PROJECT SYNOPSIS

ON

“Customer’s perception towards housing loans provided by HDFC Bank”

Submitted to LKCTC (Affiliated to the IKG Punjab Technical University)

In Partial Fulfillment of the requirement for the award of a degree of

MASTERS OF BUSINESS ADMINISTRATION

Submitted by: Supervisor:

Sahil Arora Dr. Rupinder Sampla

2131462 (Assistant Professor)

DEPARTMENT OF MANAGEMENT

LKCTC

JALANDHAR

(2021-2023)

1
 Index

Sr no. Topic Page no.

1 Introduction 3-7
2 Literature review 8-10
3 Objectives of study 11
4 Research Methodology 12-13
5 References 14

2
 Customer’s experience accessing housing loans through HDFC Bank

INTRODUCTION

Finance and banking is the lifeblood of trade, commerce and industry. Now-adays, banking
sector acts as the backbone of modern business. Development of any country mainly depends
upon the banking system. A bank is a financial institution which deals with deposits and
advances and other related services. It receives money from those who want to save in the form
of deposits and it lends money to those who need it. The banking is one of the most essential and
important parts of the human life. In current faster lifestyle peoples may not do proper transitions
without developing the proper bank network. The banking System in India is dominated by
nationalized banks. The performance of the banking sector is more closely linked to the economy
than perhaps that of any other sector. The growth of the Indian economy is estimated to have
slowed down significantly. The economic slowdown and global developments have affected the
banking sectors' performance in India in FY12 resulting in moderate business growth. It has
forced banks to consolidate their operations, re-adjust their focus and strive to strengthen their
balance sheets. Here researcher's objective is to study the Indian banking sector and performance
of Indian banks.

Introduction to meaning of bank Banks receive deposits from public and also borrow money
from other sources for raising Working Capital Funds. They have to pay cost by way of interest
on the funds raised. To recover this cost and to meet the administrative and other expenses as
also to earn profit, banks have to utilize the working capital funds by either granting advances or
making investments. Thus working capital funds, which are banks liabilities, get converted into
assets. As we have already seen although a bank's earnings accrue only from advances and
investments it has to hold “ Cash in Hand” or “Balances with other banks in Current Accounts”
and also invest some amounts in premises, furniture, fixtures and other assets.

3
H.D.F.C(Housing Development Finance Corporation) was set up on 17 October, 1977 by
I.C.I.C.I. out of the consideration that a specialised institution was needed to channel household
savings as well as funds from the capital market into the housing sector. H.D.F.C. has
emerged as the largest mortgage finance institution in the country. The main objective of
H.D.F.C. is to develop significant expertise in retail mortgage loans to different market
segments and to have a large corporate client base for its housing related credit facilities.
H.D.F.C. is to support or aid in the promotion of home ownership. H.D.F.C. is India’s
leading housing finance company and for all practical purposes is synonymous with the domestic
housing finance industry.

The primary objective of H.D.F.C is to enhance residential housing stock and promote
home ownership. One of its major objectives is to increase flow of resources for housing
through the integration of housing financial institutions with the domestic market.
H.D.F.C. has developed a strong market reputation large shareholder base and unique
consumer franchise. H.D.F.C. is India’s premier housing finance company in India as
well as in international markets. It has maintained a consistent and healthy growth in its
operations to remain the clear market leader in mortgages in India. The company has
been constantly engaged into innovation and innovative practices since its birth.

The housing finance industry is important from the point of view of over all development
of the Indian economy. Housing is being increasingly viewed as being important for over
all infrastructural development in the economy. Housing finance is one of the industries
which are driven by the fluctuations in the real state industry. Although there has been an
upsurge in the demand for the home loans in the recent past, it has not translated into a
breathtaking performance by the housing finance companies (HFC’s).The housing
finance industry is important from the point of view of over all development of the
economy. Housing is being increasingly viewed as being important for over all
infrastructural development in the economy.

4
The national housing policy reflected the trust, the government wished to give to the
housing sector and pointed out that housing was not merely consumption expenditure, but
also a productive investment which would provide economic activity and create a base
for attaining several national policy goals such as providing shelter and raising the quality
of life. It specifies the interest rate to be followed in lending and borrowing, income
recognition & prudential norms, borrowing limits & audits to the finance companies.

Housing Finance Companies which provide long term finance for construction or
purchase of houses in India for residential purposes come under National Housing Bank
(NHB), which is a full time regulator of HFC’s. HDFC has been making all attempts to
follow these norms and be as one of the leading participant in shaping the Housing &
Development sector.

When and when not too take a home loan: No other item in our daily lives is so important than
the home loan. The reason is that the home loan or mortgage is something we have to usually
carry with us for a great part of our lives. Mortgages are taken on an average of some twenty
years, hence the decision when and when not to take such a home loan is very serious. The
answer is to take a mortgage if you have to only when you can pay it all back the moment you
feel you want to. But let's not forget home loans can be acquired all along the way in order to
refurbish the home too.

On taking a home advance: In the event that you are pondering taking a home credit, at that
point reconsider. Recollect when you take a home advance you unquestionably need to take care
of it. So the appropriate response is possibly taking a home credit on the off chance that it is
significant. A great many people are attracted into taking a home credit since it's so enticing to
get in one go a tremendous singular amount of money which can be utilized for renovating the
home. Notwithstanding, chill off, all things considered, rather than taking a home credit which
you need to take care of over an extensive stretch and persevere through those stressing
installments, simply take the renovating piecemeal – it's makes life simpler.

5
Home Loan – Home credits for people to buy (crisp/resale) or develop houses. Application can
be made separately or mutually. HDFC funds up to 85% limit of the expense of the property
(Agreement esteem + Stamp obligation + Registration charges) in light of the reimbursement
limit of the client.

Home Improvement Loan - HIL encourages inward and outside fixes and other auxiliary
upgrades like artistic creation, waterproofing, plumbing and electric works, tiling and ground
surface, flame broils and aluminum windows. HDFC funds up to 85% of the expense of redesign
(100% for existing clients) subject to showcase estimation of the property

PROBLEMS THAT CUSTOMER FACES DURING APPLICATION FOR HOME LOAN

If you are like most people, buying a home is one of the biggest financial decisions you will ever
make. And for many people, taking out a home loan is the best way to afford that dream home.
Obtaining a home loan is a time-consuming procedure. But unfortunately, there are numerous
roadblocks along the way. In this blog post, we will take a look at some of the majority of
problems faced by borrowers like :

Rejection at the First Stage

One of the most common problems faced by home loan borrowers is rejection at the first stage.
It may be due to the age limit or financial requirements or required papers not being submitted
during the field investigations conducted by the bank/Housing Finance Company, and so on.
They are instantly rejected since the borrower’s qualifications do not match those of the lender.

Processing fee not refunded

When you apply for a home loan, the up-front processing fee is one of the expenses that you
have to bear.  Please note that this fee is non-refundable.

6
Desired loan amount not sanctioned

Another problem that home loan borrowers face is not getting the desired loan amount
sanctioned. This may be due to a number of reasons such as inadequate income, the lower
technical value of the property, poor repayment track, other outstanding loans, and so on.

The interest rate dilemma

You should also consult with a financial advisor to understand how fluctuations in the interest
rate will affect your monthly payments and the overall cost of the home loan. This will help you
make an informed decision about which interest rate is best for you.

The difference in property valuation

Property valuation is a key parameter during the Home Loan appraisal process. Banks and
Housing Finance Companies can lower the sanctioned amount based on the value of the
property. Property valuation is the process of determining a property’s worth based on many
variables like the age of the property, its condition, construction quality, where it is located, and
whether it has been approved/unapproved, etc. Banks and HFCs consider these factors when
assessing the property, and they will only lend you the amount that is predicted by their estimate.
It might lead to a significant disconnect between your expectations and what the bank is prepared
to offer.

7
 REVIEW TROUGH LITERATURE

Nazrine N (2020) in her study ‘A study on awareness4and satisfaction of borrowers of housing

finance in Covid times’ the objectives were to describe housing finance scenario in India, To
examine the loan seeking behavior of the borrowers of the housing finance. Major focus of her
project was on Tiruchirappalli district of Tamil nadu. Data collection was done through interview
schedule, sampling procedure – 500 borrowers of taluk. Statistical tools used were chi-square
test, ANOVA, simple correlation.

Chellamma T (11th April 2019) in her study ‘An analysis of the performance of HDFC on
housing finance in thoothukudi district and the objectives were to study in detail about housing
finance in India, To study the performance of HDFC at national level and also in Thoothukudi
district, To study the personal profile of the respondents and their opinion towards home loan
service of HDFC. Major focus of her study was on thoothukudi district. Research methodology
includes primary data collected through questionnaire and secondary data through bank reports,
journals etc. Statistical tools used were Garrett ranking, Mann-Whitney U test, Kruskal-wallis
Test. The demand for housing loan has been rapidly increased. To promote the housing finance
industry in India, government has taken many initiatives since 1970.

Berstain David (2019)in his study ‘An study on housing finance in Chittoor district, Andhra
Pradesh and the objectives were to review the growth of housing finance in India, To examine
the loan appraisal practices of Housing Fincncial Institutions. Two sets of detailed structures
schedules were prepared to collect the opinions from the borrowers as well as the officials
concerned. Statistical tools used were averages, percentages, ANOVA, T-test, chi-square. It is
clearly understood that majority of sample borrowers are satisfied with their lending agency.

Vandell Kerry D (2018) examined in his study taken from 2001 to 2015 that in this period there
is increase use of home loans as compared to private mortgage insurance (PMI). He have divided

8
his study into four sections. Section I describes why people are going more for home loans than
PMI, the main reason for this that now home loans market provide piggy bank loans for those
people who don’t have 20% of down payment. Section II 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 environment. Section III tells the measures
in changes of type of loans. For this he have taken the data from the 2001 and 2020 AHS a joint
project by HUD and census. Section IV describe the financial status of single-lien and multiple-
lien 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.

Subramaniyam S (2018) analysis the sharp rises and then suddenly drops down home
prices from the period 1998-2018. Changes in prices are for the reasons pas such economic
fundamentals, the problem was not subprime lending, but the Fed’s dramatic reductions, then
increases in interest rates during the early mid 2000, the housing-boom was concentrated in those
markets with significant increase. Finally, given a model of the factors affecting results for 2000
-2015, we predict that 2016 results will continue to show an increase in the percentage of loans
that are higher priced when final numbers are released in September 2020.

Marwaha J.S in his article “Affordable housing loans and options, a critical review of
Housing Development Programmes in India” (2018) has critically examined issues and
options with regard to the provision of housing and affordability thereof, particularly for the
economically weaker sections and low income groups of population in India, taking cognizance
of the various policies and programmes in the five year plans of the country. Although housing
policy of the government is to provide housing for the poor, yet the major beneficiaries of the
various housing programmes seem to be middle and higher income groups, mainly due to non
affordability of the poor. Further, the problem of housing is not only quantitative. About 80% of
the rural houses have no basic amenities such as drinking water, bath and latrines, facilities of
disposal of garbage and other wastes etc.

9
Akbar Khan J., in his article entitled “Karnataka’s Housing: Role Model for other Indian
States” (2017), telling the success story of Karnataka in resolving the “Ghar or Makaan”
Problem, considers it to be a role model to other states. Though the housing sector in the country
has been witnessing an annual growth of 30%, India continues to face an acute shortage of
housing units, as the demand far exceeds supply. To deal with this problem, government has
been encouraging individual home ownership by providing various fiscal incentives in its
Budgets. The Government of Karnataka, through its various housing schemes and programmes
such as Ashraya, Ambedkar, Navagrama Ashraya, etc., has achieved a remarkable progress in
providing houses to SCs, STs and other poor sections of the community. The government,
through its district administration and by involving rural and urban local bodies, has been able to
implement its housing schemes, successfully. The participation of HUDCO by way of landing
loans is also worth noting. The Karnataka Housing Board (KHB).

Aarti Varma (2016) conducted “A Study on Customers view and perception towards home
loan” and assessed the customer’s views and perception towards home loan in Bhyandar region
with the main objective to find out consumer perception and socioeconomic categories of
customers satisfaction related to home loan and lending practices followed by home loan
company. The sample size includes 200 respondents in Bhyandar region and random sampling
technique was used. The study found that maximum people preferred fixed rate of interest and
quality of service and minimum rate of interest are the important criteria seen by the people
before taking home loan. The study concluded that banks should provide different housing loan
schemes with smart features like rate of interest, margin etc. for attract more and more people in
rural area and open more number of branches in different cities and tap the rural areas and also
provide counter facility in all banks to help the customers.

10
 OBJECTIVES OF STUDY

1. To analyze the general information on Home loan at HDFC bank.

2. To evaluate the customer problems & their perception.
3. To see the progress of the institution doing way forward to solve customer’s problems.
4. To know about further developments in Housing Loan Industry

11
 RESEARCH METHODOLOGY

The procedure adopted for conducting the research requires a lot of attention as it has a direct
bearing on the accuracy, reliability, and adequacy of a result obtained. It is the reason the
research methodology, which the researcher used at the time of conducting the research, needs to
be elaborate upon. It may be understood as a science of studying how research is done
scientifically. So, the research methodology not only talks about the research methods but also
considers the logic behind the method used in the context of the research study. Research
methodology is a way to systematically study and solve research problems. If a researcher wants
to claim his study as a good study, he must clearly state the methodology adopted in conducting
the research so that it may be judged by the reader whether the methodology of work done is
sound or not.

Data Source

Both primary & secondary data would be considered.

Primary data would be collected from borrowers & customers of the bank and also through
‘QUESTIONAIRE’.

The secondary data will be collected from bank records, magazines, journals, newspapers, and
websites.

Research Sample

Since it is not possible to study the universe, it becomes necessary to sample from the universe to
know its characteristics.

Sampling Units: Customers of HDFC Bank

Technique: Random Sampling

Research Instrument: Primary and Secondary Data

12
Sample size

The work is a case of HDFC bank, one of the largest banks in the Indian banking industry
together representing over 25% of the market share of the Indian Banking space.

The survey was conducted in Jalandhar in two branches of HDFC bank, with 50 customers
as respondents.

The valuable cooperation extended by staff members and the branch manager of different banks,
contributed a lot to fulfill the requirements in the collection of data in order to complete this
research

Methods of Data Analysis

For measuring various phenomena and analyzing the collected data effectively and efficiently to
draw sound conclusions, certain statistical techniques were used. The data collected were edited,
classified, and tabulated for analysis. The analytical tool used in this study is a graphical method
like pie charts, and tabular forms to compare the performance of banks. The MS- EXCEL tool is
used to analyze the data.

13
REFERENCES

Nazrine N (2020) in her study ‘A study on awareness4and satisfaction of borrowers of housing

finance in Covid times’

Berstain David (2019) examined in his study taken from 2001 to 2015 that in this period there is
increase use of home loans as compared to private mortgage insurance (PMI).

Chellamma T (11th April 2019) in her study ‘An analysis of the performance of HDFC on
housing finance in thoothukudi district

Vandell Kerry D (2018) analysis the sharp rises and then suddenly drops down home prices
from the period 1998-2018.

Marwaha (2018) J.S in his article “Affordable housing loans and options, a critical review of
Housing Development Programmes in India”

Akbar Khan J (2017), in his article entitled “Karnataka’s Housing: Role Model for other Indian
States”
Reddy Sukumar C S (2016) in his study ‘An study on housing finance in Chittoor district,
Andhra Pradesh

Reddy Sukumar C S (2016) in his study ‘An study on housing finance in Chittoor district,
Andhra Pradesh

Aarti Varma (2016) conducted “A Study on Customers view and perception towards home
loan”

WEBSITES

www.rbi.org.in

www.hdfcbank.com

www.hdbfs.com

economictimes.com

14