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LIST OF TABLES

CHART NO
6.1 9.1 9.2 9.3 9.4 Snapshot of SBI

TITLE

Age group of surveyed respondents Gender classification of surveyed respondents Educational qualification of respondents Staying years in Bangalore

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LIST OF ABBREVIATIONS

ABBREVIATIONS

EXPANSION

ROVR NRI RBI PNB SBI IIR FLIP DSAs BSAs

RECOMMENDATION OVER NON RESIDENT INDIAN RESERVE BANK OF INDIA PUNJAB NATIONAL BANK STATE BANK OF INDIA INCOME TO INSTALLMENT RATIO FLEXIBLE LOAN INSTALMENT PLAN DIRECT SELLING AGENTS BUSINESS SELLING AGENTS

DCOVR

DOUBLE CHECKING OVER

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CHAPTER- 1

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CHAPTER-1 INTRODUCTION 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 feels comfortable. Many banks provide home loans whether commercial banks or financial institutions to the people who want to have a home. SBI 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, SBI 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 SBI 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. SBI also provides with Home Improvement Loan for internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminum windows. SBI finances up to 80% of the cost of renovation (100% for existing customers) or 10 lakhs whichever is lower. Sheshadripuram College of Commerce and Management 4

Current status is that SBI reduced home loan rates are the best in the industry

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) Door-Step Services:These doors 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. (iv)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. (v) 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 doesnt have their home and want to buy, they do it with home loan. Home loans help such persons in making their dream home.

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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. 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.

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(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 cower 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 throws 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 - Children: - It can be clubbed if only the children also stay with parents 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: - If the property is held jointly Sister-Sister : - If the property is held jointly (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. Sheshadripuram College of Commerce and Management 7

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 net 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 considers the profile before they judge the repayment capacity. The judgment 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 have 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 team 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. 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 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. Sheshadripuram College of Commerce and Management 8

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 daily 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. 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 gives an option to select either a fixed rate of interest or a variable rate of interest. d) Legal Charges:Sheshadripuram College of Commerce and Management 9

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 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. (j) Additional charges :These are levied as a percentage on the delayed payment charges by most HFls. They are levied if one fails to pay the dues within the stipulated time after a delay has taken place. (k) Incidental charge :Sheshadripuram College of Commerce and Management 10

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 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. Sheshadripuram College of Commerce and Management 11

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 income of last 3 years as it appears in the income compilation (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 certificate-retainer ship 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. Sheshadripuram College of Commerce and Management 12

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 letter head (to be signed by a senior person in the organization) comprising of: 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) : -

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A copy of the official gazette or a copy of a newspaper advertisement publicizing the name change-Marriage certificates.

(g) Proof if investment (If required) :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) Postdated cheques for the EMls. Sheshadripuram College of Commerce and Management 14

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 :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 lose if interest rate, rise again. However this decision is based on the perception of the consumer.

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INTRODUCTION TO THE INDUSTRY


5.1 THE HISTORY OF INDIAN HOME LOANS:Home loans in India have made people Buy Property in India in spite of the skyrocketing prices. Today, we find considerable Real Estate Investment in India, either in the field of Residential Property in India or Commercial Properties in India. Home Loans in India are disbursed by many Banks as Loan Banking is on of the most important function of the Financial Services in India. Property Dealers and Real Estate Consultants in India usually recommend that we undertake appropriate Home Loan or Mortgage Loan counseling so that we can Buy Apartment in India at an affordable Mortgage Rate. Purchasing the home of your dreams is not an easy task, especially when you plan to buy a home on loan. Home loan means that you buy a house on installments. In simpler terms when you want to own a home and cant afford to pay the amount in lump sum, you can pay it in monthly installments with an interest rate. The interest rates of home loans are expected to go down even further according to analysts who foresee a cut down in the rates by the RBI in the wake of the decision taken by US Federal Reserve to cut its rates by a significant margin. There are number of companies offer cheap home loans at a low interest rate. You can avail loan against existing house for renovation or expansion etc. There are many nationalized banks that offer finance for affordable housing. India Housing has put together a comprehensive data to provide you with the cheapest Home Loans available in the market. We have listed all the important housing finance institutes and some of the top home finance banks providing lowest interest rates. 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 Sheshadripuram College of Commerce and Management 17

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 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 , Bank of Baroda, SBI, Standard Chartered Bank and Axis Bank . 5.2 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. Sheshadripuram College of Commerce and Management 18

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. 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. 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 commitment usually will state the loan terms that have been approved (including loan Sheshadripuram College of Commerce and Management 19

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 lockin 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 Sheshadripuram College of Commerce and Management 20

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 comparison to the other countries Contribution of housing to GDP is close to 8%. Sources: NHB 5.4 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 likeJaipur, Bhubneshwar, Lucknow, Trivandrum 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 :- 5.1

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5.5 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:- 5.2

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 . Sheshadripuram College of Commerce and Management 22

GRAPH:-5.3

Comparison with other nations India fall behind in terms of Mortgage Penetration which directly demonstrates the potential in Indian market for Housing mortgage finance companies

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GRAPH:- 5.4

Sources: RBI

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 witnessed lot of development and price appreciation which demonstrates the growing demand . More and more people are migrating to cities for work / business. More and more jobs are created and price index rise becomes inevitable.

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Price Index: FIG-5.5

The above figure shows the rise in prices of space per sq feet in different major cities.

Housing shortage in India: - The below figure shows the ever-increasing demand for houses in India and also mentioned here is the Rural and urban requirement. Banks are driving new strategies to tap both the markets in a different way Rural/Urban. There are categories with Indian loan demand, which is shown in this figure

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FIG:- 5.6

5.6 Recent trends of home loan in India:In order to understand the recent trends we need to know or understand various factors. These factors play vital role in Indian home loan market. These include interest rate on which banks provide home loan, tax rebate on home loan and its impact. Apart from this to understand the recent trend we need to compare the trends of home loan of different years. Here we have compared the interest and other market trends of year 2009 with 2007-08. This kind of comparison gives the result which helps us to understand the trends of market of any industry. Apart from the impact of present and past economic ups and down also affect the trends. Today the US slowdown is the major issue which has affected almost all the industry. So we have also discussed this issue in terms to define trend of home loan market in India.

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5.7 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 are now apparently making a conscious 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 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 was 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.

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SBI: yielding Ground: Loan growth may slow down in 2009-10 as the company loses some market share. GRAPH: 5.7

Competition is not new to SBI, after all ICICI Bank was a tough competitor when it went on a customer acquisition spree some years back. This time around, although ICICI may not be in a position to give SBI a run for its money, public sector banks, especially State Bank of India (SBI) could. The difference between four years ago and now is that money today is not yet cheap and certainly not as inexpensive as it was back in 2004 and 2005. Of course with bank loans to SBI now treated as priority lending, the cost of funds for SBI should come down. But should long-term rates go up, SBI will feel the pinch. Thats why the market sat up and took note when SBI kicked off an 8 per cent in- the- first -year product believing SBI could lose some market share. In the recent rally, the stock which had plunged to a two year low, has gained 31 per cent to the Sensexs 23 per cent. The good news is that transactions could start picking up in the second half of 2009 now that property prices have started trending down as have interest rates. But although the home loan major believes it can manage a growth of 20 per cent in 200910, analysts are not so sure. CLSA points out that SBIs loan growth (pre-securitization) would be around 15-17 per cent. One reason for this is that SBI Bank may now hold back a higher proportion of loans that it originates; the bank currently sources just over a fourth of SBIs loans.

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As a result SBIs operating income may increase by about 15 per cent in 2009-10 while its net profits should grow by about 10-12 per cent. SBI has always scored when it comes to keeping bad loans in check, which is why a few delays or even defaults will not hurt the balance sheet. At Rs 1,653,the stock trades at around 2.8 times the estimated adjusted book value for 2009-10. 5.8 Interest and market trends in year 2010:- Home loan interest rates, especially on new home loan accounts, started softening from the beginning of this year when the Reserve Bank of India (RBI) announced sharp cuts in the repo rate and cash reserve ratio (CRR). The RBI started slashing the key policy rates since October last year, after taking into account the worsening liquidity situation of banks here. The central bank has reduced its key policy interest rates (repo and reverse repo) and reserve ratio (CRR) four times in the last six months. The cut in the repo rate meant commercial banks would have funds available at a lower cost. On the other hand, the cut in the CRR meant banks would have to keep less money with the RBI and hence they had more money to lend. Analysts believe that interest rates have not yet bottomed out and there will be further cuts in borrowing rates over the next few months. While the interest rate cut expectation is a thing of the past, the question is will it go back to the old levels of 7-8 percent which contributed to a property boom? Consensus is already building up for the fact that we are headed towards a low interest rate regime in the coming couple of years, in line with global trends. In the case of the domestic economy, the trigger for low interest rates has already happened on the deposit front with banks reducing the rate by 1-2 percent in the last few weeks. Now, the deposit rate has come down to single digit even with respect to long term deposits (on 3-5 years) and that would mean banks have access to cheaper funds. With inflation too sliding down at a rapid pace, there is hope for continuance of a cheaper rate regime. Following in State Bank of Indias (SBIs) footsteps, other state-run banks may also come out with scheme offering home loan at a fixed rate of 8%. The Indian Banks Association (IBA) would review the response of borrowers towards the SBI scheme after three weeks and if it finds that there has been a good response, other banks will follow suit. Last week, SBI had announced that it would offer home loans at a flat rate of 8% to all borrowers and would freeze this rate for one year. The chairman of one of the major banks, who asked not to be named, said SBI can afford to lend at such cheap rate as it has one of the best current and savings account (CASA) deposit ratio. CASA deposits are the cheapest source of funds for a bank and a high CASA deposit ratio brings down their average cost of funds. This in turn helps the bank in offering cheaper credit while maintaining their net interest margin (NIM). NIM is the difference between the rates at which banks borrow and lend. State-owned banks started cutting their home loan rates after country's largest lender; State Bank of India froze its new home loan rates at eight per cent for one year recently. SBI offers better competitive rates than any other housing finance companies. SBI also said that it will charge 10.75 percent of interest annually from new applicant for a loan of Rs 20 lakh or less. And for loans of more than Rs 30 lakh, it will charge interest at 11.00 percent. Sheshadripuram College of Commerce and Management 29

The bank also reduced the interest rate on deposits that it accepts from the public by 50 basis points. In a statement to the media, SBI informed that all the changes will come into effect from December 22. SBI was able to bring home loan cuts because the government and RBI had taken series of measures to infuse liquidity into the economy. Over the last three months, RBI has cut key policy rates; including cash reserve ratio, repo and reverse repo rates, and statutory liquidity ratio. Government has also infused money into the housing sector through the National Housing Bank. PSU banks are also forced to cut rates for new home loans up to Rs 20 lakh. Although in the past few weeks several banks cut home loan rates, but those decisions applied only to new customers. SBI is the first major housing lender to cut rates for both current and new customers. While commenting on this matter, Keki Mistry, SBI vice chairman and MD said that the bank was able to exercise the move especially because of the recent reduction in the cost of funds. The wholesale funding rate has declined from OctoberNovember levels hence SBI decided to pass on the benefits to its customers, both old and new ones. 5.9 Types of home loans: Housing loans offered by banks are of different types:

Home Purchase Loans Home Construction Loans Home Improvement Loans Home Extension Loans Home Conversion Loans Land Purchase Loans Stamp Duty Loans Bridge Loans Balance Transfer Loans Refinance Loans Loans to NRIs

Home purchase loans:This is the basic home loan for the purchase of a new home. If you want to buy a flat in some society or some already built house, banks and HFCs sanction you home purchase loans for this process. Home construction loans:This loan is available for the construction of a new home on a said property. The documents that are required in such a case are slightly different from the ones you submit for a normal Sheshadripuram College of Commerce and Management 30

Housing Loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFCs will include the land cost as a component, to value the total cost of the property. In cases where the period from the date Of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility. Home improvement loans:These loans are given for implementing repair works and renovations in a home that has already been purchased, for external works like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can avail of such a loan facility of a home improvement loan, after obtaining the requisite approvals from the relevant building authority. The following are coming under the home improvement loans: External repairs Tiling and flooring Internal and external painting Plumbing and electrical work Waterproofing and roofing Grills and aluminum windows Waterproofing on terrace Construction of underground/overhead water tank Paving of compound wall (with stone/tile/etc.) Bore well. Home extension loans:An extension loan is one which helps you to meet the expenses of any alteration to the existing building like extension/ modification of an existing home; for example addition of an extra room etc. One can avail of such a loan facility of a home extension loan, after obtaining the requisite approvals from the relevant municipal corporation. Home conversion loans:This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through a home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan. Land purchase loans:This loan is available for purchase of land for both home construction or investment purposes. Sheshadripuram College of Commerce and Management 31

Bridge loans:Bridge Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home. Balance- transfer loans:Balance Transfer is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest. Refinance loans:Refinance loans are taken in case when a loan for your house from a HFI at a particular ROI you have taken drops over the years and you stand to lose. In such cases you may opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower. NRI home loans:This is tailored for the requirements of Non-Resident Indians who wish to build or buy a home or property in India. The HFCs offer attractive housing finance plans for NRI investors with suitable repayment options. On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs 1 crore, based on the repayment capacity, previous credit history and the cost of the property. The bank may provide a maximum of 80% of the cost of the property or the cost of construction as applicable and 80% of the cost of land in case of purchase of land. The repayment capacity is calculated taking into account factors such as: Age Income/Salary Qualifications Dependent/(s) Assets/Liabilities Credit History Stability / continuity of your employment/business Income of co-applicant/(s) Sheshadripuram College of Commerce and Management 32

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, SBI Bank State Bank, Bank of Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank. 5.10 SBI Home Loan:Highlights:

SBI markets its parent SBI's home loan products. Finances up to 80% of the cost of the property (Agreement value + Stamp duty + Registration charges). Home improvement loan, which facilitates internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminum windows. Finances up to 80% of the cost of renovation or 10 lakhs whichever is lower. Home extension loan for extension of an existing dwelling unit under the same terms as applicable to home loan. Land Purchase Loan to purchase land for constructing house. Finances up to 80% of the cost of the land. Repayment over a maximum period of 15 years. Flexible repayment options to suit individual needs. Insurance cover under Term Assurance Plan Offer in-house scrutiny of property documents.

Eligibility; - SBI home loans are available for:


Purchase of flat, row house, bungalow from developers Purchase of existing freehold properties Purchase of properties in an existing or proposed co-operative housing society or apartment owner's association Purchase of first Power of Attorney purchases in Delhi for DDA flats allotted before 1992. Construction of own house

SBI home loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be co-owners. Maximum tenure is 30 years subject to retirement age. Loan Amount: - 80% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer. Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. An early Sheshadripuram College of Commerce and Management 33

redemption charge of 2% of the amount being prepaid is payable on repayment of a loan ahead of schedule.

Repayment Period: - Repayment Options :

Step Up Repayment Facility; helps younger borrowers to take a much bigger loan today based on an increase in their future income. Flexible Loan installments Plan: Often customers, parents and their children wish to purchase properties together. The parent is nearing retirement and their children have just started working. This option helps such customers combine the incomes and take a long term home loan where in the installment reduces upon retirement of the earning parent. Tranche Based EMI - Customers purchasing an under construction property need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. To help customer save this interest, SBI has introduced a special facility of Tranche Based EMI. Customers can fix the installments they wish to pay till the time the property is ready for possession. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards Principal repayment. The idea is customer benefits by starting EMI and hence repays the loan faster. Accelerated Repayment Scheme provides borrower the opportunity to repay the loan faster by increasing the EMI. Whenever the borrower gets an increment, increase in disposable income or have lump sum funds for loan prepayment, they can benefit by saving of interest because of faster loan repayment. Borrower can benefit by:

Increase in EMI means faster loan repayment Saving of interest because of faster loan repayment You can invest lump sum funds rather than use it for loan prepayment. The return from the investments also gives you the comfort of paying the increased EMI

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Documents Required :Salaried Customers Self Employed Professionals Application form with photograph Latest Salary-slip Form 16 Application form with photograph Education Qualifications Certificate and Proof of business existence Self Employed Businessman Application form with photograph Education Qualifications Certificate and Proof of business existence

Last 3 years Income Tax returns (self Business profile and business) Last 3 years Income Tax returns (self Last 3 years Profit /Loss and Balance and business) Sheet Last 3 years Profit /Loss and Balance Sheet Last 6 months bank statements Processing fee cheque Last 6 months bank statements (self and business) Processing fee cheque

Last 6 months bank statements

Processing fee cheque

The Credit Appraisal is an important step in sanctioning loan applications .Hence the Credit Appraiser needs to have certain important documents to compute the credit worthiness of the applicant .In the case of salaried person these include the following :1) SALARY SLIPS (3 MONTHS CURRENT) :- The salary slip is usually a printed sheet of paper that contains 2 components Income/Earnings collumn: - It contains an exhaustive list of the various components that are added to the persons salary. They contain various components like Basic pay, HRA etc. Deductions: - It contains an exhaustive list of various components that are deducted from the persons Earnings. They contain various components like Income tax, Provident fund, Employee Loans etc. Sheshadripuram College of Commerce and Management 35

2) BANK STATEMENTS (6 MONTHS CURRENT) ;- The bank statement contains the various transactions that the applicant performs in his bank account. It has 3 components Date Descriptions; - It contains the brief and standardized description of the activity or the account related to the transaction .Eg. Clearing cheque 166129, Transfer deposit. Deposits: - It contains the amounts that were credited to the account Withdrawal; - It contains the amounts that were debited to the account. This is carefully studied to find out about any regular withdrawals or a series of checks so that any existing loans may be revealed and there can be a correct estimate of the repayment capacity. Balance :- It shows effect of transaction on the preexisting account balance Special feature: - SBI will not consider any loan s without standing EMI of or below 6 months.

3) FORM 16 :- It is form given by Employer which states the income earned from that company during the full financial year ,and gives the details of Tax deducted at source. 4) COPY OF INCOME TAX RETURN(SARAL) :- The SARAL tax return form reveals the structure of incomes and/or the various earnings of the tax returnee .It also shows the various deductions that will not be included and it also contains the Rebates on which he earns tax benefit. 5) RESIDENCE PROOF: - The residence proof includes the Electricity bill, Telephone bill, Ration Card, Passport. 6) PHOTO ID PROOF: - The photo proof includes the Pancard, Voter ID card, Employee ID card, Passport etc. 7) AGE PROOF: - The age proof includes the Pan card, Passport, Photo ID. 8) LOAN APPLICATION FORM DULY FILLED :- It can also be downloaded from SBIs user friendly web based portal. 9) CHARGES FOR PROCESSING FEES :- This is a standard and nominal fees to be paid at the time of applying for loan Sheshadripuram College of Commerce and Management 36

Fee structure: 0.5% of loan amount

10) PHOTOCOPIES OF PROPERTY PAPERS. NON RESIDENT INDIAN SALARIED/EMPLOYED; - An NRI is a person with Indian citizenship but residing in another country. An NRI can take a housing loan from SBI. He is however not eligible for a Top Up loans, Home Equity Loans, Non Residential Premises Loans .He is however eligible for Home Improvement and Home Extension Loans from SBI . An NRI Loan is appraised on the Net Salary. This is the take home pay package obtained after reducing the deductions from the earnings .As this salary is low it reduces their loan eligibility .However the salary is converted into Indian Currency for computing credit worthiness. The figure obtained is higher in Indian currency hence the loan eligibility rises .Eg 5,487$ American dollars will mean 2,46,915 Rupees. SELF EMPLOYED PROFESSIONALS: - An NRI applicant can also be a Doctor, Engineer etc. In these cases SBI will put them in the special category of Self Employed Professionals. Their credit appraisal is carried out as follows:Their latest available Profit and Loss A/c is reviewed by the credit appraiser. This account has two sides a Profit side which reveals all earnings and gains .There is also a Loss side which shows all taxes, liabilities and losses. We refer to the Profit side a the Gross Receipts. These includes components revealing the nature and amount of the Prime income and other earnings Eg Consultation fees in case of Doctor. From the Gross Receipts we calculate the Gross Profits and thereon move to calculate Loan eligibility .Which is the loan amount that can be conveniently sanctioned to the applicant. Loan Eligibility = Gross Profit * 2 Another important consideration is that the Annual outflow of EMIs should not exceed the NET PROFIT. The Net Profit is computed by deducting the various costs and losses from the Gross profit. SOURCES OF LOAN APPLICANTS 1) WALK IN :- This refers to the Applicants who apply for the loan by going to the service centre or regional branch office .They may have come to know about SBI s home loan Sheshadripuram College of Commerce and Management 37

service from any source but this is their first contact with SBI is in absence of any intermediary like friends, sales men etc.The applicants who contact through or by the Website are also included in the walk in category. Walk-In applicants are given concessions on fees and charges which is applicable from time to time.

2) CALLCENTRE LEADS: - The call Centre leads refer to the applicants that come in contact with SBI through SBI Bank or through HLSIL .SBI bank is the banking section of SBI which informs SBI about persons who it thinks to needing a loan .HLSIL which has been started by SBI and refers to Housing Loan Services India Limited. This organization has been especially started by SBI to assist persons searching for home loans at easy rates and good service.HLSIL contacts probable needful of home loan, contacts them, explains them the various advantages of an SBI home loan and get their loan application filled. Every SBI service center has its own team which is managed by leader who reports diectly to the Branch Manager .In the India habitat center the HLSIL team is under the leadership of a team leader who reports directly to Mr. Peasant Malik(Branch MgrIHC /Ranked 2nd in the prestigious National Corporate Challenge 2005 conducted annually by SBI ) 3) DSAs and BSAs; - These are respectively the Direct selling agents and the Business selling agents.the DSAs refer to organizations which work in agreement with SBI and forwards them the loan requests of applicants they contact or those that contact them on the other hand BSAs usually forward loan requests and assist SBI by forwarding them the names addresses contact nos etc of various probable needfuls of home loans BSAs usually are Builders who book houses for sale in the future. they may also include Brokers.Egs for DSAs are Nishk,Chatrath,BKM.etc Deposits: Individuals: - these are: Fixed Rate Deposits Variable Rate Deposits SBI has instituted well-defined service standards for both depositors and deposit agents. SBI has been able to mobilise deposits from over 10 lac depositors. Outstanding deposits grew from Rs. 1,458 crores in March 1994 to 19,359 crores in March 2009. Much of this success can be attributed to its strong brand image, superior services, security and above all, the significant contribution made by SBI's deposit agents. SBI has over 15,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel. SBI has been awarded AAA rating for its deposits from both CRISIL and ICRA for the FOURTEENTH consecutive year, representing highest safety as regards timely payment of principal and interest. The problem of Negative Amortization is specific to the Adjustable or the Variable rate loans that are lent to customers. In the case of Variable rate home loans there are three components:Sheshadripuram College of Commerce and Management 38

RPLR 14% (CURRENT) SPREAD 3% (CURRENT) ROI- 11% The term RPLR is short for Retail Prime Lending Rate. This rate is dependent on market forces .In India the RPLR has been observing an upward trend .As a result of this there is a Change in rate of interest to be applied to different loans.RPLR is revised every 3 months in which it may or may not change. Spread refers to a special discount offered to loan applicants coming to SBI. This discount is fixed by SBI .Every loan applicant is eligible to receive this discount from SBI. It helps create a market advantage and benefits the Applicants. Spread is fixed for an uncertain length of time .It is absolutely dependent on the companys discretion to change it or not. Currently SBI is offering 0.75% spread on a loan of upto 30 lacs and 1% spread on a loan of above 30 lacs to 75 lacs, & 1.25% above 75 lacs. ROI is the rate of interest that is applicable to the loan at the time of lending. It is computed by subtracting spread discount from the RPLR. at the time of lending the ROI is good enough to repay the interest as well as the principal components .However as the RPLR increases as it is bound to do so after some time the required EMI also increases .Hence after some time the EMI becomes insufficient to repay the principal as well as the interest component .

STAGES OF HOME LOAN Application Munirka HUB Login Scanning

Data Entry

Disbursement of loan The Loan

Fixed charges

DoubleChecking Over(DCOVR)

Recommendation Over(ROVR)

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The representation shown above is not a perfect copy of the actual process. This is because these stages are taking place simultaneously and one application is being taken care for by the experienced employees of both SBI service centre and SBI HUB (also called the back end office).Also the applicant may be asked to send information or may be asked questions regarding his requirement and/or his documents for his own convenience Hence the loan application may or may not shuttle through different stages. APPLICATION STAGE :- This is the stage where the Application Form first reaches the concerned Service Centre Here all the documents in the application are reviewed by the experienced staff present at the service center The SBI employee who reviews the file checks to see whether all documents are present and in their proper place .He checks if the documents are duly filled, not fake, attested by authority in question and present in order. In case any document is missing the applicant is contacted electronically or by mail .The applicant is contacted by telephone and requested for the document until he denies it being with him. This exercise is called FOLLOW UP. The credit appraisal of the loan application starts at this stage. The service center employees compute the gross salary, IIR, FOIR, Loan Eligibility ratio etc. The credit worthiness of the applicant is calculated here. It is also at this stage that the QUICK DATA ENTRY of the loan application is done to create a serial no. of the application. After that another page appears and more data is entered .It is now that a special and unique LOAN A/C NO is created under which all the loan processes will be carried out. The number that has been generated is communicated to the applicant by means of a letter and/or electronic communication the system of electronically recording the data helps to create ready reference, a proof ,helps in quick and easy processing of the data. It also helps to very easily and quickly share data with other employees of SBI. The next and important processing performed at the service center is that of filling up a document known as the INTERVIEW SHEET. For processing individual loans (salaried cases) .It contains various simple entries like :1. Name of borrower 2. Name of co-borrower 3. Income details:-Family background and permanent address etc. It also contains various important entries like. 5. Gross Salary 6. Rental 7. Other incomes 8. Obligations: - The various other loans that the applicant is entitled to pay ,their amount, their remaining terms ,source etc. 9. Remarks;- This column contains the various findings that the employee has found out after thorough review of the applicants documents such as bank statement, salary slip etc. Hence the interview sheet contains the important findings which the employee has collected after careful review of the various documents .The interview sheet helps to cut Sheshadripuram College of Commerce and Management 40

corners and helps save time by not having other employees to go through the documents again and again .It hence acts as a source of quick reference. After all this has been performed well enough the loan application will be arranged in a file and all it will be given its loan a/c no which also acts as its file no. the file is now ready to be sent to the HUB where further processing will take place. SCANNING: - In this stage the various important documents of the applicant are scanned. This helps to create their electronic copy which acts as a ready reference, a proof, and can also be shared and utilized by other employees of SBI. DATA ENTRY :- The file has been sent to the back end office or the HUB .At HUB there are many experts with their own specializations . these officials review the various parts of the filae again and perform many specialized tasks Data entry is also one of these tasks .this entry is much more different and complex as compared to the earlier performed Quick Data Entry. An exhaustive amount and type of information has to be entered into the ILPS system ranging from Personal Details, Employment Details to Property Rate History and Customer Interactions. RECOMMENDATION OVER (ROVR) :- The Recommendation OVER is also referred to as the First Appraisal at this stage certain specially appointed persons have been given the responsibility of recommending a loan. These people have to take special care of reviewing every document, and all the small details that need to be considered before considering the loan application to be valid. After this the file is sent to another specially appointed person as explained below. At this stage if any correction or mistake is present it can be sent back to the Service Centre. DOUBLE CHECKING OVER :- As the name suggests at this stage a specially appointed person will double check all the past proceedings .He will examine the Loan file for any discrepancies ,any missing and /or misplaced documents, the Credit Appraisal results,etc.this is a very important stage and must be handled with exceptional care. This is because a mistake at this stage can cause a great loss to the company. The Double checker is responsible for the ultimate sanctioning of the loan .If any mistake is done at this stage there is no going back and hence no protection.SBI takes great care while appointing double checkers .They should have completed a select number of years with the company and should have shown exemplary performance and must possess experience. SANCTIONING :- An authorized sanctioning authority within SBI itself will review the remarks of Double Checker and Sanctioning authority .If it considers the loan suitable to be Sanctioned it gives its approval .After it has given its approval stamp the ILPS system will automatically send a letter to the Applicant that his loan has been sanctioned. After this approval the Applicant can go to whichever Service Centre which he selects to get his loan disbursed.

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SPECIAL CASE :- A special case can arise if the applicant has not mentioned the property for which he wants to take a loan .In that case the applicant can let the case be remain pending . this means that the Applicants loan request will be considered to be complete even though he has not decided the property. However the Applicant is expected to finalise the property in a short time. A Property Address is necessary to 1. get the loan disbursed 2. Process the Legal and Technical Appraisal of the property and its Papers.

DISBURSEMENT: - The last and final stage in the Home Loan process is that of disbursement. After the sanctioning has taken place the applicant becomes a registered customer of SBI . He can now take the disbursement of the loan from any of the various service centre of SBI .The loan shall be disbursed in one Lump sum or in suitable installments to be decided by SBI with reference to the need and/or progress of construction (which decision shall be final and binding on the borrower).The borrower hereby acknowledges the receipt of the loan disbursed as indicated in the receipt.

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REVIEW OF LITERATURE
SUMMARY: After going through previous studies of Home loans I came to conclude that There is growth of home loans after 2001. Home loans have an inverse relation with interest rates i.e. when interest rate low the demand of home loans increase. (Ojha 1987) People are going more towards home loans than private mortgage insurance . (Berstain 2008) Government taking various steps to encourage people to go toward home loans . (Haavio, Kauppi 2000) Growth of home loans are due to increase of living standard of people, shifting from joint family to nuclear family .(Lacourr, Micheal 2007) There are some problems also attach with these home loans such as time i.e filling of application of loan to closing ,people have their own specified needs from these home loans which are not fulfilling. (Lacour Micheal 2006). SBI provides 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 Sheshadripuram College of Commerce and Management 44

(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 owner-occupied properties with multiple mortgages among properties with Newly originated first mortgages. Section 4 describe the Financial status of single-lien and multiple-lien households and for this he have taken the survey of consumer finance and show that financial position is more weaker in multiple loans than the single loans. Vandell, Kerry D (2008) analysis the sharp rises and then suddenly drop down home prices from the period 1998- 2008. changes in prices are for the reasons as such economic fundamentals , the problem was not subprime lending per se, but the 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 subprime per se, but rather in the increased or reduced presence of certain other mortgage products. La courr, Micheal (2007) analysis in his study the factors affected the increase in the level of Annual percentages rates (APR) spread reporting during 2005 over 2004. The three main factors are changes in lender business practices; (2) changes in the risk profile of borrowers; and (3) changes in the yield curve environment. The results 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 meet 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 Sheshadripuram College of Commerce and Management 45

loan to proceed from application to closing it is find that government lending taking the longest time and Nonprime loans the shortest time. Multifamily 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 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 makes indications of liberalizing, deregulating economy to make Indian baking system more competitive and efficient. Ojha (1987) in his paper "modern international caparison of productivity and Profitability of public sector banks of India" making Comparison on the basis of per employee indicators and taking examples of state bank group and Punjab National bank noted that Indian banks are the lowest in all accounts. However such international comparison will not be fair for numbers of reasons. Godse (1983) in his essay, looking a fresh at banking productivity observe that productivity aspect is only at the Conceptualization stage in banking industry. He suggested improvement in productivity and procedures, costing of operations and capital expenditure etc. Fanning (1982), while examining bank productivity of British banks observed that although the productivity of the UK clearing banks is improving, they are still heavily over manned as compared with similar banks elsewhere. Sheshadripuram College of Commerce and Management 46

Kulkarni (1979) in his study Development responsibility and profitability of banks stated that while considering banks costs and profits, social benefits arising out of it cannot be ignored. He suggested that while meeting social responsibility banks should try to make developmental business as successful as possible. Varde and Singh (1979) in a study "profitability of commercial banks" over 15 years gave consideration to two types of factors that effects interest rates levels i.e. internal factors (including operational and managerial efficiency of individual basis). Banking Commission (1972) reviewed bank operating methods and procedures and made recommendations for improving and modernizing these, particularly relating to customer services, credit procedure and internal control systems. It observed that present methods of working out branch profitability are not appropriate and an integrated costing and financial reporting system is needed. Department of Banking operations and development, RBI : Bombay observed that the rapid expansion of banks activities since 1970 called for a phase of consolidations to improve the quality of banks operational efficiency, productivity and customer services.

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CHAPTER-2

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CHAPTER-2 RESEARCH METHODOLOGY OF THE STUDY


RESEARCH METHODOLOGY:Research methodology is a way to systematically show the research problem. It may be understood as a science of studying how research is done scientifically. It is necessary for the researcher to know not only the research methods but also the methodology. This Section includes the methodology which includes. The research design, objectives of study, scope of study along with research methodology and limitations of study etc. To know the Customers perceptions about home loans of SBI housing development finance corporation LTD. To study the satisfaction level of customers about home loans. To study the problems faced by customers in obtaining the home loans. To make comparative study of disbursement of home loans by commercial banks, the study shall be conducted in the manner enumerated below3.1- RESEARCH DESIGN:This project is based on exploratory study as well descriptive study. It was an exploratory study when the customer satisfaction level was studied to suggest new methods to improve the services of SBI in providing home loans and it was descriptive study when detailed study was made for comparison of disbursement of home loans by commercial banks. 3.2 SOURCES OF DATA :To fulfill the information need of the study. The data is collected from primary as well as secondary sourcesSheshadripuram College of Commerce and Management 49

A - PRIMARY SOURCE:I decided primary data collection method because our study nature does not permit to apply observational method. In survey approach we had selected a questionnaire method for taking a customer view because it is feasible from the point of view of our subject & survey purpose. We conducted 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 SBI. B SECONDARY SOURCE:It was collected from internal sources. The secondary data was collected on the basis of organizational file, official records, newspapers, magazines, management books, preserved information in the companys database and website of the company. 3.3- SAMPLING:Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study. SAMPLE SIZE:Large sample gives reliable result than small sample. However, it is not feasible to target entire population or even a substantial portion to achieve a reliable result. So, in this aspect selecting the sample to study is known as sample size. Hence, for my project my sample size was 100. The Sample Size consists of both the Professional and Business class people. IT peoples, Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample. SAMPLING TECHNIQUE:Sheshadripuram College of Commerce and Management 50

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. 3.4 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. 3.5 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 are 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. Sheshadripuram College of Commerce and Management 51

CHAPTER-3

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CHAPTER3 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 SBI

2) To analyze the history of SBI.

3) Generating good business to the company by promoting and selling the products of SBI. 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. Sheshadripuram College of Commerce and Management 53

10) To learn about various aspect of SBI home loan.

2.1 PURPOSE 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 is 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 SBI home loan ltd.

2.2 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 is 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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CHAPTER-4

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CHAPTER-4

State Bank of India


State Bank of India (SBI) (NSE: SBIN, BSE: 500112, LSE: SBID) is the largest banking and financial services company in India by revenue, assets and market capitalization. Its a state-owned corporation with its headquarters in Mumbai, Maharashtra. As of March 2011, it had assets of US$ 370 billion with over 13,000 outlets including 150 overseas branches and agents globally. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI is ranked #292 globally in Fortune Global 500 list in 2011. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices situated at Chandigarh, Delhi, Lucknow, Patna, Kolkata, Guwahati (North East Circle), Bhubaneswar, Hyderabad, Chennai, Trivandrum, Bangalore, Mumbai, Bhopal & Ahmedabad and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas. SBI is a commercial banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Forbes.] Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010. Sheshadripuram College of Commerce and Management 56

The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, PNB & HDFC

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History
The roots of the State Bank of India rest in the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of the royal charters. These three banks received the exclusive right to issue paper currency in 1861 with the Paper Currency Act, a right they retained until the formation of the Reserve Bank of India. The Presidency banks amalgamated on 27 January 1921, and the reorganized banking entity took as its name: Imperial Bank of India. The Imperial Bank of India remained a joint stock company Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India, which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30 April 1955, the Imperial Bank of India became the State Bank of India. The government of India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority. In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, enabling the State Bank of India to take over eight former state-associated banks as its subsidiaries. The State Bank of Saurashtra & State Bank of Indore merged with the State Bank of India in the recent past. SBI has acquired local banks in rescues. For instance, in 1985, it acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network in Kerala

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International presence
As of 31 December 2009, the bank had 157 overseas offices spread over 32 countries. It has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg, London, Los Angeles, Male in the Maldives, Muscat, Dubai, New York,Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town. It also has an ADB in Boston, USA. SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank: State Bank of India (Mauritius). In 1982, the bank established a subsidiary, State Bank of India (California), which now has ten branches nine branches in the state of California and one in Washington, D.C. The 10th branch was opened in Fremont, California on 28 March 2011. The other eight branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego, Tustin and Bakersfield. The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven branches, four in the Toronto area and three in British Columbia. In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian Merchant Bank and received permission in 2002 to commence retail banking. It now has five branches in Nigeria. In Nepal, SBI owns 55% of Nepal SBI Bank, which has branches throughout the country. In Moscow, SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In Indonesia, it owns 76% of PT Bank Indo Monex. The State Bank of India already has a branch in Shanghai and plans to open one in Tianjin. In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for US$8 million in October 2005...

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Associate banks
SBI has five associate banks; all use the same logo of a blue circle and all the associates use the "State Bank of" name, followed by the regional headquarters' name;

State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore

Earlier SBI had only seven associate banks that constituted the State Bank Group. Originally, the then seven banks that became the associate banks belonged to princely states until the government nationalised them between October 1959 and May 1960. In tune with the first Five Year Plan, emphasising the development of rural India, the government integrated these banks into the State Bank of India system to expand its rural outreach. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline operations. The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra merged with SBI, reducing the number of state banks from seven to six. Then on 19 June 2009 the SBI board approved the merger of its subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in State Bank of Indore. (Individuals who held the shares prior to its takeover by the government hold the balance of 1.77 %.) The acquisition of State Bank of Indore added 470 branches to SBI's existing network of 12,448 and over 21,000 ATMs. Also, following the acquisition, SBI's total assets will inch very close to the Rs 10-lakh crore mark. Total assets of SBI and the State Bank of Indore stood at Rs 998,119 crore as on March 2009. The process of merging of State Bank of Indore was completed by April 2010, and the SBI Indore Branches started functioning as SBI branches on 26 August 2010.

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Board Of Directors
After the end of O. P. Bhatt's reign as SBI Chairman on 31st March, 2011, the post was taken over by Pratip Chaudhuri, who is the former Deputy Managing Director of the International Division of SBI. As on 4th August, 2011, there are twelve members in the SBI Board of Directors, including Subir Gokarn, who is also one of the four Deputy Governors of the Reserve Bank of India. The complete list of the Board members is:

Pratip Chaudhuri (Chairman)

Hemant G. Contractor (Managing Director)

Diwakar Gupta (Managing Director)

A Krishna Kumar (Managing Director)

Dileep C Choksi (Director)

S. Venkatachalam (Director)

D. Sundaram (Director)

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Peer Group Comparison

Name of the company

CMP(Rs.) (As on Feb. 15, 2010) 1893.60 878.50 326.85 555.60

Market Cap. (Rs. Mn.)

EPS (Rs.)

P/E (x) P/BV (x) Dividend (%)

BIS P NB A NK O F INDIA B

1,202,208.77 276,993.20 171,653.50 202,386.50

158.17 115.31 40.43 79.74

11.97 7.62 8.08 6.97

2.07 2.11 1.46 1.58

290.00 200.00 80.00 90.00

B NK O F BARODA A

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Non Banking Subsidiaries


Apart from its five associate banks, SBI also has the following non-banking subsidiaries: SBI Capital Markets Ltd SBI Funds Management Pvt Ltd SBI Factors & Commercial Services Pvt Ltd SBI Cards & Payments Services Pvt. Ltd. (SBICPSL) SBI DFHI Ltd

Branches of State bank of India

State Bank of India has 137 foreign offices in 32 countries across the globe. SBI has about 25,000 ATMs (25,000th ATM was inaugurated by the then Chairman of State Bank Shri O.P. Bhatt on 31 March 2011, the day of his retirement); and SBI group(including associate banks) has about 45,000 ATMs.

SBI has 21,500 branches, including branches that belong to its associate banks.

SBI includes 99345 offices in India.

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India's number one ADB is in Bellary i e State bank of India Bellary ADB

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12 months ended Profit and loss account

Value(Rs. in million) Description Net Income Other Income Total Income Interest Expended Net Interest Income Operating Expenses Operating Profit Provisions & Contingencies Profit before Tax Tax Profit after Tax Minority Interest Net Profit Equity Capital EPS (Rs)

30-Jun-09 3m 246411.10 84915.90 331327.00 -175241.50 156085.50 -107140.30 48945.20 -3944.00 45001.20 -16476.70 28524.50 -939.20 27585.30 6348.80 43.45

30-Sep-09 3m 250179.10 80837.40 331016.50 -171461.80 159554.70 -98911.00 60643.70 -12017.30 48626.40 -17294.80 31331.60 -821.70 30509.90 6348.80 48.06

31-Dec-09 3m 249484.50 72830.00 322314.50 -161667.50 160647.00 -95726.60 64920.40 -14540.10 50380.30 -16830.90 33549.40 -503.50 33045.90 6348.80 52.05

31-Mar-10E 3m 254474.19 74286.60 328760.79 -167952.97 160807.82 -96700.19 64107.63 -12821.53 51286.11 -16924.41 34361.69 -528.68 33833.02 6348.80 53.29

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Quaterly ended Profit and Loss account (Consolidated)

Value(Rs. in million) Description Net Income Other Income Total Income Interest Expended Net Interest Income Operating Expenses Operating Profit Provisions & Contingencies Profit before Tax Tax Profit after Tax Minority Interest Net Profit Equity Capital EPS (Rs)

30-Jun-09 3m 246411.10 84915.90 331327.00 -175241.50 156085.50 -107140.30 48945.20 -3944.00 45001.20 -16476.70 28524.50 -939.20 27585.30 6348.80 43.45

30-Sep-09 3m 250179.10 80837.40 331016.50 -171461.80 159554.70 -98911.00 60643.70 -12017.30 48626.40 -17294.80 31331.60 -821.70 30509.90 6348.80 48.06

31-Dec-09 3m 249484.50 72830.00 322314.50 -161667.50 160647.00 -95726.60 64920.40 -14540.10 50380.30 -16830.90 33549.40 -503.50 33045.90 6348.80 52.05

31-Mar-10E 3m 254474.19 74286.60 328760.79 -167952.97 160807.82 -96700.19 64107.63 -12821.53 51286.11 -16924.41 34361.69 -528.68 33833.02 6348.80 53.29

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Slogan Of State bank Of India


The symbol of the State Bank of India is a circle and not key hole and a small man at the centre of the circle. A circle depicts perfection and the common man being the centre of the bank's business. Slogans : "With you, all the way", Pure banking Nothing else..

Employee Strength
SBI has turned into the third-largest employer in India among listed companies after Coal India Limited(383,347) and Tata Consultancy Services(226,751)

Recent Awards and Recognition

Best Online Banking Award, Best Customer Initiative Award & Best Risk Management Award (Runner Up) by IBA Banking Technology Awards 2010

The Bank of the year 2009, India (won the second year in a row) by The Banker Magazine

Best Bank Large and Most Socially Responsible Bank by the Business Bank Awards 2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times Sheshadripuram College of Commerce and Management

67

Most Preferred Bank & Most preferred Home loan provider by CNBC

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CHAPTER-5

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CHAPTER5 COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS


8.1 - Disbursement of Home loans by different banks:SBI :Years No. of Home loan account holders. 700 950 1130 1435 1594 Home loan Disbursed (in crore Rs.) Distributed 90.07 120.00 144.67 180.33 240.00 Recovered 63.05 91.20 127.31 165.90 228.12 Balance 27.02 28.8 17.36 14.43 11.88

2004-05 2005-06 2006-07 2007-08 2008-09

Interpretation:On the above table, it is evident that there are increase in No. of account holders from 700 to 1594 in the year 2008-09. The loan amount distributed among home loan account holder has also increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in 2008-09. The recovery procedure for home loans is also strengthening due to increment in recovered amount, i.e. Rs.63.05 crore to Rs.288.12 crore. So it nut shall there are upward trend in number of accountholders and disbursement of home loans.

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Punjab National Bank :Years No. of Home loan account holders. 810 950 1120 1433 1500 Home loan Disbursed (in crores Rs.) Recovered 97.28 150.00 185.86 231.07 265.05

Distributed 120.15 183.26 213.65 240.87 265.15

Balance 22.87 33.26 28.05 9.80 9.10

2004-05 2005-06 2006-07 2007-08 2008-09

Interpretation:The Punjab National Bank is Public sector Bank. It comes second after State Bank of India in its branch location and expansion. From the Table, the figures show that there are increasing trend in customer base from 810 in the year 2004-05 to 1500 in the year 2008-09. The bank also show enhancement in loan amount up to Rs.265.15 crore in the year 2008-09. The recovery process of loans in past is slow but now it is increasing.

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Standard Chartered Bank :Years No. of Home loan account holders 106 130 154 180 260 Home loan Disbursed (in crores Rs.) Recovered 5.27 10.16 14.35 18.68 23.91

Distributed 6.21 11.55 17.06 20.09 24.10

Balance 0.94 1.38 2.70 1.41 0.48

2004-05 2005-06 2006-07 2007-08 2008-09

Interpretation:The standard chartered bank is a private sector bank. It has also upgraded its position in banking sector in BANGALORE. The figures shown in table reveal that there is upward shift in customer base of Bank from 106 customers to 260 customers. The bank has also increased its share in housing finance by distributing Rs. 24.10 crores in 2008-09. The recovery procedure of Home loan is very sound.

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ICICI BANK:Years No. of Home loan account holders 650 853 1019 1132 1434 Home loan Disbursed (in crores Rs.) Recovered 98.12 105.00 133.46 144.65 209.16

Distributed 104.33 123.24 150.65 176.75 224.00

Balance 6.21 18.24 17.19 32.10 14.84

2004-05 2005-06 2006-07 2007-08 2008-09

Interpretation :The amounts reveal that there is tremendous increase in Home loan accountholders. The amount distributed as home loan is also increased from Rs. 104.33 in 2004-05 to Rs. 224 crore in 2008-09. But the recovery mechanism of the Bank is not so good thats why the outstanding amount shows fluctuating trend.

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8.2 -COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY COMMERCIAL BANKS:There are number of schemes and products, offered by commercial banks to attract the customers. The comparison among different commercial banks which offer home loans in regard of Disbursement of home loans are as:No. of Home loan account holders ;Table 8.2(a) Years SBI Punjab National Bank 810 950 1120 1433 1500 Standard chartered Ban ICICI Bank

2004-05 2005-06 2006-07 2007-08 2008-09

700 950 1130 1435 1594

106 130 154 180 260

650 853 1019 1132 1434

Average No of account holders

Total of home loan customers ----------------------------------------No. of year

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Table 8.2 (b)

Name of Bank SBI Punjab National Bank Standard Chartered Bank ICICI BANK Total

Average (Rs) 1109 1163 166 1018

Percentage of Accountholders 32 34 5 29

3456

100

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GRAPH:- 8.2

Home loan holders of SBI and commercial banks

Interpretation:The figure reveals that SBI is having large number of home loan accountholders. So it ranks first among other banks. But government sector PNB is not behind so much with 31% also market leader. The banks have shown increase in their customers base from 2004 to 2008.but SBI comes as market leader in the home loan cases.

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Home loans distributed by SBI and Commercial banks:Table 8.3 (a) Years SBI Punjab National Bank 90.07 120.00 144.67 180.33 240.00 Standard chartered Bank ICICI BANK

2004-05 2005-06 2006-07 2007-08 2008-09

120.15 183.26 213.65 240.87 265.15

6.21 11.55 17.06 20.09 24.10

104.33 123.24 150.65 176.75 224.00

(Rs.in crore)

Average home loans granted

Total home loans granted --------------------------------No. of years

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Table. 8.3 (b) Name of Bank SBI Punjab National Bank Standard Chartered Bank ICICI BANK Average (Rs) 204.62 155.01 15.80 155.79 Percentage of home loans granted (Rs in crore) 39 29 3 29

Total

531.22

100

To understand the comparison more effectively and closely, it has been shows Diagrammatically as follows:-

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GRAPH:- 8.3

Home loans granted by SBI and commercial banks

Interpretation:There is no doubt that every bank tries to maximize its home loan disbursement. But on the basis of data it is concluded that SBI shows high average of loan grants Rs. 20.62 crore as compared to ICICI, standard charted bank and PNB respectively. Rs155.01, Rs. 15.80 and Rs. 155.79 crores. On this analysis the SBI are higher loan provider as compared to other sector banks.

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Recovery of Home loans:Table 8.4 (a) Years SBI BANK (Rs in crore) 97.28 150.00 185.86 231.07 256.05 Punjab National Bank( Rs in crore) 63.05 91.20 127.31 165.90 228.12 Standard chartered Bank (Rs in crore) 5.27 10.16 14.35 18.68 23.91 ICICI BANK (Rs in crore) 98.12 105.00 133.46 144.65 209.16

2004-05 2005-06 2006-07 2007-08 2008-09

Total home loans recovered Average Recovery Of home loans = ---------------------------------No. of years

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Table 8.4 (b) Name of Bank SBI Punjab National Bank Standard Chartered Bank ICICI BANK Average (Rs) 184.05 135.21 14.47 138.08 Percentage of home loans recovered( Rs in crore) 39 30 3 28

Total

471.80

100

It is more clear with the help of this diagram:- GRAPH:- 8.4 Sheshadripuram College of Commerce and Management 81

Home loans recovered by SBI and commercial banks

40 35 30 25 percentage 20 of recovery 15 10 5 0 SBI PNB SCB ICICI BANK

GRAPH:- 8.4

Interpretation:In the previous years the recovery process of granting loans are very unorganized and inefficient. So there are less recovery of home loans by the commercial banks. But it is evident from the table that every bank whether public or private showed increase SBI has the greatest recovery of home loans i.e. 39%, thereafter Punjab national bank recovered the 30% of sanction amount. The standard chartered bank is having lowest recovery of their granted amount as home loans.

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Outstanding Balance :Table 8.5 (a) Years SBI (Rs in crore) 22.87 33.26 28.05 9.80 9.10 Punjab National Bank(Rs in crore) 27.02 28.8 17.36 14.43 11.88 Standard chartered Bank(Rs in crore) 0.94 1.38 2.70 1.41 0.48 ICICI BANK(Rs in crore) 6.21 18.24 17.19 32.10 14.84

2004-05 2005-06 2006-07 2007-08 2008-09

Average Of balance due

Total of Balance due in 5 years = -------------------------------------No. of years

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Table 8.5 (b) Name of Bank SBI PNB Standard Chartered Bank ICICI BANK Total Average (Rs) 20.61 19.89 1.38 17.72 59.15 Percentage of balance due (Rs in crore) 34 33 2 31 100

Average of one bank % age = --------------------------- x100 Total Average of Banks

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The diagrammatically presentation of data is as:- GRAPH:- 8.5

Balance due on home loans by SBI and commercial banks

Interpretation:From the above table and figure it shows that standard chartered bank has been less outstanding balance among other banks. The SBI got high balances due to large customer base, not proper recovery process and lack of modernisation of activities. The public sector bank PNB is having more balance due i.e. 33% as compared to standard chartered bank and icici bank.

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CHAPTER-6

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CHAPTER-6 ANALYSIS & INTERPRETATION

The analysis is based on the responses given by customers through questionnaires.

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 9.1: Age group 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years No. of Respondents 120 67 46 24 6

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CHART-9.1:

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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GENDER CLASSIFICATION OF SURVEYED RESPONDENTS TABLE-9.2 Sr. No. 1 2 Category Married Unmarried Total No. of Respondents 140 60 200 Percentage 70% 30% 100% Base 200 respondents

CHART-9.2

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-9.3 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-9.3

Interpretation From the table and graph above it can be seen that 25% respondents are under graduates. 40% respondents are Graduates. 35% respondents are Post graduates.

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Number Of years Are You in Bangalore?


TABLE-9.4 Sr. No. 1 2 Category Less than five years More than five years Total No. of Respondents 78 122 200 Percentage 39% 61% 100% Base 200 respondents

CHART-9.4

Staying years in Bangalore

Interpretation From the table and graph above it can be seen that 39% respondents are in Bangalore is less than five years. 61% respondents are in Bangalore is more than five years. CUSTOMER PROFILE OF SURVEYED RESPONDENTS Sheshadripuram College of Commerce and Management 91

TABLE 9.5: Customer profile Student Housewife Working Professional Business Self Employed Government service employee Chart-9.5 No. of respondents 7 5 116 49 24 24

11%

student 11% 3% 2% housewife working professional business

22%

51%

self-empoyed government service

Interpretation From the table and graph above it can be seen that:Sheshadripuram College of Commerce and Management 92

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-9.6 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-9.6

Interpretation From the table and graph above it can be seen that 49% respondents annual household income is less than 2 lacs. Sheshadripuram College of Commerce and Management 93

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 SBI housing loans? TABLE 9.7: Category Yes No. of Respondents 164

No

16

Interpretation:From the table and graph above it can be seen that 91% respondents are known about SBI 9% respondents are not known about SBI

Table 9.8 :
Reasons for getting the home financed Sheshadripuram College of Commerce and Management 94

Sr.No. a. b. c. d.

Number of Reasons Non-availability of funds Reluctancy to pay cash in one go Tax benefit Any other

Percentage 36 35 24 5

GRAPH:- 9.8 40 35 30 25 20 15 10 5 0

percentage of customers

nonreluctancy availability of funds

tax benefit

any other

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. Sheshadripuram College of Commerce and Management 95

On the basis of study, it is concluded that most of people lack of money in fulfiling their dreams and few of them were reluctant to pay cash in one go and wanted to pay their home loans slowly in installments.

Table-9.9
From where you have got your home financed Name of Banks / company SBI Punjab National Bank Standard Chartered Bank ICICI BANK Any other Percentage of customers 55 15 07 20 03

To understand the response more effective and closely, it has been showed diagrammatically

GRAPH:- 9.9

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From where you have got your home financed

Interpretation:The analysis showed that a large number of customers prefer SBI 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 SBI 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 SBI compared to public sector banks and other private banks. This is because of the extra services provided by SBI. 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 SBI for home loan because of their services and excessive feat compared to other ban

Table-9.10

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Sources of information

Percentage of customers

Sources of information about Home Loans Scheme Newspapers 49 Magazines 16

Banners/Hoardings/Pamphlets Word of mouth Any other source

11 20 04

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Interpretation:-

20% 11%

4% 49% 16%

newspaper magazines banners word of mouth any other source

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 .

Table-9.11
Opinion about the services of SBI

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Services of SBI Strongly agree a. Professionally managed b. Reliable & transparent c. Socially responsible 86%

Percentage of customers agreeing Agree Neutral Disagree Strongly disagree -

10%

4%

67%

33%

75%

10%

15%

4%

d. Customer care

20%

68%

8%

e. Query handling

20%

76%

4%

GRAPH-9.11 Opinion of customers about SBI

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90 80 70 60 percentage of customers 50 40 30 20 10 0 strongly agree agree neutral disagree strongly disagree

c
factor

Interpretation:Customers from SBI 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 SBI services is lightly satisfied.

Table-9.12
Opinion of customers about home loan schemes Sheshadripuram College of Commerce and Management 101

SBI :Services of SBI Strongly agree a. Amount of loan b. Legal formalities c. Interest rates 60% 42% 32% Percentage of customers agreeing Agree 35% 45% 56% Neutral 5% 14% 12% Disagree Strongly disagree -

d. Repayment options e. Security demanded f. Installments g. Services h. Processing for sanction of loan

26% 20% 55% 45% 55%

64% 32% 40% 30% 24%

10% 48% 5% 18% 18%

6% 3%

1% -

GRAPH:- 9.12 Percentage of satisfaction level of customers of SBI

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70 60 50
percentage of customers

40 30 20 10 0

strongly agree agree neutral disgree strongly disagree

g h

factors

Interpretation:The analysis shows that the customers of SBI 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 SBI didn't give response regarding the services of the bank / company except to the amount of loan and legal formalities.

TABLE:- 9.13
DATA GIVES PREFERENCE OF RESPONDENTS OF COMPANIES AND BANKS Sheshadripuram College of Commerce and Management 103 HOME LOANS

COMPANYS NAME SBI STANDARD CHARTERED BANK ICICI BANK PNB HDFC TOTAL

NO.OF RESPONDENTS 78 2 10 7 3 100

(%) 78 2 10 7 3 100

GRAPH:-9.13

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NO. OF RESPONDENTS

INTERPRETATION:From the table and graph above it can be seen that:78% of the people contacted prefer SBI to any other and therefore it is ranked no.1 by that percent of respondents. PROBLEMS FACED BY CUSTOMERS IN AVAILING HOME LOANS There are everything in the world has good or bad points. No doubt banking industry/ company has made many efforts to enhance the customer satisfaction but customer still faced some problems. These are high lightened as below: 1) The customer does not have proper knowledge about different home loan products so they face problem in making a good deal. 2) There are procedural delays, which harass the customers lot. This will crush the curtsy of customers to avail the home loan. 3) The attitude of bank employees sometimes non cooperative and it creates a hurdle in building trust and Confidence among customers about banks.

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4) 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. So above discussed are the problems which faced by customers while availing home loans.

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CHAPTER-7

CHAPTER-7
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FINDINGS

SBI having good brand image in the minds of customers. Majority of the people got loans from SBI only Most of the customers are not aware of the products of SBI home loans Some of the customers felt that the interest rates are somewhat high Some of the customer not having good faith on private banks like Standard chartered bank, HSBC bank etc.

Most of the people are directly go to SBI to apply a home loan Some of the customer of SBI already benefited through SBI home loan products and services

Customer awareness is medium about SBI products. SBI providing good services to their customers.

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CHAPTER-8

CHAPTER-8 RECOMMENDATIONS AND SUGGESTIONS


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These suggestions have been discussed as follows:1) To increase their customers, the SBI 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. 2) To satisfy their customers and for good dealings in future, the SBI 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 SBI 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. Needless to say, that the bank which is having lower interest rates, have the maximum clients for loans. 5) SBI 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 SBI 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 SBI 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. They should provide knowledge to the ignorant customers, especially in rural areas and backward urban areas. By considering these suggestions, the SBI can strengthen their customer base in home loans sector. They should improve their services and reduce Sheshadripuram College of Commerce and Management 110

legal proceedings and should be friendly to their customers. All this will be helpful to satisfy their customers.

CHAPTER-10
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CHAPTER-10 CONCLUSION
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1) In my study we came to know that many peoples are interested to take a home loan from SBI 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. 3) Even though the interest rates are high peoples are willing to take a loan from SBI due to some reasons. 4) The interest rates also somewhat 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 SBI which may beneficial for banks to enhance their customer base.

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BIBLIOGRAPHY
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REFERENCES
REVIEWS 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 SBI NEWS PAPERS The Times of India Financial Express

WEB PAGES:Sheshadripuram College of Commerce and Management 115

http://www.SBIindia.com/ http://www.SBIindia.com/others/popup/news/SBI_fin_result_june_30_08.html www.SBI.com http://www.iloveindia.com/real-estate/housing-finance- companies/SBI.html http://www.loansnews.info/Home-loan/SBI-home-loans/ http://www.SBIindia.com/loans/hm-loan-documents.asp http://www.thinkplaninvest.com/2009/01/SBI-will-cut-home-loan-rates/ http://www.suncorp.com.au/suncorp/personal/home_loans/tips/faq.aspx http://investing.businessweek.com/research/stocks/people/people.asp?ric=SBI.BO http://www.economywatch.com/companies/forbes-list/india/housing-developmentfinance-corporation.html http://www.SBIindia.com/loans/home-loan.asp http://docs.google.com/gview? a=v&q=cache:woJTMDV1HLYJ:www.SBI.com/pdf/32AGM %2520speech.pdf+SBI+housing+finance+development+product&hl=en&gl=in http://www.munichre.com/en/press/press_releases/2007/2007_10_30_profile_SBI.aspx http://www.SBI.com.mv/faq.htm http://ayaanbayaan.com/SBI-ltd-financial-results-indian-gaap-for-the-period-april-tojune-2009/ http://www.valuenotes.com/press/pr_SBI_250ct05.asp?ArtCd=70013&Cat=C&Id=100

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QUESTIONNAIRE
Dear Sir/ madam I am Jashank doing B.B.M from Sheshadripuram college. I m preparing a project on A STUDY ON HOME LOANS. For this I have designed a Questionnaire to know your views and satisfaction level of home loans .Please fill the given as per your thinking and experiences with this. I will be thankful to you for this. Name: .. Address: .. Contact No :( O) (M) City: ...............Pin: .State: .

1. Name: ____________________ 2. Age: (a) Below 30 3. Occupation: (a) Professional (e) Others

(b) 30-40

(c) 40-50

(d) Above 50 (c) Salaried

(b) Self-employed

4. Which income group do you belong? (Per annum) (a) Below 2 lakhs (b) 2-4 lakhs (c) 4-6 lakhs (d) 6 lakhs and above 5. Have you ever taken Home loan before? (a) Yes (b) No 6. If yes, from which Bank/company? (a) ICICI (b) SBI (d) Centurion bank of Punjab 117

(c) UTI (e) others

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7. Are you satisfied with the services provided? (on 5 point scale) _____________________________________________________________________ Highly dissatisfied dissatisfied Neutral satisfied highly dissatisfied

8. While taking loan, which things attract you the most? (a) Interest rates (b) Service Provided (c) Payback period (d) Schemes (d) Others 9. Even if the Interest rate is high for the personal loans, you will go for it? (a) Yes (b) No 10. How much loan amount you took? (a) Less than 1 lakhs (c) 5-10 lakhs

(b) 1-5 lakhs (d) more than 10 lakhs

11. Even if the Interest rate is high for the Home loans, you will go for it? (a) Yes (b) No 12. Do you own a home? Yes [ ] No [ ] If Yes, then, Proceed 13. Have you get it financed? Yes [ ] No [ ] If Yes, then, proceed.. 14. What is reason for getting it financed? 1. Non availability of funds [ ] 2. Reluctance to pay cash in on go [ ] 3. Tax benefit [ ] 4. Any other (please specify) .........................................

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15. From which of the following banks/ company you have got if financed? Standard Chartered Bank [ ] State Bank of India [ ] ICICI Bank [ ] SBI [ ] Any other (please specify) ........................................... 16. From where have you got information about home loans scheme? (Check list).. Newspapers [ ] Magazines [ ] Hoarding/banners [ ] Word of mouth [ ] Any other (please specify)........................................... 17. What problems did you face while getting home loans? a. Lack of knowledge b. Procedural delays and non-cooperation c. Any other (please specify) ........................................ 18. Did you face any problem after sanction of loan? ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 19. What suggestions do you want to give for improvements in home loans Scheme? ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________

Thank you

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