CUSTOMER PERCEPTION TOWARDS HOUSING LOAN FACILITIES PROVIDED BY SELECT BANKS AND INSTITUTIONS

A Synopsis submitted to the Bharathiar University for the award of Degree of

DOCTOR OF PHILOSOPHY IN COMMERCE

By
B.SARANYA, M.Com., M.Phil., PGDCA

Under the guidance of Dr.K.M.CHINNADORAI, M.Com.M.B.A.,M.F.T.M.F.C.,M.S.,M.Phil.,Ph.D

Since 1947 POST GRADUATE AND RESEARCH DEPARTMENT OF COMMERCE

PSG COLLEGE OF ARTS AND SCIENCE

College with Potential for Excellence (Status awarded by the UGC) An Autonomous College Affiliated to the Bharathiar University Re-accredited at A+ Grade by NAAC An ISO 9001:2008 Certified Institution Coimbatore 641 014 INDIA

APRIL 2012

CUSTOMER PERCEPTION TOWARDS HOUSING LOAN FACILITIES PROVIDED BY SELECT BANKS AND INSTITUTIONS
Introduction Home loans are provided for longer duration. In fact, home loans are one of those loan types that have the maximum repayment period. A person can repay the home loan in 35-40 years, depending upon the terms and conditions of lender. He can also repay the loan amount in shorter periods, say, 5 years. If a person takes the home loan for short period of time, higher interest rates are applied in the home loan account and he has to pay more towards monthly installment. Similarly, if the repayment period is longer, interest is applied at lower interest rates. Credit history of a person also affects home loan rates in various countries like United States etc. The home loan interest rates also get affected by the repayment option chosen by a person i.e. whether loan is taken at fixed interest rates or adjustable interest rates. It is advised that before getting home loan by way of mortgage, a person should shop extensively for the cheapest lender. This is because of the presence of large number of home loan lenders and most of them also allow people with bad credit to apply for the loan amount. A person has the option of repaying the home loan interest rates at fixed rate where the rate remains same for the entire loan term. This type of interest rate is better for those who want to know in advance the repayment amount each month and for those who wish to remain in their homes for longer periods. Adjustable mortgage home loans allow a person to repay the interest at fixed rate for a certain period of time, called as adjustment period, and then, it varies as per the market conditions. It can go lower or higher than the existing home loan rate. This type of home loan rate is considered as best for those persons who wish to make lower initial payments towards loan repayment and do not wish
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to own a home for a longer term. However, after the adjustment period, the home loan interest rate rises very steeply. Various banks and housing finance companies have their own set of offerings as far as the best possible housing loan interest rates in India are concerned. There are a variety of housing loans available in India which includes:

Home purchase loan Home construction loan Home extension loan Existing home improvement loan Land purchase loan

Statement of the Problem In India, the demand for new houses is on the increase over the years due to increase in population and migration of people from rural to urban areas which leads to giant growth of towns without proper planning and lack of finance to provide houses to the new entrants by the government. Moreover the rented accommodation has several drawbacks such as frequent hike in housing rent, higher maintenance charges, no privacy for the tenants, electricity and water problems, non adjustable neighbors and more rules and regulations are laid down by the house owners which aggravated the tenants to own a new house. This has led to the demand for constructing new house, thereby which lead to heavy increase in raw materials for construction such cement, bricks, sand etc, where the cash in hand with the tenants will not be sufficient to buy a land and to construct a new house. This necessitated them to go in for housing loan. The banks like Housing Development Finance Corporation Ltd (HDFC), Industrial Development Bank of India Home Finance Ltd (IDBI), Punjab National Bank Housing Finance Ltd (PNB), State Bank of India Home Finance (SBI), Housing Urban Development Corporation (HUDCO), LIC Housing Finance Ltd has come to rescue the middle class people in our country to satisfy their housing needs by
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offering various credit facilities, lesser down payment, quick processing, flexible equated monthly installment and quick disbursement of home loans. This being the case, an attempt on examining the customer perception towards these banks will be more useful and relevant in the present day context and hence the study. Objectives of the Study The following are the objectives of the study: 1. To study the awareness level of customers towards availing housing loan facilities. 2. To study the customer ideas, opinion and preferences towards the services of Banks/Institutions that provide housing loans. 3. To study the factors those influence the customers in choosing the Banks/Institutions for availing housing loans. 4. To study the customer satisfaction towards the services of

Banks/Institutions that provides housing loans. 5. To study the problems faced by the customers in availing housing loan. 6. To offer suggestions on the basis of the results of the study. Methodology used in the study For the purpose of the research, the following methodology is used in this study (i) Area of the study Area of the study refers to Coimbatore city which is known for textiles, foundries, wet grinders, pumps manufacturing etc. It is also becoming a hub of schools, colleges and other educational institutions. Now, it is a city of Tidal Park also. (ii) Source of data The study has used primary data only. Primary data were collected using interview schedule method. The interview schedules have been prepared in a
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simple manner to facilitate the respondents to respond easily without any difficulty. The interview schedules have been pretested and validated. (iii) Sampling design For purpose of the study, 500 customers were selected for the study using stratified random sampling technique. (iv) Tools for analysis For purpose of detailed analysis of the study, the following statistical tools have been used in the study Percentage analysis Chi-square analysis Average Rank analysis Average score analysis Analysis of Variance (ANOVA) Factor analysis Limitations of the study For want of time and for purpose of detailed analysis, the study has been confined to Coimbatore city only. However, adequate care has been exercised to collect unbiased data. Operational definition Housing loan A home loan, or mortgage, is a secured loan that borrowers obtain in order to purchase a home. Because a home is the largest purchase many individuals will ever make, most borrowers utilize home loans to purchase their dream home. Select Banks and Institutions Based on high market share, the banks and institutions such as, HDFC, IDBI, PNB, SBI, HUDCO, LIC etc that provide housing loans are selected for the study.
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Chapter Scheme Chapter I: Introduction This chapter deals with introduction, Statement of the problem, objectives, Methodology used and limitations. Chapter II: Review of Literature This chapter presents the review of various studies and articles conducted relating to the core aspects of the study. Chapter III: Housing Loan An Overview This chapter presents about housing loan and customers perception towards Chapter IV: the same.

Analysis and Discussion This chapter presents detailed analysis of data collected using various statistical tools.

Chapter V:

Results and Conclusion This chapter presents findings, recommendations and conclusion.