CHAPTER -1

INTRODUCTION

1
 INTRODUCTION
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and above
all gathering funds little by little to afford one’s dream. Home is one of the things that
everyone one wants to own. Home is a shelter to person where he rests and feel comfortable.
Many banks providing home loans whether commercial banks or financial institutions to the
people who want to have a home. HDFC-(Housing Development And Finance Corporation)
Home Loan, India have been serving the people for around three decades and providing
various housing loan according to their varied needs at attractive & reasonable interest rates.
Owing to their wide network of financing, HDFC Housing Loans provides services at your
doorstep and helps you find a home as per your requirements. Many banks are providing
home loans at cheapest rate to attract consumers towards them. The more customer friendly
attitude of these banks, currently offer to consumers cheapest loan over homes. In view of
acute housing shortage in the country, and keeping in mind the social – economic role of
commercial banks in the present times, the RBI advised banks to encourage the flow of credit
for housing finance. With the RBI reducing bank rate, the home loan market rates nose-
diving by 50 basis points. The HDFC Bank and Standard chartered bank has become the first
player in this sector to announce a housing loan for a 20 years period. No doubt it will
enhance the end cost people to plan their house over longer duration now; it has been made
easy for a person to buy that dream house which he dreamt of long ago. HDFC also provides
with Home Improvement Loan for internal and external repairs and other structural
improvements like painting, waterproofing, plumbing and electric works, tiling and flooring,
grills and aluminium windows. HDFC finances up to85% of the cost of renovation (100% for
existing customers).Current status is that HDFC reduced home loan rates by 50 basis points
for all its existing floating rate customers.

Loans are very good when they are used in the right way. They enable you to be able to
afford things that otherwise you would simply miss out on. A home is a good example. Few
people would ever own a home if loans for their purchase were not available. The typical
home is simply far too expensive, and as the prices continue to go up, they manage to stay
well out of reach. But with home loans, you can have it right away and enjoy it while you are
paying it off. In the meantime, with prices rising over time, your house gets more valuable
while your amount owing is going down. That creates “equity” for you – the difference
between the market value and what you owe.

So, since we like the idea of home loans we need to learn enough about it so that we know
what’s going on. This will help us to be able to select one that suits our needs. It will also
help us to implement a strategy to get rid of it! After all, a big part of the purpose of the loan

2
is to enable us to fully own whatever it is that we have purchased without anything owing on
it one day.

Principal

At the beginning, when you get the loan, the lender will provide some money for your
purchase. This amount of money that they advance is the “principal” of the loan. Principal
can be thought of as the primary or basic thing. And the primary thing that a home loan is all
about is giving you the money that you need to purchase your home.

As time goes on and you make payments to reduce the amount you owe, the loan principal
reduces until the loan is fully repaid and the principal is zero.

Where do you start?

A good thing to do right now is to have a chat with a professional who can answer any
questions you may have. The friendly, experienced credit managers at State Custodians
will provide helpful information without the pressure of committing and by the end of the
conversation you will have a better understanding of what home loan would suit you the
best. Give them a call during NSW business hours on 13 72 62.

Security
Since typical home loans involve a lot of money, the lender needs to have some protections
in place so that they are not left high and dry should things go pear shaped. To do that will
require that a certain value of real property (as a home on a block of land) be used to secure
the loan. That means that if you fail to repay the loan as required they have the legal ability to
have that property sold to get their money back.

There is no limit to how many properties that you use to secure your loan, given that they are
not also being used to secure another loan. The money from the loan might be used for the
purchase of one or several of those properties. That makes no difference. There just needs to
be enough total security value to cover the loan.

Mortgage

The way the property is provided as a security is through a mortgage. That’s a name for
a home loan that is linked to a security property – as they typically are. That mortgage
involves putting an “encumbrance” or “lien” on the title of the property. That’s simply a
notation on the title (papers that define the property and show who the owners are) that says
that along with the ownership of the property there is an obligation of repaying a lender.

3
Interest

As long as you owe money, you will have to pay interest. This is the basic cost paid to the
lender for the use of their money. The interest rate is the means of calculating this interest.
Usually it is expressed as an annual percentage, even though it is typically calculated daily
and charged to the loan monthly.

Variable interest rates

The interest rate can be variable or fixed. With the variable rate the lender has the ability to
change the rate as required by economic conditions. If the lender finds that it is more
expensive for them to get the money that they are using to provide the home loans, they can
increase the interest rate. If, however, the cost of their money goes down they can reduce the
rate to both attract new customers as well as to retain their existing ones. It’s a very
competitive industry, so the lender’s margins (the difference between what they pay for
money and what they lend it out at) tend to stay very tight (a small difference).

Fixed interest rates

With some loans it is possible to fix the interest rate on all or part of the loan. The fixed rate
that is on offer changes more often than the variable rate, but once it is set, it stays the same
for the specified period of time, regardless of what the variable rate is doing. Doing this can
either be seen as a gamble or it can be a matter of paying for insurance.

When the fixed rate period is over, the rate will revert to whatever the variable rate is at that
time, and the payments will be adjusted accordingly. There are likely to be very strict
limitations and associated penalties with regard to any sort of early repayment of a fixed
interest rate loan portion.

Payments

Periodically you will be making payments on your home loan. This might be weekly,
fortnightly or monthly. These payments will cover the cost of the interest, and anything
additional will be used to reduce the amount of principal owing.

Redraw

When you are ahead on your payments,which is to say that you have paid in more than just
your required payments, the principal will be brought down below the level where it would
need to be in order to be fully repaid on time. Most home loans will have the capability for
the borrower to ask for that surplus money back. The amount of money that is available is
called “redraw,” and the process of getting it is also “redraw” or “redrawing.”Some loans will
charge a fee for doing this, while with others it is free and also very easy to do. Redraw gives
you the freedom to pay as much as you can into the loan knowing that if some sort of
emergency or special need came up, it is still available.

4
More Information in the Home Loan Basics eBook
Each of the items given above are expanded upon plus a lot of additional related matters
involving home loan basics are included in the free eBookcurrently on offer. Even if you
know a lot about home loans it’s likely that you will learn something more by reading it, and
you can use it like a reference book to look up matters that you need to know about.
Download your free copy today. Click here to go to the download page.

5
 CHAPTER -2
REVIEW OF LITERATURE

6
 REVIEW of LITERATURE

• After going through pervious studies of Home loans I came to conclude that-• There is
growth of home loans after 2001.• Home loans have an inverse relation with interest rates i.e.
when interest rate low the demand of home loans increase. (Ojha 1987)• People are going
more towards home loans than private mortgage insurance.(Berstain 2008)• Government
taking various steps to encourage people to go toward home loans.(Haavio, Kauppi 2000)•
Growth of home loans are due to increase of living standard of people, shifting from joint
family to nuclear family .(Lacourr, Micheal 2007)• There are some problems also attach with
these home loans such as time i.e filling of application of loan to closing ,people have their
own specified needs from these home loans which are not fulfilling. (Lacour Micheal 2006).•
SBI provide a very low interest rate on home loans as compared to other banks.(SBI May
2000)

Now after this conclusion the details of reviews are below-

Rukmini Devi Institute of Advanced Studies35

Berstain David (2009) examined in his study taken from 2001 to 2008 that in this period there
is increase use of home loans as compared to private mortgage insurance(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 don’t have 20% of down payment. Section2 tells the factors
responsible for the growth of home loans and the risks on shifting toward home equity market
without any PMI coverage. PMI can protect lenders from most losses up to 80% of LTV and
the absence of PMI will result in considerable losses in an environment. Section 3 tells the
measures in changes of type of loans. For this he have taken the data from the 2001 and 2007
AHS a joint project by HUD and Census The results of this analysis presented in Table One
reveal a sharp increase in the Prevalence of owner-occupied properties with multiple
mortgages among properties with Newly originated first mortgages. Section 4 describe the
Financial status of single-lien and multiple-lien households and for this he have taken the
survey of consumer finance and show that financial position is more weaker in multiple loans
than the single loans.

7
Vandell, Kerry D (2008) analysis the sharp rise and than suddenly drop down home prices
from the period 1998- 2008. changes in prices are for the reasons as such economic
fundamentals , the problem was not sub prime lending per se, but the Fed‘s dramatic
reductions, then increases in interest rates during the early- mid-2000 , the housing ―boom
was concentrated in those markets with significant supply-side restrictions, which tend to be
more price-volatile; he problem was not in the excess supply of credit in aggregate, or the
increase in sub prime per se, but rather in the increased or reduced presence of certain other
mortgage products.

La courr, Micheal (2007) analysis in his study the factors affected the increase in the level of
Annual percentages rates (APR) spread reporting during 2005 over 2004. the three main
factors are changes in lender business practices; (2) changes in the risk profile of borrowers;
and (3) changes in the yield curve environment. The result show that after controlling for the
mix of loan types, credit risk factors, and the yield curve, there was no statistically significant
increase in reportable volume for loans originated directly by lenders during 2005, though
indirect, wholesale originations did significantly increase. Finally, given a model of the
factors affecting results for 2004-2005, we predict that 2006results will continue to show an
increase in the percentage of loans that are higher priced when final numbers are released in
September 2007.

La cour Micheal (2006) examined the home purchase mortgage product preferences of LMI
households. Objectives of his study to analysis the factors that determined factors their choice
of mortgage product , is different income groups have some specified need to 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 government Rukmini Devi Institute of Advanced
Studies lending taking the longest time and Nonprime loans the shortest time. Multi family
properties take longer time in closing. And during peak season take longer time to close. And
for last objective it is find that broker originated loans close faster. The effect of mortgage
brokers on pricing and other market outcomes is fertile ground for additional research.

8
Dr. Rangarajan C. (2001) said that the financial system of India built a vast network of
financial institutions and markets over times and the sector is dominated by banking sector
which accounts for about two-third of the assets of organized financial sector.

Haavio, Kauppi (2000) stated that countries where a large proportion of the population lives
in owner – occupied housing are experiencing higher unemployment rates. Than countries
where the majority of people live in private rental housing, which might suggest that rental
housing enhances labour mobility. In this paper, they develop a simple inter temporal two
region model that allow us to compare owner occupied housing markets to rental markets and
to analyze how these alternative arrangements allocate people in space and time. announced
that it will offer loans for Rs. 2-10 lakh at 12.5 percent the lowest rate offered by any housing
finance provider, big brother SBI has taken the rate war in the home loans category to new
heights. This is because, apart from the low rate, the interest on these loans is calculated on
principal, which is reduced every month unlike other housing finance companies which
calculate interest on annually reducing basis.

Narasimham Committee (1991) points out that although the banking system in our country
has made rapid progress during the last two decades, there is decline in productivity and
efficiency and erosion of profitability. The committee strongly make indications of liberlising,
deregulating economy to make Indian baking system more competitive and efficient.

Ojha (1987) in his paper "modern international caparison of productivity and Profitability of
pubic sector banks of India" making Comparison on the basis of per employee indicators and
taking examples of state bank group and Punjab National bank noted that Indian banks are
the lowest in all accounts. However such international comparison will not be fair for
numbers of reasons.

Godse (1983) in his essay, “looking a fresh at banking productivity” observe that productivity
aspect is only at the Conceptualization stage in banking industry. He suggested improvement
in productivity and procedures, costing of operations and capital expenditure etc.

Fanning (1982), while examining bank productivity of British banks observed that although
the productivity of the UK clearing banks is improving, they are still heavily over manned as
compared with similar banks else where.

Kulkarni (1979) in his study “Development responsibility and profitability of banks” stated
that while considering banks costs and profits, social benefits arising out of it cannot Rukmini

9
Devi Institute of Advanced Studies37 be ignored. He suggested that while meeting social
responsibility banks should try to make developmental business as successful as possible.

Varde and Singh (1979) in a study "profitability of commercial banks" over 15 years gave
consideration to two types of factors that effects interest rates levels i.e. internal
factors(including operational and managerial efficiency of individual basis).

Banking Commission (1972) reviewed bank operating methods and procedures and made
recommendations for improving and modernizing these, particularly relating to customer
sservices, 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.

A home loan is an amount of money that an individual borrows from a bank or money
lending company at a certain rate of interest to be paid with the EMI every month. The
property is taken as a security by the money lending company for the Home Loan.
• The property can either be commercial or personal in nature.
• When the borrower cannot pay the dues, the lender will possess all the legal rights to
recover the outstanding loan amount by sale of the property in question.

Types of Home Loans:

• Home Purchase Loan: This is the loan that one takes for purchasing a home.
• Home Improvement Loan: This loan covers expenditure related to repairs of your home or
even renovation.
• Home Construction Loan: This loan comes in handy when you are building a new house.
• Land Purchase Loan: Someone wishing to buy a plot of land for constructing his/her own
house can avail this loan.
• Home Extension Loan: Suppose you plan to add another room, garage, bathroom or kitchen
to your home. This is the loan that you should apply for and this also comes in handy if you
are planning to have another floor.
• Joint Home Loan: These are loans taken by two people or even more. For instance, spouses
can apply for joint home loans.
• Home Loan Balance Transfer: You can use this mechanism to switch your outstanding loan
amount to a different lender with better terms and conditions and lower interest.
• Top Up Home Loan: This kind of loan helps you borrow some more money above the
outstanding loan amount. There are attractive rates of interest offered by Bajaj Finserv in case
of top-up loans.

10
 CHAPTER-3

COMPANY PROFILE

11
 COMPANY PROFILE

BACKGROUND

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector, as part of RBI’s liberalisation of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.

PROMOTER

HDFC is India’s premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC
has developed significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities. With its
experience in the financial markets, strong market reputation, large shareholder base and
unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian
environment.

BUSINESS FOCUS

HDFC Bank’s mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank’s risk appetite. The bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank’s business philosophy is based on five core values: Operational
Excellence, Customer Focus, Product Leadership, People and Sustainability.

12
CAPITAL STRUCTURE

As on 31st March, 2015 the authorized share capital of the Bank is Rs. 550 crore. The paid-
up share capital of the Bank as on the said date is Rs501,29,90,634/- ( 2506495317 ) equity
shares of Rs. 2/- each). The HDFC Group holds 21.67 % of the Bank's equity and about
18.87 % of the equity is held by the ADS / GDR Depositories (in respect of the bank's
American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues). 32.57 %
of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has 4,41,457
shareholders.

The shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the
New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global
Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No
US40415F2002.

AMALGAMATION OF TIMES BANK & CENTURION BANK OF

PUNJAB WITH HDFC BANK

On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was
formally approved by Reserve Bank of India to complete the statutory and regulatory
approval process. As per the scheme of amalgamation, shareholders of CBoP received 1
share of HDFC Bank for every 29 shares of CBoP.

The amalgamation added significant value to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited (another new
private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks
in the New Generation Private Sector Banks. As per the scheme of amalgamation approved
by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank
received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

13
DISTRIBUTION NETWORK

HDFC Bank is headquartered in Mumbai. As of March 31, 2015, the Bank’s distribution
network was at 4,014 branches in 2,464 cities. All branches are linked on an online real-time
basis. Customers across India are also serviced through multiple delivery channels such as
Phone Banking, Net Banking, Mobile Banking and SMS based banking. The Bank’s
expansion plans take into account the need to have a presence in all major industrial and
commercial centres, where its corporate customers are located, as well as the need to build a
strong retail customer base for both deposits and loan products. Being a clearing / settlement
bank to various leading stock exchanges, the Bank has branches in centres where the NSE /
BSE have a strong and active member base.

The Bank also has a network of 11,766 ATMs across India. HDFC Bank’s ATM network can
be accessed by all domestic and international Visa / MasterCard, Visa Electron / Maestro,
Plus / Cirrus and American Express Credit / Charge cardholders.

MANAGEMENT

Mrs. Shyamala Gopinath holds a Master’s Degree in Commerce and is a CAIIB. Mrs.
Gopinath has 39 years of experience in financial sector policy formulation in different
capacities at RBI. As Deputy Governor of RBI for seven years and member of the Board. Mrs.
Gopinath had been guiding and influencing the national policies in the diverse areas of
financial sector regulation and supervision, development and regulation of financial markets,
capital account management, management of government borrowings, forex reserves
management and payment and settlement systems.

The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years
and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.

The Bank's Board of Directors is composed of eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head various
businesses and functions and report to the Managing Director. Given the professional
expertise of the management team and the overall focus on recruiting and retaining the best
talent in the industry, the bank believes that its people are a significant competitive strength.

14
TECHNOLOGY

HDFC Bank operates in a highly automated environment in terms of information technology

and communication systems. All the bank’s branches have online connectivity, which enables
the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also
provided to retail customers through the branch network and Automated Teller Machines
(ATMs).

The Bank has made substantial efforts and investments in acquiring the best technology
available internationally, to build the infrastructure for a world class bank. In terms of core
banking software, the Corporate Banking business is supported by Flexcube, while the Retail
Banking business by Finware, both from i-flex Solutions Ltd. The systems are open,
scaleable and web-enabled.

The Bank has prioritised its engagement in technology and the internet as one of its key goals
and has already made significant progress in web-enabling its core businesses. In each of its
businesses, the Bank has succeeded in leveraging its market position, expertise and
technology to create a competitive advantage and build market share.

BUSINESS PROFILE

HDFC Bank caters to a wide range of banking services covering commercial and investment
banking on the wholesale side and transactional / branch banking on the retail side. The bank
has three key business segments:

Wholesale Banking

The Bank’s target market is primarily large, blue-chip manufacturing companies in the Indian
corporate sector and to a lesser extent, small & mid-sized corporates and agri-based
businesses. For these customers, the Bank provides a wide range of commercial and
transactional banking services, including working capital finance, trade services, transactional
services, cash management, etc. The bank is also a leading provider of structured solutions,
which combine cash management services with vendor and distributor finance for facilitating
superior supply chain management for its corporate customers. Based on its superior product
delivery / service levels and strong customer orientation, the Bank has made significant
inroads into the banking consortia of a number of leading Indian corporates including
multinationals, companies from the domestic business houses and prime public sector

15
companies. It is recognised as a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock exchange members and banks.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalisation of the financial markets in India, corporates need more sophisticated risk
management information, advice and product structures. These and fine pricing on various
treasury products are provided through the bank’s Treasury team. To comply with statutory
reserve requirements, the bank is required to hold 25% of its deposits in government
securities. The Treasury business is responsible for managing the returns and market risk on
this investment portfolio.

Retail Banking

The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and delivered
to customers through the growing branch network, as well as through alternative delivery
channels like ATMs, Phone Banking, Net Banking and Mobile Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and
the Investment Advisory Services programs have been designed keeping in mind needs of
customers who seek distinct financial solutions, information and advice on various
investment avenues. The Bank also has a wide array of retail loan products including Auto
Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It
is also a leading provider of Depository Participant (DP) services for retail customers,
providing customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in association
with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank
launched its credit card business in late 2001. By March 2015, the bank had a total card base
(debit and credit cards) of over 25 million. The Bank is also one of the leading players in the
“merchant acquiring” business with over 235,000 Point-of-sale (POS) terminals for debit /
credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in

16
various net based B2C opportunities including a wide range of internet banking services for
Fixed Deposits, Loans, Bill Payments, etc.

RATINGS / AWARDS

Credit Rating

HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis &
Research Limited. (CARE) and Fitch Ratings India Private Limited. The bank's Fixed
Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents
instruments considered to be "of the best quality, carrying negligible investment risk".

CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which
represents "superior capacity for repayment of short term promissory obligations". Fitch
Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)" rating
to the bank's deposit programme, with the outlook on the rating as "stable". This rating
indicates "highest credit quality" where "protection factors are very high".

HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4 billion
rated by CARE and Fitch Ratings India Private Limited. CARE has assigned the rating of
"CARE AAA" for the Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the
rating "AAA (ind)" with the outlook on the rating as "stable". In each of the cases referred to
above, the ratings awarded were the highest assigned by the rating agency for those
instruments.

Corporate Governance Rating

The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating
Information Services of India Limited (CRISIL). The rating provides an independent
assessment of an entity's current performance and an expectation on its "balanced value
creation and corporate governance practices" in future. The bank was assigned a 'CRISIL
GVC Level 1' rating in January 2007 which indicates that the bank's capability with respect to
wealth creation for all its stakeholders while adopting sound corporate governance practices
is the highest

17
Awards and Accolades

Hdfc Bank began operations in 1995 with a simple mission: to be a "World-class Indian
Bank". We realized that only a single-minded focus on product quality and service excellence
would help us get there. Today, we are proud to say that we are well on our way towards that
goal.

Over the years, the Bank has received recognition and awards from several leading
organizations and publications, both domestic and international (details are available on
http://www.hdfcbank.com/aboutus/awards/default.htm).

Some important awards that the Bank won

2015 AIMA Managing India Awards 2015

- Business Leader of the Year - Aditya Puri

Barron's

- World's 30 Best CEOs - Mr Aditya Puri Finance Asia poll on Asia's Best Companies 2015

- Best Managed Public Company - India' Best CEO- Aditya Puri

Best Corporate Governance- Rank 3

Best Investor Relations- Rank 3

J. P Morgan Quality Recognition Award

- Best in class straight Through Processing Rates

2014

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 OBJECTIVES OF STUDY

There is no strongest foundation for your dream home, than a cheap loan. Home loans have
become that stronger foundations for people who want to own a home.

The main objectives of the study are as follows :-

 The main objective of this study is to know the Customers perceptions about home
loans of HDFC housing development finance corporation LTD.
 To analyze the history of hdfc ltd.To analyze the history of hdfc ltd.
 Generating good business to the company by promoting and selling the products of
HDFC LTD.
 To know the ideas of customers about home loan products and services.
 To make comparative study of Disbursement of home loans by Commercial banks.
 Fixing the appointments with the customers.
 To study the satisfaction level of customers about home loans.
 To study the problems faced by customers in obtaining the home loans.
 Visiting the customers and closing the deal. Rukmini Devi Institute of Advanced
Studies28
 To learn about various aspect of hdfc home loan ltd. To learn about various aspect of
hdfc home loan ltd.

SCOPE OF STUDY

The Indian housing finance industry has grown by leaps and bound in few years. Total home
loans disbursements by banks has risen which witnesses phenomenal growth from last 5
years. There are greater number of borrowers of home loans. so by this study we can find out
satisfaction level of customers and problems faced by them in obtaining home.

NEED OF THE STUDY

Retail banking has been popular segment to enter into for many banks. In the retail banking,
housing sector has been most promising segment which is promising a Comprehensive
growth rate of about 30 per cent for the next five years. With the government keen on
infrastructure development and announcing various tax Sops housing loan segment has been
a tempted area for many banks to enter into housing sector can be bifurcated into organized
and unorganized segments with the unorganized segments accounting for over 75 per cent of

19
the housing units constructed. During the past 4 – 5 years the housing sector helped by the
growing housing finance industry has witnessed significant developments

RESEARCH METHODOLOGY

Research methodology is a way to systematically show the research problem. It may be

understood as a science of studying how research is done scientifically. It is necessary for the
researcher to know not only the research methods but also the methodology. This Section
includes the methodology which includes. The research design, objectives of study, scope of
study along with research methodology and limitations of study etc.

 To know the Customers perceptions about home loans of HDFC housing

development finance corporation LTD.
 To study the satisfaction level of customers about home loans.
 To study the problems faced by customers in obtaining the home loans.
 To make comparative study of disbursement of home loans by commercial banks,
the study shall be conducted in the manner enumerated below-

RESEARCH DESIGN

This project is based on exploratory study as well descriptive study. It was anexploratory
study when the customer satisfaction level was studied to suggest new methodsto improve the
services of HDFC LTD in providing home loans and it was descriptive study when detailed
study was made for comparison of disbursement of home loans by commercial banks.

SOURCES OF DATA

To fulfill the information need of the study. The data is collected from primary aswell as
secondary sources-

PRIMARY SOURCE

I decided primary data collection method because our study nature does not permitto apply
observational method.

In survey approach we had selected a questionnaire method for taking a customer view
because it is feasible from the point of view of our subject & survey purpose. We conducted
100 sample of survey in our project to judge the satisfaction level of customers which took
home loans.•

20
SECONDARY SOURCE

It was collected from internal sources. The secondary data was collected on the basis of
organizational file, official records, news papers, magazines, management books, preserved
information in the company’s database and website of the company.

SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a view to
draw conclusions about that universe. A sample is a representative of the universe selected
for study.

SAMPLE SIZE

Large sample gives reliable result than small sample. However, it is not feasible to target
entire population or even a substantial portion to achieve a reliable result. So, in this aspects
electing the sample to study is known as sample size. Hence, for my project my sample size
was 100.The Sample Size consists of both the Professional and Business class people. IT
peoples, Doctors, Jewellers, Timber Merchants & Real estate Agents are taken as Sample.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

TOOLS OF ANALYSIS

Data has been presented with the help of bar graph, pie charts, line graphs etc. Rukmini Devi
Institute of Advanced Studies32

PLAN OF ANALYSIS

Tables were used for the analysis of the collected data. The data is also neatly presented with
the help of statistical tools such as graphs and pie charts. Percentages and averages have also
been used to represent data clearly and effectively.

LIMITATIONS OF THE STUDY

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

21
 The sample size of 100 customers and 4 banks might prove a limitation because of
difficulty in generalization of results.
 To collect the data from various banks was quite difficult due to non- cooperation of
some banks. This proved to be major limitation of the study.
 To access such a large number of customers was difficult because of non-cooperative
attitude of respondents.
 Lack of data was also the other limitation of the study as some of banks do not have
proper data on topic.
 There was limitation of time to conduct such a big survey in limited available time .
 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. Rukmini Devi Institute of Advanced
Studies.

22
 CHAPTER-4
DATA ANALYSIS AND
INTERPRETATION

23
 DATA ANALYSIS AND REPRESENTATION

1. No of responds based on occupation?

Table no: 1

S. No Particulars No of respondents % of respondents

1 Services 10 20

2 Business 20 40

3 Farming 10 20

4 Other 10 20

Total 50 100

Figure no: 1

100
100
90
80
70
60 50
No of respondents
50 40
% of respondents
40
30 20 20 20 20
20 10 10 10
10
0
Services Business Farming Other Total

INTERPRETATION:
The above table shows that 20% of the respondents are employees,40% of the respondents
are doing business,20% of the respondents are farmers and other occupation respondents are
20%.

24
2) Amount of housing loan?

Table no: 2

S. No Particulars No of respondents % of respondents

1 1 lakh 20 40

2 2 lakh 15 30

3 4 lakh 5 10

`4 20 lakh 10 20

Total 50 100

Figure no: 2

100
100
90
80
70
60 50
No of respondents
50 40
% of the respondents
40 30
30 20 20
20 15
10 10
10 5

0
1lakh 3lakh 4lakh 20lakh Total

INTERPRETATION:
The above table shows that 40% of the respondents are housing loan, 1 lakh, 30% of the
respondents housing loan, 2 lakh, 20% of the respondents are 20, remaining 10% of people
respondence are lakh..

25
3) Which type of housing loan do you prefer?

Table no: 3

S. No Particulars No of respondents % of respondents

1 Purchaser 14 28

2 Constructions 6 12

3 Renovation 15 30

4 Conversion loan 15 30

Total 50 100

Figure no: 3

120
100
100
80
60 50
40 28 30 30 No of respondents
14 12 15 15 % of respondents
20 6
0

INT ERPRETATION:

The above table shows that 30% of the respondents are prefer housing loan, renovation, 30%
of the respondents prefer housing loan conversion loan, 28% of the respondents are purchaser,
and remaining 10% of people respondence are constractions.

26
4) During taken by your bank to sanction a home loan?

Table no; 4

S.no particular No. Of responds %of responds

1 1-month 18 36

2 1-6 month 22 44

3 3-6 month 6 12

4 More than 3 month 4 8

TOTAL 50 100

Figure no 4
100
100
90
80
70
60 50
50 44
36 No. Of responds
40
22 %of responds
30 18
20 12
6 8
10 4
0
1-month 1-6 3-6 More TOTAL
month month than 3
month

INTERPRETATION:
The above table shows that 44% of the respondents are taken by home loan, 1- month , 36%
of the respondences are take home loan , 1-6 months , 12% of the respondents are 3-6 months,
and remaining 10% of people respondences are more than 3 months.

27
5) Do you think duration taken by the bank in sanction loan is?

Table no : 5

S. No Particulars No of respondents % of respondents

1 Very little 3 6

2 Justified 7 14

3 Long enough 30 60

4 Very long 10 20

Total 50 100

Figure: 5

100
100
80 60
60
50
40 14 30 20
6 No of respondents
20 3 7 10
0 % of respondents
No of respondents

INTERPRETATION:
The above table shows that 60% of the respondents are taken by bank sanction loan, long
enough , 20% of the respondences are taken by bank sanction very long , 14% of the
respondents are justified , and remaining 6% of people respondences are very little .

28
6) Do you think , that the processing charges of the bank were high?

Table no : 6

S. No Particulars No of respondents % of respondents

1 Yes 33 66%

2 No 17 34%

3 total 50 100%

Figure :6

% of respondents

34%
Yes
No
66%

INTERPRETATION:
The above table shows that 66% of the respondents are charges of the bank were high ,yes,
and remaining 34% of people respondence are no.

29
7) What do you think above the paper formation of the housing loans ?

Table: 7
S. No Particulars No of respondents % of respondents

1 Justified 28 56

2 Too much 22 44

3 total 50 100

Figure: 7

% of respondents

44% Justified
Too much
56%

INTERPRETATION:
The above table shows that 56% of the respondents are formation of housing loans , justified
and remaining 44% of people respondence are formation of housing loans , no.

30
8) The converned official available on his set?

Table no: 8

S: no Particulars No of respondents % of respondents

1 Yes 39 78%

2 No 11 22%

3 Total 50 100%

Figure no: 8

% of respondents

22

Yes
No

78

INTERPRETATION:
The above table shows that 78% of the respondents are converned official available, yes, and
remaining 22% of people respondence are converned official available, no.

31
9) We he/she helpful and alterative to you?

Table no: 9

S. No Particulars No of respondents % of the respondents

1 Yes 37 78%

2 No 13 22%

Total 50 100

Figure no: 9

% of the respondents

22%

Yes
No

78%

INTERPRETATION:
The above table shows that 78% of the respondents are help full and alterative, yes, and
remaining 22% of people respondence are help full and alterative, no.

32
10) There adequate sitting arrangement for the customer?

Table no: 10

S. No Particulars No of respondents % of respondents

1 YES 36 72%

2 No 14 28%

Total 50 100%

Figure no: 10

% of respondents

28%

YES
No

72%

INTERPRETATION:
The above table shows that 72% of the respondents are sitting arrangement for the customer,
yes, and remaining 28% of people respondence are sitting for customers’, no.

33
11) The concerned official gave you the satisfactory answer to your queries?

Table no: 11

S. No Particulars No of respondents % of the respondents

1 Yes 36 72

2 No 14 28

Total 50 100

Figure no:11

% of the respondents

28%

Yes
No

72%

INTERPRETATION:
The above table shows that 72% of the respondece are gave a satisfactory answers , yes, and
remaining 28% of people respondence are gave a satisfactory answers , no.

34
12) Are you satisfied with the overall behavior of the concerned official ?

Table no: 12

S. No Particulars No of respondents % of Respondents

1 Yes 38 76

2 No 12 24

total 50 100

Figure no: 12

% of Respondents

24%

Yes
No

76%

INTERPRETATION:
The above table shows that 76% of the respondece are overall behaviour of the concerned
official, yes, and remaining 24% of people respondences are overall behavior, no.

35
13) Did you observe any behavior of favoritism on part of employees?

Table no: 13

s.no particulars No. of respondents % of respondents

1 Yes 36 72

2 No 11 22

total 50 100

Figure no: 13

% of respondents

28%

Yes
No

72%

INTERPRETATION:
The above table shows that 72% of the respondece are behaviour on part of employs, yes, and
remaining 28% of people respondences are behavior on part of employs, no.

36
14) Whether adequate drinking water facilities were available in the bank?

Table no: 14

S.no Particulars No of respondents % of respondents

1 yes 48 no

2 No 02 Yes

Total 50 100

Figure no: 14

% of respondents
4%

Yes
No

96%

INTERPRETATION:
The above table shows that 96% of the respondece are drinking facilites
yes, and remaining 4% of people respondences are behavior on available in bank, no.

37
 15) The complaints / suggestions box was kept by the bank?

Table no: 15

S. No Particulars No of respondents % of respondents

1 Yes 42 84

2 No 08 16

Total 50 100

Figure no: 15

% of respondents

16%

Yes
No

84%

INTERPRETATION:
The above table shows that 84% of the respondece are suggestions box kept , yes, and
remaining 16% of people respondences are suggestions box kept, no.

38
16) Why did you choose a nationalized / private bank to get a home loan?

Table no: 16
S. No Particulars No of respondents % of the respondents

1 More branches 20 40

2 Advertising 20 40

3 Low interest rate 02 04

4 Fast sanction of loan 08 16

Total 50 100

Figure no: 16

% of the respondents
45% 40% 40%
40%
35%
30%
25%
20% 16%
15% % of the respondents
10%
4%
5%
0%
More Advertising Low intrest Fast
branches rate sanction of
loan

INTERPRETATION:
The above table shows that 40% of the respondents are nationalized /private bank to home
loan, more branches ,40% of the respondence are nationalized / private bank to home loan ,
advertisement 16% of the respondents are fast sanction loan , and remaining 4% of people
respondences are low interest rate .

39
17) Reason for taking home loans from hdfc bank?

Table no: 17

S.no Particulars No of respondents % of respondents

1 Fast processing 12 24%
2 Intrest rates 23 46%
3 Margin amount 05 10%
4 Others 10 20%
Total 50 100%

Figure no: 17

% of respondents
50% 46%
45%
40%
35%
30%
24%
25% 20%
20% % of respondents
15% 10%
10%
5%
0%
Fast Intrest rates Margin Others
processing amount

INTERPRETATION:
The above table shows that 46% of the respondents are loan from HDFC bank , interest
rate ,24% of the respondence are loan from HDFC bank ,fast processing , 20% of the
respondents are loan from HDFC bank ,margin amount , and remaining 10% of people
respondences are loan from HDFC bank , margin amount .

40
18) How do you rate the interest rates charged by the hdfc banks?

Table no: 18

S.no Particulars No of respondents % of respondents

1 Highly satisfactory 10 20%
2 Satisfactory 30 60%
3 Average satisfactory 07 14%
4 Dis-satisfactory 03 06%
Total 50 100%

Figure no: 18

% of respondents
70%
60%
50%
40%
30% 60%
20%
10% 20% 14% % of respondents
0% 6%

INTERPRETATION:
The above table shows that 60% of the respondents are interest rates in hdfc bank ,
satisfactory ,20% of the respondence are interest rates in hdfc bank ,high satisfactory , 14%
of the respondents are average satisfactory ,and remaining 6% of people respondences are
dis satisfactory .

41
19) How do you rate the emi of hdfc bank?

Table no: 19
S. No Particulars No of respondents % of respondents

1 Highly satisfactory 10 20%

2 Satisfactory 10 20%

3 Average satisfactory 28 56

4 Dis-satisfactory 02 04

Total 50 100

Figure no:19

% of respondents
60% 56%
50%
40%
30%
20% 20%
20%
10% 4% % of respondents
0%

INTERPRETATION:
The above table shows that 56% of the respondents are interest rates in hdfc bank , average
satisfactory ,20% of the respondence are interest rates in hdfc bank ,high satisfactory , 20%
of the respondents are satisfactory ,and remaining 4% of people respondences are dis
satisfactory .

42
20) How do you rate the documentation produce of hdfc bank?

Table no: 20
S. No Particulars No of respondents % of the respondents

1 High satisfactory 10 20

2 Satisfactory 14 28

3 Averagesatisfactory 20 40

4 Dis satisfactory 6 12

total 50 100

Figure no: 20

0.45
40%
0.4

0.35

0.3 28%

0.25
20% Particulars
0.2
% of the respondents
0.15 12%
0.1

0.05

0
1 2 3 4 5

INTERPRETATION:
The above table shows that 40% of the respondents are interest rates in hdfc bank , average
satisfactory ,28% of the respondence are interest rates in hdfc bank , satisfactory , 20% of
the respondents are high satisfactory ,and remaining 12% of people respondences are dis
satisfactory .

43
21) how do you rate the sanction time of hdfe bank?

Table no: 21

S. No Particulars No of respondents % of respondents

1 Highly satisfied 3 6

2 dissatisfied 11 22

3 Satisfied 27 54

4 Average satisfactory 9 18

Total 50 100

Figure no: 21

% of respondents
60% 54%
50%

40%

30%
22% % of respondents
18%
20%

10% 6%

0%
Highly dissatisfied Satisfied Average
satisfied satisfactory

INTERPRETATION:
The above table shows that 54% of the respondents are interest rates in hdfc bank ,
satisfactory ,22% of the respondence are interest rates in hdfc bank , dis satisfactory , 18%
of the respondents are average satisfactory ,and remaining 6% of people respondences are
high satisfactory.

44
22) How do you rate the fore closure charges of hdfc bank?

Table no: 22

S. No Particulars No of respondents % of respondents

1 Highly satisfied 5 10%

2 Satisfied 33 66%

3 Average satisfied 12 24%

4 Dissatisfied 10 20%

Total 50 100%

Figure no: 22

% of respondents
70% 66%

60%
50%
40%
30% 24% % of respondents
20%
20%
10%
10%
0%
Highly Satisfied Average Dissatisfied
satisfied satisfied

INTERPRETATION:
The above table shows that 66% of the respondents are interest rates in hdfc bank ,
satisfactory ,24% of the respondence are interest rates in hdfc bank , average satisfactory ,
20% of the respondents are dis satisfactory ,and remaining 10% of people respondences
are high satisfactory.

45
23) Where have you got information about house loans scheme?

Table no: 23

S. No Particulars No of respondents % of the respondents

1 News paper 26 52%

2 Magazines 10 20%

3 Word of mouth 11 22%

4 Barding/ banner 3 6%

total 50 100%

Figure no: 23

% of the respondents
60%
52%
50%

40%

30%
20% 22% % of the respondents
20%

10% 6%

0%
News paper Magazines Word of Barding/
mouth banner

INTERPRETATION:
The above table shows that 52% of the respondents are house loan schemes ,news paper ,22%
of the respondence are house loan scheme , word of month , 20% of the respondents are
house loan scheme , magazines ,and remaining 6% of people respondences are barding/
banner .

46
24) have you taken loan even before?

Table no: 24

S.no Particulars No of respondents % of respondents

1 Yes 34 68

2 no 16 32

Total 50 100

Figure no:24

% of respondents

32%

Yes
no

68%

INTERPRETATION:
The above table shows that 68% of the respondece are take loan , yes, and remaining 32%
of people respondences are taken loan , no.

47
25) Do you want taken home loan in your future?

Table no: 25

S. No Particulars No of respondents % of respondents

1 Yes 36 62%

2 No 14 38%

Total 50 100%

Figure no:25

% of respondents

38%
Yes
No
62%

INTERPRETATION:
The above table shows that 68% of the respondece are home loan in your feature , yes, and
remaining 38% of people respondences are home loan in your feature , no.

48
26) What securities have you deposits?

Table no: 26

S. No Particulars No of respondents % of respondents

1 Fixed deposits 22 44%

2 Land paper 14 28%

3 Third person 1 2%

4 other 15 30%

Total 50 100%

Figure no: 26

% of respondents
50%
44%
45%
40%
35% 30%
30% 28%
25%
20% % of respondents
15%
10%
5% 2%
0%
Fixed Land paper Third person other
deposits

INTERPRETATION:
The above table shows that 44% of the respondents are securities deposits , fixed
deposits ,30% of the respondence are securities deposits , others , 28% of the respondents
are securities deposits ,land paper ,and remaining 2% of people respondences are
securities deposits , third persons are 2% and30% are others.

49
27Are you aware of all terms and home loans?

Sno particulars No of respondents % of respondents

1 Yes 31 62%

2 No 19 38%

Total 50 100%

Figure no:27

% of respondents

38%

Yes
62%
No

INTERPRETATION:

The above table shows that 62% of the respondece are home loan in your feature , yes, and
remaining 38% of people respondences are home loan in your feature , no.

50
28)In which language you like deal with bank ?

S.NO Particulars No of respondents % of respondents

1 Telugu 25 50%
2 English 16 32%
3 Hindi 5 10%
4 other 4 8%

Total 50 100%

Figure no:28

% of respondents
60%
50%
50%

40%
32%
30%
% of respondents
20%
10% 8%
10%

0%
Telugu English Hindi other

INTERPRETATION
The above table shows that 50% of the respondents are telugu , english ,32% of the
respondence are hindi 10% of the respondents are remaining 8% of people respondences
are other. .

51
29) which grade you want to giue of home loans scheme give of home loans scheme of
your bank?

S.no Particulars No of respondents % of respondents

1 Excellent 21 42%
2 above average 5 10%
3 Average 21 42%
4 Bellow average 3 6%
Total 50 100%

Figure no:29

% of respondents
45% 42% 42%
40%
35%
30%
25%
20%
% of respondents
15%
10%
10% 6%
5%
0%
Excellent above Average Bellow
average average

INTERPRETATION
The above table respondence are above average The above table shows that 42% of the
respondents are excellent , average ,42% of the 10% of the respondents are remaining 6%
of people respondences are bellow averager.

52
30)which features of your scheme satisfied your to bank?

Table no: 30
S.no Particulars No of respondents % of respondents
1 Low installment 21 41%
2 Maximum time period 6 12%
3 High installment amount 20 40%

4 nothing 3 7%
Total 50 100%

Figure no:30

% of respondents
45% 41% 40%
40%
35%
30%
25%
20%
15% 12% % of respondents
10% 6%
5%
0%
Low Maximum High nothing
installment time period installment
amount

INTERPRETATION

The above table respondence are above average The above table shows that 41% of the
respondents are low installment , high installment amount ,40% remaning peopleof the 12%
of the respondents are r 6% of people respondences are nothing.

53
 CHAPTER – 5

FINDINGS AND SUGGESTIONS &

CONCLUSION

54
FINDINGS

HDFC LTD having good brand image in the minds of customers.Rukmini Devi Institute of
Advanced Studies
 Majority of the people got loans from HDFC LTD only
 Most of the customers are not aware of the products of HDFC home loans
 Some of the customer’s felt that the interest rates are some what high
 Some of the customer not having good faith on private banks like Standard chartered
bank, HSBC bank etc.
 Most of the people are directly go to HDFC to apply a home loan
 Some of HDFC already benefited through HDFC home lone products and service
 Customer awareness is medium about HDFC products
 HDFC LTD providing good services to their customers

SUGGESTIONS

 To increase their customers, the HDFC LTD should provide specialized services in
this sector. These services can be such as proper guidance to the customer regarding
the processing of loans, especially for the customers who are illiterate
 To satisfy their customers and for good dealings in future, the HDFC LTD should
make prompt disbursement of loan amount to the customers so that they can buy or
construct their dream home as early as possible
 Although the interest rates on specific norms, yet customers seek less interest rate
which can lower their cost of house. So banks should try to lower their interest rates.
Needles to say, that the bank which is having lower interest rates, have the maximum
clients for loans.
 HDFC LTD provide loan according to the repaying capacity of the customer and
his/her eligibility. Due to which, some customers are not able to get amount of loan
needed by them. So, the HDFC LTD should soften their norms regarding the loan
amount
 Create awareness: The Company has to take care of awareness creation about the
products and services among the customers.
 Charges: The Company has to reduce the mortality and administration charges
 The company has to reduce their interest rates on home loan products and services
 The company has to identify the potential customers.

55
  Company should consider the present competition and should act according to the
customer needs

CONCLUSION

In my study we came to know that many peoples are interested to take a home loan from
HDFC LTD to construct their homes. Rukmini Devi Institute of Advanced Studies12

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