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The document discusses home loan services provided by HDFC Bank based on a questionnaire and survey conducted.

The document is a student project report submitted to the University of Mumbai that analyzes home loan services of HDFC Bank.

Home loans are loans taken to purchase a home and are important because owning a home is a major financial decision and investment for most people.

PROJECT REPORT.

“HOME LOANS IN HDFC”

SUBMITTED TO
UNIVERSITY OF MUMBAI.

DEGREE.
BACHELOR OF MANAGEMENT STUDIES (FINANCE).
PREPARED AND SUBMITTED BY,
SUNIL VINAY COLACO.

UNDER THE GUIDANCE OF.


PROF.BRANDON D’SILVA

COLLEGE NAME.
ST.GONSALO GARCIA COLLEGE OF ARTS AND
COMMERCE.
VASAI [W]. DIST. PALGHAR, MAHARASHTRA 401208.

ACADEMIC YEAR
2019-2020.
DECLARATION.

I the undersigned, Mr. SUNIL VINAY COLACO hereby, declare that the work
embodied in thus project work titled “HOME LOANS IN HDFC” forms my
own contribution to the research work carried out under the guidance of PROF.
BRANDON D’SILVA is a result of my own research and has not been
previously submitted to any other Degree/Diploma to this or any other university.
Wherever reference has been made to previous work of other, it has been clearly
indicated as such and included in the bibliography.
I, here by further declare that all information of the document has been obtained
and presented in accordance with the academic rules and ethical conduct.

SUNIL VINAY COLACO.

CERTIFIED BY,
PROF.BRANDON D’SILVA.
CERTIFICATE.

This is to certify that Mr. SUNIL VINAY COLACO of TY BMS VI (2019-


2020) has successfully completed the project on HOME LOANS IN HDFC,
under the supervision of PROF. BRANDON D’SILVA.

______ ________________________

Dr. Somnath Vibhute Prof. Rubina D’mello


Principal Course Co-ordinator

_______________________ ______________________

Prof. Brandan D’Silva External Examiner


Project Guide
ACKNOWLEDGEMENT.
To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.
I would like acknowledge the following as being idealistic channels and fresh
dimensions in the completion of the project.
I take this opportunity to thank the UNIVERSITY OF MUMBAI, for giving me
chance to do this project.
I would like to thank my principal, DR.SOMNATH VIBHUTE, for providing
the necessary facilities required for the completion of the project.
Also, this wouldn’t have been possible without the moral support and guidance
of. PROF. RUBINA D’MELLO.
Would like to express my sincere gratitude to my project guide and my mentor,
PROF.BRANDON D’SILVA, whose guidance, care, and moral support made
this project a successful one.
I would also like to thank the COLLEGE LIBRARY, for providing various
reference books and magazine’s needed for the completion of the project.
Last but not the least, I would like to thank each and every person who has helped
me directly or indirectly in the completion of the project, especially MY
PARENTS AND PEERS, who supported me throughout my project.
EXECUTIVE SUMMARY.

Home is where the heart is -owning a home is a lifelong dream for most of
the people. Home is more or less a lifetime investment and hence home loans
are an integral part of every person who dreams and wants to have a living
space of his own. Buying a home is probably the biggest purchase most of us
will ever make in our lifetimes. Owning our own home is a watershed event
in our life. You are the master (or mistress) of your own space, your little
corner in the universe. But the process of finding your little nest is a stressful
one. A once in a lifetime investment needs a loan and that is how a home loan
comes into the scheme of things in your life. Almost all public and private
sector banks are offering home loans at attractive rates for purchasing their
dream home. Home loan usually cover a variety of types. All Banks have
come out with home loan products studded with features and value additions
that make the schemes not only attractive but also serve as a substantial
source to the borrowers for owning their dream home.
INDEX.

CHAPTER NAME PAGE


NO. OF NO.
CHAPTER.

1.] INTRODUCTION. 1

1.1 MEANING. 2

1.2 HISTORY. 4
2] HOME LOANS. 5

INTRODUCTION 5
2.1
FEATURES. 6
2.2

2.3 PROCEDURE. 7

TAXATION. 11
2.4
3] HDFC HOME 14
LOANS.

INTRODUCTION.
3.1 AND HISTORY. 14

3.2 TYPES. 16
3.3
INTERST RATES. 24
3.4 PROCESS. 25
4] RESEARCH 29
METHODOLOGY.

5] LITERATURE 32
REVIEW.

6] DATA ANALYSIS 36
AND
INTERPRETATION
.

7] CONCLUSION. 50
1] INTRODUCTION.
Home is where the heart is -owning a home is a lifelong dream for most of the
people. Home is more or less a lifetime investment and hence home loans are an
integral part of every person who dreams and wants to have a living space of his
own. Buying a home is probably the biggest purchase most of us will ever make
in our lifetimes. Owning our own home is a watershed event in our life. You are
the master (or mistress) of your own space, your little corner in the universe. But
the process of finding your little nest is a stressful one. A once in a lifetime
investment needs a loan and that is how a home loan comes into the scheme of
things in your life. Almost all public and private sector banks are offering home
loans at attractive rates for purchasing their dream home. Home loan usually
cover a variety of types. All Banks have come out with home loan products
studded with features and value additions that make the schemes not only
attractive but also serve as a substantial source to the borrowers for owning their
dream home.
Purchasing home is a big decision and if one is taking loan for the purchase of
home then it gets even bigger because as far as middle class is concerned it is a
big liability because home loan usually last for 25 to 30 years and in order to
repay loan for such a long period of time one needs to analyse all aspects and
then take the decision whether to take the loan or not on the basis on future
expected inflow of income.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 1


1.1 MEANING.
In finance, a loan is the lending of money from one individual, organization or
entity to another individual, organization or entity. A loan is a debt provided by
an entity (organization or individual) to another entity at an interest rate, and
evidenced by a promissory note which specifies, among other things, the
principal amount of money borrowed, the interest rate the lender is charging, and
date of repayment. A loan entails the reallocation of the subject assets for a
period of time, between the lender and the borrower. In a loan, the borrower
initially receives or borrows an amount of money, called the principal, from the
lender, and is obligated to pay back or repay an equal amount of money to the
lender at a later time. The loan is generally provided at a cost, referred to as
interest on the debt, which provides an incentive for the lender to engage in the
loan. In a legal loan, each of these obligations and restrictions is enforced by
contract, which can also place the borrower under additional restrictions known
as loan covenants. Although this article focuses on monetary loans, in practice
any material object might be lent. Acting as a provider of loans is one of the
principal tasks for financial institutions such as banks and credit card companies.
For other institutions, issuing of debt contracts such as bonds is a typical source
of funding.
A sum of money borrowed from a financial institution or bank to purchase a
house. Home loans consist of an adjustable or fixed interest rate and payment
terms is termed as home loan.

ADVANTAGES.
1. The first and foremost advantage of home loan is that an individual gets a tax
rebate on the interest paid by him or her so for people who fall under high tax
bracket taking home loan can be a good option as one can save taxes by showing
interest on housing loan as a tax deduction while filing income tax return.
2. Another benefit of home loan is that interest rate on home loan is lower as
compared to other loans like personal loan, vehicle loan, mortgage loan and so on
which in turn puts less burden on the borrower as far as monthly interest
payments are concerned.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 2


3. Capital appreciation is another major benefit of home loan, because over the past
few decades’ capital appreciation in the case of property prices has been much
higher than the interest required to be paid on housing loan. So for example if an
individual has taken home loan of $100000 at interest rate of 10 percent to
purchase the house and if the value of house goes to $400000 in 10 years then the
interest of 10 percent will not be a bad deal for the borrower as capital
appreciation will take care of interest expenses.

DISADVANTAGES.
1. The biggest disadvantage of home loan is that it goes on for many years
so as far as an individual is concerned he or she has to keep earning
money so that he or she can repay both the interest as well as principal
component of the home loan and if due to some unforeseen
circumstances he or she become jobless then it can lead to default on the
loan and bank or financial institution taking over the home of the borrower.
2. Another limitation of home loan is that it is not necessary that the value of
the home will rise in the same way as it has risen in the past few decades
so an individual who is taking a home loan in anticipation that capital
appreciation will take care of interest rate can be a mistake. So for
example, if in the above example if the value of house remains at
$100000 or falls to $80000 then an individual who took the house in
anticipation of capital appreciation can be in trouble because of the
interest has to be paid no matter what the value of the house is
3. Another disadvantage of home loan is the presence of opportunity cost because
many people do not take into account the opportunity cost factor into
consideration. So for example, if instead of locking $100000 in purchasing a
house an individual can invest that amount in equity market or make a fixed
deposit or invest in other income-generating securities and as far as home is
concerned he or she can take it on rent. So if the rent of home is $500 per month
and an individual is earning $1000 from $100000 of his or her investments after
paying interest on loan then this $500 can be considered as the opportunity cost
of capital.
As one can see from the above that home loan has many benefits as well as
limitations and any individual before taking home loan should carefully analyze
both the aspects and then take the decision whether to take a home loan or not.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 3


1.2 HISTORY.
Banking system in the world has emerged many centuries ago and in India it
rooted its seed with the existence of the General Bank of India in the year 1786.
In earlier days banks were the Financial Institutions dealing in day to day services
i.e. accepting deposits and lending money. But now it has spread its wings to
various others sectors like it first started. Lending to big business entities and has
also entered into the retail banking sector i.e. it started lending for purchasing car,
for education, marriage and most importantly for purchasing a house. In tune
with the conservative traditions in lending, commercial banks played a very
limited role in providing housing finance till the early seventies. However, now
as per Reserve Bank guidelines, housing finance is part of priority sector lending
schemes for banks. There has been progressive increase in housing finance
disbursed by commercial banks since 1979. The housing finance industry is
getting increasingly commoditised. Competition within the sector is ensuring that
players offer consumers flexibility and features to choose from. Features such as
adjustable rate plans, lower processing fees/monthly rest/interest
rates/EMI/margin money, no pre- payment penalty have become common across
the industry. There is a growing trend among Banks and FIS to include the cost
of registration, stamp duty, society charges and other associated costs while
sanctioning loans to differentiate and make the home loans products more
attractive. This has resulted in further lowering the threshold limit for buying a
house.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 4


2.1 INTRODUCTION.

The sun at home warms better than sun elsewhere. True isn't it, where else do you
find that comfort that makes you feel so special every day. Undoubtedly owning
a house is the most important phase in one's life. Not long ago, turning this dream
into a reality was a daunting task for the common man with property rates going
north all the time. But now, thanks to the proliferation of home loans and housing
finance companies, one can aspire to own a roof over one's head. Many think it is
an expensive affair and beyond reach.
Well, that's not always true. It takes a little planning and awareness to get to that
home you want to call your own.
Buying a home for the first time can be daunting to any person but in today's time
various banks are lending a helping hand to the people to purchase their dream
house. Thus people look forward towards choosing a home loan. The primary
concern of a housing finance company is to determine the loan amount that the
borrower is comfortably able to repay. The most popular method of financing a
home purchase is with a mortgage. This is a loan that is secured over the home.
There are a number of different mortgage suppliers and people will have to shop
around in order-to get the best deal. Home Loan is one of the fastest growing
retail and mass banking area. It forms an important part of the country's priority
in 5 year plans. Almost all public and private sector banks are offering home
loans at attractive rates for purchasing their dream home. Home loan usually
cover a variety of types. All Banks have come out with home loan products
studded with features and value additions that make the schemes not only
attractive but also serve as a substantial source to the borrowers for owning their
dream home.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 5


2.2 CHARACTERISTICS OF HOME LOAN
1. Home Loans are the consumer loans.

2. Home loans are long term loans provided by various bank.

3. These are large amount loans which provide financial support to the people who
want to purchase their dream home.

4. Home loans are secured loans.

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

6. Banks and Financial Institutions offers home loans at cost-effective rates.

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

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 6


2.3 PROCEDURE OF HOME LOAN
Home loan procedure caters to processes right from the time the customer walks
into the bank with a request for home loan till the time the loan is finally repaid
by the customer. The three major phases in the home loan procedure are the
information acquisition, credit appraisal and sanction, and disbursement.
Tracking the performance of the process is an underlying phase that runs across
the application processing cycle and is critical for monitoring and profitability.
The procedure can be explained in the chart below.

SUBMISSION OF TECHNICAL CHECK


APPLICATION ON PROPERTY BY DISBURSEMENT.
FORM. BANK.

PERSONAL LEGAL CHECK ON


DISCUSSION WITH PROPERTY BY REPAYMENT.
CUSTOMER. BANK.

FILE SUBMISSION OF
INTEREST TAX
INVESTIGATION BY PROPERTY/LEGAL
CERTIFICATE.
BANK/FI DOCUMENTS.

CREDIT APPRAISAL
ISSUE OF LETTER REPAYMENT BY
AND LOAN
TO THE CUSTOMER. CUSTOMER.
SANCTION.

A. Submission of application form:


The application is submitted along with photographs, credit documents and a
cheque for processing, documentation and administration fees by the customer.
The credit documents comprise documents to establish income, age, residence,
employment, investments, etc. During this stage, the bank/financial institution
checks the repayment capacity of the customer. The repayment capacity is
determined by taking into consideration factors such as income, age,
qualifications, number of dependants, spouse's income, assets, liabilities, stability
and continuity of occupation and savings history.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 7


B. Personal Discussion with customer:
Some banks/FIs require the customer be present at the time of the credit
appraisal. Some banks/FIs 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. For the personal discussion the customer needs to take with him
all documents pertaining to the information provided by him on the application
form.

C. Field Investigation by the bank/FI:


The bank/FI validates information provided by the customer on the application
form. This stage revolves around two key aspects. Critically appraising the credit
worthiness of the customer and analysing the risk in lending. It is necessary to
capture all the information required to cater to these aspects. It is important to
verify that the information supplied by the customer is correct and authentic.
Banks achieve this mostly through external agencies. Also the validity and
authenticity of information can be done through conducting checks on the
residential address of the customer, the place of employment of the customer, and
credentials of the employer, verification of documentary proofs of income, age
and other information. To minimize the risk, it is necessary to check that the
customer is not a fraud or black listed within the bank or other institutions.

D. Credit Appraisal and loan sanction:


The next phase in the home loan process is the credit appraisal and loan sanction.
After checking the customer's repayment capacity, the bank/FI sets norms that
define the customer’s eligibility for a loan amount. The loan then gets sanctioned
along with certain terms and conditions. Evaluating the measurable aspects of
home loan requests, an analyst addresses the following issues: the character of the
borrower, the use of loan proceeds, the amount needed, and the primary and
secondary sources of repayment. Therefore, the bank has to base its decisions
more on qualitative parameters rather than quantitative aspects. Credit analysis
therefore is distinct for each type of home loan scheme. Credit analysis is the
most popular methods of evaluating home loans.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 8


E. Issue of offer letter to the customer:
The bank/FI sends an offer letter to the customer with the loan sanction details
which mentions,
• Loan amount
• Rate of interest and whether it is fixed / variable rate of interest. If variable,
period after which the rate of interest would be reset - annual / monthly reducing
balance
• Loan duration
• Mode of loan repayment
• Scheme of the loan, if a special scheme has been offered to the customer
• General terms and conditions of the loan
• Special conditions, if any, which the customer needs to adhere to prior to
disbursement
• Submission of the acceptance copy of the offer letter and a cheque for
administrative fees by the customer.

F. SUBMISSION OF PROPERTY/LEGAL DOCUMENTS.


After the selection of the property, the customer is required to submit the original
documents pertaining to the proper being purchased or mortgaged (if the
purchased is different from the property mortgaged). The bank/FI keeps proper
documents as security for the loan amount given to the customer till the time the
loan is fully repaid.

G. Legal check on the property by the bank:


The bank/ FI sends all the documents to their empanelled lawyer for a thorough
scrutiny. On receiving the lawyers report that the documents are clear, the bank/
FI decides to disburse the loan to the customer. If the documents sent to the
lawyer are not enough to arrive at a judgment, the bank/ FI requests the customer
to furnish additional documents.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 9


H. Technical check on the property by the bank/financial institution:
Prior to disbursement, the bank/FI conduct a site visit to the customer's property
to verify the following:

In case of under construction property:


Quality of construction
• Stage of construction: Whether it is the same as mentioned in the payment notice
given to the customer by the builder
• Progress of work
• Layout of flats and area of property is within permission granted by the
governing authority.
• Requisite certificates have been received by the builder to start construction.

In case of ready construction/ resale:


• Age of the structure.
• Quality of construction
• Whether the structure will last the tenure of the loan
• External maintenance of the property
• Internal maintenance of the property
• Surrounding area (development)
• Required certificates from the governing authority have been received by the
• builder for handing over possession of the flat
• There is no existing lien or mortgage on the property

I. Disbursement:
After verifying that the property is legally and technically clear, the bank/FI
disburses the loan amount on the basis of the stage of construction of the
property. The customer needs to pay the margin money from his own
contribution prior to the disbursement.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 10


J. Repayment:
The repayment of the loan by the customer starts only after the full disbursement
of the loan amount has been made by the bank/FI. The loan is always repaid by
way of EMI’s . The mode of repayment, however, differs from case to case. In
case of a loan repayment done through Deduction against Salary (DAS), Post
Dated Cheques (PDCs), Standing Instructions (SI) and cash / Demand Draft
(accepted only by some banks/FIs). The customer can deposit the amount of his
every month at the bank/FI's office.

K. Interest tax certificate:


This certificate is given by the bank/FI to the customer to avail of tax benefits
that accrue through a home loan. The customer can submit this to his employer or
Chartered Accountant to account it while calculating the customer's tax liability

L. Prepayment by the customer:


The customer can either partly or fully prepay his loan at any given point of time.
The loan could be partly or fully disbursed when the customer wishes to prepay
his loan. Most banks/FIs, however, have a limit on the number of times that a
person can prepay his loan. There is, normally, also a minimum amount that a
customer has to prepay each time he wishes to do. Whenever a customer makes a
prepayment, the customer has an option of so reducing his EMI by keeping his
tenure constant or to reduce his tenure by keeping the EMI constant.

2.4 TAX BENEFITS


1) For Resident Indians
There are certain tax benefits for the resident Indians based on the principal and
interest component of a loan under the Income Tax Act, 1961. It may help one
get tax benefit up to Rs. 50,490 p.a. (approx.) if interest repayment of Rs. l,
50,000p.a. Is paid. In addition to this, one also is eligible for getting tax benefits
under section 80C on repayment of Rs. 1, 00,000 p.a. that further reduces the tax
liability byRs.33.660 p.a. These deductions are available to assesses, who have
taken a loan to either buy or build a house, under Section 24(b).

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 11


However, interest on borrowed capital is deductible up to Rs. 150,000 if the
following conditions are fulfilled:
1. Capital is borrowed for acquiring or constructing a property on or after April l,
1999.
2. The acquisition and construction should be completed within 3 years from the
end of the financial year in which capital was borrowed.
3. The person, extending the loan, certifies that such interest is payable in respect of
the amount advanced for acquisition or construction of the house.
4. 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:
1. Capital is borrowed before April 1, 1999 for purchase, construction,
reconstruction repairs or renewal of a house property.
2. Capital should be borrowed on or after April l, 1999 for reconstruction, repairs or
renewals of a house property.
3. If the capital is borrowed on or after April 1, 1999, but construction is not
completed within 3 years from the end of the year, in which capital is borrowed.
In addition to the above, principal repayment of the loan/capital borrowed is
eligible for a deduction of up to Rs 100,000 under Section 80C from assessment
year 2006-07.

Terms and conditions for availing Tax benefits on Home Loans


1. l. Tax deductions can be claimed on housing loan interest payments, subject to an
upper limit of Rs 150,000 for a financial year.

2. 2. An additional loan for extension/improvement to the same house and the


individual's deductions on the existing loan are less than Rs 150,000; he can
claim further benefits from the additional loan taken, subject to the upper limit of
Rs 150,000 for a financial year.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 12


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

4. According to the Income Tax Act, tax rebates can only be claimed by the loan
applicant.

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

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

7. If an individual buys a house and sells it within the same year or after 3 years, 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 in case, if the sale had taken place after 3years, then a long-
term capital gains tax liability would have arisen.

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

Tax benefits on interest on housing loans are allowable only for the
original loan and according to Section 24
(1), tax benefits can also be availed for a second loan taken to repay the first loan
but not for subsequent loans. This means that if the borrower 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.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 13


2) For Non- Resident Indians

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

3.1 Introduction and History of HDFC.

HDFC Bank is an Indian banking and financial services company headquartered


in Mumbai, Maharashtra. It has about 76,286 employees including 12,680
women and has a presence in Bahrain, Hong Kong and Dubai. HDFC Bank is the
second largest private bank in India as measured by assets. It is the largest bank
in India by market capitalization as of February 2016. It was ranked 69th in 2016
Brand ZTM Top 100 Most Valuable Global Brands. In 1995 HDFC Bank was
incorporated, with its registered office in Mumbai, India. Its first corporate office
and a full service branch at Sandoz House, Worli was inaugurated by the then
Union Finance Minister, Dr.Manmohan Singh. As of June 30, 2016, the Bank's
distribution network was at 4,541 branches and 12,013 ATMs.
HDFC Bank merged with Times Bank in February 2000. This was the first
merger of two private banks in the New Generation private sector banks category.
In 2008, Centurion Bank was acquired by HDFC Bank. HDFC Bank Board

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 14


approved the acquisition of CBoP for 95.1 billion INR in one of the largest
mergers in the financial sector in India.
The equity shares of HDFC Bank are listed on the Bombay Stock Exchange and
the National Stock Exchange of India. Its American Depository Shares are listed
on NYSE and the global depository receipt are listed on the Luxembourg Stock
Exchange where two GDRs represent one equity share of HDFC Bank.
On Jan 29, 2020 Reserve Bank of India imposes monetary penalty on HDFC
Bank Limited for failure to undertake on-going due diligence in case of 39
current accounts opened for bidding in initial public offer. [18]
There are also known instances of users reporting signature forgery and
replacement of application documents by HDFC employees.[19]
A HDFC bank manager arrested for Rs 59.41 lakh fraud in Odisha 
Altico Capital and Dubai's Mashreq Bank have approached the Reserve Bank of
India, accusing HDFC Bank NSE -1.82% of violating regulatory provisions by
debiting part of the funds the company had raised through external commercial
borrowing (ECB) and parked at the Indian bank. The local bank's decision to
transfer money from account may be a violation of the RBI's end-use rule, they
said.

Awards and recognition


 Best Bank: New Private Sector - FE Best Bank awards 
 Winner in Innovation and Inclusiveness in Priority Sector Lending - 11tg
Inclusive Finance India Awards (IFI) 2019 
 Ranked 1st in 2019 Brands’ Top 75 Most Valuable Indian Brands HDFC Bank
was featured for the 6th consecutive year.
 Among The Most Honoured Company List, Institutional Investor All-Asia (ex-
Japan) Executive Team 2019 survey
 India’s Best Bank, Euro money Awards for Excellence 2019
 Bank of the Year and Best Large Bank, Business Today – Money Today
Financial Awards 2019
 Best Bank in India 2019, by Global magazine Finance Asia.
 Ranked 60th in 2019 Brands’ Top 100 Most Valuable Global Brands  HDFC
Bank was featured brands’ Top 100 Most Valuable Global Brands 2019 for the
5th consecutive year. The Bank's brand value has gone up from $20.87 billion in
2018 to $22.70 billion in 2019.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 15


 LOANS FROM HDFC

3.2 TYPES

PERSONAL LOANS
Personal loans from HDFC Bank are quick, competitive and transparent.
Whatever be your need, talk to us and we can customise a personal loan for you.
Our seamless loan sanction and disbursal procedure ensures that availing a
personal loan is a hassle-free experience. Unmatched additional benefits, quick
documentation, ease of communication and doorstep service make HDFC Bank a
leader in personal loans.

Features
 Highly competitive personal loan interest rates
 Special offers, interest rates and charges for HDFC Bank account holders
 Personal loan eligibility in 1 minute available online and across all branches
 Special personal loan offers* for women employees
 Walk in Loan: Walk in to the branch with your documents and get Persona!Loan
in a day.
 Convenience of contacting us through SMS, Webchat, Click2Talk,Phone
Banking and across all branches

Benefits
1. Simplified documentation

2. Competitive pricing

3. Transparency

4. Personal Loans available for various needs

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 16


CAR LOAN
New Car Loans
1. Up to 100% funding

2. 7 year loan tenure.

3. Faster approvals and doorstep services

Pre-owned Car Loans


1. Widest range of authorized dealers.

2. Up to 100% finance and up to 60 months tenure.

Loan against Car


 Pre-approved cash loan for existing Car Loan customers.

 No income documents required.

BUSINESS LOAN
FEATURES
 Convenience of contacting us through SMS, Webchat, Phone Banking and across
all Branches.

 Business Loan eligibility in I minute available online & across all branches.

 Self-employed customers get exclusive higher loan amount.


Best in class offerings on loan amount, interest rates and charges, for HDFC bank
A/c customers

Benefits
 No collateral/ guarantor / security required.

 Speedy approvals.

 Funds available for business expansion, working capital, child's education or


home renovation.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 17


LOANS ON CREDIT CARD

HDFC Bank Credit Cardholders can get Pre-approved Loans on Credit


Card in just One Second. Education - be it school fees or college fees, Travel
Vacation within India or abroad, New Car, New Scooter/Bike, Marriage, Home
Renovation, Home & Kitchen appliances (TV, AC, Fridge, Washing Machine,
Microwave oven, etc), Electronic gadgets (Laptop, PC, Tablet, Camera,
Smartwatch, etc.), Sports goods or any emergency needs. If you are looking for a
loan that is easy to apply and disbursed quickly, then you can opt for pre-
approved loans on your HDFC Bank credit card - Insta Loan / Insta Jumbo Loan.
Insta Loan is a pre-approved loan within the credit limit of your HDFC Bank
credit card while Insta Jumbo Loan is a pre-approved loan over and above the
credit limit of your HDFC Bank credit card i.e. the availed loan amount will be
blocked against the credit limit of your credit card for Insta Loan while the
availed loan amount will not be blocked against the credit limit of your credit
card for Insta Jumbo Loan. On the other hand, if you have made expensive
purchases with your HDFC Bank
Credit Card, you can take up a loan on credit card that breaks up your
purchases excluding Gold/Jewellery into easily affordable instalments through
Smart EMI. They also offer loan against other bank credit card / loan outstanding
through Balance Transfer on EMI i.e. you can transfer the balance outstanding on
other bank credit card / other bank loan to your HDFC Bank credit card and pay
in EMI’s. With an expansive portfolio catering to every stage of your needs,
applying for an HDFC Bank credit card loan product will seem like the logical
choice to make.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 18


LOANS ON PROFESSIONALS
Features
 Convenience of contacting us through SMS, Webchat, Phone Banking and across
all Branches

 Professional Loan eligibility in I minute available online & across all branches.

 Special loan offers for Doctors.

 Best in class offerings on loan amount, interest rates and charges, for HDFC bank
A/c customers.

Benefits
1. No collateral/ guarantor / security required.

2. Speedy approvals

3. Funds available for business expansion, working capital, child's education or


home renovation.

LOAN ON SECURITIES
Features
 Widest Range of collateral accepted in the industry.

 Scan based account opening.

 Overdraft Facility available.

 Combines the power of Loan and bank account.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 19


Benefits
1. Anytime, anywhere access.

2. Auto Renewal of loan facility.

3. No Prepayment penalty.

4. Dedicated LAS Helpdesk.

VEHICLE LOAN

Two Wheeler Loan


 2% lower rate and 50% discount on processing fees for account holders.

 Savings up to Rs. 2375/-*.

 Check eligibility in 1 minute. Approval in 15 minutes.

Super Bike Loan


 Super Bikes of all brands are financed.

 Preferential, rates at 12.90% (reducing) for account holders.

 Savings of Rs 12500/-* on Loan amount of Rs 7 lakhs for 60 months tenure.

 Tenure up to 60 months.

 Accessory funding up to 2 lakhs.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 20


GOLD LOANS
HDFC bank's Sampoorna Bharosa Gold Loan is available the moment
you step into any of our branches. We help you optimise your investment in gold
because this loan against gold is not only easy to avail but also easy to repay. Get
convenient loan options, affordable interest rates and an opportunity to liquidate
your gold loan at any time.

EDUCATIONAL LOANS
A meritorious student is never far away from their dream career, courtesy
of HDFC Bank's education loans. Students from every discipline can now take
their first steps on the path to success. Every feature of our student loan assists
the process of higher education in a comfortable manner. Tax benefits, post-
graduation EMI schedule and a flexible tenure make higher education both
affordable and convenient as never before. With rapid loan processing, our
student loans have faster disbursal and lower ancillary expenses. Competitive
interest rates also allow students to make stress- free repayments after
moratorium period. These customizable and conducive loan terms will help bring
expensive higher educational courses within the grasp of every student. So, ready
yourself for a bright future with HDFC's student loans.

Education Loan for Indian Education


 Get up to Rs. 10, 00,000 as a study loan.

 Enjoy attractive interest rates.

 Avail flexible education loan package with multiple options of collaterals, tenure
& repayment.

 It's a zero-hassles student loan with minimal processing.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 21


Central Government Interest Subsidy Scheme
 This scheme supports economically weaker students get study loan for
professional education.

 This study loan is established by the Department of Education, Ministry of


Human Resource Development; Government of India.

 Window opened for all Education Loan cases with Moratorium period during FY
15-16.

Education Loan for Foreign Education


 Avail up to 100% finance for international education loan.

 Receive preferential interest rates for top-ranking universities/ institutes.

 It has light documentation and low processing hassles.

 Get flexible loan terms for co-applicants, repayment, and EMI.

RURAL LOANS
Retail Agri Loans- Kisan Card [Kisan Gold Card]
 Indian farmers can now swipe a Kisan Gold Card to use their loan formeeting
agricultural and production expenses.

 Available with any time banking and hassle free credit options.

 Accident Insurance Cover of Rs. 2 lakh absolutely free with the card.

Tractor Loans
 Choose HDFC Bank’s tractor loan to purchase your tractor for farming or
commercial purposes.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 22


 Up to 90% of finance on the tractor that you want to buy.

Consumer Durable Loans


Features
 Up to 100% Finance.

 36 months of Tenor.

 Loan amount up to 15 lacs.

 Nominal processing fees.

 No blocking of credit limits.

 Minimal marginal money.

 Transparent pricing.

 Low EMI.

 Less Burden.

Product categories to choose from

 LED Televisions.

 Refrigerators.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 23


3.3 INTEREST RATES FOR HOME LOANS & THEIR
CALCULATION
Interest rates charged by housing finance companies vary depending upon
your individual status - either resident or non-resident in India, the loan amount,
scheme type, and are sometimes even based on the tenure of the loan. The way
banks / FIS charge interest to arrive at the value of EMI can be broadly classified
into 'Flat rate system' and 'Reducing balance rate system'. In the flat rate system,
the rate of interest on the loan amount is calculated over the entire duration of the
loan and the principal plus the interest is divided over the number of instalments
and the value arrived is the EMI. But in case of Reducing Balance system, the
interest is charged on the outstanding balance of the loan, which goes on
reducing. The reducing balance can be further classified into monthly reducing,
quarterly reducing and annual reducing methods based on the number of times
the principal is reduced/credited in a year. Suppose the principal is reduced 12
times a year, it is termed as monthly reducing balance method, if the principal is
reduced 4 time a year, it termed as quarterly reducing balance method and if the
principal is reduced 1 time a year, it known as annual reducing balance method.
Annual reducing balance method is very common with Indian banks and monthly
reducing balance method is popular among the foreign banks and nationalized
banks, engaged in the activity of housing finance.

RESIDENT NON RESIDENT


INDIANS. INDIANS.

BUYING A NEW BUYING A NEW


HOUSE. HOUSE.

BUYING AN BUYING AN
EXISTING EXISTING
HOUSE. HOUSE.

HOUSE HOUSE
IMPROVEMENT. IMPROVEMENT.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 24


INTEREST RATES FOR RESIDENT INDIANS.

Banks and FI’s offer resident Indians loans up to rs.10, 000,000 for up to 30 years
for buying a new flat from the builder. The flat maybe under construction at the
time of application.

COMPANY FIXED FLOATING


RATE RATE.
HDFC 11.25 13.25
HSBC 12.00 13.50
ICICI 13,75 14.00
SBI 11.25 12.75

Tenure of home loan


 Residential property for salaried 15 years and self-employed 10 years.
 Plot of Land for salaried 10 years and self-employed 10 years.

 Against Existing Plot of land for salaried 15 years and self-employed 10.

3.4HDFC HOME LOAN PROCESS.


Step by step procedure for your HDFC BANK home loan disbursal:
1. Collecting the Property related Documents.
2. Legal Opinion.
3. Property Valuation.
4. E-stamping.
5. Submitting the Application.
6. Waiting period.
7. Documentation.
8. Disbursement.
9. Registration.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 25


Collecting the Property Related Documents: 
Firstly, go to the builder and get all the property related legal documents. Get the
Legal opinion and Share of agreement and Sanctioned Site plan from the builder.
Collect: Booking Receipt along with the copy of the cheque.

Legal Opinion:
Go to an Advocate who is in the HDFC BANK Panel with the documents in step
1 to get it verified. For the advocate to give the final legal opinion he needs to see
the Sales Agreement & Construction Agreement and he needs a Photostat copy of
it.
Normally if it’s a builder share following documents need to be collected from
the builder:
 Encumbrance certificate till current date (from some 35 years advocate may ask)
 Tax Paid receipt till date. Lawyer might ask you for multiple documents, so the
maximum delay is expected at this step. Once this step is done, half part is done.
Collect: Legal opinion

.Property Valuation: 
Once the Legal valuation is done, go to a property Valuator who is in the HDFC
BANK Panel with the sales agreement. He valuates the property and gives a
letter.
Collect: Valuator statement

E-stamping:
HDFC BANK mandates the Sales agreement and Construction agreement to be
stamped/Franked. Regarding what’s the value to which e-stamp, do concern the
branch staff. Normally for a ongoing construction flat, there are 2 Agreements a)
sales Agreement and b) Construction Agreement. E-stamping and franking are
actually the same, e-stamping is the new technology whereas franking is the old
one where we stamp it, Franking can be done only at register office where as e-

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 26


stamping can be done at post offices, Syndicate banks, selected registrar offices,
etc.
Note: Make sure you, your wife and builder sign on the e-stamp which you
purchase.*
Collect: e-stamp and franking on the sales agreement

Submitting the Application: 


Once you get the valuator statement and Legal opinion, go to the HDFC
BANK with the filled in application forms along with the required documents for
loan application. Also attach the legal opinion and the Valuator statement.
Note: It’s always good to go for a interiors loan (max up to 3 lakhs) along with
the home loan, which might save you the hidden charges when combined. For the
interiors loan you need to get a quote from an interior designer and get it valuator
sanctioned.
.

Waiting period:
 Now it’s time for the waiting period. The waiting period may vary from person
to person. Normally in the special home loan branch, it can be as fast as 3 days.
Periodically call them to ensure that the process is going forward. Also make sure
they inspect the property, because unless and until they inspect, you can’t reach
the disbursal stage.

Documentation:
 Once the loan is sanctioned, you get a call from the bank for documentation.
Carry all the original documents which you have submitted while applying for
the loan.
Loan applicant along with guarantor needs to be present at the bank for the
documentation. Builder is normally not required, if it’s a land lord share, then it is
a must for him too to attend.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 27


Disbursement:
 Once we get the Loan Sanction letter go to the builder and get the following
documents
 NOC from the builder stating he hasn’t mortgaged this property to any other bank
 Tripartite agreement [This is required only if it’s an ongoing construction.
 Demand Note from the builder [how much money he needs for the particular
construction stage].
Note: Please make sure whatever demand note they make is matching with the
schedule of payment.

Collect:  DD in favour of builders

If it is an under-construction property, for partial disbursements and for further


payments you can just send a mail to the manager to please disburse the amount
XXX and then ask the builder to send a boy to the HDFC BANK branch with the
original demand note and they can collect the DD from the bank directly. You
need not go to bank anymore.

Registration:
Now it’s time for registration and the final payment to be made to the builder.
You need a DD for Registration Stamp duty in the name of Sub-registrar and a
DD for Mortgage Stamp duty in the name of Sub-registrar.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 28


4. RESEARCH METHODOLOGY.
Research methodology is a way to systematically show the research problem. It
may be understood as a science of studying how research is done scientifically. It
is necessary for the researcher to know not only the research methods but also the
methodology. This Section includes the methodology which includes. The
research design, objectives of study, scope of study along with research
methodology and limitations of study etc.
1. To know the Customers perceptions about home loans of HDFC housing
development finance corporation LTD.
2. To study the satisfaction level of customers about home loans.
3. To study the problems faced by customers due to property hike rate.
4. To study about the customers preference about rate of interests.
5. The study shall be conducted in the manner enumerated below
.

5.1 RESEARCH DESIGN.


This project is based on exploratory study as well descriptive study. It was an
exploratory study when the customer satisfaction level was studied to suggest
new methods to improve the services of HDFC LTD in providing home loans.

5.2 SOURCES OF DATA.


To fulfil the information need of the study. The data is collected from primary as
well as secondary sources.

A.PRIMARY SOURCES.
I decided primary data collection method because our study nature does not
permit to apply observational method. In survey approach I had selected a
questionnaire method for taking a customer’s view because it is feasible from the
point of view of our subject & survey purpose. We conducted 100 sample of
survey in our project to understand the customer reviews about HDFC home
loans policy.
I had conducted a survey taking the sample size of 100 people including all
groups of people. I had done the survey at different places like Vasai Station,
Datani Square Mall and even my own Housing Society members and other places
ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 29
considering all income groups of people. The questionnaire of the survey in
enclosed in the annexure. It was a very good experience while conducting this
survey. It developed a sense of confidence and augmented the data collection
skills within me. It enabled me to develop a skill of getting primary data from the
common people and then analysing it and presenting it in a systemic manner.
Most importantly it made me think logically and practically and thereby
improved my research ability. The information collected is analysed and
represented below with all possible diagrams.

B. SECONDARY SOURCES.
It was collected from internal sources. The secondary data was collected on the
basis of organizational file, official records, newspapers, magazines, management
books, preserved information in the company’s database and website of the
company.

5.3 SAMPLING AND TECHNIQUE.

Sampling refers to the method of selecting a sample from a given universe with a
view to draw conclusions about that universe. A sample is a representative of the
universe selected for study.
Large sample gives reliable result than small sample. However, it is not feasible
to target entire population or even a substantial portion to achieve a reliable
result. So, in this aspect selecting the sample to study is known as sample size.
Hence, for my project my sample was 100.
Random sampling technique was used in the survey conducted.

5.4TOOLS OF ANALYSIS.
Data has been presented with the help of bar graph, pie charts, line graphs etc.

5.5 PLAN OF ANALYSIS.


Tables were used for the analysis of the collected data. The data is also neatly
presented with the help of statistical tools such as graphs and pie charts.
Percentages and averages have also been used to represent data clearly and
effectively.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 30


5.6 DATA COLLECTION INSTRUMENT AND DEVELOPMENT.
The mode of collection of data will be based on Survey Method and Field
Activity. Primary data collection will base on personal interview. I have prepared
the questionnaire according to the necessity of the data to be collected.

5.7 LIMITATIONS TO THE STUDY.


This study also includes some limitations which have been discussed as follows:
i) The sample size of 100 customers and 2 banks might prove a limitation
because of difficulty in generalization of results.
ii) To collect the data from various banks was quite difficult due to non-
cooperation of some banks. This proved to be major limitation of the study.
iii) To access such a large number of customers was difficult because of non-
cooperative attitude of respondents.
iv) Lack of data was also the other limitation of the study as some of banks do
not have proper data on topic.
v) There was limitation of time to conduct such a big survey in limited available
time.
vi) Ignorance and reluctant attitude of customers was also a major limitation in
this study. Thus above all were the limitations in this research study. The
maximum efforts were made to overcome these limitations in the study.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 31


5. REVIEW OF LITERATURE.

After going through previous studies of Home loans I came to conclude that- •
There is growth of home loans after 2001.
• Home loans have an inverse relation with interest rates i.e. when interest rate
low the demand of home loans increase. (Ojha 1987)
• People are going more towards home loans than private mortgage insurance.
(Berstain 2008)
• Government taking various steps to encourage people to go toward home loans.
(Haavio, Kauppi 2000)
• Growth of home loans are due to increase of living standard of people, shifting
from joint family to nuclear family .(Lacourr, Micheal 2007)
• There are some problems also attach with these home loans such as time i.e
filling of application of loan to closing ,people have their own specified needs
from these home loans which are not fulfilling. (Lacour Micheal 2006)

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 don’t have 20% of
down payment. Section 2 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 up to 80% of LTV and the
absence of PMI will result in considerable losses in an 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 first mortgages. Section 4 describe the Financial status of single-lien
and multiple-lien households and for this he have taken the survey of consumer

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 32


finance and show that financial position is more weaker in multiple loans than the
single loans.

Vandell, Kerry D (2008):


Analysis the sharp rise and then suddenly drop down home prices from the
period 1998- 2008. changes in prices are for the reasons as such economic
fundamentals , the problem was not subprime lending per se, but the Fed‘s
dramatic 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 main
factors are changes in lender business practices; (2) changes in the risk profile of
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 2006 results will continue to
show an increase in the percentage of loans that are higher priced when final
numbers are released in September 2007.

Dr. Rangarajan C. (2001):


Said that the financial system of India built a vast network of financial
institutions and markets over times and the sector is dominated by banking sector
which accounts for about two-third of the assets of organized financial sector.

Haavio, Kauppi (2000):


Said that countries where a large proportion of the population lives in owner –
occupied housing are experiencing higher unemployment rates. Than countries

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 33


where the majority of people live in private rental housing, which might suggest
that rental housing enhances labour mobility. In this paper, they develop a simple
inter temporal two region model that allow us to compare owner occupied
housing markets to rental markets and to analyse how these alternative
arrangements allocate people in space and time. Announced that it will offer
loans for Rs. 2-10 lakh at 12.5 percent the lowest rate offered by any housing
finance provider, big brother SBI has taken the rate war in the home loans
category to new heights. This is because, apart from the low rate, the interest on
these loans is calculated on principal, which is reduced every month unlike other
housing finance companies which calculate interest on annually reducing basis.
Narasimham Committee (1991):
Points out that although the banking system in our country has made rapid
progress during the last two decades, there is decline in productivity and
efficiency and erosion of profitability. The committee strongly make indications
of liberlising, deregulating economy to make Indian baking system more
competitive and efficient.

Ojha (1987):
In his paper "modern international caparison of productivity and Profitability of
public sector banks of India" making Comparison on the basis of per employee
indicators and taking examples of state bank group and Punjab National bank
noted that Indian banks are the lowest in all accounts. However such international
comparison will not be fair for numbers of reasons.

Godse (1983):
In his essay, “looking a fresh at banking productivity” observe that productivity
aspect is only at the Conceptualization stage in banking industry. He suggested
improvement in productivity and procedures, costing of operations and capital
expenditure etc.

Fanning (1982):
While examining bank productivity of British banks observed that although the
productivity of the UK clearing banks is improving, they are still heavily over
manned as compared with similar banks elsewhere.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 34


Kulkarni (1979):
In his study “Development responsibility and profitability of banks” stated that
while considering banks costs and profits, social benefits arising out of it cannot
be ignored. He suggested that while meeting social responsibility banks should
try to make developmental business as successful as possible

Varde and Singh (1979) :


In a study "profitability of commercial banks" over 15 years gave consideration
to two types of factors that effects interest rates levels i.e. internal factors
(including operational and managerial efficiency of individual basis).

Banking Commission (1972):


Reviewed bank operating methods and procedures and made recommendations
for improving and modernizing these, particularly relating to customer’s services,
credit procedure and internal control systems. It observed that present methods of
working out branch profitability are not appropriate and an integrated costing and
financial reporting system is needed.

Department of Banking operations and development, RBI:


Bombay observed that the rapid expansion of banks activities since 1970 called
for a phase of consolidations to improve the quality of banks operational
efficiency, productivity and customer services.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 35


6. DATA ANALYSIS AND INTERPRETATION.

AWARENESS ABOUT HOME LOANS

This survey indicates that nearly 89% people are aware about the home loan
facilities offered by different banks. But still there are 13% people who are not
much educated and are unaware about the different types of home loan facilities.
For this the banks should also target the lower income groups while also
advertising about their home loan services, there should also be direct market
selling concept on marketing, this will attract the customers. Security and comfort
in life is a top priority for everyone. So everyone should be made aware about the
home loan services rendered by the banks and should be educated about the
optimum use of the resources available, these methods are to be used by banks
and financial institutions.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 36


NEED FOR HOME LOAN

As shown in the above pictorial representation of the need for home loans, home
loan has moderate need in today’s competitive world.
1. Nearly 46% of the people believe that home loan is very essential and important.

2. 17% people believe that the need for home loans is very low in today’s world.

3. 36% that’s sums up to almost half of the crowd that filled the survey believe that
home loans have moderate or medium need.

4. Only 1% people believe it is not at all needed.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 37


Home loan process.

Buying a loan being the top priority of the young generation it should be
safe according to the survey nearly 67% people find home loan process
safe and hence the number of people who would like to take a loan in the
mere future increases and also affects the goodwill of the firm.

 Home loan process is safe and convenient for around 67% people who
participated in this survey
 Whereas 19% people feel it’s not safe.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 38


 Home loan is a long term loan and hence the risk is high, the process is slow at
the same time convenient.
 Private Banks make home loan process even more convenient for their
customers.
 The above pie chart depicts that 22% people feel home loan process is simple and
hence people would like to opt for home loans in mere future.

PURSUING HOME LOAN.

The survey conducted by me shows that of the people want to pursue home
facility in the future if required. This shows there is an increase in the demand for
home loans. The reason behind this could be the boom in the home loan sector in
India. The real estate boom has added new dimensions to the housing finance
sector. The new class of young buyers, whose affordability are high, is spending
a little more on paying Equated Monthly Instalments (EMIs) rather than spending
huge amounts on the rents, thereby, owns a house. Hence the reasons for the
growth of the home loans market has been mainly fuelled by certain fiscal, social
and regulatory drivers such as:
1. Changes in demographic profile including increase in the rate of house hold
formation due to structural shift from joint family system to nuclear family.
ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 39
2. Ever increasing middle class, migration of population and increasing urbanization
resulting in acute shortage of housing units.

3. Increase in disposable income levels due to decrease in marginal tax rates and
increase in total income levels.

4. Tax benefits and other fiscal incentives announced in the Union Budgets thereby
encouraging the sector.

5. Increasing affordability of housing property purchase due to declining interest


rates and stable property prices.

6. Decline in the average house cost to annual income ratio to around 4-5 from11-14
during the last decade resulting in an affordable EMI as a percentage of monthly
income Aggressive lending by banks to the housing sector due to lower credit off
take by the corporate sector, attractive spread and lower non-performing assets.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 40


PREFERED MODE OF INSTRUMENT.

According to the survey 70% people would prefer to get loan from a Bank rather
than any other mode of instrument. Whereas 13% people feel merchant bank is
the way to go. 17% people believe that financial institutions are more convenient
and easy. Out of the many other instruments people choose banks as banks are
more safe, more convenient, more rate of interest at times, and hence the survey
portraits the preference for loan from banks rather than financial institutions or
merchant banks.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 41


PREFRENCE FOR THE TYPE OF LOAN.

LONG TERM LOAN:


 A loan that is to be paid back over a period of time between three and ten years,
and sometimes for as long as twenty years is known as long term loan.

 According to my survey 43% people would opt for long term loan.

 Depending upon the advantages and disadvantages loan term loans are said to be
convenient and secure

SHORT TERM LOAN:


 A loan with maturity period for 1 to 5 years is known as short term loan.

 52.5% people would like to get a short term loan in the mere future.

 Short term loan saves you from burdening your finances for so many
years as happens in longer duration loans.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 42


LINE OF CREDIT
 A line of credit is a credit facility extended by a bank or other
financial institution to a government, business or individual
customer that enables the customer to draw on the facility when
the customer needs funds.

 The survey portraits that 22% people would opt for line of credit
in the future.

 A line of credit offers a lot of flexibility to the consumer.

PREFERED TYPE OF BANK.

As per the survey 60% of the people preferred to go for public sector banks, 30%
for private sector banks while the remaining for foreign banks. In the booming
home loan segment, it is the public sector banks (PSBs) which are now having a
clear-cut advantage over their private and foreign counterparts. Some of the big
PSBs, including State Bank of India, Bank of Baroda and Canara Bank, are
offering both fixed and floating home loan products almost 75-100 basis points
cheaper than private and foreign banks. After the recent rate hike by the Reserve
Bank of India (RBI), the private sector and foreign banks like ICICI Bank and
Standard Chartered have also raised rates to manage the rising cost of funds.
ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 43
However, their public sector counterparts are yet to join the bandwagon and are
unlikely to react before the quarterly review of the RBI Annual Policy. As a
result, public sector banks, now following the same marketing model like the
private sector and foreign banks, are now offering competitive rates in home loan
segments. To make life further tough for the private and foreign banks, PSBs
have beefed up their marketing campaign to sell home loan products. For
example, BOB has launched a pilot project in Mumbai, named Project Parivartan,
in which BOB Officers are going door-to-door to sell home loans. This move is
probably for the first time that a public sector bank is initiatives normally
associated With going door-to-door to sell their product started concentrating on
retailing sector particular in home loan sector in India so there is still a lot of
scope for them to catch the Indian In of public sector banks the rise in home loan
rate is not as steep.

PREFERED TYPE OF LOAN.

1. Home purchase being the top priority of the young generation today the survey
depicts that nearly 45% people want home loan for house purchase.

2. Due to property hike rates the decision for the purchase of land varies or
fluctuates, according to the survey 30% people would like to take the risk of
buying a land.

3. People who have already live in houses want to go for home extension loan in
order to extend or to do improvements in the house, the survey portraits that
nearly 18% people want a home extension loan.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 44


PREFRENCE FOR FIXED OR FLOATING RATES.

 Fixed floating rates are preferred by 80% of the crowd who have responded to the
survey.
 Whereas 20% people feel floating rates can get better returns
 Floating rates being risky, most people avoid it, the people who prefer floating
rates are risk takers it can get them higher profits at the time of boom stage but at
the same time, can experience loss during economic down swing.

Going by the trend, it should surprise no one if interest rates on home loans rise
as a consequence of the rising interest rate scenario. This being the case, home
loan seekers considers opting for a fixed rate loan (i.e. fixed for 3-5 years). This
protects them from a potential interest rate hike in the near term. At the end of the
said 3-5 year term, they have the option of considering either to continue with the
'fixed' rate (if interest rates continue to rise) or migrate to a floating rate loan
However, in case an individual does not have the risk appetite to take the interest
rate fluctuations in his stride, he may consider selecting the 'truly' fixed rate
loans. Such loans have a fixed rate throughout the tenure of the loan. However, if
interest rates were to decline going forward, the truly fixed rate loan will not
reflect the fall in interest rates and the consumer will forfeit any chance of
benefiting from a decline in interest rates.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 45


AWARENESS ABOUT HDFC HOME LOANS.

 According to the survey 69% people are aware about home loans services
rendered by HDFC Bank
 Whereas nearly 33% people are unaware about it
 The Bank in order to attract these customers should take necessary steps.

According to the survey 49% of the people are aware about the home loan policy
rendered by HDFC Bank, nearly 50% of this crowd or people acquainted to then,
have experienced this service.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 46


34% are not about the services, the bank in order to tackle this situation should
advertise more, and the brochures should have adequate information to educate
the people. The marketing and the R&D department should look into this matter
as it would get them more customers which would in turn increase profit and
goodwill.

HDFC HOME LOAN PROCESS.

 As the above pie chart depicts there are nearly 72% people who find HDFC home
loan process convenient, which creates a really good image of the bank
 For the people who don’t find the process convenient the bank should not neglect
their feedbacks, their opinions should be taken into consideration and appropriate
solutions should be taken.
 Nearly 12% people find the process not convenient and hence corrective
measures are to be taken.
 Convenient and simple processes not only attract the customers but also creates
goodwill of the bank in the market.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 47


PROPERTY HIKE RATE AWARENESS AND ITS EFFECT ON
HOME LOANS.

EFFECTS OF PROPERTY HIKE RATES ON HOME LOANS


The home loan sector has been drastically affected by the hike in the property
rates. The property prices have been rising and touching unprecedented heights.
In fact so much so, that property are again becoming out of reach of common
man. Whether the price rise is justified or is it just a manipulated bubble remains
to seen. Reserve Bank of India, in its policy statements has time and again
cautioned the banks to be extra cautious before taking exposure. In fact RBI went
to the extent of increasing the risk weight age on real exposure and hiked the risk
weight for lending to the estate sector. The RBI has cautioned the banks to be
extra careful while going all out to fund and finance the real estate sector.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 48


According to reports, the property prices have come to their situation and there is
scope for further increases. The hike rate has been quite fast and unrealistic. The
growth in infrastructure has not been able to keep pace with the increase in
property prices. Hence property rates have led to an increasing importance to
home loans but bankers have to be extra cautious on their part.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 49


7. CONCLUSION.

In view of its backward and forward linkages with other sectors of the economy,
finance in developing countries is seen as a social good. In India, growth housing
of housing finance segment has accelerated in recent years. Several supporting
policy measures (like tax benefits) and the supervisory incentives instituted had
played a major role in this market. The housing finance industry is getting
increasingly commoditized. Competition within the sector is ensuring that players
offer consumers flexibility and features to choose from. Features such as
adjustable rate plans, lower processing fees/monthly rest/interest
rates/ENII/margin money, no pre- payment penalty have become common across
the industry. There is a growing trend among Banks and FIS to include the cost
of registration, stamp duty, society charges and other associated costs while
sanctioning loans to differentiate and make the home loans products more
attractive. This has resulted in further lowering the threshold limit for buying a
house. For differentiation of their home loan products, banks are also resorting to
offering of free add-ons such as life insurance, credit cards and consumer loans at
reduced rates for furnishing the house.
HDFC has long achieving its target of providing people with roof under their
head.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 50


QUESTIONNAIRE.

1. Awareness of HOME LOANS? *


 Aware?
 Not aware?

2 .Need for home loan? *


 Low
 Medium
 High

3. How safe is the process of home loans?


 Not safe.
 Safe.
 Very safe.

4. Would you like to opt for home loan in future? *


 Yes
 No

5. If yes, then from which mode of instrument would you prefer?


 Bank.
 Financial institutions.

6. Home loan services that you would like to opt in the future?
 Long term loan.
 Short term loan.
 Line of credit.
 Alternative financing.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 51


7. Preferred type of bank for home loan? *
 Private sector banks
 Public sector banks
 Foreign banks

8. Your preference for the type of loan? *


 Home purchase.
 Land purchase.
 Home extension.

9. Are you aware of the home loans services rendered by HDFC bank? *
 Yes
 No

10. If yes, then have you or anyone that you’re aquatinted with have ever
bought a home loan from HDFC bank?
 Yes
 No

11. Preference for FIXED or FLOATING INTEREST RATES? *


 Fixed interest rate.
 Floating interest rate.

12. How would you describe home loan process? *


 Slow process.
 Fast process.
 Convenient.
 Non convenient.
 Complicated.
 Simple.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 52


13. Are you guys aware about property hike rate? *
 Yes.
 No.

14. Does property rate hike effect on home loan? *


 Yes.
 No.

15. How convenient is HDFC home loans policy? *


 Not convenient.
 Convenient.
 Very convenient.

16.Would you recommend HDFC home loans services to anyone? *


 Yes.
 No.

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 53


. REFRENCE.

BIBILOGRAPHY

1. MAGZINES.
o Professional banker ( ICFAI UNIVERSITY PRESS RELEASE,JUNE 2019)

2. BOOKS AND REFRENCE.


o Merchant banker by H.R Suneja.

3. OTHER SOURCES.
o Interview with Miss. Shubhangi gaekwad (assistant manager), HDFC BANK.
o Brochures of HDFC BANK.

WEBLIOGRAPHY.
o www.economictimes.com

o www.indiainfoline.com

o www.icicibank.com

o www.surfindia.com

o www.hindustanlinks.com

o www.myiris.com

o www.moneycontrol.com

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 54


o www.bankofindia.com.

o www.hdfc.com

o www.sundaramfinance.com

o www.harmonyindia.org

• SEARCH ENGINES.

www.google.com

o www.yahoo.com

o www.rediff.com

ST.GONSALO GARCIA COLLEGE OF ARTS AND COMMERCE. 55

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