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SUMMER TRAINING PROJECT REPORT
ON
STUDY OF FUNCTIONING AND OPERATIONS OF
LOAN DEPARTMENT OF HDFC BANK
SUBMITTED IN PARTIAL FULFILLMENT OF MASTER OF
BUSINESS ADMINISTRATION PROGRAMME: 2011-2013
OF
GBTU LUCKNOW
Submitted to Submitted ByYeshu Jaiswal Ankur Agarwal
MBA-IIIrd Sem.
MAHARAJA AGRASEN MAHAVIDHYALAYA
INSTITUTE OF MANAGEMENT
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ACKNOWLEDGEMENT
Words are inadequate to express deep sense of gratitude towards the
management of STUDY OF FUNCTIONING AND OPERATIONS OF LOAN
DEPARTMENT OF HDFC BANK who accepted me as summer trainee in their
esteem organization. It's my great privilege to express my regard towards Mr.
Vibhoor Kumar Gupta DDCIA and summer training officer and project guide,
who made my work possible through his inspiring guidance and constructive
criticism throughout the period of training. I am highly thankful to Miss Yeshu
Jaiswal, for giving his valuable time, supervision and inspiration. His expert
guidance made my study an extensive and comprehensive one.
This project has been made possible through the direct or indirect
motivation of all my family members, relatives and friends who inspired me to
work with full devotion and consistency.
( ANKUR AGARWAL )
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CONTENTS
INTRODUCTION
COMPANY PROFILE
OBJECTIVES OF THE STUDY
SCOPE OF THE STUDY
RESEARCH & METHODOLOGY
REVIEW OF LITERATURE
COMPARATIVE STUDY
ANALYSIS & INTERPRETATION
FINDINGS
RECOMMENDATION & SUGGESTIONS
CONCLUSION
REFERENCE
QUESTIONNAIRE
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EXECUTIVE SUMMARY
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries
and above all gathering funds little by little to afford ones dream. Home is one of the
things that everyone one wants to own. Home is a shelter to person where he rests and feel
comfortable. Many banks providing home loans whether commercial banks or financial
institutions to the people who want to had a home. The housing sector plays an important
role in the economic development of the country.
My project title is A STUDY ON HOME LOANS. I selected this topic because
The Indian housing finance industry has grown by leaps and bound in few years. Total
home loans disbursements by banks has risen which witnesses phenomenal growth from
last 5 years. There are greater number of borrowers of home loans so by this study we can
find out satisfaction level of customers and problems faced by them in obtaining home
loans.
My objectives of study are-
To make comparative study of Disbursement of home loans by commercial banks.
To study the satisfaction level of customers about home loans.
To study the problems faced by customers in obtaining the home loans.
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And problems face by customers in obtaining home loans are
The customer does not had proper knowledge about different Home loan products
so they face problem in making a good deal.
There are procedural delays, which harass the customers lot this will crush the
curtsy of customers to avail the home loan.
The attitude of bank employees some times non cooperative and it creates a hurdle
in building trust and Confidence among customers about banks.
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LIST OF ABBREVIATIONS
ABBREVIATIONS EXPANSION
ROVR RECOMMENDATION OVER
NRI NON RESIDENT INDIAN
RBI RESERVE BANK OF INDIA
PNB PUNJAB NATIONAL BANK
SBI STATE BANK OF INDIA
IIR INCOME TO INSTALLMENT RATIO
FLIP FLEXIBLE LOAN INSTALMENT PLAN
DSAs DIRECT SELLING AGENTS
BSAs BUSINESS SELLING AGENTS
DCOVR DOUBLE CHECKING OVER
RPLR RETAIL PRIME LENDING RATE
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INTRODUCTION TO HOME LOANS:-
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries
and above all gathering funds little by little to afford ones dream.
Home is one of the things that everyone one wants to own. Home is a shelter to
person where he rests and feel comfortable. Many banks providing home loans whether
commercial banks or financial institutions to the people who want to have a home.
HDFC-(Housing Development And Finance Corporation) Home Loan, India have
been serving the people for around three decades and providing various housing loan
according to their varied needs at attractive & reasonable interest rates. Owing to their wide
network of financing, HDFC Housing Loans provides services at your doorstep and helps
you find a home as per your requirements.
Many banks are providing home loans at cheapest rate to attract consumers towards
them. The more customer friendly attitude of these banks, currently offer to consumers
cheapest loan over homes.
With the RBI reducing bank rate, the home loan market rates nose-diving by 50
basis points. The HDFC Bank and Standard chartered bank has become the first player in
this sector to announce a housing loan for a 20 years period.
HDFC also provides with Home Improvement Loan for 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).
Current status is that HDFC reduced home loan rates by 50 basis points for all its
existing floating rate customers.
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1.1 ADVANTAGES OF HOME LOAN:-
Attractive interest rate:-
The various banks offer attractive interest rates to boost and help their customers.
Many banks provide loans on fixed or floating rates to facilitate consumers as per their
needs.
Help in owning a home:-
The home availed by a person with the help of banks, because they provide
technical and financial assistance to customers for owning their dream home.
No requirement of guarantor:-
The commercial banks now a day, liberalize their laws regarding home loans. Some
of banks dont even require the guarantor to grant loan to their consumers. They also make
consumers free by reliving him to find a guarantor to complete the proceedings of availing
loan.
Door-Step Services:-
These door to step services are provided from enquiry stage to the final disbursement
takes place such services are beneficial for customers in present busy life. Banks like ICICI
bank and standard chartered bank provide door to step services to customers to borrow
loan.
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Loan period:-
There are many banks which provide maximum loan tenures upto 15-20 years based on
the loan amount and the creatibility of customers. This relieves the customers to repay loan
amount till a long period.
For accidental death insurance:-
Some banks provide free accidental death insurance with housing loan which is also
beneficial for the customers.
These benefits or advantages of home loans are responsible for making than so
popular among customer that a person who dont have their home and want to buy, they do
it with home loan. Home loans help such persons in making their dream home.
1.2 DISADVANTAGES OF HOME LOANS:-
The main disadvantages of home loans are high lightened as below:
(i) Delays in processing :-
Many times, there are huge delays in processing of providing home loans because
various formulations to be fulfilled in this process. Due to these delays customers feel
mentally as well as financially weak.
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(ii) Fluctuating interest rates:-
Some banks give home loans at floating rates, which fluctuate at Different intervals due to
some reasons. These changes sometimes, may lead to increase in interest rate which will
increase the cost of home loans to the customers
(iii) High Cost:-
The public sector banks charge high processing cost for home loans sanctioning.
They are forced to pay serious charges at various stages to fulfill the requirements. Some
consumers are not able to pay such charges so such people could not avail the benefits of
home loan schemes.
(iii) Problems in disbursement:-
There are many problems in disbursement of home loan amount. There are some
delay in disbursement of loan amount to the customers due to legal formalities. This causes
problems to the customers.
These are limitations or disadvantages of home loans. But sometimes some banks
charges high installments to repay loan amount. Such also causes problem to customers.
These limitations can be removed by providing good and promote services to the
customers.
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1.3 DISBURSEMENT OF HOME LOANS:-
Terms & conditions:-
a) Rate of interest = 8.25% - 9.50% ( R.B.I )
b) Time period = 15 20 years
c) Limit = minimum 5 lacks.
Maximum 500 cr. Or above
Some questions asked by the customers:-
d) Location = Bareilly
e) Registry
f)Passing map
g) Marketing value of property
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Conditions regarding co-applicants: -
All Housing Finance Institutions lay down conditions on who can be co-applicants.
all co-owners to the property. need to be co-applicants to the loan necessarily. These
institutions do not permit minors to join in as either co owner or as co-applicants because
a minor is not eligible to enter into a contact as per law. They do not permit even friends
or relatives who are not blood relatives to take a property jointly. However, Income of
co-applicants can be clubbed together to get higher loan eligibility. Given below is a
Table that throw light on acceptable relationship of a co-applicant for clubbing of
income.
Income Clubbing of Co-applicants:- It is as follows:-Combination Income Clubbing: -
Husband-Wife: - Income of husband-wife can be clubbed.
Parent - son: - It can be clubbed if only son is there but not if any male sibling exists.
Brother-Brother: - If they are currently staying together and intend to stay together in
the new property, then only, their income-can be clubbed for above purposes.
Brother-Sister: - No clubbing-is possible.
Sister-Sister : - No clubbing is possible.
Parent-Minor- Child: - No clubbing is possible in this case also.
a) The income of the salaried individual is considered in the following manner:-
Gross monthly income as it appears on the salary slip
Less:- Any non regular variable income appearing on the salary slip (including overtime,etc.)
Add : - 50 per cent of the average variable income of the last six months.
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Add: - Any fixed cash/voucher payments for which proof can be submitted.
Add: - 50 per cent of the average variable cash/voucher payments with proof like travelingreimbursement etc.
Add:- HRA receivable if not being received already in the salary slip.
Average of the net profits of last 2 years as it appears in the profit and loss account(Returns need to be filed for the same. They should be filed regularly before the due date isover).
Less: - Any income, which is unusual and non-recurring in nature like sale of some asset,etc which affects profits substantially,Add: - Any expense that is unusual and non-recurring in nature like repairs andmaintenance that has not been capitalized and effect profit adversely.
Add: - 50 per cent of the average depreciation of the last two years. The above income iscalculated for the calculation of eligibility using IIR and FOIR norms.
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CUSTOMERPROFILE
Documents:-
If customer is self employed:-
A) I.D PROOF:-
-pan card-driving license-voter Id card
B) ADDRESSPROOF:-
-pass book-Electricity bill
-telephone bill (landline/ postpaid)-rashan card-rent agreement (if customer are live in rent)
C) BUSINESSPROOF:-
-visiting card-company profile-letter head
D) BANK STATEMENT:-
-LAST 6 MNTHBANKSTATEMENTS (UPDATE)
-COMPUTATIONP&LA/C, BALANCESHEET
E) INCOMETAXRETURN:-
- LAST 3 YRS. SALARYSLIP
2 PHOTO / PROPERTYCHAINPAPER
IFCUSTOMER ARESALARYBASED:-
A) I.DPROOF:-
-PANCARD
-DRIVINGLICENSE
-3YRS. SALARYSLIP
-JOININGLETTER
- OFFERLETTER+ RELEVANTLETTER
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B) ADDRESSPROOF:-
-pass book-Electricity bill
-telephone bill (landline/ postpaid)-rashan card-rent agreement (if customer are live in rent)
C) BANKSTATEMENT:-
-LAST 6 MNTHBANKSTATEMENTS (UPDATE)
-COMPUTATIONP&LA/C, BALANCESHEET
D) INCOMEPROOF :-
- SALARY SLIP- FORM 16
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COMPANY PROFILE
OF
HDFC HOSING DEVELOPMENT FINANCECORPORATION LTD
6.1 INTRODUCTION:-
Housing Development Finance Corporation Limited , founded 1977 by Ravi
Maurya and Hasmukhbhai Parekh, is an IndianNBFC, focusing on home mortgages.
HDFC's distribution network spans 243 outlets that include 49 offices of HDFC's
distribution company, HDFC Sales Private Limited. In addition, HDFC covers over 90
locations through its outreach programmes. HDFC's marketing efforts continue to be
concentrated on developing a stronger distribution network. Home loans are also Sharcket
through HDFC Sales, HDFC Bank Limited and other third party Direct Selling Agents
(DSA).
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since
emerged as the largest residential mortgage finance institution in the country. The
corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross
premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new
business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000
lives year ending March 31, 2007.
HDFC operates through almost 450 locations throughout the country with its
corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai,
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http://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/NBFChttp://en.wikipedia.org/wiki/Mortgageshttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/NBFChttp://en.wikipedia.org/wiki/Mortgageshttp://en.wikipedia.org/wiki/HDFC_Bank7/29/2019 Study of Functioning and Operations of Loan Department of Hdfc Bank_(100)_2012
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UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing
company in India for the last 27 years.
SNAPSHOT-I
Incorporated in 1977 as the first specialized Mortgage Company in India.
Almost 90% of initial shareholding in the hands of domestic institutes and retail
investors. Current 77% of shares held by foreign institutional investors.
Besides the core business of mortgage HDFC has evolved into a financial
conglomerate with holdings In:
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CHART:- 6.2
HDFC Standard Life insurance Company- HDFC holds 72.26 %.
HDFC Asset Management Company HDFC holds 60%
HDFC Bank- HDFC holds 23.26%.
Intelenet Global (Business Process Outsourcing) HDFC holds 50%.
HDFC Chubb General Insurance Company HDFC holds 74%.
HDFC
LTD
72.26%
HDFC
STANDARD
LIFE
60%
HDFC
ASSET
MANAGEMENT
23.26%
HDFC
BANK (inclusive
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SNAPSHOT-II
Loan Approvals Rs. 805 billion.
(Up to Dec 2007) (US $ 18.30 bn.)
Loan Disbursements Rs.669 billion
(Up to Dec. 2007) (US $ 15.20 bn)
Housing Units financed 2.5 million.
Distribution
Offices 181
Outreach Programs 90
HDFC Limited
Type Public (BSE: 500010)
Founded 1977
Headquarters Mumbai,India
Key peopleRavi Maurya
Hasmukhbhai Parekh
Industry Housing Finance
Revenue US$ 1.49 billion (2008)
Employees 1,029
Website www.hdfc.com
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jjjjjjj
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500010http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_Dollarhttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.hdfc.com/http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500010http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/w/index.php?title=Ravi_Maurya&action=edit&redlink=1http://en.wikipedia.org/wiki/Hasmukhbhai_Parekhhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_Dollarhttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.hdfc.com/7/29/2019 Study of Functioning and Operations of Loan Department of Hdfc Bank_(100)_2012
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KEY EXECUTIVE HDFC HOUSING DEVELOPMENT FINANCE CORP LTD :-
Mr. Deepak S Parekh: - serves as Executive Chairman and Chief Executive Officer of the
Board of Housing Development Finance Corp. Ltd., (HDFC). He joined HDFC Limited in
a senior management position in 1978. He was inducted as a whole-time director of HDFC
Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief
Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered
Accountants (England & Wales).
Mr. K.m mistry: - The Managing Director of the Corporation. He has been employed with
the Corporation since 1981 and was the executive director of the Corporation since 1993.
He was appointed as the deputy managing director in 1999 and the Managing Director in
2000. He is also a member of the Investors Grievance Committee of Directors.
Ms. Renu S. Karnad: - The Executive Director of the Corporation. She has been
employed with the Corporation since 1978 and was appointed as the Executive Director of
the Corporation in 2000. She is responsible for overseeing all aspects of lending operations
of HDFC.New Delhi.
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BOARD OF DIRECTORS:-
Mr. D S Parekh - Chairman Mr. D N Ghosh
Mr. Keshub Mahindra - Vice Chairman Dr. S A Dave
Ms. Renu S. Karnad - Executive Director Mr. S Venkitaramanan
Mr. K M Mistry - Managing Director Dr. Ram S Tarneja
Mr. Shirish B Patel Mr. N M Munjee
Mr. B S Mehta Mr. D M Satwalekar
GROUP COMPANIES:-
HDFC Bank: World Class Indian Bank- among the top private banks in India.
HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.
Intelenet Global: BPO services for international customers.
CIBIL: Credit Information Bureau India Limited.
HDFC Chubb: Upcoming Private companies in the field of General Insurance.
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6.3 JOINT VENTURE
HDFC Standard Life Insurance Company Limited was one of the first companies to
be granted license by the IRDA to operate in life insurance sector. Reach of the JV player
is highly rated and been conferred with many awards. HDFC is rated AAA by both
CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard
and Poors. These reflect the efficiency with which HDFC and Standard Life manage their
asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August
2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and
Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life
Insurance Companies, which offers a range of individual and group insurance solutions. It
is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.) Indias leading housing finance institution and the Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom. Both the
promoters are will known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry- all important factors
to consider when choosing your insurer.
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Business Growth:-
The company commands a market share of over 60% in the housing finance sector.
Leveraging on its brand equity HDFC has also entered the Indian Mutual Fund scene quite
recently. HDFC was the only applicant to be given clearance by the government, to enter
the Rs 250 bn life insurance business. This in itself speaks volumes about the
managements professional reputation.
Financial year 2000 proved to be a boon for housing finance companies, as the tax
benefits announced in the budget, coupled with the low real estate prices and rising
disposable incomes, spurred housing demand. As a result, demand for housing finance too
has registered high rates of growth. The housing sector has now been recognized as an
engine of economic growth and HDFC is well placed to capitalise on this surge in demand.
Against this backdrop, HDFC logged in an excellent performance. The companys
approvals and disbursements during the first half of financial year 2001 witnessed a year on
year growth of 33% and 32% respectively. The robust growth in itself is a conclusion that
HDFCs business is far less susceptible to any economy downturn.
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(TABLE:-6.2) Financial Snapshot
Growth ratios FY98 FY99 FY00 1HFY01
Operating income 13.7% 21.6% 15.2% 21.1%
Other income 331.7% -24.6% -54.0% 346.8%
Net profits 18.3% 13.8% 20.4% 19.8%
Approvals 28.9% 25.2% 30.3% 33.4%
Disbursements 31.1% 24.4% 31.2% 31.5%
% change compared to corresponding previous period The entry of new players has not in
any way significantly reduced HDFCs domination in terms of volume. However, the
increased competition has led to a decline in interest spread (the difference between interest
income earned and interest paid). Over the last couple of years HDFCs spread has shrunk
from 2.1% in financial year 1997 to 1.8% in financial year 2000. When it comes to
containing risk, the companys track record is among the best in the financial sector.
During the financial year 2000, HDFC has reduced the quantum of loans where payment
was in arrears to just 0.9% of its portfolio. This is because individuals account for nearly
70% of its total outstanding loans. The high level of an individual investors personal
contribution in a house makes the possibility of default less likely.
In keeping with its tradition of playing safe, HDFC is diversifying its business. The
company has chosen the acquisition route to increase its assets and customer base in its
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core business of housing finance. Its recent acquisition of Home Trust Housing Finance
and Gruh Finance will not only increase its size but will also bring the economies of scale.
GRAPH:-6.4
BUSINESS OBJECTIVES:- The primary objective of HDFC is to enhance residential
housing stock in the country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership.
Another objective is to increase the flow of resources to the housing sector by integrating
the housing finance sector with the overall domestic financial markets.
ORGANISATIONAL GOALS:- HDFC's main goals are to :-
a) develop close relationships with individual households,
b) maintain its position as the premier housing finance institution in the country,
c) transform ideas into viable and creative solutions,
d) provide consistently high returns to shareholders, and
e) to grow through diversification by leveraging off existing client base.
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In addition to home building loans, HDFC also offers home extension, home improvement and home
conversion loans. It also helps to identify and value properties. HDFC also offers depository services in form
of term deposits.
TABLE:-6.5
CONSOLIDATED EARNINGS:-
(As at March 31, 2008)
HDFC consolidated
Return on Equity 27.8% 28.2%
Return on Average Assets 2.7% 2.7%
Earnings per share (Rs) 85 95
Profit after Tax (Rs in billion) 24.36 27.13
Total Assets (Rs in billion) 810.99 925.83
DISTRIBUTION NETWORK: - HDFCs distribution network spans 254 outlets that
include 54 offices of HDFCs distribution company, HDFC Sales Private Limited (HSPL).
In addition, HDFC covers over 90 locations through its outreach programmes. Distribution
channels form an integral part of the distribution network with home loans being
distributed through HSPL, HDFC Bank Limited and other third party direct selling
associates.
To cater to non-resident Indians, HDFC has offices in London and Dubai and service
associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Al Khobar, Jeddah and Riyadh
in Saudi Arabia.
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HDFC HOME LOAN ADVANTAGE :-
Home loan counselling sharing over 30 years of home loan experience
Door step service
Helps in finding Dream home
Wide Product Range
Multiple Repayment Option
Wide Network of financing
Post disbursement service
Loan repayment option
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OBJECTIVES OF STUDY
There is no strongest foundation for your dream home, than a cheap loan. Home loans have
become that stronger foundations for people who want to own a home. The main objectives
of the study are as follows :-
1) The main objective of this study is to know the Customers perceptions about home
loans of HDFC housing development finance corporation LTD.
2) Assessing the satisfaction level of consumer within the service of HDFC bank.
3) Identifying the preferences of customer of Home loans.
4) Identifying the reason opting for home loan.
5) Assessing the problem in home loan.
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PURPOSE OF THE STUDY
The main purpose of this study is to attain the knowledge of the processing system of homeloans. the main purpose of the study are as follows :-
To know the ideas of customers about home loan products and services.
To study the satisfaction level of customers about home loans.
To study the problems faced by customers in obtaining the home loans.
To learn about various aspect of HDFC home loan ltd.To learn about various aspect of HDFC home loan ltd.
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SCOPE OF STUDY
The Indian housing finance industry has grown by leaps and bound in few years. total
home loans disbursements by banks has risen which witnesses phenomenal growth from
last 5 years. There are greater number of borrowers of home loans. so by this study we can
find out satisfaction level of customers and problems faced by them in obtaining home.
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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.
To know the Customers perceptions about home loans of HDFC housing
development finance corporation LTD.
To study the satisfaction level of customers about home loans.
To study the problems faced by customers in obtaining the home loans.
To make comparative study of disbursement of home loans by commercial banks,
the study shall be conducted in the manner enumerated below-
3.1- 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 and it was descriptive
study when detailed study was made for comparison of disbursement of home loans by
commercial banks.
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3.2 SOURCES OF DATA :-
To fulfill the information need of the study. The data is collected from primary aswell as secondary sources-
A - PRIMARY SOURCE:-
I decided primary data collection method because our study nature does not permit
to apply observational method.
In survey approach we had selected a questionnaire method for taking a customer view
because it is feasible from the point of view of our subject & survey purpose. We
conducted 200 sample of survey in our project to judge the satisfaction level of customers
which took home loans.
Sample size;-
For the questionnaire I have taken the sample size of 200 customers of HDFC LTD.
B SECONDARY SOURCE:-
It was collected from internal sources. The secondary data was collected on the
basis of organizational file, official records, news papers, magazines, management books,
preserved information in the companys database and website of the company.
3.3- SAMPLING :-
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.
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3.4 SAMPLE SIZE :-
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
size was 100.
The Sample Size consists of both the Professional and Business class people. IT
peoples, Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample.
3.5 SAMPLING TECHNIQUE:-
Random sampling technique was used in the survey conducted.
3.6 TOOLS OF ANALYSIS:-
Data has been presented with the help of bar graph, pie charts, line graphs etc.
3.7 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.
3.8 DATA COLLECTION INSTRUMENT 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.
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3.9 LIMITATIONS OF THE STUDY:-
This study also includes some limitations which have been discussed as follows:
i) The sample size of 100 customers and 4 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.
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REVIEW OF LITERATURE
4.1 SUMMARY:-
After going through pervious 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 lowthe 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, shiftingfrom 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 thesehome loans which are not fulfilling. (Lacour Micheal 2006).
SBI provide a very low interest rate on home loans as compared to other banks.(SBI May 2000)
4.2 Now after this conclusion the details of reviews are below-
Berstain David (2009) examined in his study taken from 2001 to 2008 that in this
period there is increase use of home loans as compared to private mortgage insurance
(PMI).he have divided his study into four sections. Section 1 describes why people are
going more for home loans than PMI. the main reason for this that now home loans market
provide Piggybank loans for those people who dont have 20% of down payment. 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.
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INTRODUCTION TO THE INDUSTRY PROFILE
5.1 THE HISTORY OF INDIAN HOME LOANS:-
Home loans in India have made people Buy Property in India in spite of the
skyrocketing prices. Today, we find considerable Real Estate Investment in India, either in
the field of Residential Property in India or Commercial Properties in India. Home Loans in
India are disbursed by many Banks as Loan Banking is on of the most important function
of the Financial Services in India.Property Dealers and Real Estate Consultants in India
usually recommend that we undertake appropriate Home Loan or Mortgage Loan
counseling so that we can Buy Apartment in India at an affordable Mortgage
Rate.Purchasing the home of your dreams is not an easy task. Especially when you plan to
buy a home on loan. Home loan means that you buy a house on installments. In simpler
terms when you want to own a home and cant afford to pay the amount in lump sum, you
can pay it in monthly installments with an interest rate.
The interest rates of home loans are expected to go down even further according to
analysts who foresee a cut down in the rates by the RBI in the wake of the decision taken
by US Federal Reserve to cut its rates by a significant margin.
There are number of companies offer cheap home loans at a low interest rate. You can
avail loan against existing house for renovation or expansion etc. There are many
nationalized banks that offer finance for affordable housing. India Housing has put together
a comprehensive data to provide you with the cheapest Home Loans available in the
market. We have listed all the important housing finance institutes and some of the top
home finance banks providing lowest interest rates.
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In the last few years, housing loan scenario in India has changed drastically. It has
taken a front seat and people are looking forward to owning their own houses. It is no more
a dream that required lifetime saving and a difficult decision to make. Today the new home
purchase loan is much easily available and is much cheaper than what was available earlier.
Banks are now everywhere and the schemes are implemented even in villages and smaller
towns. The housing loans are popular there too, however, the activity of building flats is
little slow. It would not be wrong to say that there has been a boom in the home loan
market and with this boom; there is also a boom in the Number of home loans mortgage
brokers in India.
The main reason for this boom in home loan market is the change in government
policies. It is our governments motivation that the home loan interest rates in India have
fallen considerably. Lot many banks are offering home loans and this is available at low
EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending
rate is in the range of 7.5 to 15 %.
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5.2 INTEREST RATES PROVIDED BY VARIOUS BANKS
Finance InstitutionLoan Period
(in years)Fixed
EMI / Lakh
(INR)Floating
EMI / Lakh
(INR)
Bank of Baroda
Up to 5 9.00 2076 8.00 2028
6 to 10 9.25 1230 8.25 1227
11 to 15 9.50 1044 8.25 970
16 to 20 9.50 932 8.50 868
State Bank Of India
Up to 5 9.50 2100 8.75 2064
6 to 10 9.75 1300 9.25 1280
11 to 15 - - 9.25 102916 to 20 - - 9.75 949
HDFC
Up to 5 11 2175 9.50 2101
6 to 10 11 1375 9.50 1294
11 to 15 11 1137 9.50 1045
16 to 20 11 1033 9.50 933
ICICI Bank
Up to 5 10.75 2162 9.50 2101
6 to 10 10.75 1364 9.50 1294
11 to 15 10.75 721 9.50 1045
16 to 20 10.75 1016 9.50 933
LIC Housing Finance
Up to 5 10.50 2149 9.50 2100
6 to 10 11 1373 9.50 1294
11 to 15 11 1137 9.50 1044
16 to 20 11 1032 9.50 932
PNB Housing Finance
Up to 5 9.00 2076 10.50 2150
6 to 10 9.00 1267 10.50 1350
11 to 15 9.25 1030 10.50 1106
16 to 20 9.50 933 10.50 999
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16 to 20 11 1032 9.50 932
PNBHousing Finance
Up to 5 9.00 2076 10.50 2150
6 to 10 9.00 1267 10.50 1350
11 to 15 9.25 1030 10.50 110616 to 20 9.50 933 10.50 999
The above table illustrates the comparison between the interest rates from variousHousing Finance Companies and banks. It can be seen that if one wishes to go for floatingloans, the bank which gives the best deal as far as the interest rate is concerned is HDFCfollowed by PNB Housing Finance with the lower rates.
GRAPH :- 5.3
5.4 Indian home loans Industry:-
Indian Home loans industry is growing at a fast pace 30% per annum, this can be
seen in the stats shown below with average ticket size (loan size) and Amount disbursed is
rising every year the opportunities have become more dominant for different organization
in India. The demand drivers are fast growing middle class population, rise in working
women workforce, bigger aspirations of youth, Tax saving, Transparency in the real estate
market.
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GRAPH:-
Still in comparison to other nations India has a long way to go, The figures shown
below shows that even the GDP/mortgage ratio is low which indicates that credit is not
well sought as figure below shows the average percentage of mortgage to GDP
.
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GRAPH:-5.4
Comparison with other nations India fall behind in terms of Mortgage Penetration which
directly demonstrates the potential in Indian market for Housing mortgage finance
companies
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GRAPH:- 5.5
Real Estate is currently sought of as a great means of Investment, the prices of
residents have shot up very high which is clearly shown in the figure below, the major
cities have witnesses lot of development and price appreciation which demonstrates the
growing demand . more and more people are migrating to cities for work / business. More
and more jobs are created and price index rise becomes inevitable.
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Price Index: FIG-5.6
The above figure shows the rise in prices of space per sq feet in different major
cities.
Housing shortage in India: - The below figure shows the ever-increasing demand for
houses in India and also mentioned here is the Rural and urban requirement. Banks are
driving new strategies to tap both the markets in a different way Rural/Urban. There are
categories with Indian loan demand, which is shown in this figure
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FIG:- 5.7
Recent trends of home loan in India:-
In order to understand the recent trends we need to know or understand various factors.
These factors play vital role in Indian home loan market. These include interest rate on
which banks provide home loan, tax rebate on home loan and its impact. Apart from this to
understand the recent trend we need to compare the trends of home loan of different years.
Here we have compared the interest and other market trends of year 2009 with 2007-08.
This kind of comparison gives the result which helps us to understand the trends of market
of any industry. Apart from the impact of present and past economic ups and down also
affect the trends. Today the US slowdown is the major issue which has affected almost all
the industry. So we have also discussed this issue in terms to define trend of home loan
market in India.
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5.8 Types of home loans: -
Housing loans offered by banks are of different types:-
Home Purchase Loans
Home Construction Loans Home Improvement Loans
Home Extension Loans
Home Conversion Loans
Land Purchase Loans
Stamp Duty Loans
Bridge Loans
Balance Transfer Loans
Refinance Loans
Loans to NRIs
Home purchase loans:-
This is the basic home loan for the purchase of a new home. If you want to buy a
flat in some society or some already built house, banks and HFCs sanction you home
purchase loans for this process.
Home construction loans:-
This loan is available for the construction of a new home on a said property. The
documents that are required in such a case are slightly different from the ones you submit
for a normal Housing Loan. If you have purchased this plot within a period of one year
before you started construction of your house, most HFCs will include the land cost as a
component, to value the total cost of the property. In cases where the period from the date
of purchase of land to the date of application has exceeded a year, the land cost will not be
included in the total cost of property while calculating eligibility.
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Home improvement loans:-
These loans are given for implementing repair works and renovations in a home that
has already been purchased, for external works like structural repairs, waterproofing or
internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can
avail of such a loan facility of a home improvement loan, after obtaining the requisite
approvals from the relevant building authority. the following are coming under the
home improvement loans:
External repairs
Tiling and flooring
Internal and external painting
Plumbing and electrical work
Waterproofing and roofing
Grills and aluminum windows
Waterproofing on terrace
Construction of underground/overhead water tank
Paving of compound wall (with stone/tile/etc.)
Borewell.
Home extension loans:-
An extension loan is one which helps you to meet the expenses of any alteration to
the existing building like extension/ modification of an existing home; for example addition
of an extra room etc. One can avail of such a loan facility of a home extension loan, after
obtaining the requisite approvals from the relevant municipal corporation.
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Home conversion loans:-
This is available for those who have financed the present home with a home loan
and wish to purchase and move to another home for which some extra funds are required.
Through a home conversion loan, the existing loan is transferred to the new home including
the extra amount required, eliminating the need for pre-payment of the previous loan.
Land purchase loans:-
This loan is available for purchase of land for both home construction or investmentpurposes.
Stamp duty loans:-This loan is sanctioned to pay the stamp duty amount that needs to be paid on thepurchase of property.
Bridge loans:-
Bridge Loans are designed for people who wish to sell the existing home andpurchase another. The bridge loan helps finance the new home, until a buyer is found forthe old home.
Balance- transfer loans:-
Balance Transfer is the transfer of the balance of an existing home loan that you
availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the
current ROI a lower rate of interest.
Refinance loans:-
Refinance loans are taken in case when a loan for your house from a HFI at a
particular ROI you have taken drops over the years and you stand to lose. In such cases you
may opt to swap your loan. This could be done from either the same HFI or another HFI at
the current rates of interest, which is lower.
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NRI home loans:-
This is tailored for the requirements ofNon-Resident Indians who wish to build or
buy a home or property in India. The HFCs offer attractive housing finance plans forNRI
investors with suitable repayment options.
On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs 1 crore,
based on the repayment capacity, previous credit history and the cost of the property. The
bank may provide a maximum of 85% of the cost of the property or the cost of construction
as applicable and 75% of the cost of land in case of purchase of land. The repayment
capacity is calculated taking into account factors such as:
Age
Income/Salary
Qualifications
Dependant/(s)
Assets/Liabilities
Credit History
Stability / continuity of your employment/business
Income of co-applicant/(s)
Taking home loans these days has become simpler. With the RBI regularly bring
down interest rates; taking home loans have become extremely easy. Housing loans which
were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down,
people increasingly number apply to take these loans. Some of the leading banks offering
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home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank State Bank, Bank of
Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank.
HDFC Home Loan:-
Highlights:-
HDFC markets its parent HDFC's home loan products.
Finances up to 85% of the cost of the property (Agreement value + Stamp duty +
Registration charges).
Home improvement loan, which facilitates internal and external repairs and other
structural improvements like painting, waterproofing, plumbing and electric works,
tiling and flooring, grills and aluminum windows. Finances up to 85% of the cost of
renovation (100% for existing customers).
Home extension loan for extension of an existing dwelling unit under the same
terms as applicable to home loan.
Land Purchase Loan to purchase land for constructing house. Finances up to 70% of
the cost of the land. Repayment over a maximum period of 10 years.
Fixed Rate, Floating Rate and options to structure loan as partly fixed or partly
floating.
Flexible repayment options to suit individual needs.
Insurance cover under Term Assurance Plan
Offer in-house scrutiny of property documents.
Eligibility; - HDFC home loans are available for:
Purchase of flat, row house, bungalow from developers
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Purchase of existing freehold properties
Purchase of properties in an existing or proposed co-operative housing society or
apartment owner's association
Purchase of first Power of Attorney purchases in Delhi for DDA flats allotted
before 1992.
Construction of own house
HDFC home loans can be applied for either individually or jointly. Proposed owners of the
property will have to be co-applicants. However, the co-applicants need not be co-owners.
Maximum tenure is 20 years subject to retirement age.
Loan Amount: - 85% of the cost of the property (including the cost of the land) and based
on the repayment capacity of the customer.
Rate of Interest :- The current applicable fixed rate of interest in respect of the total loan
approved is as follows:
For loans up to Rs.2, 00,000:-
Term of Loan
(No. of Years)
Rate Per Annum
(%p.a)
Up to 5
6 - 1011 - 15
10.00
10.7511.00
For loans greater than Rs.2, 00,000
Term of Loan Rate Per Annum
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(No. of Years) (%p.a)
5
1015
10.00
11.0011.25
All loans on annual rest basis. You repay the loan in Equated Monthly instalments
(EMIs) comprising principal and inertest.EMI per Rs 1,00,000 (for loan up to Rs.2,
00,000)
Term of Loan
(No. of Years)Rupees
51015
219914011159
EMI per Rs.1, 00,000 (for loan greater than Rs.2, 00,000)
Term of Loan
(No. of Years)Rupees
51015
219914161175
5.9 Documents Required :-
Salaried Customers Self Employed Professionals Self Employed Businessman
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Application formwith photograph
Application form with photograph Application form with photograph
Latest Salary-slipEducation Qualifications Certificateand Proof of business existence
Education Qualifications Certificateand Proof of business existence
Form 16Last 3 years Income Tax returns(self and business)
Business profile
Last 6 months bankstatements
Last 3 years Profit /Loss andBalance Sheet
Last 3 years Income Tax returns(self and business)Last 3 years Profit /Loss andBalance Sheet
Processing feecheque
Last 6 months bank statementsProcessing fee cheque
Last 6 months bank statements (selfand business)
Processing fee cheque
The Credit Appraisal is an important step in sanctioning loan applications .Hence the
Credit Appraiser needs to have certain important documents to compute the credit
worthiness of the applicant .In the case of salaried person these include the following :-
1)SALARY SLIPS (3 MONTHS CURRENT) :- The salary slip is usually a printed sheet
of paper that contains 2 components
Income/Earnings column: - It contains an exhaustive list of the various components that
are added to the persons salary. They contain various components like Basic pay, HRA etc.
Deductions: - It contains an exhaustive list of various components that are deducted from
the persons Earnings. They contain various components like Income tax, Provident fund,
Employee Loans etc.
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2) BANK STATEMENTS(6 MONTHS CURRENT) ;- The bank statement contains the
various transactions that the applicant performs in his bank account. It has 3 components
Date
Descriptions;- It contains the brief and standardized description of the activity or
the account related to the transaction .Eg. Clearing cheque 166129, Transfer
deposit.
Deposits: - It contains the amounts that were credited to the account
Withdrawal ;- It contains the amounts that were debited to the account. This is
carefully studied to find out about any regular withdrawals or a series of checks so
that any existing loans may be revealed and there can be a correct estimate of the
repayment capacity.
Balance :- It shows effect of transaction on the pre existing account balance
Special feature :- HDFC will not consider any loan s with out standing EMI of or
below 6 months.
3) FORM 16:- It is form given by Employer which states the income earned from that
company during the full financial year ,and gives the details of Tax deducted at source.
4) COPY OF INCOME TAX RETURN(SARAL) :- The SARAL tax return form
reveals the structure of incomes and/or the various earnings of the tax returnee .It also
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shows the various deductions that will not be included and it also contains the Rebates on
which he earns tax benefit.
5) RESIDENCE PROOF: - The residence proof includes the Electricity bill, Telephonebill, Ration Card, Passport.
6) PHOTO ID PROOF: - The photo proof includes the Pan card, Voter ID card,Employee ID card, Passport etc.
7) AGE PROOF: - The age proof includes the Pan card, Passport, Photo ID.
8) LOAN APPLICATION FORM DULY FILLED: - It can also be downloaded fromHDFCs user friendly web based portal.
9) CHARGES FOR PROCESSING FEES :- This is a standard and nominal fees to bepaid at the time of applying for loan
Fees structure. 0.5% of loan amount+Service tax of 12%(Less)Education Less of 3%
OR 5618/-HDFC takes from applicant whichever is less. This is applicable time to time.
10) PHOTOCOPIES OF PROPERTY PAPERS.
5.10 STAGES OF HOME LOAN
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Munirka
HUB
Login Scanning
DataEntry
Application
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The representation shown above is not a perfect copy of the actual process. This is because
these stages are taking place simultaneously and one application is being taken care for by
the experienced employees of both HDFC Ltd service centre and HDFC Ltd HUB (also
called the back end office).Also the applicant may be asked to send information or may be
asked questions regarding his requirement and/or his documents for his own convenience
Hence the loan application may or may not shuttle through different stages.
APPLICATION STAGE :- This is the stage where the Application Form first
reaches the concerned Service Centre Here all the documents in the application are
reviewed by the experienced staff present at the service centre The HDFC Ltd employee
who reviews the file checks to see whether all documents are present and in their proper
place .He checks if the documents are duly filled, not fake, attested by authority in question
and present in order. In case any document is missing the applicant is contacted
electronically or by mail .The applicant is contacted by telephone and requested for the
document until he denies it being with him. This exercise is called FOLLOW UP. the credit
appraisal of the loan application starts at this stage. The service centre employees compute
the gross salary, IIR, FOIR, Loan Eligibility ratio etc. The credit worthiness of the
applicant is calculated here.
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RecommendationOver(ROVR)Double Checking
Over (DCOVR)Fixed
charges
Disbursementof loan
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It is also at this stage that the QUICK DATA ENTRY of the loan application is
done to create a serial no. of the application. after that another page appears and more data
is entered .It is now that a special and unique LOAN A/C NO. is created under which all
the loan processes will be carried out. The number that has been generated is
communicated to the applicant by means of a letter and/or electronic communication the
system of electronically recording the data helps to create ready reference, a proof ,helps in
quick and easy processing of the data. It also helps to very easily and quickly share data
with other employees of HDFC.
The next and important processing performed at the service centre is that of filling
up a document known as the INTERVIEW SHEET. for processing individual loans
(salaried cases) .It contains various simple entries like :-
1. Name of borrower
2. Name of co-borrower
3. Income details:-Family background and permanent address etc.
It also contains various important entries like.
5. Gross Salary
6. Rental
7. Other incomes
8. Obligations: - The various other loans that the applicant is entitled to pay ,their amount,
their remaining terms ,source etc.
9. Remarks;- This column contains the various findings that the employee has found out
after thorough review of the applicants documents such as bank statement, salary slip etc.
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Hence the interview sheet contains the important findings which the employee has
collected after careful review of the various documents .The interview sheet helps to cut
corners and helps save time by not having other employees to go through the documents
again and again .It hence acts as a source of quick reference.
After all this has been performed well enough the loan application will be arranged
in a file and all it will be given its loan a/c no which also acts as its file no. the file is now
ready to be sent to the HUB where further processing will take place.
SCANNING: - In this stage the various important documents of the applicant are scanned.
this helps to create their electronic copy which acts as a ready reference, a proof, and can
also be shared and utilized by other employees of HDFC Ltd.
DATA ENTRY :- The file has been sent to the back end office or the HUB .At HUB there
are many experts with their own specializations . these officials review the various parts of
the filae again and perform many specialized tasks Data entry is also one of these tasks .this
entry is much more different and complex as compared to the earlier performed Quick Data
Entry. An exhaustive amount and type of information has to be entered into the ILPS
system ranging from Personal Details, Employment Details to Property Rate History and
Customer Interactions.
RECOMMENDATION OVER (ROVR) :- The Recommendation OVER is also referred
to as the First Appraisal at this stage certain specially appointed persons have been given
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the responsibility of recommending a loan. These people have to take special care of
reviewing every document, and all the small details that need to be considered before
considering the loan application to be valid. After this the file is sent to another specially
appointed person as explained below. At this stage if any correction or mistake is present it
can be sent back to the Service Centre.
DOUBLE CHECKING OVER :- As the name suggests at this stage a specially
appointed person will double check all the past proceedings .He will examine the Loan file
for any discrepancies ,any missing and /or misplaced documents, the Credit Appraisal
results, etc. this is a very important stage and must be handled with exceptional care. This
is because a mistake at this stage can cause a great loss to the company. The Double
checker is responsible for the ultimate sanctioning of the loan .If any mistake is done at this
stage there is no going back and hence no protection. HDFC takes great care while
appointing double checkers .They should have completed a select number of years with the
company and should have shown exemplary performance and must posses experience.
SANCTIONING :- An authorized sanctioning authority within HDFC itself will review
the remarks of Double Checker and Sanctioning authority .If it considers the loan suitable
to be Sanctioned it gives its approval .After it has given its approval stamp the ILPS system
will automatically send a letter to the Applicant that his loan has been sanctioned.
After this approval the Applicant can go to whichever Service Centre which he selects to
get his loan disbursed.
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SPECIAL CASE :- A special case can arise if the applicant has not mentioned the
property for which he wants to take a loan .In that case the applicant can let the case be
remain pending . this means that the Applicants loan request will be considered to be
complete even though he has not decided the property. However the Applicant is expected
to finalize the property in a short time.
A Property Address is necessary to
1. get the loan disbursed
2. Process the Legal and Technical Appraisal of the property and its Papers.
DISBURSEMENT: - The last and final stage in the Home Loan process is that of
disbursement. after the sanctioning has taken place the applicant becomes a registered
customer of HDFC Ltd .
He can now take the disbursement of the loan from any of the various service centre of
HDFC .The loan shall be disbursed in one Lump sum or in suitable installments to be
decided by HDFC with reference to the need and/or progress of construction (which
decision shall be final and binding on the borrower).The borrower hereby acknowledges
the receipt of the loan disbursed as indicated in the receipt.
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COMPARATIVE STUDY OF DISBURSEMENT OF HOME
LOANS BY COMMERCIAL BANKS
8.1 - Disbursement of Home loans by different banks:-
HDFC LTD :-
Years No. of Homeloan
account
holders.
Home loan Disbursed(in crore Rs.)
Distributed Recovered Balance
2004-05
2005-06
2006-07
2007-08
2008-09
700
950
1130
1435
1594
90.07
120.00
144.67
180.33
240.00
63.05
91.20
127.31
165.90
228.12
27.02
28.8
17.36
14.43
11.88
Interpretation:-
On the above table, it is evident that there are increase in No. of account holders
from 700 to 1594 in the year 2008-09. The loan amount distributed among home loan
account holder has also increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in 2008-
09. The recovery procedure for home loans is also strengthening due to increment in
recovered amount, i.e. Rs.63.05 crore to Rs.288.12 crore. So it nut shall there are upward
trend in number of accountholders and disbursement of home loans.
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Punjab National Bank:-
Years No. of Homeloan account
holders.
Home loan Disbursed(in crores Rs.)
Distributed Recovered Balance
2004-05
2005-06
2006-07
2007-08
2008-09
810
950
1120
1433
1500
120.15
183.26
213.65
240.87
265.15
97.28
150.00
185.86
231.07
265.05
22.87
33.26
28.05
9.80
9.10
Interpretation:-
The Punjab National Bank is Public sector Bank. It comes second after State Bank
of India in its branch location and expansion. From the Table, the figures show that there
are increasing trend in customer base from 810 in the year 2004-05 to 1500 in the year
2008-09. The bank also show enhancement in loan amount up to Rs.265.15 crore in the
year 2008-09. The recovery process of loans in past is slow but now it is increasing.
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Standard Chartered Bank :-
Years No. of Homeloan
accountholders
Home loan Disbursed(in crores Rs.)
Distributed Recovered Balance
2004-05
2005-06
2006-07
2007-08
2008-09
106
130
154
180
260
6.21
11.55
17.06
20.09
24.10
5.27
10.16
14.35
18.68
23.91
0.94
1.38
2.70
1.41
0.48
Interpretation:-
The standard chartered bank is a private sector bank. It has also upgraded its
position in banking sector in DEHRADUN. The figures shown in table reveal that there is
upward shift in customer base of Bank from 106 customers to 260 customers. The bank has
also increased its share in housing finance by distributing Rs. 24.10 crores in 2008-09. The
recovery procedure of Home loan is very sound.
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ICICI BANK:-
Years No. of Home
loan accountholders
Home loan Disbursed(in crores Rs.)
Distributed Recovered Balance
2004-05
2005-06
2006-07
2007-08
2008-09
650
853
1019
1132
1434
104.33
123.24
150.65
176.75
224.00
98.12
105.00
133.46
144.65
209.16
6.21
18.24
17.19
32.10
14.84
Interpretation :
The amount reveal that there is tremendous increase in Home loan accountholders. The
amount distributed as home loan is also increased from Rs. 104.33 in 2004-05 to
Rs.224crore in 2008-2009. But the recovery mechanism of the Bank is not so good thats
why the outstanding amount shows fluctuating trend.
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ANALYSIS & INTERPRETATION
GENDER CLASSIFICATION OF SURVEYED RESPONDENTS
TABLE-9.1
Sr. No. Category No. of Respondents Percentage
1 Married 70 70%
2 Unmarried 30 30%
Total 100 100%
Base 100 respondents
CHART-9.1
Interpretation
From the table and graph above it can be seen that
70% respondents are married.
30% respondents are unmarried.
Educational qualification of respondents
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TABLE-9.2
Sr. No. Category No. of Respondents Percentage
1 Under graduate 25 25%
2 Graduate 40 40%
3 Post graduate 35 35%Total 100 100%
Base 100 respondents
CHART-9.2
Interpretation
From the table and graph above it can be seen that
25% respondents are under graduate.
40% respondents are Graduate.
35% respondents are Post graduate.
Number Of years Are You in Bareilly?
TABLE-9.3
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Sr. No. Category No. of Respondents Percentage
1 Less than five years 39 39%
2 More than five years 61 61%
Total 100 100%
Base 100 respondents
CHART-9.3
Staying years in Bareilly
Interpretation
From the table and graph above it can be seen that
39% respondents are in Bareilly is less than five years.
61% respondents are in Bareilly is more than five years.
CUSTOMER PROFILE OF SURVEYED RESPONDENTS
TABLE 9.4
Customer profile No. of respondents
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Student 7
Housewife 5
Working Professional 38
Business 20
Self Employed 10Government service employee 20
Chart-9.4
Interpretation
From the table and graph above it can be seen that:-38% of the respondents are working
professionals, 20% are into business and 10% are self-employed, 20% of the respondents
are government service employee and 7% of the respondents are student and 5% of the
respondents are house-wife.
ANNUAL HOUSE HOLD INCOME?
TABLE-9.5
Sr. No. Category No. of Respondents Percentage
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1 Less than 2 lacs 98 49%
2 Between 2 to 5 lacs 62 31%
3 Between 5to 8lacs 30 15%
4 More than 8 lacs 10 5%
Total 200 100%
Base 100 respondents
CHART-9.5
Interpretation
From the table and graph above it can be seen that
49% respondents annual household income is less than 2 lacs.
31% respondents annual household income is between 2 to 5 lacs.
15% respondents annual household income is between 5 to 8 lacs.
5% respondents annual household income is more than 8 lacs.
Do you know about HDFC housing development finance corporation LTD?
TABLE 9.6
Category No. of Respondents
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Yes 91
No 9
CHART:-9.6
Awareness about HDFC LTD
Interpretation:-
From the table and graph above it can be seen that
91% respondents are known about HDFC LTD
9% respondents are not known about HDFC LTD
Table 9.7
Reasons for getting the home financed
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Sr.No. Number of Reasons Percentage
a. Non-availability of funds 36
b. Reluctancy to pay cash in one go 35
c. Tax benefit 24
d. Any other 5
GRAPH:- 9.7
Interpretation :-To interpret the response of the questions, the figures shows that most of the
customers find the problem in availability of funds i.e. 36% and very less number of
customers found problem in paying cash in one go is 35%, customers get housing loan for
tax benefits is 24%. This was the expected response because a large number of people find
a problem of availability of funds which works as an obstacle in owning a dream home.
In today's life, people hardly earn both means and ends of life and they don't have
much of money to buy a home or a land to construct house because of cost of property. So,
they take the advantage of home loans provided by different banks at different terms
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feasible to the customers. There are very less number of people, who don't own home even
when they have sufficient funds and they take the advantage of home loans because they
don't want to pay huge cash in one go.On the basis of study, it is concluded that most of
people lack of money in fulfiling their dreams and few of them were reluctant to pay cash
in one go and wanted to pay their home loans slowly in installments.
Table-9.8
From where you have got your home financed
Name of Banks / company Percentage of customers
HDFC LTD 55
Punjab National Bank 15
Standard Chartered Bank 07
ICICI BANK 20
Any other 03
To understand the response more effective and closely, it has been showeddiagrammatically as follows :-
GRAPH:- 9.8
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From where you have got your home financed
Interpretation:-
The analysis showed that a large number of customers prefer HDFC LTD as
compared to others. The data shows that 7% of customers took loan from Standard
Chartered Bank, 20% of customers from ICICI BANK, 15% Customers took loan from
Punjab National Bank, 55% of customers took loan from HDFC LTD and a 3% of
customers fall under the category of 'Any other' which included State Bank of India,
Canara Bank, Punjab and Sind Bank, etc.
The data shows that most of people prefer HDFC LTD compared to public sector
banks and other private banks. This is because of the extra services provided by HDFC
LTD. However, there is less difference in figures of ICICI Bank and Punjab National Bank.
But there is considerable difference in figures of the two private sector banks i.e. ICICI
bank and Standard Chartered Bank. As ICICI is the market leader in the home loans sector.
This may be the reason for such difference in Standard Chartered Bank's percentage and
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ICICI Bank's percentage. Another reason for specialized services in home loans, more
amounts of loans, and efficient query handling.
However, the analysis showed that the people prefer HDFC LTD for home loan
because of their services and excessive feat compared to other banks.
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Table-9.9Sources of information about Home Loans Scheme
Sources of information Percentage of customers
Newspapers 49
Magazines 16
Banners/Hoardings/Pamphlets 11
Word of mouth 20
Any other source 04
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CHART:-9.9 percentage of source of information about home loans scheme
Sources of information about Home Loans Scheme
Interpretation:-
The data shows that around 20% of customers got information from source of
'Word of Mouth' which includes information from friends, relatives, colleagues etc. 49% of
customers got information from newspapers, only 16% of customers from magazines and
4% of customers got information about home loans schemes under 'Any other source' and
11% through Banners/ Hoardings/Pamphlets .
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Table-9.10
Opinion about the services of HDFC LTD
Services of HDFC LTD Percentage of customers agreeing
Strongly
Agree
Agree Neutral Disagree Strongly
disagree
a. Professionallymanaged
86% 10% 4% - -
b. Reliable &transparent
67% 33% - - -
c. Socially responsible 75% 10% 15% 4% -
d. Customer care 20% 68% 8% - -
e. Query handling 20% 76% 4% - -
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GRAPH-9.10
Opinion of customers about HDFC LTD
Interpretation:-
Customers from HDFC LTD are quite satisfied from their services like query
handling and customers social responsibility of banks towards customers and
professionally managed services. They don't give so good response to reliability and
transparency services of banks. So, customer's satisfaction level toward HDFC LTD
services is lightly satisfied.
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Table-9.11
Opinion of customers about home loan schemes
HDFC LTD :-
Services of HDFC
LTD
Percentage of customers agreeing
Strongly
Agree
Agree Neutral Disagree Strongly
disagree
a. Amount of loan 60% 35% 5% - -
b. Legal formalities 42% 45% 14% - -
c. Interest rates 32% 56% 12% - -
d. Repayment options 26% 64% 10% - -
e. Security demanded 20% 32% 48% - -
f. Installments 55% 40% 5% - -
g. Services 45% 30% 18% 6% 1%
h. Processing forsanction of loan
55% 24% 18% 3% -
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GRAPH:- 9.11
Percentage of satisfaction level of customers of HDFC LTD
Interpretation:-
The analysis shows that the customers of HDFC LTD gave 60 percent of amount of
loan and legal proceedings, 56% to interest rates, 45% to proceedings and services, 55% to
installments. So, customer of HDFC LTD didn't give response regarding the services of the
bank / company except to the amount of loan and legal formalities.
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