Housing Loan Taken From Vysha Co Operative Bank (Autosaved) (Repaired)

A Study on Housing Loan taken from Vysya Co-operative Bank Ltd, Tumkur
INTRODUCTION
1.1INTRODUCTION ABOUT THE BANK:
A Bank is a financial institution that provides banking and other financial services to
their customers. A bank is generally understood as an institution which provides
fundamental banking services such as accepting deposits and providing loans. There
is also there is also non banking institution that provides certain banking services
without meeting the legal definition of a bank. Bank are a subset of financial service
industry. A bank system also referred as a system provided by bank which offers cash
management services customers, reporting the transaction of their accounts and
portfolios, throughout the day. The banking systems in India should not only be hassle
free but it should be able to meet the new challenges posed by the technology and any
other external and internal factors .for the past three decades, Indias banking system
has several outstanding achievements to its credit. The banks are the main participates
of the financial systems in India.The banking sector offers several facilities and
opportunities to the customers. All the bank safeguard the money and valuable and
provides loans, credit payments,services,such as checking accounts, money ,orders
and cashiers cheques .The bank also offers investment and insurance products. As a
variety of models for cooperation and integration among finance industries have
emerged, some of the traditional distinctions between banks insurance company and
securities firms have diminished. In spite of these changes, banks continue to
maintain and perform their primary role-accepting deposits and lending funds from
these deposits.
Banking is today an integral part of our everyday life. Athome, at school, atoffice,
atbusiness, on travel everywhere we counter some aspect of banking. The significance
of banking in our day to day life is being felt increasingly. Moneyplays a dominant
role in todays life. Forms of money have evolved from coins to paper currency notes
to credit cards. Commercialtransactions have increased to content and quantity from
simple bankers to speculative international trading. Hence the need arose for third
parity that will assist smooth banding of transaction,
Dept. of PG Studies in Commerce, SSIBM, Tumakuru
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mediate between the seller and buyer, hold custody of money goods, remit funds and
also collect proceeds. Such mediating agencies gave birth to the concept of banks and
banking.
1.2 OVERVIEW OF THE BANKING INDUSTRY:
Banking in India originated in the last decades of the 18th century. The oldest bank
inexistence in India is the State Bank of India, a government-owned bank that traces
its origins back to June 1806 and that is the largest commercial bank in the country.
Central banking is the responsibility of the Reserve Bank of India, which in 1935
formally took over these responsibilities from the then Imperial Bank of India,
relegating it to commercial banking functions. After India's independence in 1947, the
Reserve Bank was nationalized and given broader powers. In 1969 the government
nationalized the 14 largest commercial banks; the government nationalized the six
next largest in 1980.Currently, India has 88 scheduled commercial banks (SCBs) - 27
public sector banks (that is with the Government of India holding a stake), 29 private
banks (these do not have government stake, they may be publicly listed and traded on
stock exchanges) and 31 foreign banks. They have a combined network of over
53,000 branches and 17,000ATMs. . According to a report by ICRA Limited, a rating
agency, the public sector banks hold over 75 percent of total assets of the banking
industry, with the private and foreign banks holding 18.2% and 6.5% respectively.
1.3EARLY HISTORY:
Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India, which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India is the
State Bank of India, which originated in the Bank of Calcutta in June 1806, which
almost immediately became the Bank of Bengal. This was one of the three presidency
banks, the other two being the Bank of Bombay and the Bank of Madras, all three of
which were established under charters from the British East India Company. For
many years the Presidency banks acted as quasi-central banks, as did their successors.
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The three banks merged in 1925 to form the Imperial Bank of India, which, upon
India's independence, became the State Bank of India. Indian merchants in Calcutta
established the Union Bank in 1839, but it failed in 1848 as a consequence of the
economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still
functioning today, is the oldest Joint Stock bank in India. When the American Civil
War 7 stopped the supply of cotton to Lancashire from the Confederate States,
promoters opened banks to finance trading in Indian cotton. With large exposure to
speculative ventures, most of the banks opened in India during that period failed. The
depositors lost money and lost interest in keeping deposits with banks. Subsequently,
banking in India remained the exclusive domain of Europeans for next several
decades until the beginning of the 20th century. Foreign banks too started to arrive,
particularly in Calcutta, in the 1860s. The Comptoire d 'Escompte de Paris opened a
branch in Calcutta in 1860, and another in Bombay in 1862, branches in Madras and
Pondicherry, then a French colony, followed. Calcutta was the most active trading
port in India, mainly due to the trade of the British Empire, and so became a banking
center. Around the turn of the 20th Century, the Indian economy was passing through
a relative period of stability. Around five decades had elapsed since the Indian
Mutiny, and the social, industrial and other infrastructure had improved. Indians had
established small banks, most of which served particular ethnic and religious
communities. The presidency banks dominated banking in India but there were also
some exchange banks and a number of Indian joint stock banks. All these banks
operated in different segments of the economy. The exchange banks, mostly owned
by Europeans, concentrated on financing foreign trade. Indian joint stock banks were
generally undercapitalized and lacked the experience and maturity to compete with
the presidency and exchange banks. This segmentation let Lord Curzon to observe,
"In respect of banking it seems we are behind the times. We are like some old
fashioned sailing ship, divided by solid wooden bulkheads into separate and
cumbersome compartments." By the 1900s, the market expanded with the
establishment of banks such as Punjab National Bank , in 1895 in Lahore and Bank of
India, in 1906, in Mumbai- both of which were founded under private ownership.
Punjab National Bank is the first Swadeshi Bank founded by the leaders like Lala
Lajpat Rai, Sardar Dyal Singh Majithia. The Swedish movement in particular inspired
local businessmen and political figures to found banks of and for the Indian
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community. A number of banks established then have survived to the present such as
Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and
Central Bank of India. The fervor of Swedish movement lead to establishing of many
private banks in Dakshina Kannada 8 and Udupi district which were unified earlier
and known by the name South Canara( South Kanara ) district. Four nationalized
banks started in this district and also a leading private sector bank. Hence undivided
Dakshina Kannada district is known as "Cradle of Indian Bank
FROM WORLD WAR 1 TO INDEPENDENCE:
The period during the First World War (1914-1918) through the end of the Second
World War (1939-1945), and two years thereafter until the independence of India
were challenging for Indian banking. The years of the First World War were turbulent,
and it took its toll with banks simply collapsing despite the Indian economy gaining
indirect boost due to war-related economic activities.
POST INDEPENDENCE:
The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal, paralyzing banking activities for months. India's independence marked the
end of a regime of the Laissez-faire for the Indian banking. The Government of India
initiated measures to play an active role in the economic life of the nation, and the
Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed
economy. This resulted into greater involvement of the state in different segments of
the economy including banking and finance. The major steps to regulate banking
included:
In 1948, the Reserve Bank of India, India's central banking authority, was
nationalized, and it became an institution owned by the Government of India. In
1949, the Banking Regulation Act was enacted which empowered the Reserve Bank
of India (RBI) "to regulate, control, and inspect the banks in India."
The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
common directors. However, despite these provisions, control and regulations, banks
in India except the State Bank of India, continued to be owned and
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Operated by private persons. This changed with the nationalization of major banks in
India on 19 July, 1969.
NATIONALIZATION:
By the 1960s, the Indian banking industry has become an important tool to facilitate
the development of the Indian economy. At the same time, it has emerged as a large
employer, and ad abate has ensued about the possibility to nationalize the banking
industry. Indira Gandhi, the Prime Minister of India expressed the intention of the
GOI in the annual conference of the All India Congress Meeting in a paper entitled"
Stray thoughts on Bank Nationalization." The paper was received with positive
enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an
ordinance and nationalized the 14 largest commercial banks with effect from the
midnight of July 19,1969.Jayaprakash Narayan, a national leader of India, described
the step as a master stroke of political sagacity.
Within two weeks of the issue of the ordinance, the10 Parliament passed the
Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received
the presidential approval on 9 August, 1969.A second dose of nationalization of 6
more commercial banks followed in 1980. The state reason for the nationalization
was to give the government more control of credit delivery. With the second dose of
nationalization, the GOI controlled around 91% of the banking business of India.
Later on, in the year 1993, the government merged New Bank of India with Punjab
National Bank. It was the only merger between nationalized banks and resulted in the
reduction of the number of nationalized banks from 20 to 19. After this, until the
1990s, the nationalized banks grew at a pace of around 4%, closer to the average
growth rate of the Indian economy. The nationalized banks were credited by some;
including Home minister P. Chidambaram, to have helped the Indian economy
withstand the global financial crisis of 2007-2009.
LIBERIZATION:
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In the early 1990s, the then Narasimham Rao government
embarked on a policy of liberalization, licensing a small number of private banks.
These came to be known as New Generation tech- savvy banks, and included Global
Trust Bank (the first of such new generation banks to be setup), which later
amalgamated with Oriental Bank of Commerce, UTI Bank, ICICI Bank and HDFC
Bank. This move, along with the rapid growth in the economy of India, revitalized the
banking sector in India, which has seen rapid growth withstrong contribution from all
the three sectors of banks, namely, government banks, private banks and foreign
banks. The next stage for the Indian banking has been setup with the proposed
relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in
banks may be given voting rights which could exceed the present cap of 10%, at
present it has gone up to 49% with some restrictions. The new policy shook the
Banking sector in India completely. Bankers, till this time, were used to the 4-6-4
method of functioning. The new wave ushered in a modern outlook and tech-savvy
methods of working for traditional banks. All this led to the retail boom in India.
People not just demanded more from their banks but also received more.
Currently (2007), banking in India is generally fairly mature in terms of supply,
product range and reach-even though reach in rural India still remains a challenge for
the private sector and foreign banks. In terms of quality of assets and capital
adequacy, Indian banks are considered to have clean, strong and transparent balance
sheets relative to other banks in comparable economies in its region. The Reserve
Bank of India is an autonomous body, with minimal pressure from the government.
The stated policy of the Bank on the Indian Rupee is to manage volatility but without
any fixed exchange rate-and this has mostly been true. With the growth in the Indian
economy expected to be strong for quite some time-especially in its services sectorthe demand for banking services, especially retail banking, mortgages and investment
services are expected to be strong. One may also expect M&As, takeovers, and asse t
sales.In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase
its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time
an investor has been allowed to hold more than 5% in a private sector bank since the
RBI announced norms in 2005 that any stake exceeding 5% in the private sector
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banks would need to be vetted by them. In recent years critics have charged that the
non-government owned banks are too aggressive in their loan recovery efforts in
connection with housing, vehicle and personal loans. There are
Press reports that the banks' loan recovery efforts have driven defaulting borrowers to
suicide.12
1.4CHARACTERSTICS/FEATURES OF BANK:
1. Dealing in Money
Bank is a financial institution which deals with other people's money
i.e. money given by depositors.
2. Individual / Firm / Company
A bank may be a person, firm or a company. A banking company
means a company which is in the business of banking.
3. Acceptance of Deposit
A bank accepts money from the people in the form of deposits which are usually
repayable on demand or after the expiry of a fixed period. It gives safety to the
deposits of its customers. It also acts as a custodian of funds of its customers.
4. Giving Advances
A bank lends out money in the form of loans to those who require it for
different purposes.
5. Payment and Withdrawal
A bank provides easy payment and withdrawal facility to its customers in the form of
cheques and drafts. It also brings bank money in circulation. This money is in the
form of cheques, drafts, etc.
6. Agency and Utility Services
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A bank provides various banking facilities to its customers. They include general
utility services and agency services.
7. Profit and Service Orientation
A bank is a profit seeking institution having service oriented approach.
8. Ever increasing Functions
Banking is an evolutionary concept. There is continuous expansion and
diversification as regards the functions, services and activities of a bank.
9. Connecting Link
A bank acts as a connecting link between borrowers and lenders of money. Banks
collect money from those who have surplus money and give the same to those who
are in need of money.
10. Banking Business
A bank's main activity should be to do business of banking which should not be
subsidiary to any other business.
1.5TYPES OF BANKS
Sources: www.investiopedia.com.
1. Commercial Bank:
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According to the RBI, Commercial Banks refer to both scheduled and non-scheduled
commercial banks which are regulated under Banking Regulation Act, 1949.
Commercial banks operate on a for-profit basis. They primarily engage in the
acceptance of deposit and extend loans to the general public, businesses and the
government.
2. Scheduled Banks:
By definition, any bank which is listed in the 2nd schedule of the Reserve
Bank of India Act, 1934 is considered a scheduled bank. The list includes the State
Bank of India and its subsidiaries (like State Bank of Travancore), all nationalized
banks (Bank of Baroda, Bank of India etc), regional rural banks (RRBs), foreign
banks (HSBC Holdings Plc, Citibank NA) and some co-operative banks. These also
include private sector banks, both classified as old (Karur Vysya Bank) and new
(HDFC Bank Ltd).
To qualify as a scheduled bank, the paid up capital and collected funds
of the bank must not be less than Rs5 lakh. Scheduled banks are eligible for loans
from the Reserve Bank of India at bank rate, and are given membership to clearing
houses.
3. Non-scheduled Banks:
Non-scheduled banks by definition are those which are not listed in
the 2nd schedule of the RBI act, 1934. Banks with a reserve capital of less than 5 lakh
rupees qualify as non-scheduled banks. Unlike scheduled banks, they are not entitled
to borrow from the RBI for normal banking purposes, except, in emergency or
abnormal circumstances. Jammu & Kashmir Bank is an example of a nonscheduled commercial bank.
4. Co-operative bank:
Co-operative banks operate in both urban and non-urban areas. All banks registered
under the Cooperative Societies Act, 1912 are considered co-operative banks. These
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are banks run by an elected managing committee with provisions of members rights
and a set of communally developed and approved bylaws and amendments.
In the urban centres, they mainly finance entrepreneurs, small businesses, industries,
and self-employment and cater to home buying and educational loans. Likewise, cooperative banks in the rural areas primarily cater to agricultural-based activities,
which include farming, livestocks, dairies and hatcheries etc. They also extend loans
to small scale units, cottage industries, and self-employment activities like
artisanship.
Unlike commercial banks, who are driven by profit, co-operative banks work on a
no profit, no loss basis. These are regulated by the Reserve Bank of India under the
Banking Regulation Act, 1949 and Banking Laws (Application to Co-operative
Societies) Act, 1965.
5. Regional Rural Banks:
Regional Rural Banks or RRBs, simply put, serve the rural areas and agricultural
sectors with basic banking and adequate financial services. They were set up in 1975,
based on the recommendations of a committee. Based in Moradabad, Prathama Bank,
established on 2 October 1975, is the first RRB to open in India. It was sponsored by
Syndicate Bank. The RRBs are owned by the central government (50%), the state
government (15%) and the sponsor bank (35%). Several commercial banks have
sponsored RRBs. Prominent examples include the Maharashtra Garmin Bank
(sponsored by the Bank of Maharashtra) and the Himachal Garmin Bank (sponsored
by Punjab National Bank). RRBs were set up to eliminate other unorganized financial
institutions like money lenders and supplement the efforts of co-operative banks.
1.6 INTRODUCTION ABOUT FINANCE:
Finance is a field that deals with the study of investments. It includes the dynamics of
assets and liabilities over time under conditions of different degrees of uncertainty
and risk. Finance can also be defined as the science of money management. A key
point in finance is the time value of money, which states that purchasing power of one
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unit of currency can vary over time. Finance aims to price assets based on their risk
level and their expected rate of return. Finance can be broken into three different subcategories: public finance, corporate finance and personal finance.
1.7 FEATURES OF FINANCE:
Sources: Financial management-shashi.k.gupta.
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The main characteristics or features of finance are depicted below:
1. Investment opportunities:
In Finance, Investment can be explained as a utilization of money for profit or
returns. Investment can be done by:
Creating physical assets with the money (such as

development of land, acquiring commercial assets,
etc.),
Carrying on business activities (like manufacturing,
trading, etc.), and

Acquiring financial securities (such as shares, bonds,
units of mutual funds, etc.).

Investment opportunities are commitments of monetary
resources at different times with an expectation of
economic returns in the future.
2. Profitable Opportunities:
In Finance, Profitable opportunities are considered as important aspiration (goal).
Profitable opportunities signify that the firm must utilize its available resources most
efficiently under the conditions of cut-throat competitive markets.
Profitable opportunities shall be a vision. It shall not result in short-term profits at the
expense of long-term gains.
For example, business carried on with non-compliance of law, unethical ways of
acquiring the business, etc., usually may result in huge short-term profits but may also
hinder the smooth possibility of long-term gains and survival of business in the
future.
3. Optimal Mix of Funds:
Finance is concerned with the best optimal mix of funds in order to obtain the desired
and determined results respectively.
Primarily, funds are of two types, namely,
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Owned funds (Promoter Contribution, Equity shares, etc.), and

Borrowed funds (Bank Loan, Bank overdraft, Debentures, etc).
The composition of funds should be such that it shall not result in loss of
profits to the Entrepreneurs (Promoters) and must recover the cost of business
units effectively and efficiently.
4. System of Internal Controls

Finance is concerned with internal controls maintained in the
organization or workplace. Internal controls are set of rules and regulations framed at
The inception stage of the organization, and they are altered as per the requirement of
its business.
However, these rules and regulations are monitored at various intervals to accomplish
the same which have been consistently followed.
5. Future Decision Making

Finance is concerned with the future decision of the organization "Good Finance is
an indicator of growth and good returns. This is possible only with the good
analytical decision of the organization. However, the decision shall be framed by
giving more emphasis on the present and future perspective (economic conditions)
respectively.
1.8 CATEGORIES OF FINANCE:
Finance can be broken into three different sub categories: public finance, corporate
finance and personal finance. All three of which would contain many sub-categories.
1. Public Finance:
Public Finance is a part of study of Economics. It borders on the fields of government
and political science. Public finance is the study of the financial activities of
governments and public authorities. Public finance describes finance as related to
sovereign states and sub-national entities (like states/provinces) and related public
entities (e.g. municipal corporations) or agencies. It describes and analyses the
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expenditures of governments and the techniques used by governments to finance
these expenditures. It is concerned with the identification of required expenditure of a
public sector entity and sources of revenue and the budgeting process. Public finance
analysis helps us to understand why certain services have come to be supplied by
government, and why governments have come to rely on particular types of taxes.
2. Corporate Finance:
Corporate finance is the task of providing the funds for a corporation's activities by
raising and administering funds. Corporate finance aims at studying the funding of
assets from various sources like market, general public, or various financial
institutions. In this process corporate finance aims to balance risk and profitability,
while attempting to maximize an entity's wealth and the value of its stock. The
importance of corporate finance is underlined by economic and social significance in
terms of increase in public responsibility as the organization grows and wide
distribution of the corporate ownership in the process separating ownership from
management.
3. Personal Finance:
Personal finance refers to the financial decisions which an individual must make to
plan for his future. These decisions include obtaining monetary resources, planning
application of income, budgeting, deciding on amounts and mode of saving, and
decisions around spending monetary resources over time. During this process one is
expected to take into account various financial risks and future life events that may
impact current income levels or projected incomes and must plan for them.
1.8 OTHER CATEGORIES OF CLASSIFICATION OF FINANCE:
1. Direct & Indirect Finance:
The finance could be of two types:
Direct Finance: In this case the borrower directly borrow funds from the lender in
the financial markets by selling them securities (also called financial instruments),
which are claim on the borrowers future income/assets or reserves and entitle the
borrower with partial ownership if the funds have be raised using equity.
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Indirect Finance: In this case the role of channelizing the funds from the savers to
borrowers is done through financial intermediaries (example commercial banks).
2. Short Term & Long Term Finance:
Money is needed to setup any kind of business. A business owner can look for the
investors to invest money in the business and this money can be borrowed for short
term or long term.
Long Term Finance: Long term finance is generally used for investment in fixed
assets such as land and building, plant and machinery etc. and is not repayable with in
short period of time.
Short Term Finance: Short term finance is used for investment in working capital. It
is used to meet the short term needs of the business. It may be repayable in short term
or on demand as in case of a cash credit account. Short term loans are usually
repayable within a period of one to three years.
3. Sources of Finance:
The sources of funds can be broadly divided into owned capital and borrowed funds.
Owned Capital: Owned capital is the money brought in by the businessman himself
and sometimes referred to as capital or equity capital.
Borrowed Capital: Borrowed capital is the money advanced by outside agencies like
banks, financial institutions etc. generally in the form of loan.
1.9 ABOUT FINANCIAL MANAGMENT
Financial management refers to the efficient and effective management of money
(funds) in such a manner as to accomplish the objectives of the organization. It is the
specialized function directly associated with the top management. The significance of
this function is not seen in the 'Line' but also in the capacity of 'Staff' in overall of a
company. It has been defined differently by different experts in the field.
The term typically applies to an organization or company's financial strategy, while
personal finance or financial life management refers to an individual's management
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strategy. It includes how to raise the capital and how to allocate capital, i.e. capital
budgeting. Not only for long term budgeting, but also how to allocate the short term
resources like current liabilities. It also deals with the dividend policies of the share
holders.
"Financial management refers to proper and efficient use of money" and it plays a
significant role in analyzing to invest in profitable business enterprise.Return on
Investment must be greater than the invested amount.
1.10 OBJECTIVES OF FINANCIAL MANAGMENT
1) Profit Maximization occurs when marginal cost is equal to marginal revenue. This
is the main objective of Financial Management.
2) Wealth maximization means maximization of shareholders' wealth. It is an
advanced goal compared to profit maximization.
3) Survival of company is an important consideration when the financial manager
makes any financial decisions. One incorrect decision may lead company to be
bankrupt.
4) Maintaining proper is a short run objective of financial management. It is
necessary for operations to pay the day-to-day expenses e.g. raw material,
electricity bills, wages, rent etc. A good cash flow ensures the survival of
company.
5) Minimization on capital cost in financial management can help operations gain
more profit.
1.11SCOPE OF FINANCIAL MANAGEMENT:
1. Estimating the Requirement of Funds:
Businesses make forecast on funds needed in both short run and long run, hence, they
can improve the efficiency of funding. The estimation is based on the budget e.g.
sales budget, production budget.
2. Determining the Capital Structure:
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Capital structure is how a firm finances its overall operations and growth by using
different sources of funds. Once the requirement of funds has estimated, the financial
manager should decide the mix of debt and equity and also types of debts.
3. Investment Fund:
A good investment plan could bring business huge return.
1.12 A THEORTICAL VIEW OF LOAN:
In finance, a loan is the lending of money from one individual, organization or entity
to another individual, organization or entity. A loan is a debt provided by an entity
(organization or individual) to another entity at an interest rate, and evidenced by a
promissory note which specifies, among other things, the principal amount of money
borrowed, the interest rate the lender is charging, and date of repayment. A loan
entails the reallocation of the subject assets for a period of time, between the lender
and the borrower.
In a loan, the borrower initially receives or borrows an amount of money, called the
principal, from the lender, and is obligated to pay back or repay an equal amount of
money to the lender at a later time.
The loan is generally provided at a cost, referred to as interest on the debt, which
provides an incentive for the lender to engage in the loan. In a legal loan, each of
these obligations and restrictions is enforced by contract, which can also place the
borrower under additional restrictions known as loan covenants. Although this article
focuses on monetary loans, in practice any material object might be lent.
Acting as a provider of loans is one of the principal tasks for financial institutions
such as banks and credit card companies. For other institutions, issuing of debt
contracts such as bonds is a typical source of funding.
1.13TYPES OF LOANS
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1. Secured
A secured loan is a loan in which the borrower pledges some asset
(e.g. a car or property) as collateral.
A mortgage loan is a very common type of loan, used by many individuals to
purchase things. In this arrangement, the money is used to purchase the property. The
financial institution, however, is given security a lien on the title to the house
until the mortgage is paid off in full. If the borrower defaults on the loan, the bank
would have the legal right to repossess the house and sell it, to recover sums owing to
it.
In some instances, a loan taken out to purchase a new or used car may be secured by
the car, in much the same way as a mortgage is secured by housing. The duration of
the loan period is considerably shorter often corresponding to the useful life of the
car. There are two types of auto loans, direct and indirect. A direct auto loan is where
a bank gives the loan directly to a consumer. An indirect auto loan is where a car
dealership acts as an intermediary between the bank or financial institution and the
consumer.
2. Unsecured
Unsecured loans are monetary loans that are not secured against
the borrower's assets. These may be available from financial
institutions under many different guises or marketing packages
Credit card debt
Personal loans
Bank overdrafts
Credit facilities or lines of credit.
Corporate bonds (may be secured or unsecured)
Peer-to-peer lending
The interest rates applicable to these different forms may vary depending on the
lender and the borrower. These may or may not be regulated by law. In the United
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Kingdom, when applied to individuals, these may come under the Consumer Credit
Act 1974.
Interest rates on unsecured loans are nearly always higher than for secured loans,
because an unsecured lender's options for recourse against the borrower in the event
of default are severely limited. An unsecured lender must sue the borrower, obtain a
money judgment for breach of contract, and then pursue execution of the judgment
against the borrower's unencumbered assets (that is, the ones not already pledged to
secured lenders). In insolvency proceedings, secured lenders traditionally have
priority over unsecured lenders when a court divides up the borrower's assets. Thus, a
higher interest rate reflects the additional risk that in the event of insolvency, the debt
may be uncollectible.
3. Demand:
Demand loans are short term loans that are typically in that they do
not have fixed dates for repayment and carry a floating interest rate
which varies according to the prime lending rate. They can be called
for repayment by the lending institution at any time. Demand loans
may be unsecured or secured.
4.Subsidized
A subsidized loan is a loan on which the interest is reduced by an
explicit or hidden subsidy. In the context of college loans in the
United States, it refers to a loan on which no interest is accrued
while a student remains enrolled in education.
5. Concession
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A concessional loan, sometimes called a soft loan, is granted on terms substantially
more generous than market loans either through below-market interest rates, by grace
periods or a combination of both. Such loans may be made by foreign governments to
developing countries or may be offered to employees of lending institutions as an
employee benefit.
TARGET MARKETS:
1. Personal
Loans can also be subcategorized according to whether the debtor is an individual
person (consumer) or a business. Common personal loans include mortgage loans, car
loans, home equity lines of credit, credit cards, installment loans and payday loans.
The credit score of the borrower is a major component in and underwriting and
interest rates (APR) of these loans. The monthly payments of personal loans can be
decreased by selecting longer payment terms, but overall interest paid increases as
well. For car loans in the U.S., the average term was about 60 months in 2009.
2. Commercial
Loans to businesses are similar to the above, but also include commercial mortgages
and corporate bonds. Underwriting is not based upon credit score but rather credit
rating.
1.15TYPES OF RETAIL LOANS:
Bank offers a wide range of retail loans to meet customer diverse needs. Whether the
need is for a new house, child's education, purchase of a new car or home appliances,
77banks unique and need specific loans enable customer to convert customer dreams
to realities.
1. Home Loan
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Home Loan is available for Purchase of new / old dwelling unit, Construction of
house, Purchase of plot of land for construction of a house. Customers repaying a
loan already taken from other Housing Finance Company / Bank. Repayment
period up to 25 years (floating rate option). Also for Repairs / Renovations /
Improvement / Extension of Home and for Furniture, Fittings & Fixtures.
2. Home Loans to NRIs / PIOs
Banks have also designed housing loan facility for NRI / PIO. Customer opt for
Flexi Rate plan to hedge the interest rate risk by breaking the loan into two
separate accounts, Free property insurance and personal accident insurance.
Borrower does not pay pre payment / foreclosure charges for part as well as full
prepayment (when repaid from own sources by the borrower).
3. Interest Subsidy Scheme For Housing The Urban Poor (ISHUP)
Affordable Housing for all is an important policy agenda of Government of
India and accordingly the Ministry of Housing and Urban Poverty Alleviation
(MH & 78UPA) has designed an Interest Subsidy Scheme as an additional
instrument for addressing the housing needs of Economic Weaker Section (EWS)
and Low Income Group (LIG) segment in urban areas. The scheme envisages the
provision of interest subsidy to EWS and LIG segments to enable them to buy or
construct houses.
4. Loan against Future Rent Receivables
Loan against future rent receivables has been developed considering the growth
potential in the real estate in various metros and urban areas, where many
commercial properties / shopping malls are being developed and the owners
approach banks for loans against securitization of future rent receivables from
such properties. Loan covers the target groups, viz. owners of immoveable
properties and the minimum and maximum loan limits are based on actual rent
income received during the particular year.
5. Mortgage Loan:
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Bank gives loan to the customer an innovative combination of a loan and over
draft facility with flexible repayment options against the security of customer is
immovable property. Benefits of this loan are ideal use of idle property - generate
additional income from idle property, customer withdraw money as per their need
and save on interest cost, deposit surplus money / regular income / salary and save
interest, flexibility to withdraw money deposited earlier. Banks also provide either
as overdraft or demand loan as per the customers need.
6. Education Loan:
Education is the most important investment one makes in life. Higher studies and
specialization in certain fields call for additional financial support from time to
time. Whether customers are planning for their child for school education (nursery
to standard XII) pursuing a graduate or post-graduate degree, the bank gives
Education Loans, to fulfil customers ambitions and goals.
7. Car Loan:
In today's fast paced world, a vehicle is a necessity. Yet other expenses and plans
in life take priority and the dream of owning a car takes a back seat. Whether as a
comfortable and dependable means of transport or as a status symbol in society, it
is 79believed that customer deserve ownership of a vehicle. Benefits of this loan
are -available up to ` 15 Lakhs for any car make/model
(Inclusive of Gas-Kit), Loans can be availed for new and second-hand vehicles
(Not more than 3 years old). Repayment period of loan is as long as 7 years.
8. Two Wheeler Loan:
For those individuals who prefer to travel more conservatively or to get to their
destinations faster, a two-wheeler is as much a boon as it is to a car owner. With
newer models coming out each year, the options available to the customer are
both attractive as well as convenient. All resident Indians, salaried people,
professionals, self-employed, businessmen and farmers can apply for this loan.
9. Loan to Profession:
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Banks give loan to professional persons like doctor, engineer, CA. This loan is
designed specially to cater to the financial needs of the professional. The loan can
be availed as a demand / term loan or overdraft as per customers preference. The
loan is available for Purchase of office equipments viz. computers, fax, airconditioners and furniture, etc. Also, loan is available for Expansion / renovation /
modernization of existing premises.
10. Traders Loan
Traders Loan facility enables individuals,
proprietorships, bodies such as
partnership firms and co-operative societies to avail of working capital or

undertake development of shop by way of loan / overdraft. Dealers in gold / silver
jewelers are get benefit of this loan. The loan is provided against the security of
tangible collateral Securities in the form of mortgage of land (not agricultural
land) and building. Also National Savings Certificates, Government Bonds,
Bank's Term Deposits, Assignment of Life Insurance Policies, standing in the
name of the borrower/proprietor/partner/director.
11. Personal Loan:

There is wedding in the family. May be its high time for the person to
surprise the spouse with a priceless gift. The people simply need to pamper his
family with an 80extended vacation. These are the times when a person may need
a helping hand. Bank offers personal loan to meet the personal requirements.
Bank helps customer to take care of all kinds of expenses at a short notice. The
Loan may be availed to meet expenses related to marriage, travel, honeymoon,
holiday and medical expenditure or for any other personal use. It is also available
to Pensioners / Defense Pensioners. Loan is also available for Earnest Money
Deposits for buyers of home / flat / plot. Loan for financing Individuals for
subscription to Public Issues / IPOLoan for financing Individuals for subscription
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to Public Issues / IPO for the person to take smart investment decisions and avail
of the benefits. Customer can avail loan up to `10 Lakhs for subscribing to new
issues. Loan is offered at affordable /competitive interest rate. Customer can
invest to pay within maximum period of 90 days. Banks give option to continue
the loan thereafter by availing loan against the allotted shares.
12. Reverse Mortgage Loan:
Reverse mortgage loan aims at making financial assistance available to senior
citizens. Customer should be Senior Citizen of India, above 60 years of age.
Married couples will be eligible as joint borrowers provided one of them is above
60 years of age and age of spouse is not below 55 years at the time of application.
Customer should be the owner of a residential property (house or flat) located in
India in his/her own name. Residential property should be used as permanent
primary residence (fully self occupied property). The Commercial property will
not be taken as a security under the product.
1.16A THEORTICAL VIEW OF HOUSING LOAN
The section 5 (b) of the Banking Regulation Act 1949 defines Banking as, Accepting
for the purpose of lending or investment of deposits of money from the public,
repayable on demand or otherwise and withdraw able by cheque, draft or otherwise.
"A "housing loan" is a credit to a consumer for the purchase or transformation of the
private immovable property he owns or aims to acquire secured either by a mortgage
on immovable property or by a surety commonly used in a Member State for that
purpose.
"A housing loan requires you to pledge your home as the lender's security for
repayment of your loan. The lender agrees to hold the title or deed to your property
until you have paid back your loan plus interest. In simple words a home loan is
a fund or the loan which the buyer has taken from any financial institution or bank to
purchase a new home at an agreed rate of interest specified during the contract.
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Housing loan is the finance borrowed from a bank or financial institution to buy or
modify a residential real estate property. Any Resident or Non-resident individual who
is planning to buy a house in India can apply for a home loan. If you have decided to
buy a properly in the near future you can even apply for loan before you select your
property.
1.17 SCHEMES OF HOUSING LOAN:
1). Home loans for construction of new house/flat, purchase of old houses
flat,etc:
Initially, lenders approved a home loan family/own residence only. After
gaining experience and more importantly to be competitive, lenders now approve
loans even when the applicant has more than one house or flat/apartment. Today there
is no general restriction on the number of houses owned by an individual. The only
stipulation is that the home loan funds should not be used for commercial purposes.
2).Home extension loan:
These loans are given for expanding or extending an existing home. These are
some of the instances for which you could take an extension loan.
To construct an additional room or floor by getting additional FSI granted.
Using grills or sliding windows to enclose the balcony.
Construction of a garden or garge in the building vicinity
3) Home improvement loan:

Home improvement loans for repairs renovation including
waterproof,
plumbing,
compound wall, digging of well/tube-well, flooring/tiling, additions like built-in

cupboards shelves, internal repairs including replacing doors/windows, etc. A l o a n
f o r purchase of household furniture including space-saving furniture (kitchen racks,
cupboards, etc) may also be sanctioned as a home improvement loan.
4) Home loan for purchase of housing site:
Here again, initially many banks did not approve such loans. However,
market forces have now made this a universal feature o f t h e h o m e l o a n m a r k e t .
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H o w e v e r, c a r e h a s b e e n t a k e n i n structuring the schemes for avoiding
financing for purchase of land for speculation purposes.
5 ) Home equity loans:
A home equity loan (sometimes abbreviated HEL) is a type of loan in which
the borrower uses the equity in their home as collateral. These loans are
sometimes useful to help finance major home repairs, medical bills or college
education. A home equity loan creates a lien against the borrower's house,
and reduces actual home equity.
1.18 STEPS INVOLVED IN GETTING HOUSING LOANS
STEP 1: Submit an Application form along with relevant documents:
The finance company will process customers application to
check
the
loan eligibility based on the persons income and personal profile. Usually an up
front (non refundable fee) of about 0.5-1% of the loan amount must be
paid before processing begins.
STEP 2:
Verification of the property and supporting documents:
(Usually takes 5-7 working days after Step1)
A company representative may visit the property as well as the residence to vary
information submitted in the persons application forms. Further, a properly valuation
may be carried out by the company to determine the maximum amount they are
willing to lend you .any reference submitted by the person in the application form
may also be contacted. The person may personally interview and any further
clarifications in the documents submitted may be sought.
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STEP 3:
Sanction of the loan:
(Usually on the 7th working days after Step 1)
A sanction letter is issued which the customer will have to sign. This letter will
contain the amount and the terms of the loan. Some companies specify the
period for which the loan sanction is valid. The person will have to pay a commitment
fee 10 (normally 1% of the unutilized loan amount) if you do not draw on the
entire sanctioned amount before that period.
STEP 4:
Submission of the original Property documents and signing the loan
Agreement
(Usually on the 8-10th working days after Step 1)
The customer will be required to leave the title deed of the property r e q u i r e d t o
l e a v e t h e t i t l e with the company as a security for the loan. He will be required to
go to the companys office to execute the legal loan papers.
STEP 5:
Disbursal of the Loan Cheque
(Usually on the 10 15 working days after Step 1)
The person can draw the loan in parts depending on the stage of construction
of the building. Until such time that the entire sanctioned amount is NOT
drawn, you will pay a simple interest on the Actual Amount drawn (without
any principal repayments).
The EMI payments will commence only after the entire sanctioned loan amount is
drawn.
Equated monthly installments (EMI):
The monthly repayment by the applicant is related to his cash flow. T h e r e i s
a n e l e m e n t o f i n t e r e s t a n d o f p r i n c i p a l i n t h e monthly payments. The
interest payable over the period of the loan is calculated and added to the loan
amount to arrive at the total payable amount.
The amount is divided by the total amount is called equated monthly instalments.
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1.18 CHARGES IN HOME LOAN:

Acquiring a Home Loan doesnt only involve the cost of home l o a n i n t e r e s t
r a t e s b u t i t a l s o = i n c l u d e s o t h e r c h a rg e s & f e e accompanying at
various stages of taking the Home loan. You m u s t c o n s i d e r a l l t h e s e
c h a rg e s w h i l e c o m p a r i n g t h e c o s t structure across banks. Following is
the detailed fee structure incurred by banks at different loan stages:
Processing Charge:
It is a fee payable at the time of submitting the loan application to the bank which
is normally non-refundable. The fee ranges between 0.5 per cent and 1 per cent of
the loan amount.
Administrative Fee:
It is a fee incurred by banks at the time of loan sanction, there are few banks
who have removed this fee so you must check it with all the banks.
Prepayment Penalties:
When the borrower pre-pays the loan before the loan tenure,
banks charge a penalty which usually varies between 1 per cent and 2 per cent of the
pre-paid amount.
Legal Charges:
Banks also incur some charges from the customer for legal and technical verification
of the property.
Delayed payment Charges:
When there is a delay in the payment of your EMI, banks charge a late payment
fee from the borrowers which is normally ranges from 2% to 3% of the EMI
Cheque bounces charges:
Banks charge between Rs. 250 and Rs. 500 for every bounced cheque towards the
loan pay repayment capacity by considering various factors such income, spouses
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income, age, number of dependants qualifications, assets, liabilities, stability
and continuity of occupation and savings history.
RESEARCH DESIGN
2.1INTRODUCTION TO THE TOPIC:
The role of primary co-operative banks in providing housing finance has been
reviewed from time to time. These banks, with their vast network, occupy a very
strategic position in the financial system and have an important role to play in
providing credit to the house sector. Further, housing finance to specified categories
up to prescribed limits is treated as apriority sector lending, and the need for urban
Page: 29
co-operative banks providing credit to priority sector has come to be increasingly
recognized consistent with the social objectives placed before the banking system.
Therefore, with a view to enabling the UCBs to play a more positive role in providing
finance for housing schemes, particularly to the weaker sections of the community,
these banks are permitted to grant loans for housing schemes up to certain limits for
their own resources subject to guidelines detailed here under.
The big banks have large surplus resources may undertake larger lending for
housing, as this will provide a remunerative avenue for investment for their surplus
funds. wherever, banks are still required to obtain special permission of the registrar
for financing housing societies, in each and every cases, it is suggested that these
banks should obtain general permission to finance housing societies subject to such
other terms and conditions as have been prescribed for the purpose.
IMPORTANCE OF HOUSING LOAN

1. The need for home loans arises not because property prices are heading
upward shall the time but because home loans make great sense from a
long-term savings perspective. Not only are home loans a handy tool for
the common man to own a roof over his head but they also help save
money in the long run.
2. With skyrocketing real estate prices, people are increasingly opting for
housing loans to acquire their dream home. Interest rates are coming 76
down all the time and the banks and the housing finance companies are
literally falling over each other to lure the prospective home-seekers.
3. Notwithstanding the tax breaks and generous lending rates, a lot of people
still cannot arrange resources for the down-payment, which comes out to
be at least 15 per cent of the property value. Taking cognizance of the
situation, Banks are coming up with home loan products called zero down
payment loans wherein 100 per cent funding is provided for select
properties. These lucrative offers are other major reasons for why people
are opting for loans.
4. Even if one can afford to buy a home with one's own money, home loans
should be availed because they act as good savings instrument. According
to industry estimates, the long term average return in investing in a home
Page: 30
is about 20% p.a. while the average cost of borrowing funds in the market
today is about 7% p.a. (considering all tax breaks).
5. For salaried employees, housing loans are the best way to avail of tax
benefits. Many people simply go for the home loans in order to avail these
benefits. Interest payments up to ` 1.5 lakh on housing loans are deductible
from the taxable income and there is a further deduction of taxable income
maximum up to ` 1 lakh against repayment of principal portion per annum.
In case a person stays in a rented house, the cost of the loan will be nearly
zero per cent since he will be saving a decent amount on rent.
All the banks offer many types of loan and advances to the customers like retail
loan, term loan, working capital finance, overdraft, export import finance and project
finance. Since this study is based on home loan and home loan is part of retail loan.
ELIGIBLE CATEGORY OF BORROWERS:
UCBs may grant loan to the following categories of borrowers:
1. Individual and co-operative/group of housing societies
2. Housing boards undertaking housing projects or schemes for economically
weaker sections (EWS), low income groups and middle income groups.
3. Owners of houses/flats for extension and up-gradation, include major repairs.
BENIFTS OF HOUSING LOAN:

You can easily avail housing loan from various companies which offer house
improvements loan to finance the cost of tiling, plumbing, electrical work, grills,
wood work, painting, compound walls and almost all improvements for your house.
In fact it might be a good idea to avail of these home loans, because they offer
number of added advantages as well. One of the most important benefit of taking
housing loan is the interest rate is allowed on the housing loan .Fixed and variable
interest rate options are also available for housing loan. Many banks also offer house
improvement loans at the same rate they offers housing loan. The interest rate range
to7.75% to12.5%.there is usually a processing fee is up to 1% to 2% also involved.
Page: 31
The other benefit of taking a housing loan is the security that provided. The benefit is
that you can use the property that is currently been constructed as the security for the
housing loan. Most of the banks and finances companies do not finance do not
finance more than 80% of the mortgage loan. Perhaps the benefit that is used in the
tax benefit purpose. The interest that is paid on housing loan is deducted from the
annual value resulting in lower taxable income .the maximum amount of funds that
can be received through the home loans varies from 50%-100% of the total cost.
Apart from income and margin criteria, the applicants need to be a salaried or self
employed individual. And it is important that the loan is repaid before the retirement
stages or before the person turns 65 years in case he/she is self employed. on an
average the repayment term of the housing loans can be extended up to 15 years.
2.2 REVIEW OF LITERATURE

The following of all these related literature has helped the following observation,
which further justifies the course taking for present study.
1.Berstain David (2009)1examined in his study taken from 2001 to 2008 that in
this period there is increase use of home loans as compared to private mortgage
insurance (PMI).He have divided his study into four sections. Section 1 describes why
people are going more for home loans than PMI. the main reason for this that now home
loans market provide Piggybank loans for those people who dont have 20% of down
payment. Section2 tells the factors responsible for the growth of home loans and the risks on
Page: 32
shifting toward home equity market without any PMI coverage. PMI can protect lenders from
most losses up to 80% of LTV and the absence of PMI will result in considerable losses in an
environment. Section 3 tells the measures in changes of type of loans. For this he have taken
the data from the 2001 and 2007 AHS a joint project by HUD and Census The results of this
analysis presented in Table One reveal a sharp increase in the Prevalence of owner-occupied
properties with multiple mortgages among properties with Newly originated first mortgages.
Section 4 describe the Financial status of single-lien and multiple-lien households and for this
he have taken the survey of consumer finance and show that financial position is more
weaker in multiple loans than the single loans.
2. Vandell, Kerry D (2008)2analysis the sharp rises and then suddenly drops down
home prices from the period 1998- 2008. changes in prices are for the
reasons as such economic fundamentals , the problem was not subprime
lending per se, but the Feds dramatic reductions, then increases in interest
rates during the early- mid-2000 , the housing boom was concentrated in those
markets with significant supply-side restrictions, which tend to be more pricevolatile; he problem was not in the excess supply of credit in aggregate, or the
increase in subprime per se, but rather in the increased or reduced presence of certain
other mortgage products.
3. Lacour Michael (2006)3examined the home purchase mortgage product
preferences of LMI households. Objectives of his study to analysis the
factors that determined factors their choice of mortgage product , is different
income groups have some specified need to met particular product. The role pricing
and product substitution play in this segment of the market and do results vary
when loans are originated through mortgage brokers? For this they have use
the regression analysis and the results are high interest risk reduce loan value.
Self employed borrower chooses reduce documented loans than salaried workers. Use
of this product type seems to be more prevalent among borrowers with
substantial funds for down payment and better credit scores. In case of pricing Multi
families requires price premium and larger loans carry lower rate. And the role
of time, particularly, the time required for the loan to proceed from
application to closing it is find that lending taking the longest time and
Nonprime loans the shortest time.Multi family properties take longer
Page: 33
time in closing. And during peak season take longer time to close. And
for last objective it is find that broker originated loans close faster. The
effect of mortgage brokers on pricing and other market outcomes is
fertile ground for additional research.
4. Haavio, Kauppi (2000)4 stated that countries where a large proportion of the
population lives in owner occupied housing are experiencing higher
unemployment rates. Than countries where the majority of people live in private
rental housing, which might suggest that rental housing enhances labour mobility.
In this paper, they develop a simple inter temporal two region model that
allow us to compare owner occupied housing markets to rental markets and
analyze how these alternative arrangements allocate people in space and time.
Announced that it will offer loans for Rs. 2-10 lakh at 12.5 percent the lowest rate
offered by any housing finance provider, big brother SBI has taken the rate
war in the home loans category to new heights. This is because, apart from the
low rate, the interest on these loans is calculated on principal, which is
reduced every month unlike other housing finance companies which calculate
interest on annually reducing basis.
5.Narasimham Committee (1991)5 points out that although the banking
system in our country has made rapid progress during the last two decades, there is
decline in productivity and efficiency and erosion of profitability. The committees
strongly make indications of liberalizing, deregulating economy to make Indian
baking system more competitive and efficient.
6.Lall vinay(1984)6A Research Article entitled Housing credit situation in Eighties He

has focused attention upon formal factor which served mainly to the HIG and MIG,the loan
meets 47% of the price of the house, forcing the borrowers to make very large down
payments. Also the price of a typical house was above 3 times the annual families income of
the borrowers. In spite of the entire system of housing allocation and credit the supply of
affordable funds was much smaller than demand. Thus, large growth in urban population and
the historically low priority given to the housing, supply falls very short of demand and need.
Therefore not only that the volume of saving and investment should increase but also large
volumes of capital should flow into housing. Also, accessibility and terms and condition of
housing loan will determine the long term redistribution performance in housing.
Page: 34
7..Dr. Rangarajan C. (2001)7said that the financial system of India built a vast
network of financial institutions and markets over times and the sector is dominated
by banking sector which accounts for about two-third of the assets of organized
financial sector.
8. Godse (1983) 8 i n h i s e s s a y, looking a fresh at banking productivity
observe that productivity aspect is only at the Conceptualization stage in banking
industry. He suggested improvement in productivity and procedures, costing of
operations and capital expenditure etc.
9.Fanning (1982) 9 The demand for home mortgage debt, while examining
bank productivity of British banks observed that although the productivity of the UK
clearing banks is improving, they are still heavily over manned as compared with
similar banks elsewhere.
10..Ojha
(1987)10in
his
paper
"modern
international caparison of
productivity and Profitability of public sector banks of India " making

Comparison on the basis of per employee indicators and taking examples of state
bank group and Punjab National bank noted that Indian banks are the lowest in all
accounts. However such international comparison will not be fair for numbers of
reasons.
11.Kulkarni
(1979)11in
his study Development responsibility and
profitability of banks stated that while considering banks costs and profits, social
benefits arising out of it be ignored. He suggested that while meeting social
responsibility banks should try to make developmental business as successful as
possible.
Page: 35
12.Varde and Singh (1979)12in a study "profitability of commercial banks" over 15
years gave consideration to two types of factors that effects interest rates levels i.e.
internal factors(including operational and managerial efficiency of individual basis).
13. Banking Commission (1972)13reviewed bank operating methods and procedures
and made recommendations for improving and modernizing these, particularly

relating to customers services, credit procedure and internal control systems. It
observed that present methods of working out branch profitability are not appropriate
and an integrated costing and financial reporting system is needed.
2.3 STATEMENT OF THE PROBLEM
The statement of problem is stated that the understanding the concept of housing loan
in Tumkur city is difficult .It includes various aspect, understanding every aspects
monitoring and controlling these aspects is very difficult task. The customer belongs
to the Tumkur city has both positively and negatively impact to the housing loan and
also its impact on the vysya co-operative bank ltd. In fact many factors will
influenced for taking the housing loan like individuals are willing have a own loan,
housing as basic necessity non availability of funds, tax benefits.
2.4OBJECTIVES OF THE STUDY:
The main objective of the project study is to know the customer perceptions regarding
housing loans of Vysya co-operative bank LTD. Tumkur. The objective of the study is
as follows:
1. Generating good business to the bank by promoting and selling the products of
vysya co-operative bank LTD.Tumkur.
2. To analyze the history of vysya co-operative bank LTD. Tumkur.
3. To know the ideas of customer about home loan products and services.
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4. To study the satisfaction level of customer about home loan
5. To study the problem faced by the customer in obtaining home loans.
6. To learn the various aspect of vysya co-operative bank home loan LTD.Tumkur.
7. To analyze the Tumkur housing loan market and its growing.
2.5 SCOPEOF THE STUDY
The scope of the proposed study is restricted to Tumkur city of Vysya co-operative
bank.ltd. Tumkur .The Indian housing finances industry has grown by leaps and
bound in few years. There is greater number of borrowers of housing loans, so by this
study we can find out satisfaction level of customers problems faced by them in
obtaining loans
The main purpose of the study the knowledge of the processing system of housing
loan. The following are the purpose is as follows:
1. To know the customer about home loan products and service
2. To study the satisfaction level of customer about home loan to study the
problem faced by the customer in obtaining the home loan
3. To know about the various aspects of the Vysya co-operative bank.
4. To know the schemes followed by Vysya co-operative bank.
2.6 NEED OF THE STUDY
Shelter is a basic human need and productive investment. Easy accesses to cooperative bank at affordable rates are essential pre-requisite for accelerating the
tempo of housing activity. This is more in Tumkur city where the general level of
income is relatively low.
Home is an integral part of an individual, who since his / her birth and childhood,
dreams to have living space of his / her own. Once in a lifetime investment requires
loan to accomplish it and that is how the home loan comes into scheme of things.
Buying a home is dream for everyone. Owing to the rising price of properties, it has
almost become impossible for an average earning person to buy a home on a lump
sum payment. Therefore, the concept of home loan has come in existence. There are
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plethora of housing finance companies and equal number of banks that offer home
loans. The task of selecting one company and one offer for home loan amidst the
thousands available options have become a very complex task owing to the
burgeoning housing finance market in the country. Apart from this, there are intricate
business jargons and technicalities that make this task more difficult. In this study, I
propose to give the basic information of home loan technicalities, so that when a
person applies for the home loan, he / she can understand the basics and help
themselves remain away from the duping elements in the market.
2.7 METHOD OF RESEARCH:
The method of research adopted for the current study is both primary data and
secondary data. Primary data collected through questionnaire about customer opinion
regard housing loans, procedures of taking loan, schemes, interest rate, and also
customers preferredbank, problem faced at the time of sanctioning. In secondary data
in this study data is collected through the website management books and official
records of the banks.
2.8 PERIOD OF THE STUDY
The time period or the reference period during which the study is carried out is five
months which from January 2016to may 2016.
2.9 SOURCE OF DATA:
The method of research adopted for the current study is both primary data and
secondary data.
A.Primary source:
Primary data is collection will base on personal interviews. I have prepared the
questionnaire according to the necessity of the data to be collected about the impact
of housing loan and especially the impact of customer on vysya co-operative bank in
Tumkur city.
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Sample size: For the questionnaire I have taken the size of 100 customer of Tumkur
city.
B.Secondary source:It was collected on the basis of organizational file, official
records, newspaper, magazines, management books, preserved in bank database and
website.
2.10 SAMPLING DESIGN
Population of the study: The population of this study is the people who are the
Customers of the vysya co-operative bank ltd in Tumkur city.
Sampling technique:The total number of co-operative bankcustomer in Tumkur city
is restricted also population size is unknown and understanding. And also number of
alternatives is there to study on housing loan. Hence random probabilistic sampling
technique is preferred.
Sample size: Large sample gives a reliable result than small sample. However, it is
not feasible to target entire population or even a substantial portion to achieve a
reliable result. So in this aspect selecting the sample to study is known as sample size.
Hence, for my project my sample size was 100.
The sample size consists of both professional, business and others class people. The
people may be doctor, student, garment merchant etc.
2.11: OPERATIONAL DEFINITIONS OF THE STUDY:

Customer: A customer known as a client or buyer or purchaser is the recipient of
goods or a service or a product, or an idea, obtained from a sellor, vendor or supplier
via a financial transaction or exchange for money or some other valuable
consideration.Here customer refers to a person who take housing loan from bank.
Page: 39
Liberalization: Liberalization refers to a relaxation of government, restriction,
usually in such areas of social, political and economic policy. In some contexts, this
process or concept is often, but not always, referred to as deregulation. Liberalization
of autocratic regimes may precede democratization (or not as in case of the Prague
spring).here liberalization refers the stages of establishment of the bank.
Traders: Traders may refer to merchant, retailer or one who attempts to generally
buy wholesale and sell later at a profit. Traders loan facility enables individual bodies
such partnership firms and co-operative societies avail of working capital or under
development of shop by way of loan.
Financial Management: Financial management refers to the efficient and effective
management of funds in such a manner as to accomplish the objectives of the
organization.
Target market: A target market is a group of customer a business has decided to aim
its marketing efforts and ultimately its merchandise strategy. Product, price,
promotion, and place are the four elements of a marketing mix strategy that
determines the success of a product in the market place. Here it is a type of loan
provided the market i.e. for personal and commercial.
2.12 PLAN OF ANALYSIS:

The data collected with the help of questionnaires are analyzed with the help of
charts, graphs, and hypothesis. The secondary data will be analyzed through websites,
official records, and management books.
2.13 LIMITATIONS OF THE STUDY:Dept. of PG Studies in Commerce, SSIBM, Tumakuru
Page: 40
This study also includes some limitations which have been discussed as follows:
1. The sample size of 100 customers and bank might prove a limitation because
of difficulty in generalization of results.
2. To collect the data from bank was quite difficult due to non- cooperation of banks.
This proved to be major limitation of the study.
3. To access such a large number of customers were difficult because of noncooperative attitude of respondents.
4. Lack of data was also the other limitation of the study this bank do not have proper
data on topic.
5. There was limitation of time to conduct such a big survey in limited available time.
6. 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.
2.14 CHAPTER LAYOUT
Chapter 1: Introduction to housing loan.

Chapter 2: Research methodology.
Chapter 3: Bank profile.
Page: 41
Chapter 4: customer opinion about the housing loan taken from the bank.
Chapter 5: summary of findings and conclusion.
Chapter 6: suggestion.
REFERENCE:
1. Berstain David (2008)Home equity loans and private mortgage insurances.
Recent trends and potential implication, vol.3no.2, august 2008, Pp.41-53.
2. Dr.rangarjan c.(2001),A simple error correction model of house price
journal of housing economics.vol.4,no.3,Pp.27-34.
3. .Lacour, micheal(2006),The home purchasing mortgage preferences of
lowland-moderate
Income
Households,
Forthcoming
in
real
estate
economics.vol.5,no.7,Pp-585.
4. Haavio, kauppi (2000),residential lending to low income and minority
families: evidences from the 1992HMD Data Federal Reserve bulletin,vol
no.80(2),december2000,Pp-79-108
5. Narasimham committee (1991) points out the banking system in our country
made a rapid progress.
6. Lall vinay (1984) a research articles entitled Housing credit situation in
eighties.
7. Dr.Rangarjan.c.(2001) said the financial system of India.
8. Godse (1983) looking a fresh at bank productivity.Pp-141-146.
9. Fanning (1982),the demand for home mortgage debt journal of urban
economics.
10. Ojhha (1987) modern international caparison of productivity and

profitability.
11. Kulkarni (1979) Development responsibility and profitability of banks,
vol 9 no 1, pp -26-32.
12. Varde and Singh (1979) profitability of commercial banks.Pp-53-7.
13. Banking commission (1972)banking operating methods and procedure.
Page: 42
BANKPROFILE
VYSYA CO-OPERATIVE BANK LIMITED, TUMKUR
-
Helping to grow and growing to help
Page: 43
Source: www.Vcbltkr.com.
Table3.1: overview of vysya co-operative bank.ltd.tumkuru.
Year of establishment
Number of employees
Number of members
Numbers of branches
Profit for the 2015-16
Head office
Source: www.Vcbltkr.com
25th February 1925

80
4322
7
500.09
Vivekananda road, Tumkur
3.2 VISION AND MISSION

Vision:
To be one of the most respected corporate foundations in the country excelling in
projects management and contributing significantly to create factors responsible for
sustainable livelihoods.
Page: 44
Mission:
It aims to support programs, projects and activities that focus on creating condition
suitable for sustainable livelihood. For this endeavor, Abf partner with civil society
organizations provide them with financial, technical and capacity development
support to make positive contributions in the lives of the underprivileged and
vulnerable communities
Support projects and programs that are aligned with the national development
priorities, need of the communities.
3.3 OBJECTIVES AND GOAL OF THE BANK:
The bank is working with the following objectives and goals
1. To encourage thrif, self-help a co-operation among the members/associated and
nominal members and deposit of the bank.
2. To do banking business as defined under section 5(b) of the banking regulation act
1949(as applicable to co-operative societies and also engage in such others business is
permitted under section of the said Act.
3. To mobilize or borrow funds.
4. To prepare and finance projects to improve the economic conditions of the
members particularly those belonging to weaker section of the society.
5. To lend money to its members on hire purchase/ hypothecation of motorvehicles as
defined in the motorvehicles act.
6. To posses, acquire, alter or construct site/building etc for the use and convenience
of business of the bank.
7. To issue to accept, to sell or purchase promissory notes, drafts, warrants, share
certificates and negotiable instruments on behalf of its customers.
Page: 45
8. To invest surplus funds of the bank in government securities, debentures, share
loan bonds of such co-operative societies, which are guaranteed by the government
and in other institutions as are permitted under section 58 of the act.
9. To create funds for co-operative education.
10. To create fund for promotion of education of members children subject to the
limits prescribed by the board.
11. To create fund for promotion of education of members children subject to the
limits prescribed by the board.
12. To act as guarantor or behalf of the banks members and customers by issuing
guarantee to government, semi government organization.
13. To extend financial and technical assistance to the un employed to start their own
industry/profession.
14. To grant loans and advances and issue travelers choose.
15. To give financial and technical assistance to small/cottage industries, to transport
operations and self employed professionals to promote their business.
16. To enter into agreement with banks and other financial institution for granting
loans and advances.
17. To accept discounting of bills, to provide safe deposit lockers and other ancillary
services.
18. To receive deposits from charitable institutions/trust and other public institutions.
19. To manage sell and realize any property which may come into possession of the
bank in partial/full satisfaction of its claims.
20. To establish death relief fund for the benefits of members and extend relief for the
family of the deceased members.
21.To acquire, to hold ,to issue on commission to sell or purchase or deal on behalf of
its customers stocks, funds, shares, debentures and other form of securities.
Page: 46
22. To collect funds and securities on behalf of its members.
23. To do all other activities, which are required to promote and strengthen the
banking, activates.
3.4 SALIENT FEATURES OF THE BANK:
The following are the salient features of bank:
1. Providing attractive deposit schemes with higher rate of interest compared to the
other nationalized banks and commercial banks and other co-operative banks of
2.
3.
4.
5.
Tumkur.
Charging low/competitive rates of interest on all types of loans and advances.
Maintaining some fair investment policies.
Helping in creation of overall bank money.
Providing safe-deposits lockers to customers on rental basis with all its branches
on rental basis with all its branches.

6. All the branches are fully computerized its functions to provide better service to
customers. Customers service is main motto.
7. All deposits, which are below Rs1, 00, 000, are fully insured under (DIICI)
deposit India Insurance Corporation of India.
8. One of its at B.V.K lyenger road, Bangalore is having air conditioner facility and
fully computerized maintence system customer act as a manager and it is LOBBY
banking.
3.5 BACKGROUND OF THE BANK

Visa co-operative bank limited, Vivekananda road, Tumkur is a non-agricultural
urban co-operative bank. It is an organization helping to grow and growing to help.
It is one of the creations off vysya community, Tumkur.
The bank was incorporated as vysya co-operative society on 25 th Feb. 1925,
Mr.A.V.Nanjada setty, was the profounder who gave the idea to start the society.
Page: 47
On 11th Nov 1978 the society had converted into vysya co-operative
bank.Mr.Sampangiram.T.A is the first chairperson of the bank. To under take
banking business in the reserve bank order no: UBD:KA:634:P.the bank is performing
its functions as well and providing considerable service to its customers.
The bank increased its branches to6, the function of Head officers and all 6 branches
of the bank are fully computerized, through which the bank is aided to provide good
and fast service to it customers and shortly the bank is going to introduce any branch
banking service to its customers.
The profit of the banking is increasing considerable from year to year. At the bank is
one of the leading co-operative banks in Tumkur and occupied a second places among
all the co-operative banks of Tumkur.
3.6 AREAS OF OPERATIONS
1.
2.
3.
4.
5.
6.
Tumkur District
Bangalore urban and rural district.
Kolar district.
Mandya district.
Hassan district.
Chitradurga district.
Head office
License No: UBDKA 634P, Date: 11.11.1986
Address: Vivekananda Road, Tumkur
Phone: 227860, 2275607, 2254160(0816)
Branches
1. AP.M.C yard Branches:
License No: UBD; BL; 2072; Date: 10.6.1988
Address: Batawadi, Tumkur
2. Vijayanagar branch:
License No: UBD; BL; 14: Date: 13.7.1992
Address: SIT, Tumkur.
Page: 48
3. Madhugiri Branch:
License No: UBD; BL; 104: Date: 11.4.1994.
4. Bangalore, yashwantpur Branch:
License No: UBD; BL; 367: Date: 18.11.1999.
5. Bangalore, BVK lyengar Road Branch:
License No: UBD; BJ: BL 368: Date: 18.11.1999.
6. Pavagada branch:
License No: UBD; BJ: BL; 103: Date: 11.10.1994.
3.7 ORGANIZATION STRUCTURE:

President
Vice president
Board of directors
Page: 49
Chief Executive officers
Senior Manager
Branch manager
Accountants
Assistant Accounts
Senior assistants
(First Divisional Assistant)
Junior Assistants
(Second Divisional assistants)
Sub staff and attenders.
Source: www.Vcbltkr.com
Board of Management:
The bank is having one president and vice president and 16 boards of directors who
are called main policy makers off the bank. All the branches of the bank are working
under the control of chief executive officers. Each branch including head office
having one Branch manager, who will took after the ones all functions of the
respective branch office. The head officer is having 40 members as its full staff,
which includes manager, accountants clerks and staff.
3.8 DISTRIBUTION OF PROFITS:
The bank will announce and distribute its net profits at the general meeting as
under:
Page: 50
Before distributing profit, the losses of the previous year or years shall be
deducted out of the net profits and the remaining profits only shall be distributed.
1. A sum not less than 25% of the net profits shall be transferred to the reserve fund.
2. A sum not exceeding 2% shall be set apart for contribution towards co-op
education funds and 5% towards co-operative welfare fund constituted by
government.
Of the remaining profits:1. A sum not less than 10% may be set apart for the bad and doubtful debt fund.
2. A sum not less than 20% may be set apart to building fund.
3. A sum not less than 5% may be set apart to staff gratuity fund.
4. A sum not less than 10% may be set apart to charity fund.
5. A sum not less than 5%may set to propaganda fund.
6. The bank can pay bonus to the staff as per the co-operative act and bonus act.
7.The bank should declare the expected dividend on share of members out of
remaining profit, as per the decision taken in general body meeting, with in the limit
of act and law of co-operation.
8. The remaining profit will be distributed as follows as decided in general body
meeting.
9.
Jubilee fund
Divided equalization fund
Building fund
Members insurance fund
Public insurance fund
Members medical.
A sum not less than 5% should be set apart to meet depreciation fund of bank
investment. The remaining profit, if any after declaration of above funds should
be set apart towards reserve fund or building fund.
Rising of funds:
The bank will raise its funds by the following ways, when there is necessary they are:
a. Issue of shares
b. Accepting of deposits of various kinds and by issue off cash certificates
Page: 51
c. Obtaining cash credit/ overdrafts or other loans from Karnataka state co-operative
apex bank, district central co-op bank and with the prior approval of the registrar
from any of the nationalized commercial banks.
d. Donations
e. Entrance fees
f. Accepting subscription from members to the members welfare fund or death
relief funds.
3.9 SUMMARY OF RECOMMENDATIONS GIVEN BY THE RBI ON
CUSTOMER SERVICE IN BANKS:
Summaries of recommendations, which are given by the RBI on customer
service in banks, are as follows:
1. Commencement of employees working hours 15 minutes before commencement
of business hours can be made operative by banks at branches in metropolitan and
urban centres.
2. All the customers who enter the banking all before the close of the business hours
should be attended to.
3. Banks may extend business hours for all banking transactions expect cash up till
one hour before close of the working hours.
4. It may be ensured that no counter remains unattended during the business hours
and uninterrupted service is rendered to the customers.
5. All branches except very small branches, should have enquiry or may I help you
counter, either exclusively or combined with other duties, located near the entry
point of the banking hall
6. Notes/coins counting machines may be introduced wherever volume of work of
warrants.
7. For safeguarding currency notes form early soiling, these may be packed with
proper seal.
8. Availability of nomination facility ,also for safe custody articles, and safe deposit
lockers , may be actively publicized.
9. Issuance of statements of accounts and updating of passbook with correct and
legible particulars should attract banks constant attention.
10. Stationary with pre-demarcated flaps may be used for statements of accounts
11. Change in interest rates on deposits should be made known to customer as well as
bank branches by press notifications, based on which branches should be enabled
to accept deposits at new rates provisionally to be confirmed later on receipt of
official communication.
Page: 52
12. More and more locker facilities in residential areas and setting up of specialized
branches subsidiaries for this purpose may be examined..
3.10INCOME STATEMENTS OF VYSYA CO-OPERATIVE BANK

LTD.TUMKUR OF 2015-2016
particulars
Rs
To, interest on loans
3700,00,000.00
To, salary
3,50,00,000.00
To, rent rates, taxes and expenenses.

To, telephone expenses.
To, audit fees
To, printing and stationary. And
90,00,000.00
15,00,00,000.00
15,00,00,000.00
25,00 ,000.00
particulars
Rs
By, loan interest

received.
42,00,00,000.00
By, interest from

deposits.
11,00,00,000.00
By, Other income
2,85,000.00
Page: 53
advertising.
75,00 ,000.00
To dep on assets.
10,00,000.00
To director board meeting expenses.
12,00,000.00
To bonds
8,00,000.00
By, commission
56,05,00,000.00
20,00,000.00
56,05,00,000.00
3.11: DETAILS OF CUSTOMERS LOAN OF VYSYA CO-OPERATIVE

BANK.LTD
REF.
NO
LOAN DETAILS
ACCOUN
LOAN
AMOUNT
NO.
Page: 54
1
Overdraft loan.
76
4,88,09,579.33
Long term loan
77
23,32,90,470.28
Depository loan
378
5,00,63,045.00
Machinery loan
15
1,20,46,754.00
Instalments loan
501
215,22,74,258.00
Vehicle loan
244
2,02,059.00
Vasavi house construction loan
01
5,31,60,082.00
Vasavi residential construction loan
67
2,63,65,985.00
Gold loan
500
1,31,464.00
10
Term loan.
31,28,616.30
11
Land on loan.
149
75,51,651.00
12
Staff loan.
80
1,40,95,834.00
13
Personal loan
32,83,491.00
14
LIC policy loan
74
88,785.00
15
National saving certificate loan
06
58,000.00
16
Warehousing loan
02
3,81,86,258.00
2815
267,92,12,103..9
1
TOTAL
3.12: BALANCESHEET OF VYSYA CO-OPERATIVE

BANK.LTD.YUMKURU.
Capital and Liabilities:
Total Share Capital
12 mths
12 mths
12 mths
12 mths
474.10
469.84
467.95
413.20
Page: 55
Equity Share Capital
Reserves
Net Worth
Deposits
Borrowings
Total Debt
Other Liabilities & Provisions
Total Liabilities
Assets
Cash & Balances with RBI
Balance with Banks, Money at Call
Advances
Investments
Gross Block
Net Block
Capital Work In Progress
Other Assets
Total Assets
Contingent Liabilities
Book Value (Rs)
474.10
469.84
44,202.41 37,750.64
44,676.51 38,220.48
322,441.94 280,944.56
79,758.27 50,290.94
402,200.21 331,235.50
15,055.67 13,788.89
461,932.39 383,244.87
Mar '15
Mar '14
12 mths
12 mths
467.95
32,639.91
33,107.86
252,613.59
43,951.10
296,564.69
10,888.11
340,560.66
Mar '13
12 mths
413.20
22,395.34
22,808.54
220,104.30
34,071.67
254,175.97
8,643.28
285,627.79
Mar '12
12 mths
19,818.84
16,280.19
281,083.03
132,342.83
2,413.05
2,413.05
101.26
9,893.19
461,932.39
640,183.59
188.47
14,792.09
5,642.87
196,965.96
113,737.54
2,230.54
2,230.54
125.11
7,066.56
340,560.67
576,010.77
707.50
10,702.92
3,230.99
169,759.54
93,192.09
2,188.56
2,188.56
70.77
6,482.93
285,627.80
514,871.98
551.99
17,041.32
11,197.38
230,066.76
113,548.43
2,310.54
2,310.54
99.67
8,980.79
383,244.89
611,446.37
813.47
3.13 PROFIT AND LOSS ACCOUNT Of VYSYA CO-OPERATIVE BANK.

LTD. TUMKURU.
Mar 15
12 mths
Mar 15
12 mths
Mar 14
12 mths
INCOME
Page: 56
Mar 13
12 mths
Interest / Discount on Advances / Bills
25,867.82
Income from Investments
9,117.09
Interest on Balance with RBI and Other Inter231.26
Bank funds
Others
262.43
Total Interest Earned
35,478.60
Other Income
8,365.05
Total Income
43,843.64
EXPENDITURE
Interest Expended
Payments to and Provisions for Employees
Depreciation
Operating Expenses (excludes Employee
Cost & Depreciation)
Total Operating Expenses
Provision Towards Income Tax
Provision Towards Deferred Tax
Provision Towards Other Taxes
Other Provisions and Contingencies
Total Provisions and Contingencies
Total Expenditure
Net Profit / Loss for The Year
Net Profit / Loss After EI & Prior Year Items
Profit / Loss Brought Forward
Total Profit / Loss available for
Appropriations
APPROPRIATIONS
Transfer To / From Statutory Reserve
Transfer To / From Reserve Fund
Transfer To / From Capital Reserve
Transfer To / From Investment Reserve
Equity Share Dividend
Tax On Dividend
Balance Carried Over To Balance Sheet
Total Appropriations
OTHER INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.)
Diluted EPS (Rs.)
DIVIDEND PERCENTAGE
Equity Dividend Rate (%)
25,867.82
9,117.09
21,950.43
8,343.13
19,166.24
7,746.98
231.26
166.78
111.26
262.43
35,478.60
8,365.05
43,843.64
180.81
30,641.16
7,405.22
38,046.38
158.10
27,182.57
6,551.11
33,733.68
------------------------------
17,516.31
21,254.46
3,114.97
405.67
3,114.97
405.67
2,601.35
363.93
2,376.98
351.73
5,683.10
5,683.10
4,935.49
4,185.52
9,203.75
3,852.37
-153.36
0.93
2,327.68
6,027.62
36,485.82
7,357.82
7,357.82
13,501.45
9,203.75
3,852.37
-153.36
0.93
2,327.68
6,027.62
36,485.82
7,357.82
7,357.82
13,501.45
7,900.77
3,489.74
-358.78
0.42
2,107.04
5,238.42
31,828.71
6,217.67
6,217.67
10,029.26
6,914.24
2,720.58
-347.32
0.38
1,750.06
4,123.70
28,554.25
5,179.43
5,179.43
7,329.45
20,859.27
20,859.27
16,246.93
12,508.88
1,839.46
-1.27
63.14
25.49
1,087.54
221.42
17,623.49
20,859.27
1,839.46
-1.27
63.14
25.49
1,087.54
221.42
17,623.49
20,859.27
1,554.42
1.05
38.87
50.03
939.69
161.44
13,501.45
16,246.93
1,294.86
2.61
141.46
53.46
843.86
143.37
10,029.26
12,508.88
31.00
31.00
31.00
31.00
133.00
132.00
120.00
119.00
230.00
230.00
200.00
180.00
Page: 57
ANANLYSIS AND INTERPRETATION

PRIMARY DATA ANALYSIS
The analysis is based on the response given by customer through questionnaires
AGE:
Researcher has chosen age is one of the components to know the age group of the
customer who in willing to take housing loan.
Page: 58
Table 4.1: Age Group of Respondents
Age group
Below 30
30-40
40-50
Above 50
total
Source: Field survey
Number of respondents
21
22
18
39
100
Valid percentage
21%
22%
18%
39%
Table 4.1 represents the age pattern of housing loan investors 39% represents
are falling in the age group of above 50 followed by below 30,30-40,40-50.however,
majority of respondents are falling in the age group above 50 years. It indicates that
age of above 50 years consumers are willing to have their own house so, they go to
bank to take housing loan .In others words below 50 years are not interested to take
housing loan in the bank.
Page: 59
valid percentage
40%
35%
30%
25%
valid percentage
20%
15%
10%
5%
0%
below 30
30-40
40-50
above 50
Figure 4.1: Age Group of Respondents
OCCUPATION:
Researcher has taken the occupation as the one of the component to know which type
of occupation members will take the housing loan.
Table 4.2: Occupation of the respondents
Sl.no
occupation
No of
Valid percentage
professional
respondents
21
21%
Page: 60
2
Self employed
3
salaried
4
others
total
30
21
28
100
30%
21%
28%
Table 4.2 represents the housing loan of the investors in which:

21% are the professional respondents.
30% are the self employed respondents.
21 % are the salaried respondents.
28% are the others respondents.
Therefore from the above chart the occupation of the self employed are indicates that
they are interested in taking housing loan for their residential purpose.
Page: 61
valid percentage
28%
profeesional
21%
self employed
salaried
others
21%
30%
Figure 4.2: Occupation of the Respondents
ANNUAL INCOME:
Researcher has taken the annual income as the one of the component to know which
type of annual income consumer will take the housing loan.
Table 4.3: Annual income of the respondents
Sl.no
Annual income
No of
Valid
group
respondents
percentage
Page: 62
1
Below 2 Lakhs
2
2-4 Lakhs
3
4-6 Lakhs
4
Above 6 Lakhs
total
35
31
13
21
100
35%
31%
13%
21%
Table 4.3 represents the annual income of the customers in which:

35% of the respondents are below 2 Lakhs.
31% of the respondents are belongs to2-4 Lakhs.
13% of the respondents are belongs4-6 Lakhs.
21% of the respondents are above 6 Lakhs.
So from the above analysis we can say that the
Page: 63
valid percentage
40%
35%
30%
25%
20%
15%
10%
5%
0%
valid percentage
Figure 4.3: Annual Income of the Respondents
NUMBER OF MEMBERS WHO HAVE TAKEN HOUSING LOAN

Researcher is willing to identify the number of members have take the housing loan
to have their own residential house
Table 4.4: Home loan members of the respondents
Sl.no
Housing loan
No of
Valid percentage
1
2
members
yes
no
respondents
61
39
61%
39%
Page: 64
total
100
Table 4.4 represents the number of members who have taken housing loan in bank.
61% of members have taken the housing loan from the bank.
39% of members have taken the housing loan from the bank.
So from the above analysis we can say that 61% of the people are interested in taking
loan from bank.
Page: 65
valid percentage
yes
39%
no
61%
Figure 4.4: Number of members who have taken loan.
FROM WHERE YO HAVE GOT THE HOME LOAN:

Researcher is willing to find out from which bank the consumer has taken the housing
loan to have their residential status.
Table 4.5: Bank in which respondents have taken the housing loan.
Sl.no
1
Type of banks
No of
Valid
Vysya co-operative bank ltd
respondents
43
percentage
43%
Page: 66
2
3
4
Tumkur grameena merchant coco-operative bank ltd.

Paswanatha co-operative
bank ltd.
Tumkur Veerashaiva
co-operative bank ltd
total
7%
6%
5%
100
Table 4.5 represents the respondents from where they have borrowed housing loan.
43% of members have taken housing loan from vysya co-operative bank ltd.
7% of members have taken housing loan from Tumkur grameena co-operative
bank ltd.
6% of members have taken housing loan from paswanatha a co-operative bank
ltd.
5% of members have taken housing loan from Tumkur Veerashaiva co-operative
bank ltd.
So from the above table we can analysis that more numbers are interested in taking
housing loan from vysya co-operative bank.
Page: 67
valid percentage
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
valid percentage
Figure 4.5: Type of bank in which the customers have taken the housing loan
SERVICE RENDERED BY BANK:

Researcher has taken the bank service to know whether they are satisfied are not by
their service rendered.
Table 4.6: Number of the respondents who have taken the service from the bank
Sl.no
1
category
No of
Valid percentage
satisfied
respondents
45
45%
Page: 68
2
Highly satisfied
3
dissatisfied
4
neutral
total
25
10
20
100
25%
10%
20%
Table 4.6 represents the respondents feeling who have taken the service from bank.
45% of members have satisfaction about the service provided vysya co-operative
bank ltd.
25% of members have highly satisfaction about the service provided vysya cooperative bank ltd.
10% of members have dissatisfaction the service provided vysya co-operative
bank ltd.
20% of members have neutral opinion about the service provided vysya cooperative bank ltd.
So from the above table we can say that the respondents have satisfaction about
service of vysya co-operative bank.
Page: 69
valid percentage
50%
45%
40%
35%
30%
valid percentage
25%
20%
15%
10%
5%
0%
satisfied
highly satisfied dissatisfied
netural
Figure 4.6: Respondents opinion about the bank services
REASON FOT TAKING HOUSING LOAN IN BANK:

Researcher is willing to identify for what reasons the customers are taking housing in
the bank
Table 4.7: Number of the respondents who is willing to take the housing loan
from the bank
Sl.no
category
No of
Valid percentage
Page: 70
1
Interest rate
2
Service provider
3
schemes
4
Pay pack period
total
others
respondents
25
28
28
19
100
25%
28%
28%
19%
Table 4.7 represents the reason of the respondents to take housing loan in the bank.
25% of the respondents attracts for the interest rate.
28% of the respondents attracts for the service provided by the bank to the
customer.
28 % of the respondents attracts for the schemes available in the bank.
So from the above analysis customers attracts for service and schemes of the bank to
take housing loan in bank.
Page: 71
valid percentage
30%
25%
20%
15%
valid percentage
10%
5%
0%
Figure 4.7: Reasons for getting housing loan
AMOUNT OF HOUSING LOAN TAKEN BY THE BANK:

Researcher has taken the loan amount as a component in which to know how much
amount is loan taker is willing to take the housing loan from bank.
Table 4.8: Number of the respondents housing loan Amount.
Sl.no
Housing loan
No of
Valid
1
2
amount
Less than 2 Lakhs
2-6 Lakhs
respondents
25
32
percentage
25%
32%
Page: 72
3
6-10 Lakhs
4
More than 10 Lakhs
total
23
20
100
23%
20%
Table 4.8 shows the respondents housing loan amount.

25% of the customers have taken less than 2 lakh loan
32% of the customers have taken between 2-6 lakh loans.
23% of the customers have taken between 6-10 lakh loans.
20% of the members have taken loan more than 10 lakh.
So from above the analysis we can say that more number of the customers have taken
between 2-6 Lakhs from the bank.
Page: 73
valid percentage
35%
30%
25%
20%
15%
valid percentage
10%
5%
0%
Figure: 4.8: Respondents Housing loan Amount
Page: 74
WHETHER TO TAKE HOUSING LOAN IF INTEREST RATE IS HIGH:
Researcher has taken the bank service to know whether they are satisfied are not by
their service rendered.
Table 4.9: Number of the respondents will take loan if interest rate is high
Sl.no
Interest rate is high/low
1
yes
2
no
total
No of respondents
19
81
100
Valid percentage
19%
81%
Table 4.9 Represent the customer opinion about the interest rate of housing loan.
19% members responded yes if rate interest is high they will take loan.
81% of members responded no that if the rate of interest is high they will not take
housing loan.
So according to the above analysis of customers rate of interest should be low.
Page: 75
valid percentage
19%
yes
low
81%
Figure 4.9: Respondents opinion about the interest rate.
REASON FOR GETTING FINANCED:
Page: 76
Researcher is willing to identify for what reasons is consumers borrower loan from
bank for constructing residential house.
Table 4.10: Number of the respondents said their opinion about getting financed
from bank
Sl.no
Reason for finance
Non availability of
funds
Reduction to pay
cash in go
Tax benefit
Other reasons
3
4
total
No of
Valid percentage
respondents
23
23%
24
24%
51
02
100
51%
02%
Table 4.10 represents the customers opinion about getting financed from bank.
To interpret the response of the question, the figures shows that
most of the customers ate taking loan in order to avoid tax i.e.51% and
Very less number of customers found problems in paying cash in go ..
24%and
Non availability of funds is 23%.
This was the response because of large number of people take housing loan for the
purpose of tax benefit.
In todays life people hardly earn both means and ends of life they dont have much
money to buy a house or to construct a new property. But still they are not willing to
get financed from bank.
On the basis of the study we can conclude that the members will take loan for the
purpose of tax benefit.
Page: 77
valid percentage
60%
50%
40%
30%
20%
10%
0%
valid percentage
Figure4.10: Reasons for taking loan from bank
SOURCE OF INFORMATION ABOUT HOUSING LOAN

Researcher has to identify from which source the respondents got to know about the
information of housing loan schemes
Page: 78
Table 4.11: Number of the respondents who have selected the sources to identify
the schemes
Sl.no
Source of
No of
Valid
1
2
3
4
information
Newspapers
Magazines
Banner
Word of mouth
others
respondents
22
18
17
43
0
100
percentage
22%
17%
18%
43%
Total
Table 4.11 represents the source of information about housing loan schemes.
The data above shows that around 17% of the customers get information through
banners, 18% of the customers got through magazines, 22% of the customers got
through the newspapers and finally 43% of the customers got the information through
word of mouth, which includes family, relatives, friends.etc
Page: 79
valid percentage
22%
newspapers
magazines
banners
43%
word of mouth
18%
17%
Figure4.11: source of information of housing loan schemes
PROCEDURE OF HOUSING LOAN:

Researcher is willing to identify the customer feeling about the procedure of housing
loan provided by the bank.
Table 4.12: Number of the respondents feeling of procedure of taking loan in
bank.
Page: 80
Sl.no
procedure
1
simple
2
complex
Total
No of respondents
76
24
100
Valid percentage
76%
24%
Table 4.12represents customers feeling of procedure of taking loan in the bank.

76% of the customers felt the procedure is easy.
24% of the customer felt the procedure is difficult.
So from the above study the procedure is simple in vysya co-operative bank ltd.
Page: 81
valid percentage
24%
simple
complex
76%
Figure4.12: respondents opinion on procedure of housing loan.
PROBLEMS FACED BY LOAN TAKERS:

Researcher has to find out what problems are facing while getting housing loan.
Table 4.13: Number of the respondents who have faced the problem at the time
of taking
Sl.no
problems
No of
Valid percentage
respondents
Page: 82
1
2
Lack of knowledge
Procedural delays
and
Non co-operation
Others reasons
3
Total
62
22
62%
22%
2
100
2%
Table 4.13 represents the problems faced by the customers.

62% of the customers are beyond the information about the housing loan from the
bank.
22% of the customers problem faced by the bank employees due to their non cooperations.
2% of the customers are facing other reasons.
So from the above analysis customers are beyond the information about the housing
loan from bank.
Page: 83
valid percentage
70%
60%
50%
40%
valid percentage
30%
20%
10%
0%
Figure 4.13: problems of respondents
DOCUMENTATION PROCEDURE OF THE BANK:

Researcher is identifying the customer opinion about documentation procedure of the
bank
Table 4.14: Number of the respondents who have rate the documentation
procedure of the bank.
Sl.no
category
No of
Valid percentage
respondents
Page: 84
1
Highly satisfaction
2
satisfaction
3
Average satisfaction
4
Dissatisfaction
total
26
61
10
3
100
26%
61%
10%
3%
The table 4.14 represents the customer opinion about the documentation procedure of
the bank.
26% of the customers are highly satisfied with documentation procedure of the
bank.
61% of the customers are satisfied with documentation procedure of the bank.
10% of the customers are averagely satisfied with documentation procedure of the
bank.
3% of the customers are dissatisfied with documentation procedure of the bank.
So from this study most of the customers are satisfied about the documentation
procedure
Page: 85
valid percentage
60%
50%
40%
30%
20%
valid percentage
10%
0%
Figure 4.14: respondents opinion documentation procedure of the bank
PROCESSING FEES OF THE BANK:

Researcher is identifying the customer opinion about processing fees of the bank.
Table 4.15: Number of the respondents who have opinion about processing fees
of bank
Sl.no
1
2
3
4
category
Highly satisfaction
satisfaction
Dissatisfaction
No of respondents
40
26
30
4
Valid percentage
40%
26%
30%
4%
Page: 86
total
100
Table 4.15 represents the customer opinion about the processing fees of the bank.
40% of the customers are highly satisfied with the processing fees of the bank.
26% of the customers are satisfied with the processing fees of the bank.
30% of the customers are average satisfied with the processing fees of the bank.
4% of the customers are dissatisfied with the processing fees of the bank.
So we can conclude most of the respondents are highly satisfied about the processing
fees of the bank.
Page: 87
valid percentage
40%
35%
30%
25%
20%
15%
10%
5%
0%
valid percentage
Figure 4.15: Respondents opinion about processing fees of the bank
SANCTIONING PROCEDURE OF THE BANK:

Researcher is identifying the customer opinion about documentation procedure of the
bank.
Table 4.16: Number of the respondents who have opinion about the sanctioning
procedure of bank
Sl.no
1
category
No of
Valid percentage
Highly satisfaction
respondents
26
26%
Page: 88
2
satisfaction
3
4
Dissatisfaction
total
56
14
7
100
56%
14%
7%
Table 4.16 represents the customers opinion at the time of sanctioning procedure of
the bank.
26% of the customers are highly satisfied with the sanctioning procedure of the
bank.
56% of the customers are satisfied with the sanctioning procedure of the bank.
14% of the customers are average satisfied with the sanctioning procedure of the
bank.
7% of the customers are dissatisfied with the sanctioning procedure of the bank.
So we can say that customers are satisfied with sanctioning procedures of the bank.
Page: 89
valid percentage
60%
50%
40%
30%
valid percentage
20%
10%
0%
Figures 4.16: customers opinion about the sanctioning procedure.
PROBLEMS AT THE TIME OF SANCTIONING OF THE LOAN:

Researcher is identifying the customer problems at the time of sanctioning the
housing loan bank.
Table 4.17: Number of the respondents who have faced problems at the time of
sanction loan bank
Sl.no
category
No of
Valid
Page: 90
1
Loan amount
delayed
Delay in time
No problem
2
3
total
respondents
23
percentage
23%
15
62
100
15%
62%
Table 4.17 represents the problems faced by the customers at the time of sanction the
loan.
23% of the customers said that loan amount was not provided at the mention time.
15% of the customers said that mention time was delayed.
62% of the customer said that no problem was faced at the time of sanction the
housing loan.
So we can analysis that no problems are there in the sanction procedure.
Page: 91
valid percentage
70%
60%
50%
40%
valid percentage
30%
20%
10%
0%
loan amount delay delay in time
no problem
Figures 4.17: problems of the respondents
SUGGESTION GIVEN BY THE CONSUMER FOR IMPROVING HOUSING

LOAN SCHEMES :
Researcher is identifying the customers who have given the suggestion to improve the
home loan schemes.
Table 4.18: Number of the respondents who have suggested improving the
housing loan schemes.
Page: 92
Sl
category
Number of
Valid
no
1
Provide more
respondents
40
percentage
40%
2
3
advertisement
Reduce the interest rate
Adopt more schemes
21
39
100
21%
39%

Table4.18 represents the suggestion to improve the housing loan schemes.
40% of the customers have suggested to provide more advertisement on the
housing loan schemes which is already available in the bank
21 % of the customers have suggested to decrease the interest rate.
30% of the customers have suggested to adopt more schemes that is needed by
the customers.
So from the above we can conclude that the customers are unaware about the schemes
that is already present in the bank.
Page: 93
valid percentage
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
valid percentage
Figure4.18: suggestions of the respondents
FINDINGS AND CONCLUSION

1. Vysya co-operative bank ltd. has the good brand images in the minds of
customers.
2. Customers belongs to self employed is interested in taking loan from vysya cooperative bank.
3. Customers belong to the income group of 2-4 Lakhs are interested in taking
housing loan of vysya co-operative bank.
Page: 94
4. 61% of members have taken housing loan from bank.
5. 43% of members are taken housing loan from vysya co-operative bank ltd.
6. 45 % of customers are satisfied with service provide by vysya co-operative bank
ltd.
7. 28% of customers attract the service provider for taking loan from vysya cooperative bank.
8. 35% of members taken around 2-6 Lakhs amount of housing loan of vysya cooperative bank.
9. 81% are not willing to take housing loan from vysya co-operative bank ltd if the
interest rate is high.
10. 53% of the customers are taking housing loan for the purpose of tax benefits.
11. 43% members used word of mouth as media to know the information about the
housing loan schemes of vysya co-operative bank.
12. 76% of customers felt that procedure of taking housing loan is simple.
13. 62% of customers are not aware of the procedure of housing loan in vysya cooperative bank.
14. 61% of the customers are satisfied about the documentation procedure of vysya
co-operative bank ltd.
15. 40% of the customers are highly satisfied with the processing fees of vysya cooperative bank ltd.
16. 56% of the customers are highly satisfied with sanction procedure of vysya cooperative bank ltd.
17. 62% of the customers have no problems in sanction of the loan.
18. 40% members are suggested to provide more advertisement on housing loan
schemes which is already adopted by vysya co-operative bank.ltd.
CONCLUSION:
In my study we came to know many people are interested to take home loan from
vysya co-operative bank to construct their house. Housing loans have longer period
when compared to other personal or any others forms of loans. So people are
confused to take housing loan. Even through the interest rates is high people are
willing to take housing loan in vysya co-operative bank.ltd, due others reasons.
Finally the whole research was carried systematically way to reach at exact result.
The whole research and findings were based on the objectives. However, the study
has some limitation such as lack of time, lack of data, non response, reluctant attitude
and illiteracy of respondents. Which posed problems in carrying out the research.But
Page: 95
proper attention was made to carry out research in proper way and to make accurate
conclusion for the vysya co-operative bank ltd which may beneficial for banks to
enhance their customers base.
SUGGESTION:
To increase their customers, the vysya co-operative bank ltd should provide the
specialized services in this sector. These services can be such as proper guidance to
the customer regarding the processing of loans, especially for customer who is
illiterate. To satisfy their customer for good dealings in futures provide the loan
schemes that is suitable for the customers so they can buy or construct their dream
home as early as possible. It should use easy procedure for sanctioning for loan to the
customers, where there should be less number of legal formalities, in case this should
exist, and then this should be completed in less time. This will help in attracting more
customers.
Page: 96
Although the interest rates on specific nomes, yet the customers seek less interest.
Needless to say, that the bank which is having lowers interest rates, have the
maximum clients of loans. The vysya co-operative bank ltd. Provide according to the
repaying capacity of the customers. Due to which, some customers are not able to get
amount of loan needed by them .so bank should often the norms regarding home loan
amount. The company has to reduce the interest rates on housing loan product and
services. The company has to reduce the morality and administration charges.
The company should create awareness creation about the product and services among
the customers. The vysya co-operative bank ltd should try to provide the proper
knowledge regarding housing loan schemes, even to people who dont know about
such schemes and their benefits especially in rural areas. So they should provide
knowledge to the customers, especially in the rural areas and backward urban areas.
so the above are the main suggestion provided to the vysya co-operative bank ltd..By
considering these suggestions, the vysya co-operative bank can strengthen their
customers base in the housing loan sectors. and also another important point provide
loan in the form of lump sum , if the customer is needed in that form.
So they should improve their services and reduce legal proceedings and should be
friendly to their customers. All this will help to satisfy the customers.
Page: 97

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A Study on Housing Loan taken from Vysya Co-operative Bank Ltd, Tumkur

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

1.6 INTRODUCTION ABOUT FINANCE:

1.7 FEATURES OF FINANCE:

Sources: Financial management-shashi.k.gupta.

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Creating physical assets with the money (such as

trading, etc.), and

units of mutual funds, etc.).

Owned funds (Promoter Contribution, Equity shares, etc.), and

4. System of Internal Controls

5. Future Decision Making

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Credit card debt

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

proprietorships, bodies such as

partnership firms and co-operative societies to avail of working capital or

11. Personal Loan:

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

3) Home improvement loan:

compound wall, digging of well/tube-well, flooring/tiling, additions like built-in

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

1.18 CHARGES IN HOME LOAN:

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

IMPORTANCE OF HOUSING LOAN

BENIFTS OF HOUSING LOAN:

2.2 REVIEW OF LITERATURE

6.Lall vinay(1984)6A Research Article entitled Housing credit situation in Eighties He

productivity and Profitability of public sector banks of India " making

his study Development responsibility and

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

and made recommendations for improving and modernizing these, particularly

2.11: OPERATIONAL DEFINITIONS OF THE STUDY:

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

2.12 PLAN OF ANALYSIS:

2.14 CHAPTER LAYOUT

Chapter 1: Introduction to housing loan.

10. Ojhha (1987) modern international caparison of productivity and

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Helping to grow and growing to help

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

25th February 1925

3.2 VISION AND MISSION

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

on rental basis with all its branches.

3.5 BACKGROUND OF THE BANK

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

3.7 ORGANIZATION STRUCTURE:

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

Dept. of PG Studies in Commerce, SSIBM, Tumakuru

3.10INCOME STATEMENTS OF VYSYA CO-OPERATIVE BANK

To, interest on loans

To, rent rates, taxes and expenenses.

Dept. of PG Studies in Commerce, SSIBM, Tumakuru