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A STUDY ON HOME LOAN

WITH REFERENCE TO
HDFC BANK

HDFC Bank
Address: # 1-10-60/3, Opp. Shoppers Stop,
Begumpet, Hyderabad, Telangana 500016
Phone : 040 6160 6161

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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.
For this I had taken four commercial Banks in Dehradun city namely HDFC Bank, PNB,
standard chartered Bank, SBI. It includes two public sector banks and two private sector
banks. The period of study is five years commencing from 2004-2008.
In the research methodology I had taken both primary data as well as secondary data , in
the primary data I had make a questionnaire to check the satisfaction level of customers
about home loans . In the secondary data I had studied the annual reports of RBI,
commercial banks & broachers of these banks.
For the first objective I had collected the information about the number of account holders
of specified banks, no of disbursement of home loans and recovery of these loans.
After analysis I came to following findings
In the comparative study of specified banks its found that
Punjab National Bank is having large number of customer base with high loan
disbursement and recovery of loans.

The standard chartered bank showed less outstanding balance which presented in
percentage form in the diagram.

In case of second objective i.e. customer satisfaction level it is found that

On the basis of data the HDFC is emerging at higher position a Compare to Standard
chartered bank and other public sector banks on Ground of professionally managed
services, reliable & transparent System, easy query handling etc.

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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.
The banks do not take into account the paying capacity of customers. So some
customers are not able to get amount of Loan needed by them.

Finally the whole research was carried out in a systematic way to reach at exact results. The
whole research and findings were based on the objectives some of the limitation faced in
collecting the data were Lack of time, lack of data, non-response, reluctant attitude and
illiteracy of respondents, which posed problems in carrying out the research.
Some of the suggestions are
To increase their customers, the banks should provide specialized services in this
sector. These services can be such as proper guidance to the Customer regarding the
processing of loans, especially for the customers who are illiterate.
To satisfy their customers and for good dealings in future, the banks should make
prompt disbursement of loan amount to the customers so that they can buy or
construct their dream home as early as possible.

The Banks should use easy procedure, or say, less lengthy procedure for the
sanctioning of loan to the customer. There should be less number of legal
formalities, in case this exists, then, these should be completed in less time. This
will be helpful in attracting more customers.

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

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

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TABLE OF CONTENTS
CHAPTER
1
2

TITLE
INTRODUCTION
INDUSTRY PROFILE & COMPANY

3
4

PROFILE
REVIEW OF LITERATURE
RESEARCH METHODOLOGY
NEED OF THE STUDY
OBJECTIVE OF THE STUDY
SCOPE OF THE STUDY
LIMITATIONS OF THE STUDY

RESEARCH DESIGN
DATA ANALYSIS &

INTERPRETATIOIN
FINDINGS, SUGGESTIONS &

CONCLUSION
BIBLIOGRAPHY & ANNUXURE

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CHAPTER- 1
INTRODUCTION

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1.1 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.
In view of acute housing shortage in the country, and keeping in mind the social
economic role of commercial banks in the present times, the RBI advised banks to
encourage the flow of credit for housing finance.
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. No doubt it will enhance the
end cost people to plan their house over longer duration now; it has been made easy for a
person to buy that dream house which he dreamt of long ago.
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 aluminium 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.

1.2 ADVANTAGES OF HOME LOANS:The various benefits of home loans arising to the customers are:(i)

Attractive interest rates: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.
(ii)

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.
(iii)
No requirement of guarantor:The commercial banks now a day, liberlise their laws regarding home loans. Some
of banks dont even require the guarantor to grant loan to their consumers. They also make
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consumers free by reliving him to find a guarantor to complete the proceedings of availing
loan.
(iv)

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.
(v)

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.
(vi)

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.

1.3 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.
(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.

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These are limitations or disadvantages of home loans. But some times 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.

1.4 DISBURSEMENT OF HOME LOANS :The every bank has its own procedure to disburse the loan amount among
customers. After choosing your right home, the next step is disbursement of home loans.
The loan amount is disbursed after identifying and selecting the property or home that are
purchased and submit the requisite legal documents. In the disbursement of home loans a
clear title and full verification to ensure that a person has full rights on his house. The 230A
clearance of seller and /or 371 clearances from the appropriate authority of income tax is
also needed.
(I) Eligibility criteria:However, if one is a resident or non-resident individual who is planning to buy a
house in India, one can apply for a home loan. If a person has decided to buy a property in
the near future, he/she can apply for a loan before even selecting the property. Once the
maximum amount to put into the property has been decided, the Housing Finance
Institutions or Banks will let the customer know that how much he/she is eligible for and
this helps to plan out the budget.
(ii) 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 coowner 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 coapplicants 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.

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Parent-Minor- Child: - No clubbing is possible in this case also.

(iii) General Terms and Conditions: - The following are the terms and conditions
applicable to the basic home loan product only. These are likely to change on the basis of
the variations of the home loan product. Typically, in general home loans, the following
conditions are applicable :1) The loan to value ratio (LTV) cannot exceed a particular percentage. This differs from
product to product and from one Housing Finance Institutional Bank (HFI/B) to
another. The components of the value of the Property calculated here are covered under
cost of property.
2) The maximum tenure of the bank is nominally fixed by HFI/Bs. However, HFls/Bs do
provide for different tenures with different terms and conditions.
3) The installment that one pay is normally restricted to about-50-per cent of the monthlygross income of the candidate.
4) The total monthly outflow towards all the loans that have been availed of, including the
current loan is normally restricted to 50% of the gross monthly income.
5) One will be eligible for a loan amount which is the lowest as per one's eligibility. This is
calculated as per the LTV norms, the HR, norms and the FOIR norms as mentioned above.
6) Most HFls/Bs consider the profile before they judge the repayment capacity. The
judgement is based on age, qualifications, number of dependents, employment details,
employer credentials, work experience, previous track record of repayment of any loans
that have been availed of, occupation, the industry to which the candidate's business relates
to, if he/she is self-employed, then the turnover in the last 3-4 years etc.
7) Some HFIs/Bs insists on guarantees from other individuals for the repayment of the
loan. In such cases, the customers has to arrange for the personal guarantee before the
disbursement of the loan takes place.
8) The property should be technically clear before the HFIs/Bs disburses the loans
amount. Most of institutions and banks have a teams of technical experts who visit the site
to get a technical report before the disbursement of loan. This is also beneficial to the
customer as they check for the technical quality and compliance with local laws.
9) The property should be legally clear before one can avail of a disbursement of the loan
amount. Housing-Finance Institutions /Banks (HFIs/Bs) take legal clearance from their
lawyers before the disbursement of amount. This proves to be beneficial to the customers
as a legal expert checks his/her documentation to ensure that he/she get a proper title to the
property.

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10) The disbursement of the loan is as per the progress of construction of the property
unless it is a ready property in which case the disbursement will be by one single cheque.
PEMI or simple interest on the loan amount disbursed to the customer in case of a part
disbursement will be payable by the customer on the disbursement.
11) The disbursement in most cases will be favoring the builder or the seller or the society
or the development authority as the case may be. The disbursement will come in the
customer's favour under special circumstances only.
12) The repayment of loan can be made either through deduction against salary, post-dated
cheques, standing instructions or Auto debit instructions to bank.
13) The principle is amortized either on annual reducing or monthly reducing basis as the
case may be.
The above terms and conditions are generally true for most Housing finance
Institutions/Banks with respect to the general Home Loans. However, the specific terms
and conditions vary with respect to special Housing Finance Institutions or Banks.
(iv) Charges applicable to home loans :The different kinds of charges applicable to home loans are discussed below:
a) Processing fees :First of all, comes the process fee. This is a charge that is levied by most HFls/Bs.
This has to be paid at the time of submission of the application form. It's normally charged
as a percentage of the loan amount sanctioned. Some HFls also charge a flat fee based on
the loan amount instead of a percentage. When a lower amount is sanctioned the excess
fees paid at the time of submission of the application is adjusted with the charges, which
one make to the HFI/B subsequently. Most HFls/Bs refund the processing fee if the loan
application is rejected.
b) Administrative fees :This charge is again, normally, a percentage of the loan amount sanctioned. It is
collected by the HFI/B for the maintenance of customer's records, issuing interest
certificates, legal charges, technical charges, etc. though the tenure of the loan. It is payable
by the customer when he/she accepts the offer letter given by the HFI/B. This payment has
to be made before the availment of the disbursement. The mode of collection of these fees
varies from one HFI/B to another.

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c) Rate of interest :This is the rate of interest applicable on the loan amount through the tenure of the loan.
It is charged on the principal monthly reducing method. Most HFIs/Bs give an option to
select either a fixed rate of interest or a variable rate of interest.
d) Legal Charges:Some HFIs/Bs mainly Public Sector Banks levy legal charges that they incur on
getting the property documents vetted by their panel of lawyers.
e) Technical Charges:These charges are also levied by certain Housing Finance Institutions/Banks
(HFIs/Bs) to meet their expenses on the technical site visits to the customer's property. This
ensures quality of construction and construction within the norms as stipulated by the
respective approval authority.
f) Stamp duty and registration charges:HFIs that go in for a registered mortgage pass these charges on to the customer. These
are rather heavy in certain states depending on the laws laid down by the state where one
buy a property.
g) Personal Guarantee from Charges :Since the personal guarantee provided by the customer need to be stamped, these
charges are also recovered from the customer. They are charged to him by HFIs who
demand for Guarantees.
h) Cheque Bounce Charges :In case the cheques through which one make a payment to HFls get dishonored, some
minimum charges are levied by the HFI. The same are recovered from the customer.
(i) Delayed payment charges :HFls/Bs charge delayed payment charges from the customer if he/she delays the
payment of installments beyond the due date.

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(j) Additional charges :These are levied as a percentage on the delayed payment charges by most HFls. They
are levied if one fail to pay the dues within the stipulated time after a delay has taken place.
(k) Incidental charge :This is payable in case the HFI/B sends a representative from their organization to
collect their outstanding dues. It is normally charged at a flat rate per visit. These charges
are levied by most HFls/Bs.
l) Prepayment Charges :This is a penalty charged by HFls/Bs from when one makes either a part prepayment
or a full repayment of the loan. This charge is levied only on lump sum payments and not
on the EMls that one pays. This charge is levied on the amount prepaid by one and not on
the entire outstanding principal. These charges are gradually being discount. So, these are
the charges levied by most Housing Finance Institutions and Banks while granting home
loan to the customers. Now, the decision on the repayment capacity shall be talked about as
follows.
(v) Judgement regarding repayment capacity on the basis of income :To understand how the income of a customer is considered to arrive at his repayment
capacity, it is first necessary to classify customers into salaried and self employed
individuals.
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.
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 traveling
reimbursement etc.
Add :- HRA receivable if not being received already in the salary slip.
The above income calculated for the calculation of eligibility using IIR and FOIR norms.
For calculation of FOIR, the installments of all the loans that one has availed of currently

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for which repayment is being made is taken into account as well. The lower of the two
eligibilities is considered as the maximum repayment capacity.
b) To consider income of Self-employed individuals we further classify them into
Professionals and non-professionals .

Professionals:- Comprising doctors, chartered accountants, lawyers, architects, etc.

For calculation of eligibility of professional's income is computed by most HFIs
using the gross professional receipts instead of the Net profit as in the case of selfemployed non-professionals.

Non-Professionals: - The income of non-professionals is normally calculated by

HFIs in the following manner: -

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 is over).
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 and
maintenance 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 is
calculated for the calculation of eligibility using IIR and FOIR norms.
For calculation of FOIR the installments of all the loans that one has availed of currently
for which repayment is being made is taken into account and the eligibility is worked out.
The lower of the two eligibilities is considered as the
maximum repayment capacity.
(vi) Credit documentation:Given below is the exhaustive list of credit documents- that need to be submitted for a
general home loan product. The documents vary from one HFI/B to another based on one's
employer, qualifications experience etc. the general requirements are as follows: (a) Income Documents : For salaried slips for the last three months appointments letter-salary certificateretainership agreement, if appointed as a consultant-Form 16 issued by the employer in
customer's name income document for self employee - last three years profit and loss
account statement duly attested by Chartered Accountants. Last three years Balance Sheets
duly attested by Chartered Accountant, last three years Income Tax Returns with
computation chart duly filed and certified by the Income Tax authorities.

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b) Proof of employment : Identify card issued by the employer- Visiting card.

(c) Employer's details (In case of private limited companies) : Profile of employer on employers letterhead (to be signed by a senior person in the
organization) comprising
Name of promoter/directors
Background of promoters/directors
Nature of business activity of your employer
Number of employees
List of branches/factories
List of suppliers
List of clients/customers
Turnover of employer
Annual reports of the employer for the last two to three years.
(d) Proof of age (Anyone of the following) : Passport- Voter's ID card-PAN card-Ration card-Employer's identity card-School
leaving certificate-Birth certificate.
(e) Proof of residence (Anyone of the following) : Ration card-Passport- PAN card-Rent agreement, if the customer is staying currently
on rent- Bank Pass book-Allotment letter from the company if he/she is residing in
company quarters.
(f) Proof of name change (If applicable) : A copy of the official gazette A copy of a newspaper advertisement publicizing
the name change-Marriage certificates.
(g) Proof if investment (If required) :-

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Bank statement for the last six months of all operating and salary accounts - Bank
statements for the last six months of all current accounts, if self-employed-any other
photocopies of investments held, if required by the HFC.
(vii) Legal documentation :Legal Documentation the typical legal documents that need to be submitted to the
HFC arc discussed here. Given below is a list of legal property documents that need to be
submitted to the HFC for mortgage of the property. The name and the list of documents
vary from state to state and also depend on the type of property being financed. A broad
outline of the documents required is given below.
a) Acceptance copy of the offer letter issued by the HFC/B.
b) Title documents of the property that include -sale agreement duly
Registered-Own contribution receipts - Allotment letter-Registration receipt-Land
documents indicating ownership, if applicable- Possession letter-Lease agreement, if
applicable (Property bought from a development authority) - Mortgage deed if the HFC
opts for a registered mortgage.
c) No Objection Certificate from the developer, society or development authority as
applicable.
d) Personal Guarantees, if applicable.
e) In case of alternator additional security, documents for the same depending upon the
security details.
f) Post dated cheques for the EMls.
The above documents are only indicative in nature and do not cover the entire list. It may,
also be noted that in a resale case, the previous chain of agreement also need to be taken.
(viii) The tax benefits that are applicable to housing loans for individuals :Currently Tax Benefits to individuals are available only for the Home Loans and Home
Extension Loans products. The benefits available are covered under these sections.
Property Insurance :-

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Is it compulsory to insure the property? some HFls insist on a mortgage redemption life
insurance policy. In this case the customer gets a benefit of an interest rate reduction.
Though the HFI may not insist, it is better to go in for property insurance to safeguard the
asset against any sort of damage or loss. The customer can select the tenure for the property
insurance. The insurance premium is changed up front. Most insurance companies provide
for huge discounts on the rate of premium for larger tenures. The premium charged
currently is seventy-seven for every lakh of property for a year. So a customer has to fulfill
various conditions to be eligible for availing home loan from a Housing Finance
Institution/Bank After fulfilling these conditions, a customer can avail loan at low interest
rate i.e. fixed rate floating rate. A decision on whether one should go in for a fixed-rate loan
or a floating-rate loan now is a function of two factors i.e. One's perception of where
interest rates in the economy are headed and one' capacity to ride the interest rate changes.
A floating-rate loan let one take advantage of further falls in interest rates but one stand to
loose if interest rate, rise again. However this decision is based on the perception of the
consumer.

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CHAPTER 2
INDUSTRY PROFILE
&
COMPANY PROFILE

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INDUSTRY PROFILE
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.
In the last few years, housing loan scenario in India has changed drastically. It has
taken a front seat and people are looking forward to owning their own houses. It is no more
a dream that required lifetime saving and a difficult decision to make. Today the new home
purchase loan is much easily available and is much cheaper than what was available earlier.
Banks are now everywhere and the schemes are implemented even in villages and smaller
towns. The housing loans are popular there too, however, the activity of building flats is
little slow. It would not be wrong to say that there has been a boom in the home loan
market and with this boom; there is also a boom in the Number of home loans mortgage
brokers in India.
The main reason for this boom in home loan market is the change in government
policies. It is our governments motivation that the home loan interest rates in India have
fallen considerably. Lot many banks are offering home loans and this is available at low
EMIs (Equated monthly Installments). High EMIs are now a thing of past. Today lending
rate is in the range of 7.5 to 15 %.
Again, there are different types of home loans available today. The interest rate
available is also of two different types. One is the fixed rate loan and the other is the
floating rate loan. In the fixed rate loan, whatever interest is fixed on the start of loan is
carried on for the complete period. However, in the other one, the interest rate is not fixed
and as the interest rate goes up or low the effect is directly transferred to the person who is

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taking the loan. In the last few years the floating interest rate has been a favorite among
most of the people taking home loans.
There is also a trend to opt for home construction loan. This loan is available to
those who want to design their homes according to their requirement and taste. In other
words, this loan is meant for those who themselves want to construct their new home.
As shared earlier, taking a loan is not a difficult task. However, before taking a loan,
one must realize that the relationship with the bank will be for a longer period usually 15 to
20 years so one must ensure faith and integrity in bank. Apart from low rate of interest, the
bank should also provide some value added services. The other thing is to look into is the
property that is to be brought. Making sure that the builder has all sanctions and facility to
build a good building is very important.
Taking home loans these days has become simpler. With the RBI regularly bring
down interest rates; taking home loans have become extremely easy. Housing loans which
were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down,
people increasingly number apply to take these loans. Some of the leading banks offering
home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank , Bank of Baroda,
SBI, Standard Chartered Bank and Axis Bank .
Home Loan Procedure in India :Submission of Application Form: - After choosing a particular home loan, the customer
submits the application form to the housing finance company (HFC) along with other
relevant documents as required by the HFC. They comprise documents to establish income,
age, residence, employment, investments, etc. The customer also needs to hand over a
cheque for payment of an up front (non -refundable) processing fee of about 0.5-1% of the
loan amount to the HFC.
Validation of the Information: - In the next stage, HFCs validate the information
provided by the customer on the application form. They usually conduct checks on the
residential address of the customer, the place of employment of the customer, and
credentials of the employer. Some HFCs may insist on a personal interview with the
customer and perform a reference check on the references provided by the customer on the
application form.
Issue of Sanction Letter :- After due appraisal of customer profile, a sanction letter is
issued which contains details such as loan amount, rate of interest, annual / monthly
reducing balance, tenor of the loan, mode of repayment and general terms and conditions of
the loan. This is the actually the approval of the money lending procedure by the company.
However, the money is sanctioned only after the documents and the property on behalf of
which the loan is being granted is thoroughly verified.
Submission of Documents: - Once the sanction letter is passed, the customer is required to
leave the entire set of original documents pertaining to the property being purchased with
the HFC as security for the loan amount sanctioned. These documents remain in the
custody of the HFC till the time the loan is fully repaid. Once the documents are handed
over to the HFC, they send all the documents for a thorough legal scrutiny.

20

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

Loan Period
(in years)

Fixed

EMI / Lakh
(INR)

Floating

EMI / Lakh
(INR)

Bank of Baroda

Up to 5
6 to 10
11 to 15
16 to 20

9.00
9.25
9.50
9.50

2076
1230
1044
932

8.00
8.25
8.25
8.50

2028
1227
970
868

State Bank Of India

Up to 5
6 to 10
11 to 15
16 to 20

9.50
9.75
-

2100
1300
-

8.75
9.25
9.25
9.75

2064
1280
1029
949

HDFC

Up to 5
6 to 10
11 to 15
16 to 20

11
11
11
11

2175
1375
1137
1033

9.50
9.50
9.50
9.50

2101
1294
1045
933

Up to 5

10.75

2162

9.50

2101

6 to 10
11 to 15
16 to 20

10.75
10.75
10.75

1364
721
1016

9.50
9.50
9.50

1294
1045
933

ICICI Bank

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LIC Housing Finance

PNB Housing Finance

Up to 5

10.50

2149

9.50

2100

6 to 10
11 to 15
16 to 20

11
11
11

1373
1137
1032

9.50
9.50
9.50

1294
1044
932

Up to 5

9.00

2076

10.50

2150

6 to 10
11 to 15
16 to 20

9.00
9.25
9.50

1267
1030
933

10.50
10.50
10.50

1350
1106
999

11

1032

9.50

932

9.00
9.00
9.25
9.50

2076
1267
1030
933

10.50
10.50
10.50
10.50

2150
1350
1106
999

16 to 20
Up to 5
6 to 10
PNBHousing Finance
11 to 15
16 to 20

The above table illustrates the comparison between the interest rates from various
Housing Finance Companies and banks. It can be seen that if one wishes to go for floating
loans, the bank which gives the best deal as far as the interest rate is concerned is HDFC
followed by PNB Housing Finance with the lower rates.
Lock-in facility by banks :A lock-in, also called a rate-lock or rate commitment, is a lenders promise to hold a
certain interest rate and a certain number of points for you, usually for a specified period of
time, while your loan application is processed. (Points are additional charges imposed by
the lender that are usually prepaid by the consumer at settlement but can sometimes be
financed by adding them to the mortgage amount. One point equals one percent of the loan
amount.) Depending upon the lender, you may be able to lock in the interest rate and
number of points that you will be charged when you file your application, during
processing of the loan, when the loan is approved, or later.
A lock-in that is given when you apply for a loan may be useful because its likely
to take your lender several weeks or longer to prepare, document, and evaluate your loan
application. During that time, the cost of mortgages may change. But if your interest rate
and points are locked in, you should be protected against increases while your application
is processed. This protection could affect whether you can afford the mortgage. However, a
locked-in rate could also prevent you from taking advantage of price decreases, unless your
lender is willing to lock in a lower rate that becomes available during this period.
It is important to recognize that a lock-in is not the same as a loan commitment,
although some loan commitments may contain a lock-in. A loan commitment is the lenders
promise to make you a loan in a specific amount at some future time. Generally, you will
receive the lenders commitment only after your loan application has been approved. This

22

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commitment usually will state the loan terms that have been approved (including loan
amount), how long the commitment is valid, and the lenders conditions for making the
loans such as receipt of a satisfactory title insurance policy protecting the lender.
Oral or written lock-in agreement? :Some lenders have preprinted forms that set out the exact terms of the lock-in
agreement. Others may only make an oral lock-in promise on the telephone or at the time
of application. Oral agreements can be very difficult to prove in the event of a dispute. It is
wise to obtain written, rather than verbal, lock-in agreements to make sure that you fully
understand how your lenders lock-ins and loan commitments work and to have a tangible
record of your arrangements with the lender. This record may be useful in the event of a
dispute.
Charges of a lock-in:Lenders may charge you a fee for locking in the rate of interest and number of
points for your mortgage. Some lenders may charge you a fee up-front, and may not refund
it if you withdraw your application, if your credit is denied, or if you do not close the loan.
Others might charge the fee at settlement. The fee might be a flat fee, a percentage of the
mortgage amount, or a fraction of a percentage point added to the rate you lock in. The
amount of the fee and how it is charged will vary among lenders and may depend on the
length of the lock-in period.
Types of lock-in:Locked-In Interest Rate--Locked-In Points :- Under this option, the lender lets you lock
in both the interest rate and points quoted to you. This option may be considered to be a
true lock-in because your mortgage terms should not increase above the interest rate and
points that youve agreed upon even if market conditions change.
Locked-in Interest Rate--Floating Points:- Under this option, the lender lets you lock in
the interest rate, while permitting or requiring the points to rise and fall (float) with changes
in market conditions. If market interest rates drop during the lock-in period, the points may
also fall. If they rise, the points may increase. Even if you float your points, your lender
may allow you to lock-in the points at some time before settlement at whatever level is then
current. (For instance, say youve locked in a 10 percent interest rate, but not the 3 points
that went with that rate. A month later, the market interest rate remains the same, but the
points the lender charges for that rate have dropped to 2. With your lenders agreement,
you could then lock in the lower 2. Points.) If you float your points and market interest
rates increase by the time of settlement, the lender may charge a greater number of points
for a loan at the rate youve locked in. In this case, the benefit you might have had by
locking in your rate may be lost because youll have to pay more in up-front costs.
Indian Economy is growing at a nice pace (8% p.a) which is also driving per capita income
rise. The demand of real estate has reached at a new peak according to ninth five year plan
there is a shortage of 42million houses .But in India the figures to GDP are smaller in

23

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comparison to the other countries Contribution of housing to GDP is close to 8%. Sources:
NHB
Indian Market for Home loans is more than Rs.500,000 crore:Today, not only the metros are witnessing the housing crunch even the second tier cities
like- Jaipur, Bhubneshwar, Lucknow, Trivendrum etc. are falling into the dearth of living
space and wanting for more expansion.
India Report:
Indian credit report in comparison to the other Asian countries is shown in the statistics
below, which is among the lowest. It is Indian psyche that credit is termed bad, Indian are
traditionally not inclined to take credit this reflects in the figures below:GRAPH :-

24

j j j jj jj j

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.
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
.

25

j j j jj jj j

GRAPH:-

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
GRAPH:-

Sources: RBI

26

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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.
Price Index:

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

27

j j j jj jj j

FIG:-

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 200708. 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.
Impact of slowdown on home loan market in India:The fear of a recession looms over the United States. And as the clinch goes,
whenever the US sneezes, the world catches a cold. This is evident from the way the Indian
markets crashed taking a cue from a probable recession in the US and a global economic
slowdown. U.S slowdown has affected almost all sectors not only in US but to all over the
world. Indian economy has also been affected by this slowdown because India is a growing
country and almost in all sectors various multinational companies have major contribution.
So the role of this slowdown is a major issue to be discussed while talking about Home
Loan Market in India.
Bankers who were earlier falling over each other to dole out home loans, even for
soft furnishings, have suddenly become choosy. Banks like SBI, ICICI Bank, UTI Bank,
IDBI Bank and leading mortgage firm HDFC are now apparently making a conscious
28

j j j jj jj j

attempt to curb their aggression in the home loan market.situation is like that if a customer
who recently approached a private sector bank for a home loan of about Rs 10 lakh for a
tenure of 15 years found, to his shock, that the eventual loan disbursement was just Rs 5
lakh. Most bankers aren't willing to confirm any slowdown in their home loan portfolio. On
record, they attribute the marginal dip in home loan disbursements to the recent hike in
interest rate.
Privately, however, they have a different story to tell. "The slowdown in the home
loan market for select players like ICICI Bank was evident from January. ICICI Bank's
average home loan disbursement in a month is around Rs 2,500 crore in a month, which
has come down to almost Rs 2,000 crore in March," said a private sector banker. ICICI
Bank officials denied any slowdown in their home loan portfolio and they say that the
recent dip in interest rates has had some impact on disbursals. However, in absolute terms,
it is still low. Even this slowdown the deposit growth for the sector as a whole is around
17%, while credit is growing at almost 28%, forcing banks to become selective. Institutions
now charge a floating rate of 8 to 8.25 per cent on home loans above Rs 20 lakh. Initial
estimates by bankers suggest that the increase in rate for home loans and other segments
would be around 25-50 basis points (0.25% to 0.5%). Even as the provisioning requirement
has gone up around 60 basis points, the hike in interest rates may be lower as the impact
would be felt for the first year. It would also depend on how well capitalized the banks are
as the rise in provisioning and risk weightage would affect the return on equity for banks.
Weaker banks and banks with a large portfolio of these loans are likely to be more affected
and may hike rates first.
Home loan growth of disbursals were at 20 per cent in 2007-08 according to a study
by the credit rating agency CRISIL, a Standard & Poors company. This rate is lower than
the 30 per cent annual increase seen in the past three years, but in absolute terms represents
a substantial expansion. The slower growth reflects the impact of rising property prices and
interest.

COMPANY PROFILE
29

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OF
HDFC HOSING DEVELOPMENT FINANCE CORPORATION LTD
INTRODUCTION:Housing Development Finance Corporation Limited , founded 1977 by Ravi
Maurya and Hasmukhbhai Parekh, is an Indian NBFC, 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,
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:

30

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CHART:-

HDFC
LTD

72.26%
HDFC
STANDARD
LIFE

60%
HDFC
ASSET
MANAGEMENT

23.26%
HDFC
BANK (inclusive
of warrants)

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%.

SNAPSHOT-II
31

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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

Distribution

2.5 million.

Offices

181

Outreach Programs

90

HDFC Limited

jjjjjjjj

Type
Founded
Headquarters
Key people

Public (BSE: 500010)

1977
Mumbai,India
Ravi Maurya
Hasmukhbhai Parekh

Industry

Housing Finance

Revenue

US$ 1.49 billion (2008)

Employees
Website

1,029
www.hdfc.com

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).

32

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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.
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.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

33

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HDFC Standard Life Insurance Company Ltd Aug, 2000

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 14 th 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.
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.

34

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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%

331.7% -24.6% -54.0%

346.8%

Other income
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
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.
Apart from these traditional methods of growing, HDFC is also leveraging the
Internet to consolidate its business. It has picked up a stake in various portals. These are
pure investments to draw synergies for its existing businesses. Its proposed venture with
TCS for setting up call centres can potentially provide HDFC with strong revenue streams.
The venture is aimed at cornering a share of $10 bn IT (information technology) enabled
services market where India has a significant cost advantage. While its investments in new
business may not yield immediate returns, they are likely to enhance HDFCs returns on
equity over the medium term. It will also help in expanding its customer base and provide
more credence to its cross-selling efforts.
HDFC derives an edge in all its forays because of its wide reaching marketing and
distribution network (over 44,000 agents). Once it has the entire range of products (post
insurance), the company has plans to enter into distribution of financial products by
35

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leveraging its own as well as the network of HDFC Bank. The company can leverage its
existing channels to provide the products and services in the areas of Infotech services,
asset management, life insurance and commercial banking. This over a longer time frame
can emerge as a major source of revenue for the company.
The companys proactivity and brand name, has always accorded it premium
valuations on the bourses. But the evidence of increasing competition (from SBI and
ICICI) may lead to slow down in its growth, in turn affecting its current valuations.
Nevertheless, if its investments in new ventures like call centres, mutual funds, insurance
and Internet initiatives click, then HDFC looks set for higher growth and hence, valuations.
Also one should not ignore the value of its 27% stake in HDFC Bank (Indias No. 1 private
sector bank), which will pay rich dividends to the company.
The near term concerns however, are centered on its diversifications. It is not easy
for the company to dominate its other new businesses, as it has done in housing finance.
With its entry into the insurance sector in association with Standard Life of the UK, the
growth from other income may slowdown, as the insurance business requires long gestation
period and large investments. Lower than anticipated returns could also worry its investors.
GRAPH:-6.3

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,

36

j j j jj jj j

d) provide consistently high returns to shareholders, and

e) to grow through diversification by leveraging off existing client base.
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.

Types of Products offered

HDFC provide loans to meet all your requirements for you to make that house a home.
Home Improvement Loan

Home Extension Loan

Loans to professionals for office or clinic.

Home Equity Loans (Loan Against Property)

Loan against Rent receivables

Short Term Bridging Loan.

Loans to professionals for non-residentials premises loan

Key Associates and Subsidiaries: - These are:HDFC BANK: 23.26% owned by HDFC(inclusive of warrants)

Market Cap US $ 11 billion

ADRs listed on NYSE

In February 2008, HDFC Bank board approved the merger with

Centurion Bank of Punjab {CBOP} (1 share of HDFC Bank for 29
Shares of CBOP)

1,412 branches, 528 cities, 2,890 ATMs

Over 12 million customer accounts

Key business areas

37

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_ Wholesale banking Retail banking Treasury operations

Financials (as per Indian GAAP) for the half year ended Sept 30,
2008
Total net revenues: Rs 48.26 bn, increase of 51% over previous
year
PAT: Rs 9.92 bn, increase of 44% over the previous year
HDFC Standard Life Insurance Company Ltd. (HDFC-SL) :Structure: - Strong and stable partnership: Tie up with Standard Life Assurance Company, U.K.
HDFC holds 72.26% of the equity of HDFC-SL
Products: - Diversified product portfolio covering all life stages and needs: Offers 20 individual products and 5 group plans along with 5 optional riders
Offers 8 fund options with market linked products
Premium income and growth: - Values driven growth:Total premium income of Rs. 48.59 bn for FY 07-08 (Previous year Rs 28.56 bn);
reflecting a growth of 70% Q1 08-09 growth in total premium of 34% over Q1 07-08
Funds under management of group new business increased by 8% in as at June 30, 2008 as
against the previous year.
Coverage: - Committed to increasing coverage in an under-insured market :Achieved a total sum assured of Rs. 33.12 bn in respect of 0.25 million lives covered in Q1
09 taking the cumulative sum assured to Rs. 907.5 bn covering over 3.66 million lives
Claims other than withdrawals/surrenders amounted to Rs 0.09 bn .
Distribution: - Diversified distribution network to cater to customer preference: - HDFC
network is used to cross sell by offering customized products Operates out of 575 offices
across the country serving over450 locations Network of over 1,62,000 financial
consultants, 379 corporate agents and other sales intermediaries .
Market share: - Market share of 7.3% (private sector) and 4.7% (overall) in terms of
Effective Premium.
Key performance indicators and business practices: -A diversified distribution mix
including the tied agency and alternate channels
Banks, brokers, telemarketing, direct sales force Tied agency contributed 64%
effective premium in Q1 09 Strong bank assurance tie-ups with public, private, cooperative and foreign banks amongst the leading players in the pensions segment
Leveraging technology to strengthen processes.
Workflow system awarded the best technology innovation

38

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Web based facility to service customers and channel partners

HDFC ASSET MANAGEMENT:

Tie-up with Standard Life Investments (SLI)

HDFC holds 60% of HDFC Asset Management
HDFC MF offers 34 equity and debt oriented products
Earned a Profit after Tax of Rs 1.18 billion for FY08; Return on Equity: 75%
Paid a dividend of 150% for FY08 to equity shareholders
Total assets under management (AUM) as at September 30, 2008, stood at Rs. 647
bn which is inclusive of portfolio management and advisory
Services of Rs. 170 bn.
Equity assets as a proportion of the mutual funds AUM is 35%.

HDFC PROPERTY FUND: Launched in March 2005

First Scheme: HDFC India Real Estate Fund
Fund corpus: US $ 250 million fully invested
Domestic, 7 year close ended fund
Funds managed by HDFC Venture Capital Limited
HDFC International Fund
Fund Corpus: US$ 800 million
International, 9 year close ended fund
Targeted at premier institutions and funds across the world
Interested in taking an exposure in Indian real estate.
HDFC ERGO GENERAL INSURANCE COMPANY LTD:

HDFC holds 74% and ERGO (Germany) holds 26%

The company offers Auto Insurance, Home Insurance, Group Accident Insurance,
Group Travel Insurance, Commercial Insurance which includes Fire and Marine and
Specialty Insurance Products like Directors & Officers Liability .
Achieved Gross Written Premium of Rs. 2.4 bn.
Operates out of 28 locations across the country
HDFC network is used to cross sell Home Insurance & Accident Insurance
HDFC and HDFC Bank database is used to cross sell Accident Insurance.

TABLE:-6.4
CONSOLIDATED EARNINGS:-

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(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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AWARDS & ACCOLADES:

Goldman Sachs has listed HDFC as one among top 7 financial services organization
in 2008.
HDFC ranked among the top 3 Best Managed Companies in India by Finance Asia
in 2007
Selected as the best Indian company in the FIs / NBFCs / Financial Services sector
at the Dun & Bradstreet American Express Corporate Awards 2006 and 2007.
Best Investment Management Company in India by EUROMONEY 2007
HDFC was awarded a rating of 4 out of 5 in Karmayog's Corporate Social
Responsibility Ratings in 2007.
HDFC is featured in the Limca Book of Records 2006, for the landmark
achievement of Rs. One trillion in home loan approvals
HDFC was awarded the Gold Shield in the Finance Sector by ICAI for excellence
in Financial Reporting in 2005. This is the 14th time HDFC has been selected for
this award.
HDFC has been awarded the 'Business Superbrand' status.
HDFC has been awarded the 'Best Home Financier' title by Outlook Money 2005
Economic Times Corporate Citizen of the Year Award - November 2004.

FUTURE: - HDFC has always been market-oriented and dynamic with respect to resource
mobilisation as well as its lending programme. this renders it more than capable to meet the
new challenges that have emerged. Over the years, HDFC has developed a vast client base
of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal
and satisfied client base for future growth. Internal systems have been developed to be
robust and agile, to take into account changes in the volatile external environment. HDFC
has developed a network of institutions through partnerships with some of the best
institutions in the world, for providing specialized financial services. Each institution is
being fine-tuned for a specific market, while offering the entire HDFC customer base the
highest standards of quality in product design, facilities and service.

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CHAPTER 3
REVIEW OF LITERATURE

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REVIEW OF LITERATURE
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 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).
SBI provide a very low interest rate on home loans as compared to other banks.
(SBI May 2000)
Now after this conclusion the details of reviews are belowBerstain 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. 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 owneroccupied properties with multiple mortgages among properties with Newly originated first
mortgages. Section 4 describe the Financial status of single-lien and multiple-lien

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households and for this he have taken the survey of consumer 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 than 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 sub prime lending per se, but the Feds 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 sub prime 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.
La cour Micheal (2006) examined the home purchase mortgage product preferences of
LMI households. Objectives of his study to analysis the factors that determined factors
their choice of mortgage product , is different income groups have some specified need to
met particular product. The role pricing and product substitution play in this segment of the
market and do results vary when loans are originated through mortgage brokers? For this
they have use the regression analysis and the results are high interest risk reduce loan
value. Self employed borrower chooses reduce documented loans than salaried workers.use
of this product type seems to be more prevalent among borrowers with substantial funds for
down payment and better credit scores. In case of pricing Multi families requires price
premium and larger loans carry lower rate. And the role of time, particularly, the time
required for the loan to proceed from application to closing it is find that government
lending taking the longest time and Nonprime loans the shortest time.Multi family
properties take longer time in closing. And during peak season take longer time to close.
And for last objective it is find that broker originated loans close faster.The effect of
mortgage brokers on pricing and other market outcomes is fertile ground for additional
research.
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) stated that countries where a large proportion of the population
lives in owner occupied housing are experiencing higher unemployment rates. Than

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countries 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 analyze 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 pubic 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 else where.
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 customers
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.

46

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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.

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CHAPTER 4
RESEARCH METHODOLOGY

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NEED OF THE STUDY

The main purpose of this study is to attain the knowledge of the processing system of home
loans. 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.

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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) To analyze the history of hdfc ltd.
3) Generating good business to the company by promoting and selling the products of
HDFC LTD.
4) To know the ideas of customers about home loan products and services.
5) To make comparative study of Disbursement of home loans by
Commercial banks.
6) Fixing the appointments with the customers.
7) To study the satisfaction level of customers about home loans.
8) To study the problems faced by customers in obtaining the home loans.
9) Visiting the customers and closing the deal.
10) 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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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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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.
SOURCES OF DATA :To fulfill the information need of the study. The data is collected from primary as well
as secondary sourcesA - 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 100 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 100 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.
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.
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.
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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.
SAMPLING TECHNIQUE:Random sampling technique was used in the survey conducted.
TOOLS OF ANALYSIS:Data has been presented with the help of bar graph, pie charts, line graphs etc.
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.
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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CHAPTER 5
ANALYSIS & INTERPRETATION

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ANALYSIS & INTERPRETATION

The analysis is based on the responses given by customers through questionnaires.
AGE GROUP OF SURVEYED RESPONDENTS
TABLE 5.1:
Age group
18 - 25 years
26 - 35 years
36 - 49 years
50 - 60 years
More than 60 years

No. of Respondents
127
67
46
24
6

CHART-5.1:

Analysis:- From the chart above we find that 47% of the respondents fall in the age group
of 18 25 years, 25% fall in the age group of 26 35 years and 17% fall in the age group
of 36 49 years.
Therefore most of the respondents are relatively young (below 26 years of age). and 6%
respondents age are 50-60 years and 2% respondents age are 60 to above years.

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MARITUAL STATUS OF SURVEYED RESPONDENTS

TABLE-5.2
Sr. No.
1
2

Category
Married
Unmarried
Total

No. of Respondents
140
60
200

Percentage
70%
30%
100%
Base 200 respondents

CHART-5.2

Interpretation
From the table and graph above it can be seen that
70% respondents are married.
30% respondents are unmarried.

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EDUCATIONAL QUALIFICATION OF RESPONDENTS

TABLE-5.3
Sr. No.
1
2
3

Category
Under graduate
Graduate
Post graduate
Total

No. of Respondents
50
80
70
200

Percentage
25%
40%
35%
100%
Base 200 respondents

CHART-5.3

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.

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CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 5.4:
Customer profile
Student
Housewife
Working Professional
Business
Self Employed
Government service employee

No. of respondents
7
5
116
49
24
24

Chart-5.4

Interpretation
From the table and graph above it can be seen that:51% of the respondents are working professionals, 22% are into business and 11% are selfemployed, 11% of the respondents are government service employee and 3% of the
respondents are student and 2% of the respondents are house-wife.
ANNUAL HOUSE HOLD INCOME?
TABLE-5.5
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Sr. No.
1
2
3
4

Category
Less than 2 lacs
Between 2 to 5 lacs
Between 5to 8lacs
More than 8 lacs
Total

No. of Respondents
98
62
30
10
200

Percentage
49%
31%
15%
5%
100%
Base 200 respondents

CHART-5.5

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 5.6:

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Category

No. of Respondents

Yes

164

No

16

CHART:-5.6

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 5.7: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

GRAPH:- 5.7

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
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.

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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.

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Table-5.8
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 showed
diagrammatically as follows :-

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GRAPH:- 5.8

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
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-5.9
Sources 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

CHART:-5.9 percentage of source of information about home loans scheme

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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-5.10
Opinion about the services of HDFC LTD
Services of HDFC LTD

Percentage of customers agreeing

Strongly
agree

Agree

Neutral

Disagree

Strongly
disagree

a. Professionally
managed

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-5.10
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-5.11
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 for
sanction of loan

55%

24%

18%

3%

GRAPH:- 5.11

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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.

TABLE:- 5.12
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DATA GIVES PREFERENCE

COMPANIES AND BANKS

COMPANYS NAME

OF

RESPONDENTS

OF

NO.OF
RESPONDENTS

HOME

(%)

HDFC LTD

78

78

STANDARD CHARTERED
BANK

ICICI BANK

10

10

PNB

SBI

100

100

TOTAL

LOANS

GRAPH:-5.12

NO. OF RESPONDENTS

INTERPRETATION:From the table and graph above it can be seen that:78% of the people contacted prefer HDFC LTD to any other and therefore it is
ranked no.1 by that percent of respondents.

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CHAPTER 6
FINDINGS, SUGGESTIONS,
&
CONCLUSION

FINDINGS
1. HDFC LTD having good brand image in the minds of customers.

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2. Majority of the people got loans from HDFC LTD only

3. Most of the customers are not aware of the products of HDFC home loans
4. Some of the customers felt that the interest rates are some what high
5. Some of the customer not having good faith on private banks like Standard
chartered bank, HSBC bank etc.
6. Most of the people are directly go to HDFC to apply a home loan
7. Some of the customer of HDFC already benefited through HDFC home loan
products and services
8. Customer awareness is medium about HDFC products.
9. HDFC LTD providing good services to their customers.

SUGGESTIONS
These suggestions have been discussed as follows:1) To increase their customers, the HDFC LTD should provide specialized services
in this sector. These services can be such as proper guidance to the customer regarding the
processing of loans, especially for the customers who are illiterate.
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2) To satisfy their customers and for good dealings in future, the HDFC LTD should
make prompt disbursement of loan amount to the customers so that they can buy or
construct their dream home as early as possible.
3) The HDFC LTD should use easy procedure, or say, less lengthy procedure for the
sanctioning of loan to the customer. There should be less number of legal formalities, in
case this exists, then, these should be completed in less time. This will be helpful in
attracting more customers.
4) Although the interest rates on specific norms, yet customers seek less interest rate
which can lower their cost of house. So banks should try to lower their interest rates.
Needles to say, that the bank which is having lower interest rates, have the maximum
clients for loans.
5) HDFC LTD provide loan according to the repaying capacity of the customer and
his/her eligibility. Due to which, some customers are not able to get amount of loan needed
by them. So, the HDFC LTD should soften their norms regarding the loan amount.
6) Create awareness: The Company has to take care of awareness creation about the
products and services among the customers.
7) Charges: The Company has to reduce the mortality and administration charges.
8) The company has to reduce their interest rates on home loan products and
services.
9) The company has to identify the potential customers.
10) Company should consider the present competition and should act according to
the customer needs.
11) The HDFC LTD should try to provide proper knowledge regarding their home
loan schemes, even to people who don't know about such schemes and their benefits
especially in rural areas. So they should provide knowledge to the ignorant customers,
especially in rural areas and backward urban area So, above are the main suggestions
provided to the HDFC LTD. By considering these suggestions, the HDFC LTD can
strengthen their customer base in home loans sector. They should improve their services
and reduce legal proceedings and should be friendly to their customers. All this will be
helpful to satisfy their customers.

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CONCLUSION
1) In my study we came to know that many peoples are interested to take a home loan from
HDFC LTD to construct their homes.
2) Home loans have long period when compare to other personal loans and other loans. So
peoples are confused to take a home loan.

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3) Even though the interest rates are high peoples are willing to take a loan from HDFC
LTD due to some reasons.
4) The interest rates also some what high when compare to other banks
5) The loan sanction process is low when compare to other banks.
6) For disbursement process is also it will take low time when compare to other banks
Finally the whole research was carried out in a systematic way to reach at exact
results. The whole research and findings were based on the objectives. However, the study
had some limitations also such as lack of time, lack of data, non-response, reluctant attitude
and illiteracy of respondents, which posed problems in carrying out the research. But
proper attention was made to Carry out research in proper way and to make accurate
conclusion for the HDFC LTD which may beneficial for banks to enhance their customer
base.

CHAPTER 7
BIBLIOGRAPHY
&
ANNUXURE
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BIBLIOGRAPHY
REFERENCES
REVIEWS

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Berstain David(2008), Home equity loans and private mortgage insurance: Recent
Trends & Potential Implications, Vol.3 No.2, August 2008, Pp. 41 - 53
Dr. Rangarajan C. (2001), A Simple Error Correction Model of House
Price.Journal of Housing Economics Vol. 4, No. 3,pp 27 34
Fanning (1982), The Demand for Home Mortgage Debt Journal of Urban
Economics, Vol 11 No 2, November, pp. 770-774
Godse (1983), looking a fresh at banking productivity, Journal of Real Estate
Literature, Vol. No. 13, Page 141 to 164.
Haavio, Kauppi(2000) , Residential Lending to Low-Income and Minority
Families: Evidence from the 1992 HMDA Data," Federal Reserve Bulletin,Vol no
80(2), December 2000 Pp-79-108
Kulkarni (1979), Development responsibility and profitability of banks Journal of
Economic Perspectives, Vol 9 No 1 ,pp. 26-32.
La courr, Micheal(2007) , Economic Factors Affecting Home Mortgage Disclosure
Act Reporting The American Real Estate and Urban Economics Association, Vol.2
No. 2 May 18, 2007, Pp. 45 -58
La cour Micheal(2006) , The Home Purchase Mortgage Preferences Of LowandModerate Income Households, Forthcoming in Real Estate Economics , Vol 18, No
4 , December 20, 2006, p. 585.
Vandell ,kerry D(2008), Subprime lending and housing bubble:tail wag
dog?International Journal of Bank Marketing, vol 21,no 2, pp. 53-7
Brochure on home loans from HDFC LTD
NEWS PAPERS
The Times of India
Financial Express
WEB PAGES:http://www.hdfcindia.com/
http://www.hdfcindia.com/others/popup/news/hdfc_fin_result_june_30_08.html
www.hdfc.com
http://www.iloveindia.com/real-estate/housing-finance- companies/hdfc.html
http://www.loansnews.info/Home-loan/hdfc-home-loans/
http://www.hdfcindia.com/loans/hm-loan-documents.asp
http://www.thinkplaninvest.com/2009/01/hdfc-will-cut-home-loan-rates/

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http://www.suncorp.com.au/suncorp/personal/home_loans/tips/faq.aspx
http://investing.businessweek.com/research/stocks/people/people.asp?ric=HDFC.BO
http://www.economywatch.com/companies/forbes-list/india/housing-developmentfinance-corporation.html
http://www.hdfcindia.com/loans/home-loan.asp
http://docs.google.com/gview?
a=v&q=cache:woJTMDV1HLYJ:www.hdfc.com/pdf/32AGM
%2520speech.pdf+hdfc+housing+finance+development+product&hl=en&gl=in
http://www.munichre.com/en/press/press_releases/2007/2007_10_30_profile_hdfc.aspx
http://www.hdfc.com.mv/faq.htm
http://ayaanbayaan.com/hdfc-ltd-financial-results-indian-gaap-for-the-period-april-tojune-2009/
http://www.valuenotes.com/press/pr_HDFC_250ct05.asp?
ArtCd=70013&Cat=C&Id=100

ANNUXURES
QUESTIONNAIRE
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1) age group of surveyed respondents

2) maritual status of surveyed respondents
3) educational qualification of respondents

4) customer profile of surveyed respondents

5) annual house hold income?
6) do you know about hdfc housing development finance corporation
ltd?
7) reasons for getting the home financed
8) from where you have got your home financed
9) sources of information about home loans scheme
10) opinion about the services of hdfc ltd

11) satisfaction level of customers of hdfc ltd

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