makes an upward swing, and investors opt
for housing finance or home loans, tax benefits obtained from them is a
lucrative option. Customers availing of Home Loans can claim a certain
portion of the interest and principal that they pay towards the loan
installments for reducing tax liability. Resident Indians are eligible for
certain tax benefits on principal and interest components of a loan under the
Income Tax Act, 1961. Moreover, an added tax benefits under Sec 80 C on
repayment of principal amount up to Rs. 1,00,000 p.a. can be availed that
can further reduce your tax liability by about Rs. 30,000 p.a.
Tax benefits can be claimed on both the principal and interest components of
the home loan as per the Income Tax Act, 1961. These deductions are
available to assesses, who have taken a loan to either buy or build a house,
under Section 24(b). Interest on borrowed capital is deductible up to Rs 2,
00,000 if the following conditions are satisfied:
• 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 principle amount 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:
• 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.
• According to the Income Tax Act, only the person who has taken the
loan can claim tax rebates.
• 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 same year. But, if the sale had
taken place after 3 years, then a long-term capital gains tax liability
would have arisen.
• 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.
UNION BANK
Power Home
Quick and easy home loans
Overview:
Union Bank's Power Home puts an end to your Real Estate troubles. Augment your reach
and buy the house that you've set your heart on
Features
• No Prepayment charges.
Power Home: Loan Purposes
You can apply for Power Home for the following purposes -
Salaried Individuals
• The applicant in all the cases should be above 21 years of age at the time of loan
commencement and up to the age of superannuation.
Professionals
• The applicant should be above 21 years of age at the time of loan commencement
and up to 65 years or less at the time of loan maturity.
• The applicant in all the cases should be above 21 years of age at the time of loan
commencement and up to 65 years or less at the time of loan maturity.
Power Home: Documentation
Documents Required
The following documents are required along with your loan application
• In Society Cases
• Allotment Letter.
• Possession letter.
• Regularization cum NO dues Certificate.
• Convenience Deed (for structure).
• Perpetual Lease Deed (for Land).
• Allotment Letter.
• Site Plan.
File Documentation
• PROPIETORSHIP FIRM
• PARTNERSHIP FIRM
COMMON DOCUMENTS
• Either single a/c or joint a/c with other family members (father,mother,son) with
regular source of income
• Individuals who may be employed/self-employed in business having regular
income
• Last one year Statement in case of Current A/C.
• Address proof.
• Photo ID.
• IF Customer is already taken any other Loan than Track Record of that loan.
• Indian Citizen -21 years of age
Note:
Margin
• For loan up to rs. 200 lacs, 20% of the cost of the property
• For loan up to rs. 200 lacs, 35% of the cost of the property
Repayment
Disbursement
The loan will be disbursed in full or in suitable installments, taking into account the
requirement of funds and progress of construction, as assessed by the Bank directly to
seller or builder or local development authority or supplier of materials etc.
Processing fee equivalent to 0.50% of the loan amount (applied for) will be collected
along with the application form (taxes as applicable).
2% of the principle outstanding in case of takeover by other bank or HFC, otherwise nil.
• Bank reserves the right to reject any application without assigning reasons thereof
• The applicant will undertake to inform the Bank as and when there is a change in
address or employment
• No repayment penalty
• Flexible repayment schedule
• Easy and convenient EMIs
• Sanction within 72 hours on receipt of application in full as per requirement
• Pay interest on daily reduced balances
The terms and conditions mentioned above and elsewhere under the scheme are
subject to modification from time to time solely at Bank's discretion.
Rate of interest (w.e.f 15.02.2010) for Home Loans up to rs. 5.00 lacs
Rate of interest (w.e.f 15.02.2010) for Home Loans up to rs. 5.00 lacs and
30.00lakh
Fixed Floating
Rate of interest (w.e.f 15.02.2010) for Home Loans up to rs. 50.00 lacs to
200.00 lacs
Rate of interest (w.e.f 15.02.2010) for Home Loans above 200.00 lacs
As directed by the Reserve Bank of India, vide circular. The Bank has adopted modified
Fair Practice Code for lenders as approved by the Board of Directors. The salient features
of the same are:
In the loan application form, the Bank shall provide comprehensive information
including information about fees and charges if any payable for processing and
amount of such fees refundable in case of non acceptance of application,
prepayment options and other matter which affects the interest of the borrowers, of
all categories of loans, irrespective of the amount of loan sought by them.
Processing
• The Bank shall provide acknowledgement for receipt of all loan applications
indicating the time frame within which the application will be disposed of.
• The Bank shall verify the loan application and if additional details / documents
are required, these will be sought from the applicant.
• For all categories of loans and irrespective of any threshold limits, the Bank will
be expected to process the application without delay. In case the application is
turned down, the Bank will convey in writing to the applicant the reasons for
rejection within one month.
• All the terms and conditions and other caveats will be duly communicated by
an authorized official of the Bank to the customer in writing.
• The acceptance of the customer will be obtained on the sanction letter with the
customer's signature under the caption "I/WE ACCEPT ALL THE TERMS
AND CONDITIONS WHICH HAVE BEEN READ AND UNDERSTOOD
BY ME/US".
• A copy of the loan agreement along with all the enclosures quoted in the loan
agreement will be furnished to the customer at the time of issue of the
sanction letter.
• The sanction letter / loan agreement will clearly state that the credit facilities
will be extended solely at the discretion of the Bank and that drawings under
the following circumstances will be solely at the discretion of the Bank.
• Drawings beyond the drawing power / sanctioned limits.
• The disbursement will be done immediately on compliance of all the terms and
conditions of the sanction by the borrower and the branches need not refer to the
sanctioning authority for disbursement.
• Any changes in the terms and conditions of the sanction such as interest and
charges will be notified to the borrower before effecting the changes.
• Any changes in interest rate and charges will be effected only prospectively after
giving due notice to the borrower.
• The Bank shall release all securities on receiving payment of loan. However, the
Bank may decide to exercise the right to set off any legitimate right or lien for any
other claim against borrower. In case the Bank decides to retain the security, the
borrower will be notified about the remaining claims and the documents under
which the Bank is entitled to retain the security till the relevant claim is paid /
settled.
Others
• The Bank will not interference in the affairs of the borrowers except where
provided for in the terms and conditions of the loan sanction documents, such as
periodic inspection, scrutiny of books of accounts, verification of stocks and book
debts, and scrutiny of QIS statements.
• In case any information not disclosed earlier by the borrower has come to the
notice of the Bank, the Bank will have the right to elicit the necessary information
from the borrower and initiate action to protect its interest.
• While, the Bank may participate in credit-linked schemes framed for weaker
sections of the society, the Bank shall not discriminate on grounds of sex, caste
and religion in the matter of lending.
• In the matter of recovery of loans, the Bank shall not resort to undue harassment
such as persistently bothering the borrowers at odd hours and use of muscle
power.
• In the case of receipt of request for transfer of borrowed account, either from the
borrower or from other banks / FIs which propose to take over the loan, the
Banks' consent or objection, if any, shall be conveyed within 21 days from the
date of receipt of request.
Grievance Redressal
Though the sanction of the loans will be at the sole discretion of the Bank, borrowers will
have an opportunity to appeal against the decision of the Bank's functionaries. Any such
grievance received from the borrower will be heard and disposed of by the next higher
authority. For this purpose the following review structure is available to the borrower,
Details:
Calculation of Eligibility
For Example –
• case of salaried person we calculate the average of the six months pay slip.(If Net
Salary is variable)
P * r/12 (1 + r/12) n * 12
EMI =
(1 + r/12) n *12 – 1
Here:
P = Principal Amount
R = Rate of interest
N = No. of years
Amortization
Mode of Payment
Bank/Housing Processin
Pre-Payment
Finance g 0-5 Years 6-10 Years Over 10 Years
Penalty
Corporation Fee
Fixed Floating Fixed Floating Fixed Floating
No penalty if upto 25% of loan is
ABN-Amro 0.50% cleared per year. Else 2% on the 7.75 7.25 7.75 7.75 7.75 7.25
amount in excess of 25%
Allahabad Bank 0% 7.75 7.25 8.25 7.75 8.75 7.75
Andhra Bank 2% 8.50 8.00 9.25 8.75 9.50 9.00
Bank Of Baroda 0% Upto 3% 9.0 7.50 9.5 8.0 10.0 8.25
Bank of India 8.5 7.5 9.25 7.75 9.25 8.25
Bank of
- 7.5 - 8.0 - 8.25
Maharashtra
Bank of Punjab 11.75 7.50 11.75 7.50 11.75 7.50
Bank of Rajasthan 8.0 7.5 8.25 7.5 8.5 8.0
Birla Home
8.00 8.00 8.5 8.5 8.75 8.75
Finance
Central Bank of
0% 0 8.5 8.0 9.0 8.5 9.5 9.0
India
Corporation Bank 0% 0 8.0 7.5 9.00 8.25 - 8.50
Canara Bank 8.0 7.50 9.00 8.00 9.25 8.00
Can Fin Homes 7.75 7.25 8.75 8.0 8.75 8.0
Citibank 8.25 8.25 8.25 8.25 8.25 8.25
Dena Bank 0.50% 0% 8.75 7.25 9.25 7.75 9.50 8.0
Dewan Housing
Finance Ltd ? 0 0 8.5 8.0 8.5 8.0 8.5 8.0
DHFL
Federal Bank - 7.25 - 7.5 - 8.0
GIC Housing
9.75 7.5 9.75 8.0 10.0 8.25
Finance
HDFC Bank 1.0% 2% 8.75 8.25 8.5 8.0 8.25 7.5
Up to 25% of the loan amount
every financial year - NIL, For
HSBC 1.8% amount over 25% of loan 8.0 7.75 8.0 7.75 8.0 7.75
amount in every financial year-
2% of amount prepaid
IDBI 0.75% 2% 9.25 7.5 9.25 8.0 9.25 8.25
ICICI 0.50% 2% 9.0 8.0 9.0 8.0 9.0 8.0
Indian Bank 0 0 7.75 7.25 8.25 7.75 8.75 7.50
Indian Overseas
0.5% 8.25 7.75 9.25 9.25
Bank
Kotak Mahindra
Nominal fee 8.5 8.5 8.25 7.25 8.0 7.5
Bank
LIC Housing
1% 8.0 7.5 8.0 7.5 8.0 7.5
Finance
Oriental Bank of
8.0 7.5 8.5 8.0 8.75 8.25
Commerce
Punjab National
9.25 7.75 10.25 8.0 10.5 8.25
Bank
Standard No fee for part-prepayment. Else
10.5 10.5 10.5 10.5 10.5 10.5
Chartered Bank 2.5%
State Bank Of
7.5 7.25 8.25 8.0 8.5 8.25
Hyderabad
State Bank of
0% 0 8.0 7.5 8.5 8.0 8.75 8.25
India
State Bank of
1% 7.75 7.5 8.25 8.0 8.5 8.25
Mysore
State Bank of
0.5% 7.5 7.0 8.5 8.0 8.75 8.25
Travencore
Sundaram Home
9.00 8.75 9.00 8.75 9.00 8.75
Finance
Syndicate Bank Rs 1000 0 8.0 7.75 8.5 8.25 8.75 8.50
Tata Home
12.0 7.75 12.0 8.25 12.0 8.5
Finance
Union Bank of
0 9.75 9.5 10.25 10.0 10.75 10.5
India
At PLR Minus At PLR Minus At PLR Minus
United Bank of 2.00% subject to 2.00% subject to 2.00% subject to
1% 8.5 9.0 9.25
India a minimum of a minimum of a minimum of
9.5% 9.5% 9.5%
Vijaya Bank 1% 7.5 7.0 8.5 8.0 8.75 8.25
Note:
• LTV – 85%
• Minimum Return – 1.20 lac
Features Offered By Other Banks
SBI
Unique features:
The most preferred home loan provider. The latest offer is an interest rate
concession on GREEN HOMES in accordance with SBI's commitment to Environment
protection. Having a vast variety of products to suite every kind of customer.
Minimum age limit 18 yrs & Maximum age limit for a Home Loan borrower is fixed at
70 years, i.e. the age by which the loan should be fully repaid.
Special Features:
LIC Housing Finance offers home loans for construction/purchase of house/flat and
also for renovation of existing flat/house. While LIC Griha Prakash and are for
purchase, construction of properties and extension of residential units, LIC Griha
Sudhar Loan facilitates repairs/renovation of properties. Minimum age requirement is
21 years as on the date of sanction.
A financially strong and stable company we have already sanctioned loans to over 5
lakh
applicants.
With a network of more than 100 offices in the country we are always accessible to
you, wherever you may be.
HDFC
Home Loan - Home loans for individuals to purchase (fresh / resale) or construct houses.
Application can be made individually or jointly. HDFC finances up to 85% maximum of
the cost of the property (Agreement value + Stamp duty + Registration charges).
Home Improvement Loan - HIL facilitates internal and external repairs and other
structural improvements like painting, waterproofing, plumbing and electric works, tiling
and flooring, grills and aluminum windows. HDFC finances up to 85% of the cost of
renovation (100% for existing customers).
Home Extension Loan - HEL facilitates the extension of an existing dwelling unit. All
the terms are the same as applicable to Home Loan.
Land Purchase Loan - Be it land for a dream house, or just an investment for the future,
HDFC Land Purchase Loan is a convenient loan facility to purchase land.
HDFC finances up to 70% of the cost of the land (Conditions Apply). Repayment of the
loan can be done over a maximum period of 10 years.
Choose from Fixed Rate or Floating Rate with options to structure your loan as Partly
Fixed or Partly Floating.
Flexible repayment options to suit your individual needs.
Loan cover Term Assurance Plan - HDFC Standard Life Insurance Company Ltd.
offers an insurance plan*, which is designed to ensure that life's uncertainties do not
affect your
family's interests and your precious home. LCTAP provides a lump-sum payment on the
unfortunate demise of the life assured.
This pure risk plan is designed in a way that the cover decreases as you repay your home
loan making it a low cost premium insurance plan.
Automated Repayment of Home loan EMI - You can give us standing instructions to
repay your Home Loan EMIs directly from your HDFC Bank Savings Account, thus,
saving you the trouble of procuring, signing and tracking post-dated cheques.
HDFC also offers In-house scrutiny of Property documents for your complete peace of
mind.
Customer privileges - If you are an existing HDFC Home Loan customer, you can
avail of other loans (such as Personal Loans, Car Loans, Two-wheeler Loans and Loan
against securities) at lower interest rates.
IDBI
Advantages of IDBI Ultra Flexible Home Loans: Helps you realise your long
cherished dream of owning your home through hassle free and customer friendly
home loans. The tenor of a home loan can be up to 25 years for a resident individual
whereas for NRIs the maximum tenure is 15 years subject to maximum age of 60
years at maturity. Loan can be applied for a maximum of 90% of the property value
subject to credit discretion
• Maximum Funding
• Flexibility of choosing between Floating or Fixed interest rate
• Attractive rate of interest
• EMI on daily reducing balance
• Personalized doorstep service
• Simple documentation
• Legal and technical assistance
• Balance transfer facility
• Reassessment and adjustment of applicant's loan eligibility in case of change of
income and residence status
You can avail of a special insurance cover on your home loan for a small premium.
Features
• Tenure of a home loan can be up to 25 years for a resident individual whereas for
NRIs the maximum tenure is 15 years subject to maximum age of 60 years at
maturity.
• Loan can be applied for a maximum of 90% of the property value subject to credit
discretion.
• Security for the loan is a first mortgage of the property to be financed, normally
by way of deposit of the title deeds or such collateral security as may be
necessary.
• Title to the property should be clear and free from encumbrance, i.e., without any
pending legal litigation adversely affecting the ownership of the property.
c) Objective of Study
d) Type of Research
The research methodology adopted was both Primary and Secondary. Primary
data was collected to study the investment psyche of a person, their practice on
saving, investment options available and the need of financial planners to
manage individual’s wealth. Questionnaire was designed to ascertain the
investor’s behavior as well as to depict the future prospects and growth
momentum of the wealth management industry.
e) Sample Size and method of selecting sample
The mode of communication was informal & friendly conversation, which does
not limit discussion within a well-defined boundary.
i) Primary Research
Research was done to get a detail overview of the wealth management industry
and study the need for financial planner in the current scenario. Questionnaire
was designed to study the investment psyche of a person, their practice on
saving, different investment options available and the need of financial planners
to manage individual’s wealth. This project is mainly based on first hand
observation in the market, the way financial planning functions, scope of financial
planning and the need of a certified financial planner.
A structured questionnaire was designed covering both open and close ended
questions, to study the perception of people regarding investment avenues and
the concept of financial planner. {Specimen of the questionnaire is attached in
ANNEXURE A}.
• Companies websites
Sample Details
100 people belonging to different fields, who do investment, were asked to fill the
questionnaire, on the basis of which an attempt is made to study the prospects of
Financial Planning in the market. The sample unit consists of those people who
are trading in secondary markets, mutual funds, initial public offer, insurance,
debt instruments as they can give the accurate information about financial
planning. A sampling frame has been developed so that everyone in the target
population has an equal chance of being sampled.
Personal Information:
• Sex Ratio: From the total 100 respondents 15 were females and 85 were
males, as also shown in Fig.5.1 below.
Persons Ratio
Male 85
Female 15
f) Scope of Study
• The sample area was primarily in Jaipur. (Johari Bazar, M I Road, Tonk
Road, Malviya Nagar and Jhotwara Industrial Area) and at the Union Bank
of India branch Jagatpura.
• The sample size comprised of 100 respondents from different fields and
income group, and their responses are presumed to represent the wealth
management market.
STRENGHTS:
WEAKNESS
• Being a world class bank and having a good reputation, the goodwill can be
cashed upon with the growing economy of India.
• Rapid growth of jaipur city is another prime opportunity and moreover new
industry in and around has sprung up.
• Jaipur has great business and export of precious and semi precious and gems ,
jewellery and handicrafts, UBI has good opportunity to provide for better banking
at the national as well as international level.
• The bank should focus on common customers for wealth management as they
have more day to day spare money.
• Superior segment demarcation and co-ordination will be beneficial.
THREATS:
• All the public sector bank has started to redefine their services in order to attract
customer’s attention.
• Stringent norms by reserve bank of India at any time in near future can be threat
to foreign banks as their activities could be adversely affected.
• The entry of other foreign banks can take away some of the business.
• Many bank also coming up with ATM’s which will act as a major threat.
• The presence of other private sector bank and foreign bank in jaipur and because
of intense competition they are coming with the better products and services.
• The cash credit limit provided by other nationalized bank is major thearts.
• There is a myth surrounding the people that foreign bank are not trustworthy and
hence, do not rely on such banks.
• Special permission is required to open for the accounts of various segments like
politicians, exporters and jewelers.
Analysis and Findings
Mortgage Market Growth. As India’s housing market continues to grow and mature, it
will be important to monitor the market. During the rapid expansion of the mortgage
market from about 2003 to 2008, many commercial banks eased their lending standards
as they pursued heightened demand in the market spurred by low interest rates and rising
personal incomes.
With demand outpacing housing supply, property prices in urban areas doubled in some
neighborhoods. Prices were also bolstered by some speculative activity in the market in
from mid-2005 to about early 2008. Thus, some commercial banks pursued aggressive
growth strategies, offering loans as high as 100% of the cost of the property.
Retail Asset Products - While working on the project I found out and analysis that
Retail advances of UNIONBANK grew from Rs. 8,928 crores as at end March'07 to Rs.
13,592 crores as at end March'08, a growth of 52% yoy. Retail Advances account for
23% of the total Advances of the Bank as at end March'08. The Bank has set up Retail
Asset Centers (RACs) at 70 towns and cities for focused retail lending.
Lessons and Recommendations
• Payment System:
If facility of direct account transfer should be offered, then it will make payment
System easier for customer whose accounts are in other banks.
• Funding Of Sources:
At present Axis Bank is providing 6.31% appox. retail advances of total deposits. If
increase in the percentage ratio 8-10%, then it will allow more finances of short term
loans to the customers which will assist the bank to increase their income sources.
• Others:
• Minimum limit of home Loans amount should be decreased to attract the small
home loan sector (construction, repair etc.).
• Provide finances up to 85% of the cost of renovation (100% for existing
customers).
Summary/Conclusion
Finance for real estate is now easily available in India. The property boom is not
restricted to the national capital region but it has even transcended to satellite towns and
remote semi-urban areas in and around the national capital. The number of transactions in
the real estate sector has increased a number of times, making it profitable for the banks
and other lending institutions to offer more finance opportunities to the buyers.
In India, the most of the borrowers in home loan segment fall in the first time buyer
category. It means that they are either tenants or living with their parents in their ancestral
house. As the salaried-class is spreading and emerging stronger than ever, more and more
people are becoming capable of buying house. Their need to get finance from banks is
being taken care of by all the major players in the market. Banks like UBI, ICICI, SBI,
LIC, HDFC and all the nationalized banks are offering home loans at attractive rates.
Several housing finance companies have now begun to offer tailor-made loan schemes to
renovate, repair, extend, convert or otherwise improve one’s home. Companies like
HDFC and others provide home improvement loans for purposes like external repairs,
water-proofing, roofing, internal and external painting, plumbing and electrical work,
tiling and flooring, grills and aluminum windows, construction of underground or
overhead water tanks, paving of compound walls and setting up bore wells, among other
things.
Some of the major players in the housing finance industry have started organizing
property fairs, wherein the projects of different construction companies are brought
together and bundled with a lower than normal interest rate loan product. Such initiatives
are expected to result in a more organized housing market and more value for the
customer.
On the services front the housing finance companies have begun addressing concerns of
borrowers through counseling and legal advisory services on matters pertaining to
property’s title, its technical evaluation, its pricing etc. Customer relationship
management is emerging as one of the key areas of competition to win over new
customers. Housing finance companies have been upgrading their technology and
investing in sophisticated systems for sourcing, processing and managing information
pertaining to home loan customers.
As the scope for product differentiation is increasingly getting limited, the housing
finance companies will increasingly compete on the strength of their service quality.
Rendering technology-enabled value added services would enable the housing finance
companies to better withstand the competition.
The procedure for taking a home loan is rather easy. You can directly approach the bank
or call for a meeting to be arranged with the bank's loan executive. This can also be done
over the Internet. The banks may ask for various proofs like those related to your
residence, income, spouse's income, number of dependants, etc. Based on a number of
parameters, the banks arrive at your credit rating and offer you varying amount of loans.
Home loans in India come in various forms inviting fixed interest rate or floating interest
rates. There are hybrid loans also that are a middle path between fixed and floating
options. The borrower can put a part of his loan amount under fixed rate and expose the
other part to the floating rates that depend on market conditions and the interventions by
the Reserve Bank of India.
The Internet as a medium of loan arrangement is fast catching up in India. Many websites
are coming up that take care of individual and corporate finance for various purposes like
buying real estate, investments, business operations, etc. This medium of finance is
growing rapidly although it is surely in its nascent age as far as the Indian market is
concerned.
Appendixes
PERFORMANCE HIGHLIGHTS
Q1 FY09
Union Bank of India reported its financial performance for the year ended 31st
March 2010. Highlights of the audited results as compared to the previous period
are as under:-
The Bank’s net profit grew by 20.15% yoy to Rs20.75bn in FY10. Operating profit
grew by 18.72% YoY to Rs36.59bn in FY10. On a quarterly basis, the Bank’s net
profit for Q4 10 increased by 27.47% to Rs5.94bn from Rs4.66bn in the previous
year.
The Net Interest Margin (on interest earning assets) of the Bank stood at 2.71%
for the year ended 31st March’10 as against 3.24% in the previous year.
The Bank’s Net Interest Income increased from Rs.3813 crs to Rs.4192 crs, a
growth of 9.94% YoY.
The bank’s non-interest fee based income grew by 33.18% to Rs 1975 crs in FY
10 as against Rs 1483 crs in the previous year. Core fee based income grew by
32.74% to Rs 896 crs from Rs 675 crs in the previous year.
Operating expenses are at Rs.2508 crs in 31st March’10 as against Rs.2214 crs
in the previous year. The ratio of Operating expenses to Average working funds
reduced to 1.52% as of 31st March’10 as against 1.63% in the previous year.
Business Growth
� Domestic Business mix of the Bank has registered growth of 22.33%
(y-o-y) to Rs.287942 Crore as on 31st March’10 from Rs 235376 crore
as on 31st March’09.
The Bank recorded a quarterly Operating profit of Rs.1148 crs for Q410
as against Rs.912 crs for Q409 registering increase of 25.88%.
� Net Profit increased from Rs. 466 crore to Rs 594 crore registering a
growth of 27.47% QoQ.
� Net Interest Margin (NIM) for quarter ended 31st March’10 is at 3.39%
as against 2.69% in the corresponding period of the previous year.
% of Total
Rank Sectors
Corporate Credit
1 Gems & Jewellery 8.97**
2 Metals 8.24
3 Infrastructure 7.70
4 Real Estate 7.68
5 Financial Companies* 7.33
6 Trade 5.64
7 Textiles 5.43
8 Petrochemicals 4.02
9 Food Processing 4.00
10 Chemicals 3.99
As on 30.6.2008
RETAIL BANKING
INCREASING REACH
RETAIL ASSETS
• Retail Assets grow 52% yoy.
• Retail Assets constitute 24% of the Bank’s total advances, as against 23%
at end June’07.
• Do you know properly about the terms & conditions of home loan services?
[ ] Yes [ ] No
• Are you know about product & services offered by Union Bank of India related home
loan?
• Would you like to recommend your friends and relatives about UBI home loan?
[ ] Yes [ ] No
[ ] Yes [ ] No
(12) What types of changes you expect from Union Bank of India in feature?
Suggestion…
1………………………………………………
2………………………………………………
3………………………………………………
References and Bibliography
Net Sites:
• www.unionbank.com
• www.emkayshare.com
• www.indiaground.com/home_loans
• www.in.ibtimes.com/articles/20070806
• www.niftindia.com/unionbanklist.html
• www.indiahousing.com
• www.indiaearnings.moneycontrol.com/sub_india/compnews.php?autono=330584
• www.equitymaster.com/DETAIL.ASP?story=2&date
Releases:.
• Annual Performance Report.