home loan project

DECLARATION

I, HIMA GUPTA student of M.B.A, Sacred Heart Institute of Management &

Technology, Sitapur, hereby declare that the Summer Training project report on “Critical

Analysis Of Housing Loan in Urban Co-Operative Banks .” at Lakimpur is an original and

authenticated work done by me.

HIMA GUPTA

Date:

PREFACE

MBA program is one of the most professional courses in the field of management. This

course includes both theory and application content of curriculum.

Project work is an integral part of MBA program at “UTTAR PRADESH

TECHNICAL UNIVERSITY” each student is required to do project and has to prepare

and submit report on the work conduct by the student.

This report is the continuation of above tradition. The topic of the project work was

“Critical Analysis of Housing Loan in Urban Co-Operative Banks.”

The number and importance of research report operation is growing at a very fast rate in

the society. We now need input from different specialization area; the research report is

very suitable for detailed study on any area.

ACKNOWLEDGEMENT

To complete the project is not an easy thing. You have to take the help of others. I

would like to add a few heartfelt words for the people who are the part of this project in

numerous ways people who gave unending support right from the stage the project data

was conceived

My special thanks to MRS. Ruchi Thakur (HEAD OF THE DEPARTMENT) that

provides gentle encouragement and constant support.

I am extremely thankful to MRS. Ruchi Thakur (project guide) for providing me with sense

of direction in building this methodical approach in this report. Continuous source of inspiration

through out the project.

I sincerely thank them for the constant cooperation, guidance and incessant inspiration and

their guidance without which this project would have been like a rudderless boat. Well to put in a

nutshell, without their guidance and support this project would have been futile.

Hima Gupta

M.B.A III- Sem

Table of Content

Chapter-1

1. Introduction Introduction of housing loan

Home Loan Procedure in India 2. Importance of Study3. Objective of Study4. Limitation of study5. Executive Summary6. Company profile Urban co-Operative Bank introduction History of Urban co-Operative Bank

Chapter-2

7. Sampling Design8. Research Methodology

Chapter-3

9. Data analysis & Interpretation

Chapter-4

10. Findings11. Recommendations12. Conclusion13. Bibliography14. Appendices

INTRODUCTION

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 one’s dream.

Home is one of the things that everyone one wants to own. Home is a shelter to person

where he rests and feel comfortable. Many banks providing home loans whether

commercial banks or financial institutions to the people who want to have a home.

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 redit for housing finance.

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

Home Loan Procedure in India :-

Submission of Application Form: - After choosing a particular home loan, the customer

submits the application form to the housing finance company (HFC) along with other

relevant documents as required by the HFC. They comprise documents to establish

income, age, residence, employment, investments, etc. The customer also needs to hand

over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-

1% of the loan amount to the HFC.

Validation of the Information: - In the next stage, HFCs validate the information

provided by the customer on the application form. They usually conduct checks on the

residential address of the customer, the place of employment of the customer, and

credentials of the employer. Some HFCs may insist on a personal interview with the

customer and perform a reference check on the references provided by the customer on

the application form.

Issue of Sanction Letter :- After due appraisal of customer profile, a sanction letter is

issued which contains details such as loan amount, rate of interest, annual / monthly

reducing balance, tenor of the loan, mode of repayment and general terms and conditions

of the loan. This is the actually the approval of the money lending procedure by the

company. However, the money is sanctioned only after the documents and the property

on behalf of which the loan is being granted is thoroughly verified.

Submission of Documents: - Once the sanction letter is passed, the customer is required

to leave the entire set of original documents pertaining to the property being purchased

with the HFC as security for the loan amount sanctioned. These documents remain in the

custody of the HFC till the time the loan is fully repaid. Once the documents are handed

over to the HFC, they send all the documents for a thorough legal scrutiny.

Validation of Property: - Prior to disbursement, the HFC also conducts a site visit to the

customer's property to ensure that all construction norms have been adhered to properly.

Once the HFC is satisfied that the property is legally and technically clear, they disburse

the loan amount. The disbursement from the HFI is on the basis of the stage of

construction of the property.

Payment Procedure: - Once all the above mentioned process, the borrower is entitled to

take the money from the lender party. Until such time that the entire sanctioned amount is

not drawn, the customer is supposed to pay a simple interest on the Actual Amount drawn

(without any principal repayments). The EMI payments commences only after the entire

sanctioned loan amount is drawn.

INTEREST RATES PROVIDED BY VARIOUS BANKS

Finance Institution Loan Period(in years) Fixed EMI / Lakh

(INR) Floating EMI / Lakh(INR)

Bank of Baroda Up to 5 9.00 2076 8.00 2028

http://www.guide2homeloan.com/loans/hfcs/bob-housing-finance.aspx

6 to 10 9.25 1230 8.25 122711 to 15 9.50 1044 8.25 97016 to 20 9.50 932 8.50 868

State Bank Of India

Up to 5 9.50 2100 8.75 20646 to 10 9.75 1300 9.25 128011 to 15 - - 9.25 102916 to 20 - - 9.75 949

HDFC

Up to 5 11 2175 9.50 21016 to 10 11 1375 9.50 129411 to 15 11 1137 9.50 104516 to 20 11 1033 9.50 933

ICICI Bank

Up to 5 10.75 2162 9.50 21016 to 10 10.75 1364 9.50 129411 to 15 10.75 721 9.50 104516 to 20 10.75 1016 9.50 933

LIC Housing Finance

Up to 5 10.50 2149 9.50 21006 to 10 11 1373 9.50 129411 to 15 11 1137 9.50 104416 to 20 11 1032 9.50 932

PNB Housing Finance

Up to 5 9.00 2076 10.50 21506 to 10 9.00 1267 10.50 135011 to 15 9.25 1030 10.50 110616 to 20 9.50 933 10.50 999

Loans For HousingRealising the necessity to provide houses and improve housing facilities in the

country, the nationalised banks have been asked to provide funds for housing since 1979.

Initially, they were expected to lend Rs. 150 crores annually, but the target was raised to

Rs. 300 crores for the year 1989-90. For the year 1990-91, individual nationalised banks

http://www.guide2homeloan.com/loans/hfcs/pnb-housing-finance.aspx

http://www.guide2homeloan.com/loans/hfcs/pnb-housing-finance.aspx

http://www.guide2homeloan.com/loans/hfcs/lic-housing-finance.aspx

http://www.guide2homeloan.com/loans/hfcs/ICICI.aspx

http://www.guide2homeloan.com/loans/hfcs/HDFC.aspx

http://www.guide2homeloan.com/loans/banks/state-bank-of-india.aspx

housing finance allocation was required to be computed at 1.5% of the incremental

deposits on March 1990, over the corresponding figure of March 1989.

According to the guidelines issued by the Reserve Bank, a bank’s assistance to the

housing sector (including rural areas) may be as follows:

a) 30% of the total housing finance allocation by way of direct assistance to

individuals or a group of borrowers etc., out of which at least half should be given

as direct housing loans in rural and semi-urban areas.

b) 30%of the allocation for landing to HUDCO, Housing Development Boards,

HDFC and other housing agencies for construction of house.

c) The remaining 40% of the assistance may be by way of subscription to the

guaranteed bonds/ debentures of HUDCO, and National Housing Bank.

The terms and conditions etc., for housing finance have been liberalized to encourage the

flow of credit for housing as follows:

a. The loan can be used for purchase of a house or flat, construction of a house or

tenement or for additions or extensions to an existing structure.

b. The loan will be secured by mortgage of the property. Banks also accept security

of adequate value in the form of life insurance policies. Government promissory

notes, shares and debentures or gold ornaments.

c. Terms loans from banks to housing finance companies(other than HUDCO,HDFC

and companies promoted by commercial banks) has been raised to three times

there net own funds in January,1990.

d. The repayment period will be spread over fifteen years.

e. The maximum amount of loan was earlier fixed at Rs 3 Lacks per individuals. But

this ceiling was withdrawn, effective 11th October, 1989

Types of home loans: -

Housing loans offered by banks are of different types:-

Home Purchase Loans

Home Construction Loans

Home Improvement Loans

Home Extension Loans

Home Conversion Loans

Land Purchase Loans

Stamp Duty Loans

Bridge Loans

Balance Transfer Loans

Refinance Loans

Loans to NRIs

Home purchase loans:-

This is the basic home loan for the purchase of a new home. If you want to buy a

flat in some society or some already built house, banks and HFCs sanction you home

purchase loans for this process.

Home construction loans:-

This loan is available for the construction of a new home on a said property. The

documents that are required in such a case are slightly different from the ones you submit

for a normal Housing Loan. If you have purchased this plot within a period of one year

before you started construction of your house, most HFCs will include the land cost as a

component, to value the total cost of the property. In cases where the period from the date

of purchase of land to the date of application has exceeded a year, the land cost will not

be included in the total cost of property while calculating eligibility.

http://www.indianground.com/home_loans.aspx

http://www.indianground.com/home_loans.aspx

Home improvement loans:-

These loans are given for implementing repair works and renovations in a home

that has already been purchased, for external works like structural repairs, waterproofing

or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can

avail of such a loan facility of a home improvement loan, after obtaining the requisite

approvals from the relevant building authority. the following are coming under the home

improvement loans:

External repairs

Tiling and flooring

Internal and external painting

Plumbing and electrical work

Waterproofing and roofing

Grills and aluminum windows

Waterproofing on terrace

Construction of underground/overhead water tank

Paving of compound wall (with stone/tile/etc.)

Borewell.

Home extension loans:-

An extension loan is one which helps you to meet the expenses of any alteration

to the existing building like extension/ modification of an existing home; for example

addition of an extra room etc. One can avail of such a loan facility of a home extension

loan, after obtaining the requisite approvals from the relevant municipal corporation.

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.

http://www.indianground.com/home_loans/homeloans_faq_indian.aspx

http://www.indianground.com/home_loans/homeloans_faq_indian.aspx

Land purchase loans:-

This loan is available for purchase of land for both home construction or

investment purposes.

Stamp duty loans:-

This loan is sanctioned to pay the stamp duty amount that needs to be paid on the

purchase of property.

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 85% of the cost of the property or the

http://www.indianground.com/nri/nri_investments_in_india.aspx



cost of construction as applicable and 75% of the cost of land in case of purchase of land.

The repayment capacity is calculated taking into account factors such as:

Age

Income/Salary

Qualifications

Dependant/(s)

Assets/Liabilities

Credit History

Stability / continuity of your employment/business

Income of co-applicant/(s)

Taking home loans these days has become simpler. With the RBI regularly bring down

interest rates; taking home loans have become extremely easy. Housing loans which were

16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down,

people increasingly number apply to take these loans. Some of the leading banks offering

home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank State Bank, Bank of

Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank

IMPORTANCE OF

STUDY

IMPORTANCE OF STUDY

The Indian housing finance industry has grown by leaps and bound in few years. total

home loans disbursements by banks has risen which witnesses phenomenal growth from

last 5 years. There are greater number of borrowers of home loans. so by this study we

can find out satisfaction level of customers and problems faced by them in obtaining

home.

OBJECTIVE OF STUDY

OBJECTIVE 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:-

The main objective of this study is to know the Customers perceptions

about home loans.

To know the awareness of customers about home loan products and

services.

To make comparative study of Disbursement of home loans by a few

Commercial banks.

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 home loans

Giving proper knowledge about home loan interest rates of nationalised Banks.

Making a comparative study of the interest rates, maximum loan amount sanctionable

and EMI of the different nationalised banks.

LIMITATIONS OF THE STUDY

LIMITATIONS OF THE STUDY:-

This study also includes some limitations which have been discussed as follows:

i) 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.

ii) To access such a large number of customers were difficult because of non-

cooperative attitude of respondents.

iii) Lack of data was also the other limitation of the study as some of banks do not

have proper data on topic.

iv) There was limitation of time to conduct such a big survey in limited available

time.

v) 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.

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

In the wake of declines in the manufactured home loan market in recent months,

Consumers Union investigates deals gone awry. We reviewed more than 400 anufactured

home consumer complaints filed with the Attorney General or the Office of Consumer

Credit Commissioner.

Many of these complaints illustrate the reasons why manufactured home loan default

rates have risen sharply. Many consumers could not afford the credit deal they were

offered, or got a home that was probably worth substantially less than they paid. Others

reported loans packed with insurance, financed "points" and other charges that left them

with negative equity for the first several years after their purchase.

Consumers report a variety of dealer problems including falsified down payment

information on credit applications, and misrepresentations about terms, price, or the home

itself. And while dealers are quick to ask for a deposit, they are sometimes slower to

refund it when consumers change their mind after seeing the terms of the final deal.

Deposit requirements and credit checks discouraged buyers from adequate comparison

shopping.

COMPANY PROFILE

COMPANY PROFILE

Introduction

Today banks have become a part & parcel of life. There was a time when the

dwellers of city alone could enjoy their services. Now banks offer access to even a

common man and their activities extend to areas hitherto untouched. Banks cater to the

needs of agriculturist, industrialists, traders & to all the other sections of the society.

Thus, they accelerate the economic growth of a country & steer the wheels of the

economy towards its goal of "Self-Reliance In All Fields".

Origin Of Banking:

Since the banking activities were started in different periods in different countries,

there is no unanimous view regarding the origin of the word “Bank”.

The word, “bank”is said to have been derived from the French word, 'Banco' or

'Bancus' or 'Banc' or 'Banque' which means a bench. In fact, the early Jews in Lombardly

transacted their banking business by sitting on benches. When their business failed, the

benches were broken and hence the word 'bankrupt' come into vogue.

Another common held view is that the word 'bank' might be originated from the

German word 'Back' which means a joint stock fund. Of course, a bank essentially deals

with funds. In due course, it was Italianised into “banco”, Frenchised into “banc” and

finally Anglicised into “bank”. This view is most prevalent today.

Banking and other Business: Traditionally, money lenders and indigenous bankers have been

advancing loans. But the don’t receive deposits from the public. They rely upon their own

resources. Moreover, their main business is not banking. They used to combine banking

with trading business. Hence, money lenders and indigenous bankers are not regarded as

bankers in the strict sense of the term.

Classification Of Banks

On the basis of the functions they performed, the banks can be classified into the

following types:

1. Commercial Banks:The commercial banks mobilise deposits from the public which are repayable on

demand or at short notice. They lend to traders and manufacturers for short periods. They

provide the working capital to the business in the form of overdraft and cash credit.

2. Investment Banks or Industrial Banks:Investment banks provide medium and long term finance to industries to meet

their fixed capital requirements. For existing industries, they lend for expansion and

modernisation of industries. They help to promote new industries by underwriting the

issue of securities. The industrial banks secure funds through share capital and

debentures. They also receive deposits from the public for long periods.

3. Exchange Banks:Exchange banks specialise in financing the foreign trade. They supply necessary

foreign exchange required for settlement of transactions in foreign trade. The exchange

banks discount foreign bills of exchange. Nowadays commercial banks themselves

undertake foreign exchange business.

4. Co-operative Banks:Banks formed on the principle of cooperation are called cooperative banks. They

provide short term credit to agriculturalists, artisans, small farmers, and small scale

industries. Cooperative banks accept all kinds of deposits and make loans to the members

at lower rate of interest

5. Land Development Banks:Agriculturists require short term and long term loans. Land development banks

provide long term loans to agriculturists for purchasing tools and equipments and cattle

and making permanent improvement. The long term loans granted are against the security

of immovable property such as land. Land development banks are organized on

cooperative basis in India. The banks raise their resources in the form of shares and by

issuing long term securities. There banks are presently known as Agriculture and Rural

Development Banks.

6. Savings Banks:Savings banks are specialised institutions collecting savings from the poor and

middle income people of the society. These are banks primarily intended to encourage

habits of thrift and savings among people with small incomes. The depositors are allowed

to withdraw the amount in times of need. But there are restrictions on the number of

withdrawals to be made in a month. Separate savings banks are organised in various

countries. In India, the Government runs savings banks and they are managed by the

postal department.

7. Central Bank: Every country has only one central bank. The central bank acts as the leader of the

money market; supervising, controlling and regulating the activities of the commercial

banks and other financial institutions. It enforces monetary discipline in the country's

economy. It seeks to manage the issue and circulation of currency and control the

creation of bank deposits with a view to safeguard the financial stability in the country.

The central bank functions in close touch with the government and assists in the

implementation of its economic policies. It serves as banker, agent and advisor to the

government. Thus, the central bank is the apex bank of the country in maintaining the

monetary and economic stability.

INTRODUCTION TO CO-OPERATIVE BANKING

DEFINATION:

“A Co-operative bank, as its name indicates is an institution consisting of a

number of individuals who join together to pool their surplus savings for the purpose of

eliminating the profits of the bankers or money lenders with a view to distributing the

same amongst the depositors and borrowers.”

The Co-operative Banks Act, of 2007 (the Act) defines a co-operative bank as a

co-operative registered as a co-operative bank in terms of the Act whose members –

1. are of similar occupation or profession or who are employed by a common

employer or who are employed within the same business district; or

2. have common membership in an association or organisation, including a

business, religious, social, co-operative, labour or educational group; or

3. have common membership in an association or organisation, including a business,

religious, social, co-operative, labour or educational group; or

4. Reside within the same defined community or geographical area.

CO-OPERTIVE BANKING - AN INTRODUCTION:

Co-operative bank, in a nutshell, provides financial assistance to the people with

small means to protect them from the debt trap of the moneylenders. It is a part of vast

and powerful structure of co-operative institutions which are engaged in tasks of

production, processing, marketing, distribution, servicing and banking in India. A co-

operative bank is a financial entity which belongs to its members, who are at the same

time the owners and the customers of their bank. Co-operative banks are often created by

persons belonging to the same local or professional community or sharing a common

interest. These banks generally provide their members with a wide range of banking and

financial services (loans, deposits, banking accounts…). Co-operative banks differ from

stockholder banks by their organization, their goals, their Values and their governance.

The Co-operative Banking System in India is characterized by a relatively

comprehensive network to the grass root level. This sector mainly focuses on the local

population and micro- banking among middle and low income strata of the society. These

banks operate mainly for the benefit of rural areas, particularly the agricultural sector.

ORIGIN AND OPERATION OF CO-OPERATIVE

BANKING

ORIGIN OF CO-OPERATIVE BANKING :

The beginning co-operative banking in India dates back to about 1904, when

official efforts were made to create a new type of institution based on principles of co-

operative organization & management, which were considered to be suitable for solving

the problems peculiar to Indian conditions.

The philosophy of equality, equity and self help gave way to the thoughts of self

responsibility and self administration which resulted in giving birth of co-operative. The

origin on co-operative movement was one such event-arising out of a situation of crisis,

exploitation and sufferings.

Co-operative Banks in India are registered under the Co-operative Societies Act.

The cooperative bank is also regulated by the RBI. They are governed by the Banking

Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

OPERATION OF CO-OPERATIVE BANKING:

Establishments:

Co-operative bank performs all the main banking functions of deposit

mobilisation, supply of credit and provision of remittance facilities.

Co-operative Banks belong to the money market as well as to the capital market.

Co-operative Banks provide limited banking products and are functionally

specialists in agriculture related products. However, co-operative banks now

provide housing loans also.

UCBs provide working capital loans and term loan as well.

The chief functions of Co-operative banks are:

a. To attract deposit from non-agriculturist,

b. To use excess funds of some societies temporarily to make up for shortage in

another,

c. To supervise and guide affiliated societies.

The basic principles on which a Co-operative bank works are:

A co-operative character of activities and trait of mutual aid

of credit granted.

Catering for collective organizations and their members.

Restriction on the number of individual votes.

As a result, during 2007-08, the Primary Cooperative Agriculture and

Rural Development Banks have again started lending for the Non-Farm Sector including

Jewel Loans.

Aiming at high rates on deposits and low rates on lending.

Limitation of dividends out of profits and bonus to depositors

and borrowers or grants to cultural or co-operative endeavour.

These banks are constituted of voluntary association, self-help and mutual aid,

one share one vote and non-discrimination and equality of members. The co-operative

banks are the organizations of and for the people.

. ROLE OF CO-OPERATIVE BANKING

ROLE OF CO-OPERATIVE BANKING IN INDIA:

Co-operative Banks are much more important in India than anywhere else in the

world. The distinctive character of this bank is service at a lower cost and service without

exploitation. It has gained its importance by the role assigned to them, the expectations

they are supposed to fulfill, their number, and the number of offices they operate. Co-

operative banks role in rural financing continues to be important day by day, and their

business in the urban areas also has increased phenomenally in recent years mainly due to

the sharp increase in the number of primary co-operative banks. In rural areas, as far as

the agricultural and related activities are concerned, the supply of credit was inadequate,

and money lenders would exploit the poor people in rural areas providing them loans at

higher rates. So, Co-operative banks mobilize deposits and purvey agricultural and rural

credit with a wider outreach and provide institutional credit to the farmers. Co-operative

bank have also been an important instrument for various development schemes,

particularly subsidy-based programmes for poor.

The Co-operative banks in rural areas mainly finance agricultural based

activities like:

Farming

Cattle

Milk

Hatchery

Personal finance

The Co-operative banks in urban areas finance in activities like:

Self-employment

Industries

Small scale units

Home finance

Consumer finance

Personal finance

Some of the forward looking Co-operative banks have developed sufficient core

competencies to such an extent that they are able to challenge state and private sector

banks.

IMPORTANCE OF CO-OPERATIVE BANKING

Co-operative bank forms an integral part of banking system in India. This bank

operates mainly for the benefit of rural area, particularly the agricultural sector. Co-

operative bank mobilize deposits and supply agricultural and rural credit with the wider

outreach. They are the main source for the institutional credit to farmers. They are chiefly

responsible for breaking the monopoly of moneylenders in providing credit to

agriculturists. Co-operative bank has also been an important instrument for various

development schemes, particularly subsidy-based programmes for the poor. Co-operative

banks operate for non-agricultural sector also but their role is small.

HISTORY OF CO-OPERATIVE BANKING

The origins of the cooperative banking movement in India can be traced to the

close of nineteenth century when, inspired by the success of the experiments related to

the cooperative movement in Britain and the cooperative credit movement in Germany,

such societies were set up in India.

Now, Co-operative movement is quite well established in India. The first

legislation on co-operation was passed in 1904. In 1914 the Maclagen committee

envisaged a three tier structure for co-operative banking viz. Primary Agricultural Credit

Societies (PACs) at the grass root level, Central Co-operative Banks at the district level

and State Co-operative Banks at state level or Apex Level.

In the beginning of 20th century, availability of credit in India, more particularly

in rural areas, was almost absent. Agricultural and related activities were starved of

organised, institutional credit. The rural folk had to depend entirely on the money lenders,

who lent often at usurious rates of interest.

The co-operative banks arrived in India in the beginning of 20th Century as an

official effort to create a new type of institution based on the principles of co-operative

organisation and management, suitable for problems peculiar to Indian conditions. These

banks were conceived as substitutes for money lenders, to provide timely and adequate

short-term and long-term institutional credit at reasonable rates of interest.

The Anyonya Co-operative Bank in India is considered to have been the first co-

operative bank in Asia which was formed nearly 100 years back in Baroda. It was

established in 1889 with the name Anyonya Sahayakari Mandali Co-operative Bank

Limited, with a primary objective of providing an alternative to exploitation by

moneylenders for Baroda's residents.

With gradual growth and also given philip with the economic boom, urban

banking sector received tremendous boost and started diversifying its credit portfolio.

Besides giving traditional lending activity meeting the credit requirements of their

customers they started catering to various sorts of customers viz.self-employed, small

businessmen / industries, house finance, consumer finance, personal finance etc.

TYPES OF CO-OPERATIVE BANKS

CLASSIFICATION OF CO-PERATIVE BANKS:

The Co-operative banking structure in India comprises of:

1. Urban Co-operative Banks

2. Rural Co-operatives

Some co-operative banks are scheduled banks, while others are non-scheduled

banks. For instance, State Co-operative banks and some Urban Co-operative banks are

scheduled banks but other co-operative banks are non-scheduled banks.

Scheduled banks are those banks which have been included in the second

schedule of the Reserve bank of India act of 1934.

The banks included in this schedule list should fulfill two conditions.

1. The paid capital and collected funds of bank should not be less than Rs. 5 lac.

2.Any activity of the bank will not adversely affect the interests of depositors.

Every Scheduled bank enjoys the following facilities.

1. Such bank becomes eligible for debts/loans on bank rate from the RBI

2. Such bank automatically acquire the membership of clearing house.

1. Urban Co-operative Banks:Urban Co-operative Banks is also referred as Primary Co-operative banks

by the Reserve Bank of India. Among the non-agricultural credit societies urban co-

operative banks occupy an important place. This bank is started in India with the object

of catering to the banking and credit requirements of the urban middle classes.

The RBI defines Urban Co-operative banks as “small sized co-operatively

organized banking units which operate in metropolitan, urban and semi-urban centers to

cater mainly to the needs of small borrowers, viz. owners of small scale industrial units,

retail traders, professional and salaries classes.”

The objectives and functions of the Urban Co-operative banks:

Primarily, to raise funds for lending money to its members.

To attract deposits from members as well as non-members.

To encourage thrift, self-help ad mutual aid among members.

To draw, make, accept, discount, buy, sell, collect and deal in bills of exchange,

drafts, certificates and other securities.

To provide safe-deposit vaults.

Area of Operation :The area of operation of these banks are usually restricted by its byelaws

to a municipal area or a town. In some occasions it exceeds this limit. The study group on

Credit Co-operatives in Non-Agricultural Sectors has recommended that normally, it

would be advisable for an urban co-operative bank to restrict its area of operation to the

municipality or the taluka town where it operates.

2. Rural Co-operatives:

Rural Cooperative Banking plays an important role in meeting the growing credit

needs of rural population of India. It provides institutional credit to the agricultural and

rural sector. The inadequacy of rural credit engaged the attention of RBI and

Government throughout the 1950s and 1960s. One important feature of providing

agriculture credit in India has been the existence of a widespread network of rural

financial institutions. The separate structure of rural Co-operative sector for long-term

and short-term loans has enabled these institutions to develop a specialized institution for

rural credit delivery. The volume of credit flowing through these institution has

increased. The Rural Co-operative structure has traditionally been bifurcated into two

parallel wings, i.e.

I. Short-term Rural Co-operatives,

II. Long-term Rural Co-operatives.

There is a larger network of co-operative banks in the rural sector, consisting of 29

State Co-operative Banks and 367 District Central Co-operative Banks, with 13,025

branches. In addition, there are 92,000 Primary Agricultural Co-operative Credit

Societies , 19 State Land Development Banks and 745 Primary Land Development

Banks, along with 1,847 branches, which are not strictly banks as they are not covered

under the Banking Regulation Act, 1949. The RBI Governor's proposals should,

therefore, encompass the entire Co-operative banking system.

I. Short-term Rural Co-operatives: The short-term rural co-operatives provide crop and other working capital loans to

farmers and rural artisans primarily for short-term purpose. These institutions have

federal three-tier structure.

At the Apex of the system is a State Co-operative bank in each state.

At the middle (or district) level, there are Central Co-operative Banks also known as

District Co-operative banks.

At the lowest (or village) level, are the Primary Agricultural Credit Societies.

i. State Co-operative Banks:

State Co-operative Banks are the apex of the three-tier

Co-operative structure dispensing mainly short/medium term credit. It is the principal

society in a State which is registered or deemed to be registered under the Government

Societies Act, 1912, or any other law for the time being in force in India relating to co-

operative societies and the primary object of which is the financing of the other societies

in the State which are registered or deemed to be registered. The State Co-operative

Banks receive current and fixed deposits from its constituent banks as well as savings,

current and fixed deposits from the general public and from local boards, other local

authorities, etc. Further, they receive loans from the RBI and NABARD. NABARD is the

supervisory authority for State Co-operative Banks. The state government contributes the

certain portion of their working capital.

ii. Central Co-operative Banks:

Central Co-operative Banks form the middle tier of Co-

operative credit institutions. These are the independent units in as much as the State Co-

operative Banks have control to control or supervise their affairs. They are of two kinds

i.e. ‘pure’ and ‘mixed’. Those banks are the membership of which is confined to co-

operative organizations only are included in ‘pure’ type, while those banks the

membership of which is open to co-operative organizations as well as to the individuals

are included in ‘mixed’ type.

The Central Co-operative Banks draw their funds from share capital,

deposits, loans from the State C-operative Banks and where State Banks do not exist

from the RBI, NABARD and commercial banks. NABARD is the supervisory authority

for Central Co-operative Banks. Deposits constitute the major component of sources of

funds, followed by borrowings. The main function of Central Co-operative Banks is to

finance the primary credit societies.

The central co-operative banks are located at the district headquarters or some

prominent town of the district. These banks have a few private individuals also who

provide both finance and management. The central co-operative banks have three sources

of funds,

Their own share capital and reserves

Deposits from the public and

Loans from the state co-operative banks

iii. Primary Agriculture Credit Societies:

Primary Agricultural Credit Societies is the foundation

of the co-operative credit system on which the superstructure of the short-term co-

operative credit system rests. It deals directly with individual farmers, provide short and

medium term credit, supply agricultural inputs, distribute consume articles and also

arrange for the marketing of products of its members through a c-operative marketing

societies. These societies form the basic unit of co-operative credit system in India.

The major objective of Primary agricultural Credit Societies is to serve the

need of weaker sections of these society. For this purpose, the people with limited means,

particularly with schedules castes and scheduled tribes, are encouraged to become

members of these societies.

II. Long-term Rural Co-operatives:

The long-term rural co-operative provide typically medium and long-term

loans for making investments in agriculture, rural industries and, in the recent period,

housing. Generally, these co-operatives have two tiers, i.e. State Co-operative Agriculture

and Development Banks (SCARBDs) at the state level and Primary Co-operative

Agriculture and Rural Development Banks (PCARDBs) at the taluka or tehsil level.

However, some States have a unitary structure with the state level banks operating

through their own branches.

i. State Co-operative Agriculture and Development Banks (SCARBDs ):

State Co-operative Agriculture and Development Banks

constitute the upper-tier of long term co-operative credit structure. Though long term

credit co-operatives have been allowed to access public deposits under certain conditions,

such deposits constitute a relatively small proportion of their total liabilities. They are

mostly dependent on borrowings for on-lending.

The main objective of the Co-operative State Agriculture and Rural Development

bank is to finance primary agriculture and rural development banks. The bank undertakes

the following functions to achieve the above objectives:-

(a) Floatation of Debentures,

(b) Receiving Deposits;

(c) Grant of loans to primary cooperative agriculture and rural development banks for

purposes approved by the National Bank for Agricultural and Rural Development and

Registrar of Cooperative Societies;

(d) To function as the agent of any cooperative bank subject to such conditions as the

Registrar may specify;

(e) To develop, assist and coordinate the work of affiliated primary cooperative

agriculture and rural development banks.

The bank issues long term and medium term loans towards agricultural and

allied activities like construction of godowns, cattle shed, farm house, purchase of lands

etc

Structure of Co-operative Banking (March 2007)

Institution Number of

Institute

Number of

Branch

Asset Share

(%)

A. Rural Co-operative Credit

Structure:

1. Short term:

State Coop bank

Central Coop bank

Primary Agri Coop soc.

2. Long term:

State Coop Agri and Rural

Dev banks

Primary Coop Agri and Rural

Dev banks

107497

106781

31

369

97224

716

20

696

112895

111090

938

12928

97224

1800

1104

696

67

58

15

29

14

8.3

4.4

3.9

B. Urban Co-operative Banks: 49805 56600 33

STRENGTH AND WEAKNESS OF CO-OPERATIVE BANK

MAIN WEAKNESS OF CO-OPERATIVE BANKS

The main weaknesses of co-operative banks are as follows:

1. The vital link in the co-operative credit system namely, the Primary Agricultural Co-

operative Societies, themselves remain very weak. They are too small in size to be

economical and viable; besides too many of them are

dormant, existing only on paper.

2. With the expanding credit needs of the rural sector, the commercial banks have come

in actively to meet the credit requirements of this sector, and this has aggravated the

difficulties of co-operative banks. The theory that co-operative banks would be buoyed

up by the competition from other financial institutions does not appear to have worked.

3. Co-operative banks are not doing well in all the states; only a few account for a major

part of their business. For example, 75 per cent of total deposits mobilised by State C-

operative Banks was from only seven states in 1987-Andhra Pradesh, Gujarat, Karnataka,

Madhya Pradesh, Maharashtra, Tamil

Nadu, and Uttar Pradesh.

4. These banks still rely very heavily on refinancing facilities from the government, the

RBI, and NABARD. They have yet not been able to become self-reliant in respect of

resources through deposit mobilisation.

5. They suffer from dangerously low or weak quality of loan assets, and from highly

unsatisfactory recovery of loans. They suffer from infrastructural weaknesses and

structural flaws. They do not look like banks and do not inspire confidence in the

potential members, depositors and borrowers.

GOVERNMENT INITIATIVES TO STRENGTHEN THE

DEVELOPMENT OF CO-OPERATIVE BANKS

Even before the submission of the Khusro Committee Report, the government and the

RBI had initiated certain measures to strengthen the development of co-operative banks.

Some of these policy initiatives were as follows:

(i) The NABARD had formulated a scheme for the reorganisation of Primary

Agricultural Co-operative Societies and the implementation of this scheme had started in

those states which have accepted it.

(ii) The programme for development of selected Primary Agricultural Co-operative

Societies into truly multi-purpose co-operative societies has been

implemented in many states and Unionterritories.

(iii) In addition to such programmes, certain state governments like Andhra Pradesh,

Madhya Pradesh West Bengal had also initiated development programmes to strengthen

the working of the co-operative credit institutions at the base level.

SUGGESTIONS FOR EFFECTIVE OPERATION IN CO-

OPERATIVE BANKING:

The following suggestions can be made for improving the effectiveness in operation of

Co-operative banking:

1. It is apparent that the mountain overdue has become a major problem of most of the

co-operative banks and their performance in managing Non Performing Assets is not

satisfactory. Firm measure should be followed to make credit appraisal, documentation,

disbursement, monitoring, etc. The following strategies may help the banks in avoiding

or reducing NPA’s.

Pre-sanction strategies: Before sanctioning a loan, a bank has to go for detailed

inquiry about borrower and his loan proposal.

Post-sanction strategies: After the loan is disbursed, proper supervision of loan

utilization is to be ensured. Bank has to maintain proper relationship with the

borrower and ensure that first installment id deposited timely.

2. These banks can also go for such schemes for opening of saving bank and other

accounts treated as low cost deposit base as well as clientele base of the banks will take

remarkable shape. In this respect, banks can introduce effectively various innovative

deposit schemes like women’s savings, children’s savings, savings scheme for youth,

daily collection etc.

Bank Profiles

Industrial Development Bank Of India

IDBI was established in 1964 and it was nationalised in 1969.

Eligibility Criteria:a) Age 18 to 65 years.

b) Repayment span is maximum 25 years.

c) 90% of cost of construction.

d) Income tax benefit for payment of both Principle and Interest as per I.T.

Rules.

e) For salaried person 75 times net monthly income is the maximum loan amount

sanctionable.

Floating Interest Rates:-

In this bank, the floating interest rates for home loan for a span of 1 to 25 years is

11.00%

Fixed Interest Rates :-

Tenure Rate of Interest

For 3 years 12.00%

For 5 years 12.25%

Features:

Documents required during application of any home loan:

Completed application form

Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License

Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax

receipt/ Passport/ Voters ID

Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance

certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to

satisfaction report from our empanelled lawyer)

Copy of approved plan and approval from the Local Body Statement of

Bank Account/ Pass Book for last 6 months

State Bank Of India

State Bank Of India was established in 1806 and it was nationalised in 1969.

Eligibility Criteria:a) Age 18 to70 years.

b) Repayment span is maximum 20 years.

c) 75% of cost of construction.

d) Income tax benefit for payment of both Principle and Interest as per I.T.

Rules.

e) For salaried person 40 times gross monthly income is the maximum loan

amount sanctionable.


Tenure Upto Rs. 20 Lacs Above Rs. 30 Lacs

Upto 5 years 10.50% 10.75%

Above 5 years and upto 15 years 10.75% 11.00%



In this bank, the fixed interest rates for home loan for a span of 1 to 10 years

are 12.75%.

Features:

a) Free personal accident insurance cover up to Rs.40 Lac.

b) Optional Group Insurance from SBI Life at concessional premium (Upfront

premium financed as part of project cost)

c) Interest calculated on daily reducing balance basis, and starts from the date of

disbursement.

d) Option to avail loan at the place of employment or at the place of construction

e) Complimentary international ATM-Debit card

f) Complimentary SBI Classic/ International Credit Card.

g) Option for internet-banking

h) Concessional package under ‘Credit Khazana’ for prospective Auto Loan, Student

Loan, Personal Loan borrowers whose accounts are conducted satisfactorily

i) 50% concession in charges in respect of all personal remittances/ collection of

outstation cheques.

j) Equitable mortgage of the property or otherwise other tangible security of

adequate value.









Copy of approved plan and approval from the Local Body Statement of Bank

Account/ Pass Book for last 6 months

United Commercial Bank

United Commercial Bank was established in 1943 and it was nationalised in 1969.

Eligibility Criteria:a) Age 21 to 65 years.

b) Maximum 75 years of age for senior citizens availing finance to secure shelter

in old age homes.

c) Repayment span is maximum 25 years.

d) 85% of cost of construction.

e) Income tax benefit for payment of both Principle and Interest as per I.T.

Rules.

f) For salaried person 60 times gross monthly income is the maximum loan

amount sanctionable.

g) Monthly income should be equal to/more than EMI + Rs.4,000/- in case of a

family with up to four members – Salaried/Non-salaried and agriculturist and

bank’s own staff are entitled for loan.



Upto 10 years 10.25% 10.75%


Above 20 years 11.25% 11.75%



Upto 10 years 10.50% 11.25%


Above 20 years 11.50% 12.25%

Features:a) A minimum of 1 guarantor is required whose income is either equivalent to or

more than the applicant.

b) The area-specific maximum limits for construction/purchase are as under :

Rural Areas : Rs.25 Lac

Semi-urban/Urban/Metro Areas : Rs.100.00 Lac

Maximum limits for Repair/Extension/Renovation are Rs.7.50 lacs in

rural areas and

Rs.25.00 lacs in Metro/Urban/Semi-Urban areas.

c) No processing fees for take over loan.

d) 2% of the prepaid amount, if the loan is prepaid within 3 years. No

prepayment charges thereafter. However, no pre-payment charges are to be

levied if loan is pre-paid from own source.

e) Tax relief on principal and interest components of this loan would be available

as per provisions prevailing under Income Tax Act.

f) Insurance cover on property under UCO Griha Raksha Yojna Scheme of

NICL and personal accident benefit to the borrower is available on death only

to cover the outstanding balance under UCO Griha Lakshmi Yojana Scheme

(UCOGLYS). Group insurance cover to home loan borrowers is available

against any type of death from Rs.50000/- to Rs.100.00 lac under UCOGLYS.









Copy of approved plan and approval from the Local Body Statement of Bank Account/ Pass

Book for last 6 months.

Project Methodology

Research Methodology

Data Collection

What is Research?

Research is a systematic and refined technique of thinking: Research starts with

problems, collecting data or facts, analysing them critically and reaching a decision based

on the actual evidence.

Research is a science of thinking: Research means discovery of facts, development of

facts and verification of facts.

Advancement of knowledge: Research is the scientific endeavour of the human mind.

Data collection is comprised of Primary and Secondary Data

Primary Data-: For the purpose of collection of primary data, we went to several

nationalised banks and met their PR Managers. We interviewed them about their Home

Loan Schemes.

The main methods for the primary data collection are:

Observation

Interview

Questionnaires

Secondary Data-: For the purpose of collection of secondary data we referred to various

bank websites and researched in newspapers, books and magazines.

The main methods for the secondary data are:

Internet

Magazine

Television

Newspapers

Books

COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY

COMMERCIAL BANKS

Disbursement of Home loans by different banks:-

HDFC LTD :-

Years No. of Home

loan

account

holders.

Home loan Disbursed

(in crore Rs.)

Distributed Recovered Balance

2004-05

2005-06

2006-07

2007-08

2008-09

700

950

1130

1435

1594

90.07

120.00

144.67

180.33

240.00

63.05

91.20

127.31

165.90

228.12

27.02

28.8

17.36

14.43

11.88

Interpretation:-

On the above table, it is evident that there are increase in No. of account holders

from 700 to 1594 in the year 2008-09. The loan amount distributed among home loan

account holder has also increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in

2008-09. The recovery procedure for home loans is also strengthening due to increment

in recovered amount, i.e. Rs.63.05 crore to Rs.288.12 crore. So it nut shall there are

upward trend in number of accountholders and disbursement of home loans.

Punjab National Bank :-

Years No. of Home

loan account

holders.

Home loan Disbursed

(in crores Rs.)


2004-05

2005-06

2006-07

2007-08

2008-09

810

950

1120

1433

1500

120.15

183.26

213.65

240.87

265.15

97.28

150.00

185.86

231.07

265.05

22.87

33.26

28.05

9.80

9.10

Interpretation:-

The Punjab National Bank is Public sector Bank. It comes second after State Bank

of India in its branch location and expansion. From the Table, the figures show that there

are increasing trend in customer base from 810 in the year 2004-05 to 1500 in the year

2008-09. The bank also show enhancement in loan amount up to Rs.265.15 crore in the

year 2008-09. The recovery process of loans in past is slow but now it is increasing.

Standard Chartered Bank :-

Years No. of Home

loan

account

holders

Home loan Disbursed

(in crores Rs.)


2004-05

2005-06

2006-07

2007-08

2008-09

106

130

154

180

260

6.21

11.55

17.06

20.09

24.10

5.27

10.16

14.35

18.68

23.91

0.94

1.38

2.70

1.41

0.48

Interpretation:-

The standard chartered bank is a private sector bank. It has also upgraded its

position in banking sector in DEHRADUN. The figures shown in table reveals 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.

ICICI BANK:-

Years No. of

Home

loan account

holders

Home loan Disbursed

(in crores Rs.)


2004-05

2005-06

2006-07

2007-08

2008-09

650

853

1019

1132

1434

104.33

123.24

150.65

176.75

224.00

98.12

105.00

133.46

144.65

209.16

6.21

18.24

17.19

32.10

14.84

Interpretation :-

The amount reveal that there is tremendous increase in Home loan

accountholders. The amount distributed as home loan is also increased from Rs. 104.33 in

2004-05 to Rs. 224 crore in 2008-09. But the recovery mechanism of the Bank is not so

good that’s why the outstanding amount shows fluctuating trend.

-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 5.2(a)

Years HDFC LTD Punjab

National

Bank

Standard

chartered Ban

ICICI

Bank

2004-05

2005-06

2006-07

2007-08

2008-09

700

950

1130

1435

1594

810

950

1120

1433

1500

106

130

154

180

260

650

853

1019

1132

1434

Average of No. of accounts holders: - Total of home loan customers

= --------------------------------------

No. of year

GRAPH:- 4.2

Home loan holders of commercial banks

Interpretation:-

The figure reveals that HDFC LTD 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 HDFC LTD comes as market leader in the home

loan cases.

Home loans distributed by Commercial banks:-

Table 4.3 (a)

Years HDFC LTD Punjab

National

Bank

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

90.07

120.00

144.67

180.33

240.00

6.21

11.55

17.06

20.09

24.10

104.33

123.24

150.65

176.75

224.00

(Rs.in crore)

Average of home loans granted

Total home loans granted

= ---------------------------------

No. of years

GRAPH:- 4.3

Home loans granted by 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 HDFC LTD 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 HDFC LTD

are higher loan provider as compared to other sector banks.

Recovery of Home loans:-

Table4.4 (a)

Years HDFC

BANK (Rs in

crore)

Punjab

National

Bank( Rs in

crore)

Standard

chartered

Bank (Rs in

crore)

ICICI BANK

(Rs in crore)

2004-05

2005-06

2006-07

2007-08

2008-09

97.28

150.00

185.86

231.07

256.05

63.05

91.20

127.31

165.90

228.12

5.27

10.16

14.35

18.68

23.91

98.12

105.00

133.46

144.65

209.16

Average recovery of home loans

Total home loans recovered

= ----------------------------------

No. of years

GRAPH:- 4.4

Home loans recovered by commercial banks

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

HDFC LTD 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.

ANALYSIS &

INTERPRETATION

ANALYSIS & INTERPRETATION

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

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 5.1:

Age group No. of Respondents

18 - 25 years 80

26 - 35 years 64

36 - 49 years 30

50 - 60 years 20

More than 60 years 6

CHART-5.1:

Analysis:- From the chart above we find that 47% of the respondents fall in the age

group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age

group of 36 – 49 years.

Therefore most of the respondents are relatively young (below 26 years of age). and 6%

respondent’s age are 50-60 years and 2% respondent’s age are 60 to above years.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS TABLE-5.2

Sr. No. Category No. of Respondents Percentage

1 Married 140 70%

2 Unmarried 60 30%

Total 200 100%

Base 200 respondents

CHART-5.2

Interpretation

From the table and graph above it can be seen that

70% respondent’s are married.

30% respondent’s are unmarried.

Educational qualification of respondent’s

TABLE-5.3


1 Under graduate 50 25%

2 Graduate 80 40%

3 Post graduate 70 35%

Total 200 100%


CHART-5.3

Interpretation


25% respondent’s are under graduate.

40% respondent’s are Graduate.

35% respondents are Post graduate.

CUSTOMER PROFILE OF SURVEYED RESPONDENTSTABLE 5.5:

Customer profile No. of respondents

Student 15

Housewife 10

Working Professional 100

Business 40

Self Employed 20

Government service employee 15

Chart-5.5

Interpretation

From the table and graph above it can be seen that:-

51% of the respondents are working professionals, 22% are into business and 11% are

self-employed, 11% of the respondent’s are government service employee and 3% of the

respondents are student and 2% of the respondents are house-wife.

ANNUAL HOUSE HOLD INCOME?

TABLE-5.6


1 Less than 2 lacs 98 49%

2 Between 2 to 5 lacs 62 31%

3 Between 5to 8lacs 30 15%

4 More than 8 lacs 10 5%

Total 200 100%


CHART-5.6

Interpretation


49% respondent’s annual household income is less than 2 lacs.

31% respondent’s annual household income is between 2 to 5 lacs.

15% respondent’s annual household income is between 5 to 8 lacs.

5% respondent’s annual household income is more than 8 lacs.

Do you know about Urban Co-Operative Bank ?

TABLE 5.7:

Category No. of Respondents

Yes 164

No 36

CHART:-5.7

Awareness about Urban co-operative bank

Interpretation:-


91% respondent’s are known about Urban co-operative bank

9% respondent’s are not known about Urban co-operative bank

Table 5 .8:-

Reasons for getting the home Loan

Sr.No. Number of Reasons Percentage(%)

a. Non-availability of funds 36

b. Reluctancy to pay cash in one go 35

c. Tax benefit 24

d. Any other 5

GRAPH:- 5.8

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.

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-5.9

From where you have got your home loan?

Name of Banks / company (%)Percentage of customers

HDFC LTD 55

Punjab National Bank 15

Standard Chartered Bank 07

ICICI BANK 20

Any other 03

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

diagrammatically as follows :-

GRAPH:- 5.9

From where you have got your home financed

Interpretation:-

The analysis showed that a large number of customers prefer HDFC LTD as

compared to others. The data shows that 7% of customers took loan from Standard

Chartered Bank, 20% of customers from ICICI BANK, 15% Customers took loan from

Punjab National Bank, 55% of customers took loan from HDFC LTD and a 3% of

customers fall under the category of 'Any other' which included State Bank of India,

Canara Bank, Punjab and Sind Bank, etc.

The data shows that most of people prefer HDFC LTD compared to public sector

banks and other private banks. This is because of the extra services provided by HDFC

LTD. However, there is less difference in figures of ICICI Bank and Punjab National

Bank. But there is considerable difference in figures of the two private sector banks i.e.

ICICI bank and Standard Chartered Bank. As ICICI is the market leader in the home

loans sector. This may be the reason for such difference in Standard Chartered Bank's

percentage and ICICI Bank's percentage. Another reason for specialized services in home

loans, more amounts of loans, and efficient query handling.

However, the analysis showed that the people prefer HDFC LTD for home loan

because of their services and excessive feat compared to other banks.

Table-5.10

Sources of information about Home Loans Scheme?

Sources of information (%)Percentage of customers

Newspapers 49

Magazines 16

Banners/Hoardings/Pamphlets 11

Word of mouth 20

Any other source 04

CHART:-5.10 percentage of source of information about home loans scheme

Sources of information about Home Loans Scheme

Interpretation :-

The data shows that around 20% of customers got information from source of

'Word of Mouth' which includes information from friends, relatives, colleagues etc. 49%

of customers got information from newspapers, only 16% of customers from magazines

and 4% of customers got information about home loans schemes under 'Any other source'

and 11% through Banners/ Hoardings/Pamphlets .

FINDINGS

Nearly half of the consumer complaints we reviewed involved allegations of dealer fraud

or misrepresentation. The final deal often looked different from the one consumers

thought they had made. Consumers said:

the dealer switched the house with a different make, model, year or size or a

completely different home;

the salesman tried to falsify loan application information, including falsifying the

down payment amount or taking money a consumer borrowed as a down

payment;

the actual price of the home increased from the original quote to the final loan;

the terms or conditions of the sale worsened, including additional costs for items

consumers thought they had already covered, additional loan fees, higher interest

and more;

the dealer refused to give buyers copies of contracts, including loan contracts; and

RECOMMENDATIONS

Facilitate shopping by posting prices, notifying consumers of their full refund

rights, and eliminating credit scoring models that penalize rate shopping.

Provide 5 day "cooling off" period after full disclosure of final loan terms with

cancellation right and full refund.

Provide standard contracts and standard Spanish translation.

Prohibit financed points if points and fees together will add more than 3% to the

home price.

Require independent inspection/appraisal of every home prior to release of loan

funds.

Bibliography

Websites:

a. www.andhrabank.com

b. www.bankofbaroda.com

c. www.bankofindia.com

d. www.idbi.com

e. www.sbi.co.in

f. www.hdfc.com

Search Engines:

a. www.google.com

b. www.wikipedia.org

Books & Magazines:

a. Business Today

b. The Economic Times

c. The Times Of India

d. Banking Theory, Law & Practice

-Gordon & Natarajan

e. Indian Banking System

-Dr. Mukund Mahajan

f. Banking Law And Practice

-P. N. Varshney

http://www.sbi.co.in/

Annexure

QUESTIONNAIRE:

HOME LOAN INTEREST RATES

[NATIONALISED BANKS]

1. How many kinds of home loans do you offer?

2. How much time is required for a home loan to get sanctioned once

applied?

3. What are the documents required?

4. Are mortgages accepted? If yes, what are the conditions?

5. Is the home loan based on the area of the house or locality? How?

6. How many guarantors are required?

7. What if an installment is not paid?

8. If the salary account is not in your bank then what is the procedure

followed?

9. What if the borrower changes his job?

10.Are loans sanctioned to temporary employees?

11.What if the interest rates change after a period of time (floating)?

12.What if the borrower goes bankrupt?

13.Is insurance covered in home loans plans?

14.Does the loan repayment start directly after it is sanctioned?

15.Can a loan on a single property be sanctioned on 2 or more people?

home loan project

Documents

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particular home loan

housing loans

rates of home loans

housing loan scenario

india housing

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