Ritesh Mrp

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SANGHVI INNOVATIVE ACADEMYInstitute Of Technology & Management

AMajor Research Project

on

A comparative study of impact of economic factors on Home Loans sector of

LIC & HDFC

(A Research Dissertation Submitted in Partial Fulfillment for the Award of the Degree of

Masters of Business Administration)

(20010-2012)

EXTERNAL GUIDE: SUBMITTED BY:

. Ritesh Makwane

MBA IV Semester

Roll No: - 1006154


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CERTIFICATE

This is to certify that the Project Report entitled (Title of the Project)

. which is being submitted herewith for the award

of the degree ofMaster of Business Administration of Devi Ahilya Vishwavidyalaya,

Indore is the result of the original research work completed by .(Name of

the student).. under my supervision and guidance and to the best of my

knowledge and belief.

The work embodied in this Project Report has not formed earlier the basis for the award

of any degree or similar title of this or any other University or examining body.

EXTERNAL GUIDE INTERNAL GUIDE

Place: Indore

Date:


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(i)

DECLARATION

I, the undersigned, hereby declare that the Project Report entitled (Title of the Project)

written and submitted by me to the Devi Ahilya Vishwavidyalaya, in partial fulfillment of

the requirement for the award of degree of Master of Business Administration under the

guidance of(Name of the Guide) is my original work and the conclusions drawn therein

are based on the material collected by myself.

Place: Indore Date: / /2012

Ritesh Makwane


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(ii)

ACKNOWLEDGEMENT

The journey towards knowledge is challenging but difficult. It is almost impossible for the single

individual to reach the destination alone. Luckily, the world is full of knowledgeable as well as

co-operative human beings who are always there when one looks for help. The present study

has reached to the final stage due to the contributions and help from a number of individuals

who always stayed with me during the rough patches.

I feel honored to have an opportunity to express my gratitude to my mentor and research

supervisor,

Prof. SURBHI GANGRADE for his/ her able guidance and continuous inspiration. I am deeply

indebted to him/ her for constant encouragement, self-less direction, attention to every minute

detail of my research work and taking up the task to successful completion.

I am highly obliged for him/ her kind guidance. I find no words to express the depth of my

gratitude towards him/ her.

My special thanks are to Prof. Gaurav Moghe, Head of the Department, Sanghvi Innovative

Academy, Indore for his whole hearted and unwavering support at the crucial parts of the work.

Apart from this, I would like to thank all the respected professors who trim the silver lamp of

knowledge kept the scared of flame bright towards me. I would also like to thank all the

respondents who helped me whole heartedly by providing me valuable information.

RITESH MAKWANE


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MBA IV Semester

(iii)

PREFACE

In this project here I declared about the information related to the maximum retail

prize (M.R.P.) of the Home Loans, in my project I have defined the information

which are of the LIC ( Life Insurance Company) and HDFC

(Housing Development and Finance Corporation). Here we declare the report

about the Home Loans and its literature and the objectives of research so that

we can improve the Home Loans Maximum Retail Price (MRP).


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(iv)

TABLE OF CONTENTS

CHAPTER NO. PARTICULARS PAGE NO.

Certificate (i)

Declaration (ii)

Acknowledgement (iii)

Preface (iv)

Chapter 1

Introduction (for an example)1.1. General Overview

1.1.1. History1.2. Perception

1.2.1. Customer Perception1.2.2. Factors affecting Perception

Chapter 2 Review of Literature

Chapter 3 Research Design & Methodology

Chapter 4Data Presentation , Analysis andInterpretation

Chapter 5 Findings , Suggestions and Conclusion

Bibliography

Appendix/Annexure


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Introduction

Taking a Home loan is a big task in itself and one of the biggest financial decisions.Home loan is the longest debt in our life. At times 10-20 yrs, which makes demands along term commitment. Each month you have to pay your EMI, sometimes you have toprepay some part of home loan, sometimes you need some documents and visit thebank. There are numerous things to be done during taking the home loan and aftertaking the home loan, hence you should be very clear that which is the best bank forHome Loan. Without much confusion, its very clear that everyone wants to go with the


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bank which makes your life easy at the time of taking home loan and even after that. Sothe biggest question on everyones mind is Which is the best bank for Home loan?

First thing first, you have to be very very clear that there cant be a single bank or loaninstitution which is perfect for everything and you will never face an issue with them.

Also there is no best bank for Home Loan which has always worked for everyone tilldate. But overall we can always pick some banks which have been better than otherson different parameters. You can say that on a high level Bank A is better than Bank

B and this is based on many loan takers experience over the years. So now in thisarticle we will try to understand difference between different banks and how they differwith each other. We will also see a survey result done with the vast community of thisblog and which bank they choose collectively as best bank for home loan.

Public Companies vs Pvt Companies

While researching on this topic , the first thing which came to my mind was all banksare same, everyone has bad experience will all kind of banks, whether PSU or private.But we have to understand that while some people can have bad experience with somebanks, there are positive experience too and we have to see things from a very high

level and not judge a bank just based on handful of bad experiences. The first confusionwhich comes to any loan taker mind is PSU bank or private bank? and based on theexperience here is the conclusion.

PSU Banks are good post-loan but not friendly at the time of taking the loan

Private banks are very fast and friendly at the time of disbursing the home loan, they willtreat you like a king up-till the loan is disbursed, but once every formality is complete


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and your home loan is sanctioned, you are a trash to them! As they are extremelyagressive in marketing of home loans, a lot of people fall for it, Private companiespresentation and they way they approach you is good but only till you are not a homeloan customer. A lot of times private companies make things easy for you and also bendsome rules for home loans. the number of documents they need also is less compared

to a PSU bank.

On the other hand, PSU banks are not that great at the start of home loan , their rulesare very strict and stringent and they still operate in the sarkari style, however onceyou loan process is complete and things start, there after life is much easier comparedto private banks. The overall handling is much professional and as per the process. Inshort they dont suck your blood every now and then as private companies do.

Private banks are first to raise the interest rates

On the interest rates increase and reduction side, its seen that private companies are

first to raise the interest rates after the rate increase from RBI side, but private bankshide somewhere when there is a time for reducing the interest rates. However PSUbanks are more transparent on this front and much less annoying than Private banks.

Also private banks arbitraly increase the pre-payment charges ( like from 2% to 3%) theconversion fees is also charged heavily if you want to move down to a lower interestrates.

Also the changes of fraud at employees level in Private bank is much higher than PSUBanks. I cant say that PSU banks are not into the bad game, but its much much higherin Private banks because of sales pressure and targets. There has been cases of forcedselling of home insurance and also cross selling of ULIPs and other financial products

along with the home loan

Which is the best bank for Home loan in India?

Now there are millions of people who have taken home loan and there are variousparameters on which a bank can be ranked like Processing time for home loan,Transparency in whole process, Attitude towards customer, Interest rates and pre-payment charges, online tracking of your home loan after disbursement. But there is noranking of banks on all these parameters. However still you can rank a bank overall asgood or bad in total. I ran a survey on this blog and got around 1504 participants to votefor best bank for home loan and based on that we can judge which banks are more

preferable and more trusted. Here are the results

Best Bank for Home Loan in India (Survey Results)
http://www.jagoinvestor.com/2011/02/4-home-loan-facts.htmlhttp://www.jagoinvestor.com/2011/04/loan-amortization-emi.htmlhttp://www.jagoinvestor.com/2012/02/home-loan-prepayment-online.htmlhttp://www.jagoinvestor.com/2011/04/loan-amortization-emi.htmlhttp://www.jagoinvestor.com/2012/02/home-loan-prepayment-online.htmlhttp://www.jagoinvestor.com/2011/02/4-home-loan-facts.html


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A good place to look for all the home loan related data (Click here)

Top 5 banks for Home Loan at the moment

If you see the survey above , you can clearly see that the top 5 banks for home loan areSBI , HDFC , LIC housing, Axis Bank and ICICI Bank and these 5 banks comprise of83% votes . While a big reason for this can be that these are big banks having a widereach and has more customers and hence the results are little biased. But at least youcan see that out of 1504 people on this blog, 83% of them have a home loan from these5 big banks , in which SBI tops the list.

1. SBI Bank

Based on the survey and overall readings done over net and comments section of thisblog. SBI bank seems to be the best bank for Home Loan. While SBI Bank still carriesthe hangover of Sarkari culture and they are strict in the overall process , which meansyou will have to run all over the bank and many times to get things done, but once thewhole process is complete , may be you will have a smooth experience overall. Thingswill be easy post home loan process if you need anythings from bank compared to otherbanks. For those who want to know why SBI is preferred , follow this thread
http://www.deal4loans.com/home-loans-interest-rates.php%20%20http://www.indianrealestateforum.com/home-loans-relocation-vaastu-shastra/t-why-people-prefer-sbi-home-loan-25608.htmlhttp://www.deal4loans.com/home-loans-interest-rates.php%20%20http://www.indianrealestateforum.com/home-loans-relocation-vaastu-shastra/t-why-people-prefer-sbi-home-loan-25608.html


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2. HDFC Bank

Overall HDFC bank seems to be have mixed review. Some people had greatexperience and some had very bad experience. HDFC Bank is overall recognised asthe bank for home loan itself. But overall the experience was very very mixed.

3. LIC Housing Finance

LIC housing finance seem to be a decent option after SBI. While they are not that greatas SBI , still they seem to be a good choice after HDFC and ICICI bank . LIC HousingFinance has lesser documentation requirements, but one has to run around for smallerdetails. LIC seem to offer better rates and also giving option to fix the interest rate for 5years. One thing which many people do not know is that LIC reduces the interest ratesfor home loan for its customers having any insurance/investment policy with LIC by atleast 0.25% , but only if Sum assured of all policies collectively is more than 15,00,000and all policies should be under the name of loan applicant.

4. ICICI Bank

ICICI Bank seems to be very very fast and too friendly at the time of loan processing,but once the loan is done, the life seems to be hell for most of the people . They are notvery supportive most of the times and one gets too frustrated with their attitude. Overalltheir interest rates are also very high.

5. Axis Bank

Axis Bank is another good option as big bank . One good thing about Axis bank is that

they have NIL charges for any pre-payment . Its a big surprise that Axis bank was morepreferred than ICICI bank overall in the survey. While Axis Bank has few good options,there was one recent case from axis bank which I had highlighted on this blog on howthey forced sell a life insurance policy along with home loan, While this was a negativething from Axis Bank, we have to understand that good and bad experience are part ofall the banks.

So what is the final answer ?

While there are positive and negative experiences from different banks, the clearanswer coming out of different comments from readers and survey is that if one has to

choose just one name, SBI bank is the best bank for home loan. We have seen most ofthe votes going to SBI Bank and all the pointers are suggesting that its a right choice.

Which bank do you have home loan with and what was your experience overall fromstart till the end. Can you share it in for others benefit?
http://www.jagoinvestor.com/2011/08/lic-policies.htmlhttp://www.jagoinvestor.com/2012/04/axis-bank-sold-policy-without-informing.htmlhttp://www.jagoinvestor.com/2011/08/lic-policies.htmlhttp://www.jagoinvestor.com/2012/04/axis-bank-sold-policy-without-informing.html


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Company History - HDFC Bank1994

- The Bank was Incorporated on 30th August. A new private sectorBankpromoted by housing Development Corporation Ltd. (HDFC), a premierhousing finance company. The bank is the first of its kind to receivean in-principle approval from the RBI for establishment of a bank inthe private sector. Certificate of Commencement of Business wasreceived on 10th October 1994 from RBI.

- The Bank transacts both traditional commercial banking as well as


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investment banking. HDFC, the promoter of the bank has entered intoan agreement with National Westminister Bank Pc. and its subsidiaries(Natwest Group) for subscribing 20% of the banks issued capital andproviding technical assistance in relation to the banks proposedbanking business.

1995- 70 No. of equity shares issued to subscribers to the Memorandum &Articles of Association on 30th August 1994. On the same date500,00,000 equity shares were allotted to HDFC promoters. 509,20,000shares were allotted to HDFC Employees Welfare Trust and HDFC BankEmployees Welfare Trust on 22nd December, 1994.

- On 16.1.1995, 90,79,930 No. of equity shares were allotted toJarrington Pte. Ltd. Another 400,00,000 equity shares were allotted on

private placement basis to Natwest Group on 9.5.1995. 500,00,000shares were allotted to the public on 9.5.95 (all were taken up).- The Bank opened its first branch in Ramon House at Churchgate,Mumbai on January 16th.

- The Bank has created an efficient operating system using well testedstate-of-the-art software.

1996

- HDFC Bank has entered the banking consortia of over 50 corporates,including some leading multinational companies, flagship companiesof local business houses and strong public sector companies.

- HDFC Bank has set up a state-of-the-art dealing room to handle alltransactions possible in Indian financial markets.

- The Certificates of Deposits were awarded a PP1+ rating which isthe highest rating for short term instruments indicating superiorcapacity for repayment.

1997

- The bank is one of the largest mobilisers of retail depositsThrough its network of 20 branches. Its credit deposits ratio was 53.8%.

- The bank has set up a ultra-modern hub at Powai in Mumbai whereThe ank's central computer is housed. This hub housed in 35,000 squarefeet of space, houses data of all the branches and facilitates the


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introduction of new products and services.- HDFC has installed state-of-the-art systems to facilitateinter-connectivity between branches and link up with on line system.

- The bank has also recently signed up as a depository participant,under the newly set up NSDL, wherein the members clearing accountssettlement for dematerialised shares can be done through the bank.

- HDFC Bank, one of the nine new-generation private sector banks,has planned to set up an all-India on-line automated teller machine(ATM) network.

- HDFC Bank proposed to launch tele-banking for the first time inJune in Mumbai at its Chandiveli branch.

- HDFC Bank has drawn up plans to become a niche player in corporatebanking by sticking to top-rung corporates.- HDFC Bank has become the first private sector bank to conclude astructured interest rate option deal.

- HDFC Bank has launched its Versova branch, the 11th branch inMumbai.

- HDFC Bank, as part of its expansion plans in the South, has openedanother branch in Chennai.

- HDFC Bank has entered into strategic alliances with 10 overseasBanks to provide customers with a wide range of derivatives includinginterest rate and foreign currency swaps.

- HDFC Bank on October 14 introduced ATMs that converse in a regionallanguage.

- HDFC Bank has introduced the Freedom Account for the average retailcustomer located in the major metros as a means to wean away themiddle-income market from nationalised banks.

- HDFC Bank has launched an account in all its 28 branches across Indiathat seeks to free depositors from minimum balance requirement, for thefirst time in the country.

- HDFC has introduced a new loan product for the payment of bettermentfees announced by the Bangalore Mahanagar Palike.


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- HDFC Bank is all set to launch its debit card by April 1998.1998

- HDFC Bank has tied up with the Ahmedabad Stock Exchange (ASE) to act

as its clearing bank.- HDFC Bank proposes to strengthen its branch network in Calcutta withthe addition of two new branches in the first quarter of the nextfiscal.

- HDFC Bank has signed an agreement with the National Stock Exchange(NSE) which will give it a second charge over the brokers deposit forproviding loan against share facility to NSE brokers.

- The bank has also entered into a similar understanding with the

Bombay Stock Exchange (BSE) whereby the bourse will provide support forrecovery of money against the card for loan against share facility.- The bank has also entered into `Cirrus' arrangements by which allmaster card holders across the globe will be able to transact at HDFCBank in India.

- The bank will also provide phone-banking facility in Bangalore. HDFChas tied up with Visa International to offer its Debit Card.

- HDFC Bank Ltd has entered into a memorandum of understanding for a

strategic business collaboration with Chase Manhattan Bank.- HDFC Bank has become the first bank in India to link up its automatedteller machine (ATM) network with all the three major payment systemsworld-wide.

- HDFC Bank will be the first bank in the Asia-Pacific region toconnect the American Express (Amex) payment system.

- The HDFC Bank is expanding its ATM network to connect to AmericanExpress Interchange based in Phoenix, Arizona, USA. With thisconnectivity, HDFC Bank has become the first bank in the Asia-pacificregion to connect to the Amex Interchange.

- HDFC Bank was the first to sign up with AMEX in December of 1998.

- The Bank has tied up with ITC Threadneedle Mutual Fund to provide itsinvestors with the High Interest Fund (HIF), a facility to encash theirunits through the bank's Automated Teller Machines in addition to a


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cheque book facility also to be provided by the bank.- Sony India Ltd (SIL) has joined hands with HDFC Bank to work out aninnovative car finance package under which a sony car audio systemwould be installed to a new car for no additional upfront cash

outflow.- The bank has decided to issue 1,33,10,000 equity shares of Rs. 10each to HDFC and a wholly-owned subsidiary of it at a price of Rs. 94per share.

- The bank will also issue 13,70,000 equity shares to India PrivateEquity Fund and 51,20,000 shares to Indocean Financial Holding, the twoequity funds controlled by Chase Manhattan Bank.

- HDFC Bank, has tied up with BPL Ltd to offer Internet-enabled

supply-chain management and business-to-consumer (B2C) e-commerceservices to corporates.- Hutchison Max Telecom and HDFC Bank introduced the country'sfirst-ever mobile-banking services in the city.

2000

- HDFC Bank also signed a memorandum of understanding with SingaporeTelecom's e-commerce arm Sesami.Com Pvt Ltd.

- The Bank latter also entered into a partnership agreement withNational Computer Systems, the e-commerce unit of Singtel.- A new company called SESAMi.com (India) has been formed by astrategic alliance between HDFC Bank and Singapore Telecom's e-

commerce company SESAMi.com, to offer e-commerce solutions forthe Indian market.- HDFC Bank has a tie-up with Maxtouch for giving the facility to thelatter's customers in Mumbai. This is the first and only service ofthis sort in the country, he said.

- HDFC Bank is also launching an online electronic banking solutioncalled Enet which will allow corporates to access their accounts overthe net and carry out trade related transactions and cash managementfunctions.

- HDFC Bank entered into a tie-up with Telco by which the bank wouldprovide preferential financing options for Tata's range of passenger


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cars including the Indica, Sumo, Safari, Estate and Sierra.- HDFC Bank allotted 1.98 crore shares of Rs 10 each at an issue priceof Rs 94 per share to promoters and strategic investors on March 29.

- HDFC Bank is also set to become the first bank in the country tooffer wireless application protocol (WAP) services to customers.- SkyCell Communications Ltd, one of the two cellular service providersin Chennai, has launched `Sky Banking', for which the company has tiedup with ICICI Bank and HDFC Bank.

- The bank has tied up with 12 utility companies nationwide includingBSES, MSEB, BEST, Orange, BPL and MTNL.

- The Bank has tied up with financial portals, e-brokerages and the

National Stock Exchange to enable broker payments for e-brokingventures.- The Bank has set up 100 new electronic data capture (EDC) terminalsin Mumbai.

- HDFC Bank has launched its first B2C payment gateway which allowsVisa and MasterCard credit card-holders to do transaction online andrealtime.

- CYBERITMALL.COM has joined hands with HDFC Bank to provide

VISA/MasterCard users with an online payment gateway solution to enablethem to have a secure eshopping experience.- HDFC Bank plans to extend its mobilephone banking services introducedin select metros to mobilephone broking when it introduces its Interneton-line trading in July.

- HDFC Bank and portal clickforsteel.com have signed a memorandum ofunderstanding for offering online credit and services to facilitate`post transaction' activities through the portal's `allied servicesproviders' programme.

- Indianfoline.com signed an agreement with HDFC bank for the use ofpayment gateway to enable online financial transactions.

- HDFC Bank, in association with cellular service provider Orange,haslaunched the entire range of mobile banking services and mobilecommerce services using wireless application protocol (WAP)technology.


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- The Company has introduced a new scheme whereby it will provide loansto individuals for payment of self assessment tax on their propertiesin Bangalore.

- The Foreign Investment Promotion Board has cleared the proposal ofthe HDFC Group to enter into a joint venture with Singapore Telecom'se-commerce company for providing a comprehensive range ofbusiness-to-business e-commerce solutions to companies in India.

- The Company proposes to pick up an equity stake in Softcell Trade andTechnologies Ltd., a Mumbai-based software company.

- BPL Mobile has tied up with HDFC Bank to offer Internet bankingthrough the mobile phone.

- HDFC Bank launched `eInstant Car Loans' a new scheme for offeringcustomers a range of net-enabled loan products.- HDFC Bank launched depository services on the net.

- HDFC Bank tied up with NSE.IT, a wholly owned subsidiary of theNational Stock Exchange, for providing payment gateway services for thelatter's Internet trading operations.

- HDFC Bank has been identified as the best domestic commercial bankfor the second consecutive year by FinanceAsia.com, which provides a

network for financial decision makers.- The Mumbai-based Geojit Securities Ltd. has tied up with HDFC Bankfor Internet trading of shares.

- Calcutta's cellular services provider Modi Telstra, and HDFC Bankhave entered into a collaboration to provide mobile commerce inCalcutta.

- HDFC Bank has got the Kerala-based Nedungadi Bank as its firstcustomer for its new joint venture company with I-Flex Solutions.

- HDFC Bank has set a target of attaining a business of over Rs15,000crore this fiscal mainly through expansion and new product launches,including a credit card.

- HDFC Bank, in association with Tata Cellular, has launched MobileCommerce Service, for customers in Hyderabad and Vishakaptnam.


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- HDFC Bank has tied up with about 25 equity brokerages for enablingthird party transfer of funds and securities through itsbusiness-to-business portal -- `e-Net'.

- The Bank has entered into an alliance with Deloitte Haskins and

Sells, a member firm of Deloitte and Touch, to offer banking servicesto its non-resident Indian customers.- HDFC Bank has launched its 123rd outlet at Delhi Stock Exchangebuilding at Asaf Ali Road.

- The Bank proposes to acquire up to 24.5 per cent stake in the MIELe-Security Pvt. Ltd., which is engaged in the business of developingand marketing of security products and services for a range ofe-commerce and enterprises security applications.

- The Bank has tied up with Rajan Raheja-owned Hathway for providingbanking at home as part of the Net-over-cable initiative of the latterin Mumbai.

- HDFC Bank launched its on-line bill payment facility in alliance withthe Maharashtra State Electricity Board has also begun to offer bridgeloans against fixed deposits of parent Housing Development FinanceCorporation the financial institution.

- HDFC Bank has tied up with portal brainvisa.com to retail educationloans to students.

- The Gujarat Cellular operator Fascel, has signed up with the HDFCBank to introduce mobile commerce for the first time in the State.

- HDFC Bank has tied up with BPL Mobile for mobile commercefacility.

- CricketNext.com, a sports e-commerce site has tied up with HDFC Bankto provide an on-line payment gateways and marketing opportunities fora wide range of cricket sports gear on its on-line shop BatNext.

- Singapore-based Growasia.com has entered into an understanding withHDFC Bank and credit rating agency Icra, for picking up equity in thecompany's Indian subsidiary Gasia.com.

- The Bank has launched `Freedom - The e-Age Savings Account' forcellular phone users.

- Spice Cell has tied up with Citibank N A, HDFC Bank and ICICI Bank


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- The Bank has opened four ATMs outlets in Bangalore at Coles Road, RTNagar, Rajaji Nagar and Jaya Nagar on March 26.

- HDFC Standard Life Insurance has launched a `Development InsurancePlan' a low cost life insurance product developed specifically to meet

the needs of economically weaker sections.- Two Directors, Mr. S.S. Thakur and Mr. Amit Judge, have resigned fromthe board of the bank effective from March 30.

- HDFC Bank files with US regulators to list more than 11 millionAmerican Depositary Shares on the New York Stock Exchange.

2002

- HDFC Bank unveiled a new online account aggregation service

`OneView'.- HDFC launched 'One View' service to customers

- HDFC Bank launched its 9th branch in Karnataka.

- HDFC opens its branch in Mangalore.

- HDFC Bank unveils Silver card in Hyderabad.

- HDFC Bank opens first overseas representative office.

- HDFC Bank unveils gold card- Mediclaim facilities to HDFC Bank gold cardholders.

- HDFC Bank Ltd has informed BSE that Mr Deepak Satwalekar hassubmitted his resignation as Director of the Bank. The Board ofDirectors has accepted the same. The Board of Directors has co-optedMrs Renu Karnad as Additional Director of the Bank.

- Mrs. Renu Karnad has been co-opted as an Additional Director ofthe Bank. Mrs Karnad shall represent the promoters of the bank i.e.HDFC Ltd. Also Mr. Deepak Satwalekar, Managing Director of HDFCStandard Life Insurance Company Ltd, has been on the Board of theBank as nominee of HDFC Ltd since September 12, 1994 and shallcomplete the period of 8 yrs before the next scheduled board meeting.In view of the provisions of the Banking Regulation Act, 1949, Mr.Satwalekar has submitted his resignation as Director of the Bank andthe Board has accepted the same.


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- HDFC Bank launched new products to its wealth management programmeto increase its customer base. The bank introduced a non-interactiveproduct named Financial Planner, which would be available for all itscustomers for an annual fee starting from Rs 10,000. The bank is

offering fee based advisory programme to the mass affluent segment,which was earlier offered to high net worth customers. The wealthmanagement programme would cater to individual needs taking intoaccount various factors such as customer's age, financial goals andrisk profile, which includes equity, MFs and debt instruments such asRBI Relief Bonds.

- Orange JV with HDFC Bank.

2003

- HDFC Bank unveils resident foreign currency account.- HDFC Bank unveils co-branded credit card with e-Seva.

- The Board of Directors of HDFC Bank Ltd at their meeting held onJanuary 15, 2003 approved the appointment of Mr. Arvind Pande as anAdditional Director pursuant to section 260 of the Companies Act,1956.

- EPFO JV with HDFC Bank for its pension distribution.

- HDFC enters into agreement with HDFC Bank to source housing loans.- HDFC Bank, IRCTC in tie up for online railway booking.

- HDFC Bank inks pact with ANB for remittance service

- HDFC Bank introduces 'HDFC Bank Health Plus Credit Card'.

- Uma Krishnan resigns HDFC Bank as country head.

- Escotel ties up with HDFC Bank for Global Debit Card.

- HDFC Bank launches India's first mobile payment solution.

- HDFC Bank's debt programme of Rs 400-crore has received triple A(ind) rating from CREDIT rating agency FITCH.

-Mumbai - HDFC Bank in collaboration with Tally Solutions isplanning to launch electronic data interchange (EDI) system for small


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and medium enterprises (SMEs).-Warburg Pincus sells 2% stake in HDFC for Rs 235 cr

- HDFC Bank began selling home loans of its promoter Housing

Development Finance Corporation (HDFC).-Board approved to allot 4,16,400 equity shares to the employees ofthe Bank under the Employee Stock Option Scheme

2004

-Mr Ranjan Kapur & Mr Bobby Parikh appointed as Additional Directors

-NMCE inks pact with HDFC Bank for warehouse receipts

- HDFC Bank has entered into an alliance with Clearing Corporation ofIndia Ltd (CCIL). The tie-up offers the latter's collateral borrowingand lending obligation (CBLO) product to cooperative banks that arenot direct members of the negotiated dealing system (NDS).

-HDFC Bank repurchases HDFC loans worth Rs 208 cr

-Launches Quickremit, a unique online service that enables NRIs inthe US to send money to their relatives in India from the comfort oftheir homes.

-Andhra Bank has entered into an alliance with HDFC Bank for sharingits network of automated teller machines (ATMs). On March 29, 2004- HDFC Bank and Bahraini Saudi Bank (BSB) have announced an allianceto cater to service the needs of the non-resident Indians (NRIs) inBahrain.

- HDFC bank Ltd has informed that Dr (Mrs) Amla Samanta has ceased tobe a director of the Bank wef April 25, 2004.

- HDFC Bank launches new scheme for Maruti 800 buyers, providing 85per cent finance on the on-road price of the car for seven years.

-HDFC Bank wins Asiamoney award for Best Domestic Bank

-HDFC Bank managing director Aditya Puri has been awarded themanagement man of the year by the Bombay Management Association(BMA)


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-HDFC Bank has entered into an agreement with Shrachi Securities Ltd,the flagship company of the Kolkata-based Rs 300-crore Shrachi Group,for financing of multi-utility vehicles all over India

-HDFC Bank has launched an online bill payment facility for its

customers who are also subscribers to Tata Teleservices-HDFC Bank join hands with NCR Corporation to offer managed ATMservices

- IKF Finance Ltd has entered in to a Joint Lending Arrangement withHDFC Bank Ltd

2005

-TMB forges alliance with HDFC Bank

-HDFC Bank inaugurates first ATM in Hotel- HDFC Bank ties up with the International Bank of Qatar (IBQ) tolaunch banking services in Qatar.

- HDFC Bank launches loyalty rewards programme for its debit andcredit cardholders under the name InstaWonderz.

-HDFC Bank along with MasterCard International launched credit cardtargeted at small and medium-sized enterprises

-HDFC Bank has tied up with US-based WL Ross and company LLC forinvesting in corporate restructuring

-HDFC Bank unveils credit card for farmers

2006

-HDFC sets up two more branches in AP

- Osim to join hands with HDFC Bank for consumer loans

- HDFC Bank inaugurates VbV facility for online shopping

- HDFC sets up two more branches in AP

2007

-HDFC Bank has signed an agreement with Tata Pipes to offer credit


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facilities to farmers across the country.-Hdfc Bank Ltd has appointed Mr. Pandit Palande as an additionalDirector of the Bank at the Board Meeting held today i.e. on 24thApril 2007.

- HDFC Bank Ltd has informed that the Board of Directors of the Bankat its meeting held on October 12, 2007, has been appointed Mr.Paresh Sukthankar & Mr. Harish Engineer as Executive Directors on theBoard of Directors of the bank. Mr. Sukthankar & Mr. Engineer havebeen senior employees of the Bank since 1994 and have held variouspositions of responsibility.

The above appointments as Executive Directors of the Bank are subjectto approval of Reserve Bank of India and of the Bank's shareholders.

2008- HDFC Bank Ties Up With Postal Department, Extends Rural Reach- HDFC Bank Wins Nasscom IT User Award The Year'

- HDFC Bank Opens Its First Overseas Branch In Bahrain

- HDFC Bank and Centurion Bank of Punjab merger at share swap ratioof 1:29

- HDFC Bank Launches Indias First Rural Banking BPO At Tirupathi

- HDFC Bank Launches Indias First Online Market Linkage ProgrammeFor Self Help Groups 2009

- HDFC Bank Bags Asiamoney Award for the Best Domestic Bank- HDFC Bank offers electronic payment collection facility to Guruvayoor Devaswom.- HDFC Bank launches Meritus Scholarship Programme.- The Asian Banker declares HDFC Bank the Best Retail Bank 2010- With a view to attract long term deposits and prevent premature

withdrawal when the interest rates peak, HDFC, the housing financemajor, has decided to pay variable interest rate on recurring deposits.

- HDFC Bank on Feb 19 increased the fixed deposit rates by up to 150basis points across maturities, a move that follows the Cash ReserveRatio hike of 75 basis points by the Reserve Bank of India last month.

Company History - LIC Housing Finance1989- The Company was incorporated on 19th June as a public limitedcompany. It was promoted by LIC of India. The Company provide housing


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loans to individuals, builders, development authorities, employersorganisation etc.

- The Company has started various schemes: Griha Prakash a generalscheme, Griha Tara under which it accepts only Bima Sandesh Plan as

Life Insurance Corporation, Griha Shobha for NRIs and Griha Lakshmi forpeople to have a second house.1994

- 3,00,57,900 No. of equity shares were issued at a premium of Rs 50per share through public issue on 15th November 1994. The allotmentwas as follows; 10,82,000 shares to LIC on firm allotment basis and thebalance 189,75,900 shares to public (all were taken up).

1996

- The Company has decided to carry out fund based and one-fund basedactivities, viz., debt securitisation, lease and hire purchase, rentingof properties and giving guarantee to co-operate bodies.

2000

- Crisil has assigned a AAA rating to the issue of mortgage backed passthrough certificate backed by mortgages orginated by the company.

2001

- The Company has launched its new scheme, Griha Vikas.2002

-LIC Housing Finance Ltd has informed BSE that the Company hasforfeited 1,25,300 equity shares due to non payment of allotment/callmonies.

-LIC Housing Finance has approved for the take over of IndividualHousing loan portfolio of GLFL Housing Finance.

-Around 25 investors subscribed to the issue of confidentially placeddebentures for a total amount of Rs.392 cr of LIC Housing Finance Ltd.

-LIC Housing Finance Ltd has decreased its interest rates on housingloans by 25-50 basis points.

-Financial Institutions have increased their stake from 0.01% to


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1.96% and Mutual Fund companies have increased their stake from 0.35%to 1.06% in LIC Housing Finance.

-LIC Housing Finance Ltd has decreased the floating rate of interestunder individual loan scheme to 9.5% from 11%.

-LIC Housing Financee signed a deed of assignment to take overindividual housing loan portfolio of Citibank N A.

-UTI and IFCI has been removed from the list of promoters of LICHousing Finance.

2003

-LIC Housing Finance has unveiled a new project for elderly peoplecalled 'LIC HFL Care Homes' .

-LIC Housing Finance Ltd has sanctioned 84,126 loans worthRs.3265.78cr and disbursed 76,663 loans worth Rs.2941.24cr under its I

ndividual Loan Scheme.-LICHFL has mobilised Rs.280cr for 15 years at 7% rate of interestthrough private placement.

-Lic Housing Finance Ltd has informed that the shares of the companyhave been delisted from The Stock Exchange - Ahmedabad w.e.f December08, 2003.

2004-Merill Lynch Capitat acquires LIC housing stake of 0.39%

-Templeton Asset Management buys 37,52,362 equity shares,representing 5.01% of LIC Housing's total paid-up capital of Rs 74.9 crore

-LIC Housing Finance Ltd has informed that the shares of the Companyhas been voluntarily delisted from the Delhi Stock Exchange (DSE)w.e.f. January 23, 2004.

-LIC Housing Finance shares delisted from Madras Stock Exchange

-Mr D Krishnan appointed as Chief Executive Officer

- LIC Housing Finance Ltd's (LICHFL) one-crore global depositoryreceipts (GDR) issue opened on August 27.

- Lists its maiden global offerings worth .85 million at the


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Luxembourg Stock Exchange successfully.-Introduces new product that starts as a fixed rate loan but containsan option to convert it to a floating rate loan at the end of fiveyears, at the then prevailing rate.

2005-Delist from The Calcutta Stock Exchange Association Ltd (CSE) witheffect from December 09, 2004.

-LIC Housing Finance launches loan product that eliminates therequirement of charge on house financed.

-Goldman Sachs acquires share in LICHF

2007-LIC Housing Finance to launch FD scheme

-LIC Housing Finance to enter into reverse mortgage product

2008

LIC Housing Finance Ltd has informed that the Board has appointed thefollowing persons as Directors on the Board of the Company on May 20,2008:

- Name of the Director : Shri. D K Mehrotra For the Position of : Managing DirectorChange effective from : May 20, 2008.

- LIC Housing Finance Ltd has informed that the Board of Directors ofthe Company has appointed following person as Director on the Board ofthe Company on July 01, 2008.

- Name of the Director : Shri A S Narayanamoorthy

- For the position of : Additional Director

- Change effective from : July 02, 2008

-LIC Housing Finance launches Reverse Mortgage for senior citizens 2009

- LIC Housing Finance cut interest rates for new loans by 0.5% wherefor customers opting for floating rate loans between Rs 30 lakh andRs 75 lakh, the new rates will be 8.755 against 9.25%.


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LICHFL Customer Perception

I am writing this email to highlight a poor service provided on being your valued customer 2 times.

LIC hfl prevented me to sell my property for 3 years and worst service provided to me and my father


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in law (senior citizen). The expenses and personal losses incurred after each trip is neglected by this

esteemed organization.

I am not sure if this feedback is being considered but I cant resist myself providing honest feedback.

This also needs a strong attention on consumer complaint forums.

Here is the sequence-

1) I completed a payment of my home loan (810201897) 3 years back and followed up several times

for getting the registration document back. The request was made several times to madam

dhanashri but it is completely ignored

2) I personally visited india by spending a lot of money and visited her 2 times again. She didnt even

offer a seat and neither had a time to meet. I had to wait for 2 hours, run and request her attention

for 1 min. She finally noted the request but never called for document when I was in india. The

appointment register have all these proofs. All my visits to her office wasted and the treatment

provided was worst than anything.

3) finally, on my return date to usa, I introduced her to my father in law who holds the power of

attorney for me. Kindly requested to return the document to him

4) I had already spent a lot of money on my india visit/ Travels and legal power of attorney

document. No reply from same person for a complete year

5) then after 1 year, I emailed (as you see below) rubina madam and requested to provide document

to my father in law on 9th oct 2012. He waited on 9th oct for 4-5 hours but no output on this

document (although he got other one).

6) he was called on 22 oct. But again he was not given a fair treatment. He was asked to return w/O

document. But finally he got it after a lot of arguments. Nobody even thought about the trouble he

suffered considering his age, travel from beed to pune, efforts and money spent after each trip

I would never have gone for LIC hfl as there is no customer care at all. In fact, I took a loan for 2

times and also referred you to some friends. I have provided a couple of customers also. The only

reason I availed this service was because of the help and support provided by archana madam, but Iwould certainly not go and suggest this route to anybody.

Hope this is taken as a true customer feedback and I appreciate everybody who helped in getting

the document back

HDFC Customer Perception

venkat asked, Hi,I am having Homeloan from IDBI bank and recently they have

reduced the interest rate to 12.25%, but they are giving at 11% to new


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customers. Axis bank is giving full term fixed interest at 11.75%.Is it advisable to

switch to Axis bank fixed rate? or can I go to other bank who is giving 10.75%

floating?

Harsh Roongta answers, at 2012-05-03 16:12:31Venkat - normally you should go

for a fixed rate when rates are at the lowest which is clearly not the case today.

interest rates are expected to drop further (maybe with a lag) but the direction of

interest rates is clear. So currently only floating rates makes sense. On floating

rates if you poay anything more than 10.75% you are paying too much. If you are

not able to get this floating rate loan at 10.75% (assuming that you have paid all

your EMIs always on time and the property title is good and your income details

are as good as if not better than what they were when you took the loan) you

should apply for a balance transfer loan on and our network of providers will

compete to provide you the best deal. Remember IDBI Bank cannot charge you

a pre-payment charge and the processing fee charged by the new lender cannot

exceed 0.5618% or Rs. 11,236 whichever is lower. The new lender may also be

willing to give you an additional loan while keeping the EMI and the tenure same

as the existing lender or provide you lower EMI or lower tenure. To summarise -

if you are paying mroe than 10.75% on a floating rate loan you are apying too

much.

sunil asked, I have existing home loan with HDFC [ Get Quote ]. To reduce my

ROI (by 1%) they asked me to pay .5% of existing loan amount. Is it really worth

to get this done?

Harsh Roongta answers, Depends. If after the reduction your interest rate is

10.50% or at the most 10.75% it may be worthwhile to pay a fee of 0.5618%

(0.50% +serfvice tax) just to avoid the formalities involved in transferring legal

documents from one lender to another lender. But dont oay more than 10.75%.

In any case if you are not a teaser rate loan consumer then they cannot charge

you any pre-payment charge and as i said in response to the first question you

will get the rate of 10.75% from another bank easily.

vineet asked, Hi Harsh, I have taken home loan from LIC [ Get Quote ] @ 10.65

floating. Will LIC reduce the interest rate? Should i continue with LIC? Is there

any other better option for me to switch ?

Harsh Roongta answers, Fisrt please re-confirm that the rate being charged to

you is still 10.65%. Many times the rate changes without changing the EMI since
http://money.rediff.com/quotes/hdfc+bank+ltdhttp://money.rediff.com/quotes/lic+housing+finance+ltdhttp://money.rediff.com/quotes/hdfc+bank+ltdhttp://money.rediff.com/quotes/lic+housing+finance+ltd


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the lender may increase the tenure. In teh current circumstances 10.65% floating

is a decent rate and it may not be worthwhile to shift to another lender. But

please re-confirm that you are paying 10.65% only and not some other rate.

raj asked, sir I have taken homeloan from hdfc in 2010 under dual home loanscheme in which intialy it was fixed basis and now from april 2012 its in floating

basis. as per rbi gudelines i want to shift the same to sbi but hdfc is asking for

aforeclosure charge of 2% .can u pl guide me if if 2% is payable .the say since it

is not from your sources u have to pay 2% foreclosure.kindly guide me.

Harsh Roongta answers, HDFC is correct. HDFC is governed by National

Housing bank (and not RBI) who have just clarified that the regulation banning

charging of pre-payment charges does not apply to the so-called "teaser rate"

loans even after they have become floating. So unfortunately you will have to fork

out 2.2472% (with service tax) as you are not pre-paying the loan from your own

sources. It will still make sense for you to shift though as the flaoting arte loan

from HDFC for you will be around 11.75% and the new rate will be around 10.50

- 10.75% depending on the loan amount. You will quickly gain this back in 2

years and then enjoy the benfit of lower rates for the balance tenure of the loan.

Daniel asked, HFCs like HDFC are usually very reluctant to pass on the benefits

of RBI's repo cut to existing home loan customers although they are quick to

entice new customers. So what should existing customers look forward to?

Harsh Roongta answers, Existing customers should vote with their feet. If you

have been a good customer and paid all EMI in time nothing stops you to shift

your loan to another lender who will be happy to give you a much lower rate and

best of all you dont even have to pay any pre-payment charges in most cases.

farhan asked, Hi, I have existing home loan from Union Bank with 11% rate

floating, is it worth to shift to another bank at this point? If transfer is required

than what extra expense will come, like any commission, etc.

Harsh Roongta answers, You should consider shifting if you get 10.50% which

you can possibly get depending on your repayment track record, property title

and income. At most you will need to pay a processing fee of around 0.5618% or

Rs. 11,236/- whichever is lower.


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Review of Literature and Research MethodologSection-A Review of LiteratureBefore giving details regarding the research methodology used in the study, itis appropriate to present a brief overview of the research articles, case studies, andbooks written on this particular topic. The area of study may be within the country oroutside the country.Review of literature helps a researcher to get acquainted with his/her selectedresearch problem and also may provide some guidelines in selecting a proper research


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methodology. It is also helpful in finding out the research gaps in the existing literature.This will help the researcher in fine-tuning his/her research problem and methodology.

Another advantage of reviewing in the existing literature is that in cases where theresearch problems are similar, the conclusions and findings may be easily compared.This will help the researcher in determining whether his/her findings are possible or not.

The literature under review may be of two types: (i) concerning the conceptualand theoretical framework. (ii) the empirical literature dealing with the studies made inthe past which are similar to the one that the researcher intended to undertake. Thebasic outcomes of such review will be the knowledge as to what data are available foranalytical purposes, which will help the researcher to specify his/her own researchproblem in a more meaningful way. Thus, review of literature is helpful in formulatingthe research problem and also helps the researcher in deciding about the mostappropriate methodology to be used. While comparing the results of the earlier studieswith his/her own results, care must be taken to verify whether the objectives andmethodology are similar.While reviewing the earlier studies a researcher has to state the objectives of the

study, describe the concepts and definitions used, the methodology employed and theimportant findings and conclusions of the study. The researcher is supposed to make acritical review of methodology used by the earlier researcher of the methodology if any.The researcher should improve his methodology in light of this.In the following paragraphs several similar studies undertaken earlier arereviewed keeping in mind, the following aspects: 1) The objectives, 2) Area of study withreference year, 3) Research methodology used and 4) Major findings and conclusions.

A Research Article entitled Housing Credit Situation in Eighties by Lall Vinay(1984)He has focused attention upon formal factor (Permanent Construction) which

served mainly to the HIG and MIG, the loan meets only 47% of the price of the house,forcing the borrowers to make very large down payments. Also the price of a typicalhouse was above 3 times the annual families income of the borrowers. In spite of, theentire system of housing allocation and credit the supply of affordable funds was muchsmaller than demand. Thus, large growth in urban population and the historically lowpriority given to housing, supply falls very short of demand and need. Therefore, notonly that the volume of saving and investments should increase but also larger volumesof capital should flow into housing. Also, accessibility and terms and condition ofhousing credit will determine the long term redistribution performance in housing.

The Research Study entitled Housing in the New Millennium: A Home WithoutEquity is Just a Rental with Debt by Joshua Rosner (2001)He studied the prospects of the U.S. housing / mortgage sector over the nextseveral years. Based on his analysis, he believes that, there are elements in place forthe housing sector to continue to experience growth well above GDP. However, hebelieves that there are risks that can materially distort the growth prospects of thesector.Specifically, it appears that a large portion of the housing sectors growth in the 1990scame from the easing of the credit underwriting process. Such easing includes:


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The drastic reduction of minimum down payment levels from 20% to 0%. A focused effort to target the low income borrower. The reduction in private mortgage insurance requirements on high loan to valuemortgages. The increasing use of software to streamline the origination process and modify /

recast delinquent loans in order to keep them classified as current. Changes in the appraisal process which has led to widespread overappraisal /overvaluation problems.If these trends remain in place, it is likely that the home purchase boom of thepast decade will continue unabated. Despite the increasingly more difficult economicenvironment, it may be possible for lenders to further ease credit standards and morefully exploit less penetrated markets. Recently, targeted populations that havehistorically been denied homeownership opportunities have offered the mortgageindustry novel hurdles to overcome. Industry participants in combination with easedregulatory standards and the support of the GSEs (Government Sponsored Enterprises)have overcome many of them. If there is an economic disruption that causes a marked

rise in unemployment, the negative impact on the housing market could be quite large.These impacts come in several forms. They include a reduction in the demand forhomeownership, a decline in real estate prices and increased foreclosure expenses.These impacts would be exacerbated by the increasing debt burden of the U.S.consumer and the reduction of home equity available in the home. Although we haveyet to see any materially negative consequences of the relaxation of credit standards,we believe the risk of credit relaxation and leverage cant be ignored. Importantly, arelatively new method of loan forgiveness can temporarily alter the perception of credithealth in the housing sector. In an effort to keep homeowners in the home and reduceforeclosure expenses, holders of mortgage assets are currently recasting or modifyingtroubled loans. Such policy initiatives may for a time distort the relevancy of delinquency

and foreclosure statistics. However, a protracted housing slowdown could eventuallycause modifications to become uneconomic and, thus, credit quality statistics wouldlikely become relevant once again. The virtuous circle of increasing homeownership dueto greater leverage has the potential to become a vicious cycle of lower home pricesdue to an accelerating rate of foreclosures.

A research article entitled Home Ownership Risk Beyond a Subprime Crisis: TheRole of Delinquency Management by Jaco Melissa B. (2002)She concluded that public investment in and promotion of homeownership andthe home mortgage market often relies on three justifications to supplement sheltergoals:to build household wealth and economic self-sufficiency, to generate positivesocialpsychological states, and to develop stable neighborhoods and communities.Home ownership and mortgage obligations do not inherently further these objectives,however and sometimes undermine them. The most visible triggers of the recent surgein subprime delinquency have produced calls for emergency foreclosure avoidanceinterventions (as well as front-end regulatory fixes). Whatever their merit, she contend


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that a system of mortgage delinquency management should be an enduring componentof housing policy.Furtherance of housing and household policy objectives hinges in part. On theconditions under which homeownership is obtained, maintained, leveraged, and insome situations exited. Given that high leverage or trigger events such as job loss and

medical problems play significant roles in mortgage delinquency independent of loanterms, better origination practices cannot eliminate the need for delinquencymanagement. In terms of analyzing this framework, it is tempting to focus on its impacton mortgage credit cost and access or on the absolute number of homes temporarilysaved, but her proposed analysis is based on whether the system honors and furthersthe goals of wealth building, positive social psychological states, and communitydevelopment. Because those ends are not inexorably linked to ownership generally orowning a particular home, a system of delinquency management that honors theseobjectives should strive to provide fair, transparent, humane, and predictable strategiesfor home exit as well as for homeretention.

A research article entitled Housing Problem and Public Action: ContinuedIncompatibility Experience from a South Indian State by M. Mahadeva (2004).In this article, the author has analysed the nature and distribution of the housingproblem in Karnataka and examined how the state has addressed this issue. Inparticular, it considers the strategies adopted during the 90s and identifies a number offailures including the task force on housing. Some of the major weaknesses, pertainingto incidence by type and by rural-urban areas, on approaches, on financial requirementsand issue of development and redevelopment are examined to propose alternativepolicy strategies to effectively address the housing problem in the state. From theanalysis it is found that Karnataka is not an exception to the general rule that housingstrategies, which were evolved over decades, have not taken the direction expected. By

and large, the sectoral policies pursued were only ad hoc without a clear focus. Lack ofcomprehensive policy to guide housing development on equity principle together withadhoc approaches, have failed to deliver housing benefits and develop critical housinginputs on a sound footing with equal opportunities for all need based policy interventionshasslefree input delivery mechanism existing housing shortage and rural-urbandisparities substantially. Unfortunately, this did not happen. Thus, policy issues like whatpolicies are needed for the state of Karnataka to guide housing development, increasingthe housing supply to the poorer and marginalized sections, mobilizing the neededfinancial resources and a host of other issues in addressing the housing problememerge.

A study entitled Performance of Housing Finance Companies by BrarJasmindeep et.al. (2005)The objectives of this study were: to study the operational performance, and thefinancial performance of the selected institutions.The study covers three institutions viz. HDFC, LIC & PNB. The study is based onsecondary data that have been collected from the annual reports and web sites of theinstitutions selected under study. It covers the period from 1990-91 to 2002-03. The


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performance of the selected institutions has been studied by using percentages,compound growths rates and various ratios.Findings of the study are:- HDFC comes at the top among all the institutions as far as loan sanctioned,disbursements and the loan outstanding are concerned, PNB has the last rank for

both loans sanctioned and disbursed. However, the compound growth rate for theloan sanctioned, disbursement and outstanding has been highest in the case ofLICHF. It stood at 26.49%, 30.89%, 36.16%. Against PNB showed the lowestcompound growth rates of 18.62% and 19.90%, for the loan sanctioned anddisbursement over the same period. However, the compound growth rate of theloan outstanding in the case of PNBHF was higher than the growth rate of HDFC. The ratio of loan disbursed to loan sanctioned shows that the ratio of PNBHFshowed the highest variations from 53.37% to 96.52 % over the given period,followed by LICHF for which the ratio varied from 56.88% to 95.65%. On theother hand, the ratio for HDFC showed the lowest range of variation from 81.07%to 88.19 in the same period.

Number of housing units assisted by the selected institutions and its percentage tothe total units financed during the year showed that HDFC and PNBHF financedmore than 64% and less than 3% of the total units financed during the entireperiod of the study, respectively. HDFC has provided the highest proportion of loans to individuals. The highestvariation in the composition of loan outstanding has been in the PNBHF. The loanoutstanding to individuals in the case of HDFC ranged from 66.89% to 81.99%whereas it ranged from 89.58% to 100% for LICHF for the same period. HDFC has been a major market share holder among the HFIs selected understudy. PNBHF has disbursed less than 4% of the total loan disbursed by HFIs. It is found that during almost all the years under study, all the HFCs earned more

than 80% of their interest income from the interest on housing loans. LICHF earned the maximum proportion of total income from the interest onhousing loans. It was followed by PNBHF and HDFC. As far as ratio of interest expense to total expenses is concerned, it ranged from89.15% to 93.13% for HDFC over the period 1990-91 to 2002-03. It ranged from65.74% to 92.45% for PNBHF and from 83.39% to 94.31% in case of LICHFover the same period. PNBHF spent in the range of 0.63% to 4.57% of the total expense onestablishment over the period of the study which was the highest among all theinstitutions. LICHF spent the lowest proportion ranging from 0.42% to 0.89% onestablishment expenses during the same period and the ratio showed a decliningtrend in the case of HDFC cover the same period. The interest paid to loans funds showed much variation in the case of PNBHF.The ratio for HDFC increased in the initial period but decreased later on. Amongall the institutions under study PNBHF paid the highest cost for raising loanfunds. The assets of LICHF constituted the highest proportion of outstanding housingloans followed by PNBHF and HDFC. During the period, investments comprised less than 25% of the total assets for all


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the institutions. LICHF has a comparatively low ratio of investments to the totalassets the ratio of HDFC has been the highest over the same period. PNBHFshowed a considerably increasing trend in the earlier years but it declined in thelater years. The net profit margin of PNB was higher than that of LICHF in the initial years,

but the ratio of LICHF shows improvement over PNBHF in the later period. Inthe case of HDFC the net profit margin was in the range of 11.32% to 23.20%over the period of study. Return on net worth: - The ratio had considerable variation in the case of PNBHFfrom 49.23% to 40.26%. The ratio also showed a comparatively little variationand was at a reasonable level for both HDFC and LICHF during the period of thestudy

A Paper entitled Retail Banking Emerging Issue in Home Loan by Rao K. N.et.al. (2005)In this paper the authors revealed that during 2002-03 housing loans by banks

grew at a hefty growth rate of more than 100%. The factors that contributed to thisaggressive growth in the portfolio of housing loans of banks and HFC are: Taxintensives on repayment of principal and interest, rising income level of middle class,falling interest rate, stable real estate prices, easy availability of housing loans, lowreturns on the investment opportunities available in the market. They also concludedthat although there is strong growth in housing loans by financial situations in India, weare still behind the developed countries in terms of housing loans to GDP ratio. In Indiait is around 2.5% compared to 57% in the UK and 54% in the US. It shows that there isa vast scope for housing loans in India. One economist has argued that every rupeespent on the housing sector will increase the GDP by more than 75 paise. It alsocreates a labour intensive. Despite the immense growth in housing loans there are

certain challenges that the banks might face in the time to come, e.g. falling rate ofinterest, rising mismatch in the assets and liabilities of the bank, rising NPA in thehousing loan portfolio, etc.

A Research Article entitled Housing Loan Frauds in Banks: Some PrecautionaryMeasures by Phogat M. (2006)This article gives the measures for the housing loan frauds in banks. The authorconcluded that housing for all envisaged 2 million houses every year out of which 0.7million are in the urban sector. Government provided certain relief under Income Tax

Act. It motivated many people to avail housing loan. The author thinks that differentfrauds committed on various banks can be divided into the following two categories. i.e.Pre sanction and Post Sanction. KYC related due weakness in pre inspection, Benami

A/c, forged title deeds, by selling same flat to different people, inflated salary certificate,filing of IT return for the last three years in one lot and particularly by paying a nominalamount of tax, valuation of the property is manipulated to manage margin money arepost sanction fraud.The precautions may be taken at the bank level to avoid the assurance of fraud i.e.KYC norms be followed, main salary A/c should be verified, loan should be grantedagainst the flat / houses built by reputed builders only. An undertaking from the builders


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for not been sold to any other person, search report of property to be conducted by theadvocate, original title deeds, property tax, electricity bill, kept on records. Disbursementof loan should be made after spot verification, title deed should be scanned throughultra violet ray machines before mortgage and bank should independently verify thereport and no middle man should be involved in the process and entire KYC. So the

author points out that above mentioned precautions will enable the bankers to curbfrauds and public money can be saved.

A Paper entitled Housing Finance A Global Perspective by Rao K.N. (2006)According to Rao, housing finance is a long term proposition involving manyrisks for the lenders, borrowers and even for the economy in general. As housingfinance is a long term game, it requires proper asset-liability management strategy, theborrowers also face interest rate risk, especially when they are locked in fixed rateswhen interest rates are falling and floating rates are rising. The author mentions in thisarticle that home loans have been registering exponential growth in India during the lastsix years. Easy liquidity conditions, low interest rates, availability of tax shelters on

repayment of principal and interest surging demand from middle income groupborrowers, lower regulatory capital, the comfort of tangible security have all collectivitycontributed to the spurt in home loans. HDFC, ICICI and SBI are the major players indisbursement of home loans. These banks sanction upto 85% of the cost of the propertyas home loan for a maximum period of 20 to 30 years. In US, GSE that are instrumentalin the high percentage of home ownership. These two enterprises enjoy implicitgovernment guarantee and consequently raise long term funds globally at low interest.Consequently, the interest rates on home mortgage loans have become relativelycheaper and affordable for middle and low income groups. Europe has a very advancedmortgage market. In Italy foreclosure will fructify in 120 months whereas it takes just 6months in Sweden and 9months in the Netherland. Securitization route is employed by

banks essentially to raise finance securitization process have given tremendous thrustto housing finance in countries like the US and Europe. It is a process of sellinghomogeneous loans for cash by the financing banks, to a special purpose vehicle. TheSPV in turn collects money by selling bonds, which have the security backing in theform of home mortgages. Chinese banks do not have any significant exposure tohousing loans. The Latin American countries do not have an efficient institutionalmechanism for disbursing housing loans.

A Paper entitled Is Housing Finance Safe as House? Or Delinquency in HousingFinance Authored by Srinivas S.P. (2006)The study revealed that disbursement of home loan increased at increasing growthrate during the growth rate of disbursement in 2000-01 compared to the earlier year was13.7% which increased up to 76% in 2002-03. The reasons behind the growth inhousing loans are,(i) Easy availability of housing loans(ii) Growing population(iii) Nuclear family system(iv) Newer segments for finance(v) Urbanization of Indian economy


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(vi) Shortage of dwelling units(vii) Declining of cost of house to income ratio etc and,(viii) Tax benefits.The study revealed that banks have also concentrated on housing loans becausethe housing loans are totally secured as the mortgage on the property securities the

loan.Also the capital adequacy requirement for general lending is at 100% for housing loans.The processing and documentation of housing loan is very easy due to extensiveutilization of technology. But there are also some common frauds occurring in housingfinance like an individuals inflate their income statement, manipulate the income taxreturns, inflate the value property, lack of appraisal & follow up etc. The researcher hasalso explained the new concept of NPL (Non-performing loan). The housing finance hasbeen associated very low risk. But empirical evidence suggest that non-performing loanin the Indian housing finance sector are much higher than in a developed market. NPLrise in India because of willing defaulters and an emerging population of fraudsters. Thisis also a reflection of industrys aggressive marketing and some inadequacies in

appraisal standards and system. Such high NPL have two-fold impact i.e. they depressyield and entail a credit cost in the form of provisioning and write-off. The researcheralso found that the NPL of housing finance companies are higher than the banks. Thesuggestion given by researcher is that if the banks have not taken the prudential normsfor housing loans they have to conduct recovery mela instead of present loan mela.

A Research Article entitled Housing Finance in India A Case Study of LICHousing Finance Limited by Singh Fulbag et.al. (2006)In this paper, the authors have studied the housing finance in India. Housing, asone of the three basic needs of life, always remains on the top priority of any person,economy, government and society at large. In India, majority of the population lives in

slums and shabby shelters in rural areas. From the last decade, the Government ofIndiahas been continuously trying to strengthen the housing sector by introducing varioushousing loan schemes for rural and urban population. The first attempt in this regardwas the National Housing Policy (NHP), which was introduced in 1988. The NationalHousing Bank (NHB) was set up in 1988 as an apex institution for housing finance anda wholly-owned subsidiary of Reserve Bank of India (RBI). The main objective of thebank is to promote and establish the housing financial institutions in the country as wellas to provide refinance facilities to housing finance corporations and scheduledcommercial banks. Moreover, for the salaried section, the tax rebates on housing loanshave been introduced. The paper is based on the case study of LIC Housing FinanceLtd., which analyzes region-wise disbursements of individual house loans their portfolioamounts and the defaults for the last ten years, i.e., from 1995-96 to 2004-05 byworking out relevant ratios in terms of percentage and the compound annual growthrates.

A Research Article entitled Housing Loan Frauds: Are they Avoidable? byPadhi Manohar (2007)This article addressed the key issues of housing loan frauds. Aggressive growth


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in housing finance by the banks is for the reasons of Tax incentives on repayment ofprincipal and interest, rising income level of the middle class, affordable interest rate,completion amongst banks and housing finance institutions, low returns on otherinvestments, low incidence of NPA, and housing as priority sector lending for banks.Housing loans as a percentage of GDP, is 57% in UK, 54% in USA and it is only 2.5%

in India. It shows vast scope for housing loans in India. Increased focus of banks inhousing finance is also not free from fraud. Fraud is one of the reasons for turning thehousing loan account to NPA. The main reason for housing loan turning NPA are loss of

job, closure of the factory/company, illness of the borrower, dispute between builder andborrower, over-finance to the borrower, agents approaches the bank for section ofhousing loans in bunches, sections of loan on fabricated documents without properverification (Benami A/C, submission of fake title deeds of immovable property, coloredXerox copy of the title deed, subject of fake income certificate etc.) but theprecautionary measures prevent the frauds in housing finance like pre-sanctionappraisal, documentation and creation of charge and post-sanction follow-up. The otherpreventive measures like Identification of Borrower, Guarantor and Branch should insist

opening of bank A/C as per KYC Norm, pre sanction verification report, site verification,existence of property, valuation of property photo of the immovable property, approvalof map and cost-estimate, scrutiny of title, end-use verification of amount disbursed.Pay order should be issued in the name of banker, cross verification with balance sheetdocument of title should be in DEMAT form, in case of large value of loan bankapproach subregistrars office to verify, Bank should develop in-house expertise etc.

A Research Article entitled Reverse Mortgage - A Novel Financial Product forElderly People by Bhattacharjee K. (2007)

A reverse mortgage is a home equity loan offered to senior citizens that permitsthem to convert home equity into cash while they retain ownership. A reverse mortgage

works like a traditional mortgage loan, only in reverse direction. A borrower does notmake regular payments to a lender; instead he/she receives payments from the lender.The first reverse mortgage loan launched by Dewan housing in 2006. Reversemortgage product name was Saksham. Then ICICI and NHB launched a new productof reverse mortgage. Reverse mortgage can provide a valuable income source forseniors who own property but lack liquid assets. So it is mainly meant for home-richsenior citizens who are otherwise cash-poor. This is precisely the scenario wherereverse mortgage products can be a boon to senior citizens and a business for thelenders.

A Research Study entitled Housing Advances and Commercial Banks: AReview Authored by Vimala P. (2007)The objectives of the study were:1) To review the housing advances of commercial banks in Kerala.2) To compare the performance of different bank groups in respect ofhousing advances.The study covered a period of seven years from March 2000 to March 2006 andthe secondary data are used in the study. For the purpose of the study, commercialbanks are grouped into four categories. The study revealed that there is no significant


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difference in the growth rate of housing advances by different bank groups in state.Kruskal Wallis (H-Test) was applied to arrive at this conclusion. The amount of housingloan disbursed by RRB which was ` 6.09 crore in 1999-2000 rose to 236.35 crore in2005-06 showing a CGR of 85% which was the highest amount of all categories.

A Paper entitled Housing Finance Sector in India An Overview by Sreelaxmi P.(2007)The author stated that housing has always been an important agenda for theGovernment of India. It generates national income by creating employment and helpsthe individuals in their socio economic development. It gives impetus to the economyby enhancing capacity utilization of related industries such as steel, cement,transportation, etc. The home loan sector in India is on a boom. The new class of youngbuyers, whose affordability is high, is spending a little more on paying EMI rather thanspending huge amounts on the rents, thereby owning a house. The government is alsoencouraging this sector by allowing tax benefits. The housing finance sector shows anexponential growth as compared to the other areas of credit. The annual growth rates

(in %) of direct housing finance disbursals by the Primary Lending Institution during2001-02, 2002-03, 2003-04 and 2004-05 were 25,76,29 and 32 respectively. Whilehousing finance is experiencing exponential growths, the menace of bad loans cannotbe ignored. These loans required better monitoring, fair assessment of property andcompliance with end use principles and because of the Securitizations Act, banks arenow able to overcome the problem of non- performing Assets e.g. In 2004-05,percentage of NPA in housing finance was only 1.4 compared to 2.80% in case ofbanks total retail credit. Once the loan is sanctioned the job of the lender is not over. Hehas to exercise vigilance and monitor the payments of installments by the borrowers. Itis advisable to make periodical review of the borrowers financial position to ensure hiscapabilities of prompt payments of installments. The researchers suggest that the

industry has been constructing stories on a safe foundation. It will continue to thrive solong as it plays safe averting NPAs. Necessary measures like takeover of bad loans, fairassessment of property and employee morale may be taken by the financial institutionby improving their performance and avoiding NPAs.

A Research Paper entitled Risk in Real Estate Financing Authored by Bagchi S.(2008)The author has analyzed the factors affecting risk and suggests that real estatefinancing will be the order of the day in a new age bank / Institution lending in theinterest of the development of the country. Real estate financing is no longeruntouchable as it used to be before 1990s. It is also a fact that this sector contains ahigher order risk of default and lower order scope of eventual recovery since the fateof real estate is interwoven with macro-economic fundamentals and volatility of assetprices. The researcher has given the following suggestions to avoid risk factors in realestate financing. Land records at the land registration offices have to be streamlined and broughtunder the contemporary technology support system. Bank/Financial institutions should create a special cadre of credit investigationoffices who need to perform like private detectives to ascertain the track record of


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the borrowers. No loan/advance should be granted by way of equitable mortgage but a simplifiedregistered mortgage system can be devised with provision for low registration feefor loans against any real estate. Title Insurance system should be devised to enable lenders to obtain insurance

cover from any approved insurance company. At the Corporate head quarters of each banks/financial institution there shouldbe a cell known as Real Estate Financing Cell which should be involved in theentire cycle starting with sanction and disbursement of such loan to periodicalmonitoring and recovery thereof.

A Paper entitled Rural Housing in India: Problem and Prospects Authored byDinesha P. et.al. (2008)The data released by the census of India on house, households, amenities andassets for 2001, indicate that total number of household in rural area is 138.27 millionas against the availability of 135.05 millions house of which nearly 11.14 million house

were non-serviceable kuchcha/temporary houses needing replacement. Thus, theyconsider the requirement of houses in rural area is about 14.6 million units. There isalso regional imbalance in rural housing in India. Most of North Eastern states haveachieved better performances in housing production and have successfully mitigatedthe problem of housing shortage to a very large extent. Apart from this, Tamilnadu,Bihar and Andhra Pradesh have also successfully mitigated the housing shortageprogrammes by 2001. However, unfortunately housing problem has either becomeaggravated or has remained unchanged in states like Gujarat, Haryana, HimachalPradesh, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Uttar Pradesh andWest Bengal. Another serious dimension of housing problem is related to housingamenities like drinking water, sanitation, lighting and drainage connection. The number

of rural household deprived of all four amenities has increased from 73.1 to 78.5 millionalthough the deprivation percentage was reduced to 56.80 from 65.53. Priority shouldbe given to rural area while allocating resources as they represent countrys worsthousing situation. Institutional finance at affordable rate is one of the prerequisites foraccelerating the availability of housing finance. However government also adoptedmany strategies but it has not reached interior and most needy part of the country. Soall-round efforts and developments as well as from people to achieve the goal ofhousing for every household with sustainable manner is the need of the hour.

A Paper entitled Housing Finance: Problems and Prospects Authored byRajasekhar D. et.al. (2008)The objective of the study was to analyse the trend in the growth and structure ofLICHFL in Chennai city and to evaluate the relative performance of LICHFL inproviding housing loans in Chennai city. One hundred respondents have been selectedon the basis of random sampling technique. Researcher used conventional statisticaltools like percentage and average for analyzing perception of the borrowers about theLICHFL.Linkert scaling test was used. The study revealed that in Chennai, 34% of therespondents have reported that the institution provides loan at low rate of interest, 33%


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have reported easy installments, 31% reported that they approached for simpleprocedure and formalities and only a negligible 2% of the respondent represents locatednear to their house. The other findings of the study are: 45% of the respondents have bought loan for purchase of house, 37% of havebought the loan for purchase of flat, 16% for construction of house and remaining

2% for other reasons. 93% of the sample respondents preferred the flexible type rate and 7% preferredfixed rate of interest. The researchers suggest that the deposit of title deed is the most requireddocument at the time of getting loan from the institution. The study shows that54%, 36% and 10% of the respondents preferred the repayable period of morethan 10 years, more than 15 years and more than 5 years respectively. So, themajority of the respondents preferred more than 10 year to settle their loanamount. 53%, 27% and 14% of the respondents were paying their loan amount throughECS, through postdated cheque and through the collecting bank respectively. So,

it may be concluded from the above result that majority of the respondentspreferred to pay their loan amount through the Electronic Clearing System. A large majority i.e. 75% of sample respondents reported that there is delay insanction and disbursement of loan amount.

A Paper entitled Whether Todays Customers are satisfied? A Study withBanksAuthored by Ashok Kumar M. et.al. (2009)The objective was to rank the banks on the basis of customers satisfaction and tofind out the problems faced by the present day customers with the banker and to makesuggestions for better working of the banking services. The study is restricted to

Coimbatore headquarters only. Only 105 customers were considered as sample for thestudy which was conducted during the months of May and June, 2008. SBI and itsassociate bank were taken for the study. The findings of the study are: 42.86% of the respondents are in the age group of 31-40 years. 68-57% aremarried, 42.86% have post-graduate education, 36.19% are businessman, and35.24% are employed. 37.14% respondents income range between `1,000 to`15,000.With infrastructure 51% of the respondents were found to be satisfied. Withregard to location of the bank, 25% of their customers are highly satisfied. Regarding attitude of the bankers toward its customers, only 59% are found to besatisfied and only 6.7% were found to be highly satisfied. Regarding investment opportunities, 35% of the respondents are satisfied 16.19% of the respondents were dissatisfied regarding advice towards investment. 51% of the customers are satisfied with the banks the behaviour towardscustomers by the bank employees. Regarding Evening Banking services, phone banking services & Sunday bankingservices there were 33%, 18% and 11% dissatisfied customers respectively.With regards to the core banking service only 28.9% of the respondents wereaware of the functioning of CBS, with regards to online banking services 70% and


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the functions of smart card, digital cash and e-purse 69% respondents aresatisfied. 80% of the customers are satisfied with the proximity of the ATM. 41% are satisfied regarding the approach of banks towards redressal. Overall rate compared to age and income was found to be significant whereas rest

of the factors considered do not have significant influence on the other. Theresearcher suggested that,- The facilities of the bank should be made more convenient for customercomforts.- The ATM services should be extended with few more cabins.- Customer meets should be organized at reasonable intervals so that theycan establish better rapport with the customers and educate them about thelatest advancement made in the bank.-Additional branches can be opened to reduce the burden of work on theexisting branch.

- The banks should improve the working performance of operations.

Research Article entitled Multiple Home Loans Systematic Gaps SuggestedTherapy Authored by Bagchi S. (2008)Institutional provision of home loans is a societal compulsion and, as such, is afull scale national priority of emerging economy like India. The existing regulatory andinstitutional framework in India for meeting the growing needs of the people to owntheir nest is fairly adequate and should continue. But recent reports from varioussources indicate that some home loan borrowers have been playing foul with banks inoffering mortgage of the same property to a number of banks by providing falseownership deeds /documents. Usually this type of fraud appears because Banks, generally, prefer to

obtain simple deposit of title deeds i.e. (mortgage by deposit of title deeds) but it wasfound that title deeds of some property were offered by having multiple registrations ofthe property, false income details, credit officer not investigating properly borrowersincome level,genuineness of title deeds etc.

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