SANGHVI INNOVATIVE ACADEMY

Institute Of Technology & Management

A Major Research Project on A comparative study of impact of economic factors on Home Loans sector of LIC & HDFC

(A Research Dissertation Submitted in Partial Fulfillment for the Award of the Degree of Masters of Business Administration) (20010-2012)

EXTERNAL GUIDE:
.

SUBMITTED BY:
Ritesh Makwane MBA IV Semester Roll No: - 1006154

CERTIFICATE
This is to certify that the Project Report entitled (Title of the Project) . which is being submitted herewith for the award of the degree of Master of Business Administration of Devi Ahilya Vishwavidyalaya, Indore is the result of the original research work completed by .(Name of the student).. under my supervision and guidance and to the best of my knowledge and belief. The work embodied in this Project Report has not formed earlier the basis for the award of any degree or similar title of this or any other University or examining body.

EXTERNAL GUIDE

INTERNAL GUIDE Place: Indore Date:

(i)

DECLARATION
I, the undersigned, hereby declare that the Project Report entitled (Title of the Project) written and submitted by me to the Devi Ahilya Vishwavidyalaya, in partial fulfillment of the requirement for the award of degree of Master of Business Administration under the guidance of (Name of the Guide) is my original work and the conclusions drawn therein are based on the material collected by myself.

Place: Indore 2012

Date: / /

Ritesh Makwane

(ii)

ACKNOWLEDGEMENT
The journey towards knowledge is challenging but difficult. It is almost impossible for the single individual to reach the destination alone. Luckily, the world is full of knowledgeable as well as co-operative human beings who are always there when one looks for help. The present study has reached to the final stage due to the contributions and help from a number of individuals who always stayed with me during the rough patches. I feel honored to have an opportunity to express my gratitude to my mentor and research supervisor, Prof. SURBHI GANGRADE for his/ her able guidance and continuous inspiration. I am deeply indebted to him/ her for constant encouragement, self-less direction, attention to every minute detail of my research work and taking up the task to successful completion. I am highly obliged for him/ her kind guidance. I find no words to express the depth of my gratitude towards him/ her. My special thanks are to Prof. Gaurav Moghe, Head of the Department, Sanghvi Innovative Academy, Indore for his whole hearted and unwavering support at the crucial parts of the work. Apart from this, I would like to thank all the respected professors who trim the silver lamp of knowledge kept the scared of flame bright towards me. I would also like to thank all the respondents who helped me whole heartedly by providing me valuable information.

RITESH MAKWANE

MBA IV Semester

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PREFACE
In this project here I declared about the information related to the maximum retail prize (M.R.P.) of the Home Loans, in my project I have defined the information which are of the LIC ( Life Insurance Company) and HDFC (Housing Development and Finance Corporation). Here we declare the report about the Home Loans and its literature and the objectives of research so that we can improve the Home Loans Maximum Retail Price (MRP).

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TABLE OF CONTENTS

CHAPTER NO.

PARTICULARS

PAGE NO.

Certificate Declaration Acknowledgement Preface Introduction (for an example) Chapter 1

1.1. General Overview 1.1.1. History 1.2. Perception 1.2.1. Customer Perception 1.2.2. Factors affecting Perception

(i) (ii) (iii) (iv)

Chapter 2 Chapter 3

Review of Literature Research Design & Methodology Data Presentation Interpretation , Analysis and

Chapter 4

Chapter 5

Findings , Suggestions and Conclusion Bibliography Appendix/Annexure

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

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

First thing first, you have to be very very clear that there cant be a single bank or loan institution which is perfect for everything and you will never face an issue with them. Also there is no best bank for Home Loan which has always worked for everyone till date. But overall we can always pick some banks which have been better than others on different parameters. You can say that on a high level Bank A is better than Bank B and this is based on many loan takers experience over the years. So now in this article we will try to understand difference between different banks and how they differ with each other. We will also see a survey result done with the vast community of this blog and which bank they choose collectively as best bank for home loan.

Public Companies vs Pvt Companies

While researching on this topic , the first thing which came to my mind was all banks are same, everyone has bad experience will all kind of banks, whether PSU or private. But we have to understand that while some people can have bad experience with some banks, there are positive experience too and we have to see things from a very high level and not judge a bank just based on handful of bad experiences. The first confusion which comes to any loan taker mind is PSU bank or private bank? and based on the experience here is the conclusion. PSU Banks are good post-loan but not friendly at the time of taking the loan Private banks are very fast and friendly at the time of disbursing the home loan, they will treat you like a king up-till the loan is disbursed, but once every formality is complete

and your home loan is sanctioned, you are a trash to them! As they are extremely agressive in marketing of home loans, a lot of people fall for it, Private companies presentation and they way they approach you is good but only till you are not a home loan customer. A lot of times private companies make things easy for you and also bend some rules for home loans. the number of documents they need also is less compared to a PSU bank. On the other hand, PSU banks are not that great at the start of home loan , their rules are very strict and stringent and they still operate in the sarkari style, however once you loan process is complete and things start, there after life is much easier compared to private banks. The overall handling is much professional and as per the process. In short they dont suck your blood every now and then as private companies do. Private banks are first to raise the interest rates On the interest rates increase and reduction side, its seen that private companies are first to raise the interest rates after the rate increase from RBI side, but private banks hide somewhere when there is a time for reducing the interest rates. However PSU banks are more transparent on this front and much less annoying than Private banks. Also private banks arbitraly increase the pre-payment charges ( like from 2% to 3%) the conversion fees is also charged heavily if you want to move down to a lower interest rates. Also the changes of fraud at employees level in Private bank is much higher than PSU Banks. I cant say that PSU banks are not into the bad game, but its much much higher in Private banks because of sales pressure and targets. There has been cases of forced selling of home insurance and also cross selling of ULIPs and other financial products along with the home loan

Which is the best bank for Home loan in India?

Now there are millions of people who have taken home loan and there are various parameters on which a bank can be ranked like Processing time for home loan, Transparency in whole process, Attitude towards customer, Interest rates and prepayment charges, online tracking of your home loan after disbursement. But there is no ranking of banks on all these parameters. However still you can rank a bank overall as good or bad in total. I ran a survey on this blog and got around 1504 participants to vote for best bank for home loan and based on that we can judge which banks are more preferable and more trusted. Here are the results

Best Bank for Home Loan in India (Survey Results)

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

Top 5 banks for Home Loan at the moment

If you see the survey above , you can clearly see that the top 5 banks for home loan are SBI , HDFC , LIC housing, Axis Bank and ICICI Bank and these 5 banks comprise of 83% votes . While a big reason for this can be that these are big banks having a wide reach and has more customers and hence the results are little biased. But at least you can see that out of 1504 people on this blog, 83% of them have a home loan from these 5 big banks , in which SBI tops the list. 1. SBI Bank Based on the survey and overall readings done over net and comments section of this blog. SBI bank seems to be the best bank for Home Loan. While SBI Bank still carries the hangover of Sarkari culture and they are strict in the overall process , which means you will have to run all over the bank and many times to get things done, but once the whole process is complete , may be you will have a smooth experience overall. Things will be easy post home loan process if you need anythings from bank compared to other banks. For those who want to know why SBI is preferred , follow this thread

2. HDFC Bank Overall HDFC bank seems to be have mixed review. Some people had great experience and some had very bad experience. HDFC Bank is overall recognised as the bank for home loan itself. But overall the experience was very very mixed. 3. LIC Housing Finance LIC housing finance seem to be a decent option after SBI. While they are not that great as SBI , still they seem to be a good choice after HDFC and ICICI bank . LIC Housing Finance has lesser documentation requirements, but one has to run around for smaller details. LIC seem to offer better rates and also giving option to fix the interest rate for 5 years. One thing which many people do not know is that LIC reduces the interest rates for home loan for its customers having any insurance/investment policy with LIC by at least 0.25% , but only if Sum assured of all policies collectively is more than 15,00,000 and all policies should be under the name of loan applicant. 4. ICICI Bank ICICI Bank seems to be very very fast and too friendly at the time of loan processing, but once the loan is done, the life seems to be hell for most of the people . They are not very supportive most of the times and one gets too frustrated with their attitude. Overall their interest rates are also very high. 5. Axis Bank Axis Bank is another good option as big bank . One good thing about Axis bank is that they have NIL charges for any pre-payment . Its a big surprise that Axis bank was more preferred than ICICI bank overall in the survey. While Axis Bank has few good options, there was one recent case from axis bank which I had highlighted on this blog on how they forced sell a life insurance policy along with home loan, While this was a negative thing from Axis Bank, we have to understand that good and bad experience are part of all the banks.

So what is the final answer ?

While there are positive and negative experiences from different banks, the clear answer coming out of different comments from readers and survey is that if one has to choose just one name, SBI bank is the best bank for home loan. We have seen most of the votes going to SBI Bank and all the pointers are suggesting that its a right choice. Which bank do you have home loan with and what was your experience overall from start till the end. Can you share it in for others benefit?

Company History - HDFC Bank

1994 - The Bank was Incorporated on 30th August. A new private sectorBank promoted by housing Development Corporation Ltd. (HDFC), a premier housing finance company. The bank is the first of its kind to receive an in-principle approval from the RBI for establishment of a bank in the private sector. Certificate of Commencement of Business was received on 10th October 1994 from RBI. - The Bank transacts both traditional commercial banking as well as

investment banking. HDFC, the promoter of the bank has entered into an agreement with National Westminister Bank Pc. and its subsidiaries (Natwest Group) for subscribing 20% of the banks issued capital and providing technical assistance in relation to the banks proposed banking business. 1995 - 70 No. of equity shares issued to subscribers to the Memorandum & Articles of Association on 30th August 1994. On the same date 500,00,000 equity shares were allotted to HDFC promoters. 509,20,000 shares were allotted to HDFC Employees Welfare Trust and HDFC Bank Employees Welfare Trust on 22nd December, 1994. - On 16.1.1995, 90,79,930 No. of equity shares were allotted to Jarrington Pte. Ltd. Another 400,00,000 equity shares were allotted on private placement basis to Natwest Group on 9.5.1995. 500,00,000 shares were allotted to the public on 9.5.95 (all were taken up). - The Bank opened its first branch in Ramon House at Churchgate, Mumbai on January 16th. - The Bank has created an efficient operating system using well tested state-of-the-art software. 1996 - HDFC Bank has entered the banking consortia of over 50 corporates, including some leading multinational companies, flagship companies of local business houses and strong public sector companies. - HDFC Bank has set up a state-of-the-art dealing room to handle all transactions possible in Indian financial markets. - The Certificates of Deposits were awarded a PP1+ rating which is the highest rating for short term instruments indicating superior capacity for repayment. 1997 - The bank is one of the largest mobilisers of retail deposits Through its network of 20 branches. Its credit deposits ratio was 53.8%. - The bank has set up a ultra-modern hub at Powai in Mumbai where The ank's central computer is housed. This hub housed in 35,000 square feet of space, houses data of all the branches and facilitates the

introduction of new products and services. - HDFC has installed state-of-the-art systems to facilitate inter-connectivity between branches and link up with on line system. - The bank has also recently signed up as a depository participant, under the newly set up NSDL, wherein the members clearing accounts settlement for dematerialised shares can be done through the bank. - HDFC Bank, one of the nine new-generation private sector banks, has planned to set up an all-India on-line automated teller machine (ATM) network. - HDFC Bank proposed to launch tele-banking for the first time in June in Mumbai at its Chandiveli branch. - HDFC Bank has drawn up plans to become a niche player in corporate banking by sticking to top-rung corporates. - HDFC Bank has become the first private sector bank to conclude a structured interest rate option deal. - HDFC Bank has launched its Versova branch, the 11th branch in Mumbai. - HDFC Bank, as part of its expansion plans in the South, has opened another branch in Chennai. - HDFC Bank has entered into strategic alliances with 10 overseas Banks to provide customers with a wide range of derivatives including interest rate and foreign currency swaps. - HDFC Bank on October 14 introduced ATMs that converse in a regional language. - HDFC Bank has introduced the Freedom Account for the average retail customer located in the major metros as a means to wean away the middle-income market from nationalised banks. - HDFC Bank has launched an account in all its 28 branches across India that seeks to free depositors from minimum balance requirement, for the first time in the country. - HDFC has introduced a new loan product for the payment of betterment fees announced by the Bangalore Mahanagar Palike.

- HDFC Bank is all set to launch its debit card by April 1998. 1998 - HDFC Bank has tied up with the Ahmedabad Stock Exchange (ASE) to act as its clearing bank. - HDFC Bank proposes to strengthen its branch network in Calcutta with the addition of two new branches in the first quarter of the next fiscal. - HDFC Bank has signed an agreement with the National Stock Exchange (NSE) which will give it a second charge over the brokers deposit for providing loan against share facility to NSE brokers. - The bank has also entered into a similar understanding with the Bombay Stock Exchange (BSE) whereby the bourse will provide support for recovery of money against the card for loan against share facility. - The bank has also entered into `Cirrus' arrangements by which all master card holders across the globe will be able to transact at HDFC Bank in India. - The bank will also provide phone-banking facility in Bangalore. HDFC has tied up with Visa International to offer its Debit Card. - HDFC Bank Ltd has entered into a memorandum of understanding for a strategic business collaboration with Chase Manhattan Bank. - HDFC Bank has become the first bank in India to link up its automated teller machine (ATM) network with all the three major payment systems world-wide. - HDFC Bank will be the first bank in the Asia-Pacific region to connect the American Express (Amex) payment system. - The HDFC Bank is expanding its ATM network to connect to American Express Interchange based in Phoenix, Arizona, USA. With this connectivity, HDFC Bank has become the first bank in the Asia-pacific region to connect to the Amex Interchange. - HDFC Bank was the first to sign up with AMEX in December of 1998. - The Bank has tied up with ITC Threadneedle Mutual Fund to provide its investors with the High Interest Fund (HIF), a facility to encash their units through the bank's Automated Teller Machines in addition to a

cheque book facility also to be provided by the bank. - Sony India Ltd (SIL) has joined hands with HDFC Bank to work out an innovative car finance package under which a sony car audio system would be installed to a new car for no additional upfront cash outflow. - The bank has decided to issue 1,33,10,000 equity shares of Rs. 10 each to HDFC and a wholly-owned subsidiary of it at a price of Rs. 94 per share. - The bank will also issue 13,70,000 equity shares to India Private Equity Fund and 51,20,000 shares to Indocean Financial Holding, the two equity funds controlled by Chase Manhattan Bank. - HDFC Bank, has tied up with BPL Ltd to offer Internet-enabled supply-chain management and business-to-consumer (B2C) e-commerce services to corporates. - Hutchison Max Telecom and HDFC Bank introduced the country's first-ever mobile-banking services in the city. 2000 - HDFC Bank also signed a memorandum of understanding with Singapore Telecom's e-commerce arm Sesami.Com Pvt Ltd. - The Bank latter also entered into a partnership agreement with National Computer Systems, the e-commerce unit of Singtel. - A new company called SESAMi.com (India) has been formed by a strategic alliance between HDFC Bank and Singapore Telecom's ecommerce company SESAMi.com, to offer e-commerce solutions for the Indian market. - HDFC Bank has a tie-up with Maxtouch for giving the facility to the latter's customers in Mumbai. This is the first and only service of this sort in the country, he said. - HDFC Bank is also launching an online electronic banking solution called Enet which will allow corporates to access their accounts over the net and carry out trade related transactions and cash management functions. - HDFC Bank entered into a tie-up with Telco by which the bank would provide preferential financing options for Tata's range of passenger

cars including the Indica, Sumo, Safari, Estate and Sierra. - HDFC Bank allotted 1.98 crore shares of Rs 10 each at an issue price of Rs 94 per share to promoters and strategic investors on March 29. - HDFC Bank is also set to become the first bank in the country to offer wireless application protocol (WAP) services to customers. - SkyCell Communications Ltd, one of the two cellular service providers in Chennai, has launched `Sky Banking', for which the company has tied up with ICICI Bank and HDFC Bank. - The bank has tied up with 12 utility companies nationwide including BSES, MSEB, BEST, Orange, BPL and MTNL. - The Bank has tied up with financial portals, e-brokerages and the National Stock Exchange to enable broker payments for e-broking ventures. - The Bank has set up 100 new electronic data capture (EDC) terminals in Mumbai. - HDFC Bank has launched its first B2C payment gateway which allows Visa and MasterCard credit card-holders to do transaction online and realtime. - CYBERITMALL.COM has joined hands with HDFC Bank to provide VISA/MasterCard users with an online payment gateway solution to enable them to have a secure eshopping experience. - HDFC Bank plans to extend its mobilephone banking services introduced in select metros to mobilephone broking when it introduces its Internet on-line trading in July. - HDFC Bank and portal clickforsteel.com have signed a memorandum of understanding for offering online credit and services to facilitate `post transaction' activities through the portal's `allied services providers' programme. - Indianfoline.com signed an agreement with HDFC bank for the use of payment gateway to enable online financial transactions. - HDFC Bank, in association with cellular service provider Orange,has launched the entire range of mobile banking services and mobile commerce services using wireless application protocol (WAP) technology.

- The Company has introduced a new scheme whereby it will provide loans to individuals for payment of self assessment tax on their properties in Bangalore. - The Foreign Investment Promotion Board has cleared the proposal of the HDFC Group to enter into a joint venture with Singapore Telecom's e-commerce company for providing a comprehensive range of business-to-business e-commerce solutions to companies in India. - The Company proposes to pick up an equity stake in Softcell Trade and Technologies Ltd., a Mumbai-based software company. - BPL Mobile has tied up with HDFC Bank to offer Internet banking through the mobile phone. - HDFC Bank launched `eInstant Car Loans' a new scheme for offering customers a range of net-enabled loan products. - HDFC Bank launched depository services on the net. - HDFC Bank tied up with NSE.IT, a wholly owned subsidiary of the National Stock Exchange, for providing payment gateway services for the latter's Internet trading operations. - HDFC Bank has been identified as the best domestic commercial bank for the second consecutive year by FinanceAsia.com, which provides a network for financial decision makers. - The Mumbai-based Geojit Securities Ltd. has tied up with HDFC Bank for Internet trading of shares. - Calcutta's cellular services provider Modi Telstra, and HDFC Bank have entered into a collaboration to provide mobile commerce in Calcutta. - HDFC Bank has got the Kerala-based Nedungadi Bank as its first customer for its new joint venture company with I-Flex Solutions. - HDFC Bank has set a target of attaining a business of over Rs15,000 crore this fiscal mainly through expansion and new product launches, including a credit card. - HDFC Bank, in association with Tata Cellular, has launched Mobile Commerce Service, for customers in Hyderabad and Vishakaptnam.

- HDFC Bank has tied up with about 25 equity brokerages for enabling third party transfer of funds and securities through its business-to-business portal -- `e-Net'. - The Bank has entered into an alliance with Deloitte Haskins and Sells, a member firm of Deloitte and Touch, to offer banking services to its non-resident Indian customers. - HDFC Bank has launched its 123rd outlet at Delhi Stock Exchange building at Asaf Ali Road. - The Bank proposes to acquire up to 24.5 per cent stake in the MIEL e-Security Pvt. Ltd., which is engaged in the business of developing and marketing of security products and services for a range of e-commerce and enterprises security applications. - The Bank has tied up with Rajan Raheja-owned Hathway for providing banking at home as part of the Net-over-cable initiative of the latter in Mumbai. - HDFC Bank launched its on-line bill payment facility in alliance with the Maharashtra State Electricity Board has also begun to offer bridge loans against fixed deposits of parent Housing Development Finance Corporation the financial institution. - HDFC Bank has tied up with portal brainvisa.com to retail education loans to students. - The Gujarat Cellular operator Fascel, has signed up with the HDFC Bank to introduce mobile commerce for the first time in the State. - HDFC Bank has tied up with BPL Mobile for mobile commerce facility. - CricketNext.com, a sports e-commerce site has tied up with HDFC Bank to provide an on-line payment gateways and marketing opportunities for a wide range of cricket sports gear on its on-line shop BatNext. - Singapore-based Growasia.com has entered into an understanding with HDFC Bank and credit rating agency Icra, for picking up equity in the company's Indian subsidiary Gasia.com. - The Bank has launched `Freedom - The e-Age Savings Account' for cellular phone users. - Spice Cell has tied up with Citibank N A, HDFC Bank and ICICI Bank

for mobile bill settlements. - HDFC Bank and Cosmos Bank launched a co-branded ATM card. - The Chatterjee Group-promoted Captech Online Ltd. has signed memorandum of understanding with HDFC Bank and UTI Bank for setting up a payment gateway for its debt negotiation platform, Riskxpress.com. - HDFC Securities Ltd., promoted by the HDFC group with equity participation from the Housing Development Finance Corporation Ltd., HDFC Bank and Chase Capital Partners, has launched its brokerage services for retail investors in the Capital. - The HDFC Bank and Airtel launched their mobile-banking service through WAP in Delhi. - HDFC Bank has launched wireless application protocol-based mobile-banking in Coimbatore and Trichy in association with Aircel. 2001 - The Bank has opened its first branch in Aurangabad. - HDFC Standard Life Insurance has entered into a memorandum of understanding with the Chennai-based Indian Bank. - The Bank has launched the international Maestro debit card in association with Master Card. - HDFC Bank will launch its credit card in June through link-ups with MasterCard and Visa. - LTtrade.com has entered into a strategic tie-up with HDFC Bank to provide Net banking services to online investors. - Standard Chartered Bank, HDFC Bank and Bharat Petroleum Corporation have joined the eCash Forum which has been set up by the Smart Card Forum of India. - HDFC Bank has launched a new campaign for its eage savings account. - HDFC Bank entered into a strategic tie-up with Tally Solutions Pvt. Ltd. to offer online real time accounting services to small and medium enterprises.

- The Bank has opened four ATMs outlets in Bangalore at Coles Road, RT Nagar, Rajaji Nagar and Jaya Nagar on March 26. - HDFC Standard Life Insurance has launched a `Development Insurance Plan' a low cost life insurance product developed specifically to meet the needs of economically weaker sections. - Two Directors, Mr. S.S. Thakur and Mr. Amit Judge, have resigned from the board of the bank effective from March 30. - HDFC Bank files with US regulators to list more than 11 million American Depositary Shares on the New York Stock Exchange. 2002 - HDFC Bank unveiled a new online account aggregation service `OneView'. - HDFC launched 'One View' service to customers - HDFC Bank launched its 9th branch in Karnataka. - HDFC opens its branch in Mangalore. - HDFC Bank unveils Silver card in Hyderabad. - HDFC Bank opens first overseas representative office. - HDFC Bank unveils gold card - Mediclaim facilities to HDFC Bank gold cardholders. - HDFC Bank Ltd has informed BSE that Mr Deepak Satwalekar has submitted his resignation as Director of the Bank. The Board of Directors has accepted the same. The Board of Directors has co-opted Mrs Renu Karnad as Additional Director of the Bank. - Mrs. Renu Karnad has been co-opted as an Additional Director of the Bank. Mrs Karnad shall represent the promoters of the bank i.e. HDFC Ltd. Also Mr. Deepak Satwalekar, Managing Director of HDFC Standard Life Insurance Company Ltd, has been on the Board of the Bank as nominee of HDFC Ltd since September 12, 1994 and shall complete the period of 8 yrs before the next scheduled board meeting. In view of the provisions of the Banking Regulation Act, 1949, Mr. Satwalekar has submitted his resignation as Director of the Bank and the Board has accepted the same.

- HDFC Bank launched new products to its wealth management programme to increase its customer base. The bank introduced a non-interactive product named Financial Planner, which would be available for all its customers for an annual fee starting from Rs 10,000. The bank is offering fee based advisory programme to the mass affluent segment, which was earlier offered to high net worth customers. The wealth management programme would cater to individual needs taking into account various factors such as customer's age, financial goals and risk profile, which includes equity, MFs and debt instruments such as RBI Relief Bonds. - Orange JV with HDFC Bank. 2003 - HDFC Bank unveils resident foreign currency account. - HDFC Bank unveils co-branded credit card with e-Seva. - The Board of Directors of HDFC Bank Ltd at their meeting held on January 15, 2003 approved the appointment of Mr. Arvind Pande as an Additional Director pursuant to section 260 of the Companies Act, 1956. - EPFO JV with HDFC Bank for its pension distribution. - HDFC enters into agreement with HDFC Bank to source housing loans. - HDFC Bank, IRCTC in tie up for online railway booking. - HDFC Bank inks pact with ANB for remittance service - HDFC Bank introduces 'HDFC Bank Health Plus Credit Card'. - Uma Krishnan resigns HDFC Bank as country head. - Escotel ties up with HDFC Bank for Global Debit Card. - HDFC Bank launches India's first mobile payment solution. - HDFC Bank's debt programme of Rs 400-crore has received triple A (ind) rating from CREDIT rating agency FITCH. -Mumbai - HDFC Bank in collaboration with Tally Solutions is planning to launch electronic data interchange (EDI) system for small

and medium enterprises (SMEs). -Warburg Pincus sells 2% stake in HDFC for Rs 235 cr - HDFC Bank began selling home loans of its promoter Housing Development Finance Corporation (HDFC). -Board approved to allot 4,16,400 equity shares to the employees of the Bank under the Employee Stock Option Scheme 2004 -Mr Ranjan Kapur & Mr Bobby Parikh appointed as Additional Directors -NMCE inks pact with HDFC Bank for warehouse receipts - HDFC Bank has entered into an alliance with Clearing Corporation of India Ltd (CCIL). The tie-up offers the latter's collateral borrowing and lending obligation (CBLO) product to cooperative banks that are not direct members of the negotiated dealing system (NDS). -HDFC Bank repurchases HDFC loans worth Rs 208 cr -Launches Quickremit, a unique online service that enables NRIs in the US to send money to their relatives in India from the comfort of their homes. -Andhra Bank has entered into an alliance with HDFC Bank for sharing its network of automated teller machines (ATMs). On March 29, 2004 - HDFC Bank and Bahraini Saudi Bank (BSB) have announced an alliance to cater to service the needs of the non-resident Indians (NRIs) in Bahrain. - HDFC bank Ltd has informed that Dr (Mrs) Amla Samanta has ceased to be a director of the Bank wef April 25, 2004. - HDFC Bank launches new scheme for Maruti 800 buyers, providing 85 per cent finance on the on-road price of the car for seven years. -HDFC Bank wins Asiamoney award for Best Domestic Bank -HDFC Bank managing director Aditya Puri has been awarded the management man of the year by the Bombay Management Association (BMA)

-HDFC Bank has entered into an agreement with Shrachi Securities Ltd, the flagship company of the Kolkata-based Rs 300-crore Shrachi Group, for financing of multi-utility vehicles all over India -HDFC Bank has launched an online bill payment facility for its customers who are also subscribers to Tata Teleservices -HDFC Bank join hands with NCR Corporation to offer managed ATM services - IKF Finance Ltd has entered in to a Joint Lending Arrangement with HDFC Bank Ltd 2005 -TMB forges alliance with HDFC Bank -HDFC Bank inaugurates first ATM in Hotel - HDFC Bank ties up with the International Bank of Qatar (IBQ) to launch banking services in Qatar. - HDFC Bank launches loyalty rewards programme for its debit and credit cardholders under the name InstaWonderz. -HDFC Bank along with MasterCard International launched credit card targeted at small and medium-sized enterprises -HDFC Bank has tied up with US-based WL Ross and company LLC for investing in corporate restructuring -HDFC Bank unveils credit card for farmers 2006 -HDFC sets up two more branches in AP - Osim to join hands with HDFC Bank for consumer loans - HDFC Bank inaugurates VbV facility for online shopping - HDFC sets up two more branches in AP 2007 -HDFC Bank has signed an agreement with Tata Pipes to offer credit

facilities to farmers across the country. -Hdfc Bank Ltd has appointed Mr. Pandit Palande as an additional Director of the Bank at the Board Meeting held today i.e. on 24th April 2007. - HDFC Bank Ltd has informed that the Board of Directors of the Bank at its meeting held on October 12, 2007, has been appointed Mr. Paresh Sukthankar & Mr. Harish Engineer as Executive Directors on the Board of Directors of the bank. Mr. Sukthankar & Mr. Engineer have been senior employees of the Bank since 1994 and have held various positions of responsibility. The above appointments as Executive Directors of the Bank are subject to approval of Reserve Bank of India and of the Bank's shareholders. 2008 - HDFC Bank Ties Up With Postal Department, Extends Rural Reach - HDFC Bank Wins Nasscom IT User Award The Year' - HDFC Bank Opens Its First Overseas Branch In Bahrain - HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29 - HDFC Bank Launches Indias First Rural Banking BPO At Tirupathi - HDFC Bank Launches Indias First Online Market Linkage Programme For Self Help Groups 2009 - HDFC Bank Bags Asiamoney Award for the Best Domestic Bank - HDFC Bank offers electronic payment collection facility to Guruvayoor Devaswom. - HDFC Bank launches Meritus Scholarship Programme. - The Asian Banker declares HDFC Bank the Best Retail Bank 2010 - With a view to attract long term deposits and prevent premature withdrawal when the interest rates peak, HDFC, the housing finance major, has decided to pay variable interest rate on recurring deposits. - HDFC Bank on Feb 19 increased the fixed deposit rates by up to 150 basis points across maturities, a move that follows the Cash Reserve Ratio hike of 75 basis points by the Reserve Bank of India last month. Company History - LIC Housing Finance 1989 - The Company was incorporated on 19th June as a public limited company. It was promoted by LIC of India. The Company provide housing

loans to individuals, builders, development authorities, employers organisation etc. - The Company has started various schemes: Griha Prakash a general scheme, Griha Tara under which it accepts only Bima Sandesh Plan as Life Insurance Corporation, Griha Shobha for NRIs and Griha Lakshmi for people to have a second house. 1994 - 3,00,57,900 No. of equity shares were issued at a premium of Rs 50 per share through public issue on 15th November 1994. The allotment was as follows; 10,82,000 shares to LIC on firm allotment basis and the balance 189,75,900 shares to public (all were taken up). 1996 - The Company has decided to carry out fund based and one-fund based activities, viz., debt securitisation, lease and hire purchase, renting of properties and giving guarantee to co-operate bodies. 2000 - Crisil has assigned a AAA rating to the issue of mortgage backed pass through certificate backed by mortgages orginated by the company. 2001 - The Company has launched its new scheme, Griha Vikas. 2002 -LIC Housing Finance Ltd has informed BSE that the Company has forfeited 1,25,300 equity shares due to non payment of allotment/call monies. -LIC Housing Finance has approved for the take over of Individual Housing loan portfolio of GLFL Housing Finance. -Around 25 investors subscribed to the issue of confidentially placed debentures for a total amount of Rs.392 cr of LIC Housing Finance Ltd. -LIC Housing Finance Ltd has decreased its interest rates on housing loans by 25-50 basis points. -Financial Institutions have increased their stake from 0.01% to

1.96% and Mutual Fund companies have increased their stake from 0.35% to 1.06% in LIC Housing Finance. -LIC Housing Finance Ltd has decreased the floating rate of interest under individual loan scheme to 9.5% from 11%. -LIC Housing Financee signed a deed of assignment to take over individual housing loan portfolio of Citibank N A. -UTI and IFCI has been removed from the list of promoters of LIC Housing Finance. 2003 -LIC Housing Finance has unveiled a new project for elderly people called 'LIC HFL Care Homes' . -LIC Housing Finance Ltd has sanctioned 84,126 loans worth Rs.3265.78cr and disbursed 76,663 loans worth Rs.2941.24cr under its I ndividual Loan Scheme. -LICHFL has mobilised Rs.280cr for 15 years at 7% rate of interest through private placement. -Lic Housing Finance Ltd has informed that the shares of the company have been delisted from The Stock Exchange - Ahmedabad w.e.f December 08, 2003. 2004 -Merill Lynch Capitat acquires LIC housing stake of 0.39% -Templeton Asset Management buys 37,52,362 equity shares, representing 5.01% of LIC Housing's total paid-up capital of Rs 74.9 crore -LIC Housing Finance Ltd has informed that the shares of the Company has been voluntarily delisted from the Delhi Stock Exchange (DSE) w.e.f. January 23, 2004. -LIC Housing Finance shares delisted from Madras Stock Exchange -Mr D Krishnan appointed as Chief Executive Officer - LIC Housing Finance Ltd's (LICHFL) one-crore global depository receipts (GDR) issue opened on August 27. - Lists its maiden global offerings worth .85 million at the

Luxembourg Stock Exchange successfully. -Introduces new product that starts as a fixed rate loan but contains an option to convert it to a floating rate loan at the end of five years, at the then prevailing rate. 2005 -Delist from The Calcutta Stock Exchange Association Ltd (CSE) with effect from December 09, 2004. -LIC Housing Finance launches loan product that eliminates the requirement of charge on house financed. -Goldman Sachs acquires share in LICHF 2007 -LIC Housing Finance to launch FD scheme -LIC Housing Finance to enter into reverse mortgage product 2008 LIC Housing Finance Ltd has informed that the Board has appointed the following persons as Directors on the Board of the Company on May 20, 2008: - Name of the Director : Shri. D K Mehrotra For the Position of : Managing Director Change effective from : May 20, 2008. - LIC Housing Finance Ltd has informed that the Board of Directors of the Company has appointed following person as Director on the Board of the Company on July 01, 2008. - Name of the Director : Shri A S Narayanamoorthy - For the position of : Additional Director - Change effective from : July 02, 2008 -LIC Housing Finance launches Reverse Mortgage for senior citizens 2009 - LIC Housing Finance cut interest rates for new loans by 0.5% where for customers opting for floating rate loans between Rs 30 lakh and Rs 75 lakh, the new rates will be 8.755 against 9.25%.

LICHFL Customer Perception

I am writing this email to highlight a poor service provided on being your valued customer 2 times. LIC hfl prevented me to sell my property for 3 years and worst service provided to me and my father

in law (senior citizen). The expenses and personal losses incurred after each trip is neglected by this esteemed organization. I am not sure if this feedback is being considered but I cant resist myself providing honest feedback. This also needs a strong attention on consumer complaint forums. Here is the sequence1) I completed a payment of my home loan (810201897) 3 years back and followed up several times for getting the registration document back. The request was made several times to madam dhanashri but it is completely ignored 2) I personally visited india by spending a lot of money and visited her 2 times again. She didnt even offer a seat and neither had a time to meet. I had to wait for 2 hours, run and request her attention for 1 min. She finally noted the request but never called for document when I was in india. The appointment register have all these proofs. All my visits to her office wasted and the treatment provided was worst than anything. 3) finally, on my return date to usa, I introduced her to my father in law who holds the power of attorney for me. Kindly requested to return the document to him 4) I had already spent a lot of money on my india visit/ Travels and legal power of attorney document. No reply from same person for a complete year 5) then after 1 year, I emailed (as you see below) rubina madam and requested to provide document to my father in law on 9th oct 2012. He waited on 9th oct for 4-5 hours but no output on this document (although he got other one). 6) he was called on 22 oct. But again he was not given a fair treatment. He was asked to return w/O document. But finally he got it after a lot of arguments. Nobody even thought about the trouble he suffered considering his age, travel from beed to pune, efforts and money spent after each trip I would never have gone for LIC hfl as there is no customer care at all. In fact, I took a loan for 2 times and also referred you to some friends. I have provided a couple of customers also. The only reason I availed this service was because of the help and support provided by archana madam, but I would certainly not go and suggest this route to anybody. Hope this is taken as a true customer feedback and I appreciate everybody who helped in getting the document back

HDFC Customer Perception

venkat asked, Hi,I am having Homeloan from IDBI bank and recently they have reduced the interest rate to 12.25%, but they are giving at 11% to new

customers. Axis bank is giving full term fixed interest at 11.75%.Is it advisable to switch to Axis bank fixed rate? or can I go to other bank who is giving 10.75% floating? Harsh Roongta answers, at 2012-05-03 16:12:31Venkat - normally you should go for a fixed rate when rates are at the lowest which is clearly not the case today. interest rates are expected to drop further (maybe with a lag) but the direction of interest rates is clear. So currently only floating rates makes sense. On floating rates if you poay anything more than 10.75% you are paying too much. If you are not able to get this floating rate loan at 10.75% (assuming that you have paid all your EMIs always on time and the property title is good and your income details are as good as if not better than what they were when you took the loan) you should apply for a balance transfer loan on and our network of providers will compete to provide you the best deal. Remember IDBI Bank cannot charge you a pre-payment charge and the processing fee charged by the new lender cannot exceed 0.5618% or Rs. 11,236 whichever is lower. The new lender may also be willing to give you an additional loan while keeping the EMI and the tenure same as the existing lender or provide you lower EMI or lower tenure. To summarise if you are paying mroe than 10.75% on a floating rate loan you are apying too much. sunil asked, I have existing home loan with HDFC [ Get Quote ]. To reduce my ROI (by 1%) they asked me to pay .5% of existing loan amount. Is it really worth to get this done? Harsh Roongta answers, Depends. If after the reduction your interest rate is 10.50% or at the most 10.75% it may be worthwhile to pay a fee of 0.5618% (0.50% +serfvice tax) just to avoid the formalities involved in transferring legal documents from one lender to another lender. But dont oay more than 10.75%. In any case if you are not a teaser rate loan consumer then they cannot charge you any pre-payment charge and as i said in response to the first question you will get the rate of 10.75% from another bank easily. vineet asked, Hi Harsh, I have taken home loan from LIC [ Get Quote ] @ 10.65 floating. Will LIC reduce the interest rate? Should i continue with LIC? Is there any other better option for me to switch ? Harsh Roongta answers, Fisrt please re-confirm that the rate being charged to you is still 10.65%. Many times the rate changes without changing the EMI since

the lender may increase the tenure. In teh current circumstances 10.65% floating is a decent rate and it may not be worthwhile to shift to another lender. But please re-confirm that you are paying 10.65% only and not some other rate. raj asked, sir I have taken homeloan from hdfc in 2010 under dual home loan scheme in which intialy it was fixed basis and now from april 2012 its in floating basis. as per rbi gudelines i want to shift the same to sbi but hdfc is asking for aforeclosure charge of 2% .can u pl guide me if if 2% is payable .the say since it is not from your sources u have to pay 2% foreclosure.kindly guide me. Harsh Roongta answers, HDFC is correct. HDFC is governed by National Housing bank (and not RBI) who have just clarified that the regulation banning charging of pre-payment charges does not apply to the so-called "teaser rate" loans even after they have become floating. So unfortunately you will have to fork out 2.2472% (with service tax) as you are not pre-paying the loan from your own sources. It will still make sense for you to shift though as the flaoting arte loan from HDFC for you will be around 11.75% and the new rate will be around 10.50 - 10.75% depending on the loan amount. You will quickly gain this back in 2 years and then enjoy the benfit of lower rates for the balance tenure of the loan. Daniel asked, HFCs like HDFC are usually very reluctant to pass on the benefits of RBI's repo cut to existing home loan customers although they are quick to entice new customers. So what should existing customers look forward to? Harsh Roongta answers, Existing customers should vote with their feet. If you have been a good customer and paid all EMI in time nothing stops you to shift your loan to another lender who will be happy to give you a much lower rate and best of all you dont even have to pay any pre-payment charges in most cases. farhan asked, Hi, I have existing home loan from Union Bank with 11% rate floating, is it worth to shift to another bank at this point? If transfer is required than what extra expense will come, like any commission, etc. Harsh Roongta answers, You should consider shifting if you get 10.50% which you can possibly get depending on your repayment track record, property title and income. At most you will need to pay a processing fee of around 0.5618% or Rs. 11,236/- whichever is lower.

Review of Literature and Research Methodolog

Section-A Review of Literature Before giving details regarding the research methodology used in the study, it is appropriate to present a brief overview of the research articles, case studies, and books written on this particular topic. The area of study may be within the country or outside the country. Review of literature helps a researcher to get acquainted with his/her selected research problem and also may provide some guidelines in selecting a proper research

methodology. It is also helpful in finding out the research gaps in the existing literature. This will help the researcher in fine-tuning his/her research problem and methodology. Another advantage of reviewing in the existing literature is that in cases where the research problems are similar, the conclusions and findings may be easily compared. This will help the researcher in determining whether his/her findings are possible or not. The literature under review may be of two types: (i) concerning the conceptual and theoretical framework. (ii) the empirical literature dealing with the studies made in the past which are similar to the one that the researcher intended to undertake. The basic outcomes of such review will be the knowledge as to what data are available for analytical purposes, which will help the researcher to specify his/her own research problem in a more meaningful way. Thus, review of literature is helpful in formulating the research problem and also helps the researcher in deciding about the most appropriate methodology to be used. While comparing the results of the earlier studies with his/her own results, care must be taken to verify whether the objectives and methodology are similar. While reviewing the earlier studies a researcher has to state the objectives of the study, describe the concepts and definitions used, the methodology employed and the important findings and conclusions of the study. The researcher is supposed to make a critical review of methodology used by the earlier researcher of the methodology if any. The researcher should improve his methodology in light of this. In the following paragraphs several similar studies undertaken earlier are reviewed keeping in mind, the following aspects: 1) The objectives, 2) Area of study with reference year, 3) Research methodology used and 4) Major findings and conclusions. A Research Article entitled Housing Credit Situation in Eighties by Lall Vinay (1984) He has focused attention upon formal factor (Permanent Construction) which served mainly to the HIG and MIG, the loan meets only 47% of the price of the house, forcing the borrowers to make very large down payments. Also the price of a 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 housing, supply falls very short of demand and need. Therefore, not only that the volume of saving and investments should increase but also larger volumes of capital should flow into housing. Also, accessibility and terms and condition of housing credit will determine the long term redistribution performance in housing. The Research Study entitled Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt by Joshua Rosner (2001) He studied the prospects of the U.S. housing / mortgage sector over the next several years. Based on his analysis, he believes that, there are elements in place for the housing sector to continue to experience growth well above GDP. However, he believes that there are risks that can materially distort the growth prospects of the sector. Specifically, it appears that a large portion of the housing sectors growth in the 1990s came from the easing of the credit underwriting process. Such easing includes:

 The drastic reduction of minimum down payment levels from 20% to 0%. A focused effort to target the low income borrower. The reduction in private mortgage insurance requirements on high loan to value mortgages. The increasing use of software to streamline the origination process and modify / recast delinquent loans in order to keep them classified as current. Changes in the appraisal process which has led to widespread overappraisal / overvaluation problems. If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. Recently, targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them. If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses. These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home. Although we have yet to see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit relaxation and leverage cant be ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures. A research article entitled Home Ownership Risk Beyond a Subprime Crisis: The Role of Delinquency Management by Jaco Melissa B. (2002) She concluded that public investment in and promotion of homeownership and the home mortgage market often relies on three justifications to supplement shelter goals: to build household wealth and economic self-sufficiency, to generate positive socialpsychological states, and to develop stable neighborhoods and communities. Home ownership and mortgage obligations do not inherently further these objectives, however and sometimes undermine them. The most visible triggers of the recent surge in subprime delinquency have produced calls for emergency foreclosure avoidance interventions (as well as front-end regulatory fixes). Whatever their merit, she contend

that a system of mortgage delinquency management should be an enduring component of housing policy. Furtherance of housing and household policy objectives hinges in part. On the conditions under which homeownership is obtained, maintained, leveraged, and in some situations exited. Given that high leverage or trigger events such as job loss and medical problems play significant roles in mortgage delinquency independent of loan terms, better origination practices cannot eliminate the need for delinquency management. In terms of analyzing this framework, it is tempting to focus on its impact on mortgage credit cost and access or on the absolute number of homes temporarily saved, but her proposed analysis is based on whether the system honors and furthers the goals of wealth building, positive social psychological states, and community development. Because those ends are not inexorably linked to ownership generally or owning a particular home, a system of delinquency management that honors these objectives should strive to provide fair, transparent, humane, and predictable strategies for home exit as well as for home retention. A research article entitled Housing Problem and Public Action: Continued Incompatibility Experience from a South Indian State by M. Mahadeva (2004). In this article, the author has analysed the nature and distribution of the housing problem in Karnataka and examined how the state has addressed this issue. In particular, it considers the strategies adopted during the 90s and identifies a number of failures including the task force on housing. Some of the major weaknesses, pertaining to incidence by type and by rural-urban areas, on approaches, on financial requirements and issue of development and redevelopment are examined to propose alternative policy strategies to effectively address the housing problem in the state. From the analysis it is found that Karnataka is not an exception to the general rule that housing strategies, which were evolved over decades, have not taken the direction expected. By and large, the sectoral policies pursued were only ad hoc without a clear focus. Lack of comprehensive policy to guide housing development on equity principle together with adhoc approaches, have failed to deliver housing benefits and develop critical housing inputs on a sound footing with equal opportunities for all need based policy interventions hasslefree input delivery mechanism existing housing shortage and rural-urban disparities substantially. Unfortunately, this did not happen. Thus, policy issues like what policies are needed for the state of Karnataka to guide housing development, increasing the housing supply to the poorer and marginalized sections, mobilizing the needed financial resources and a host of other issues in addressing the housing problem emerge. A study entitled Performance of Housing Finance Companies by Brar Jasmindeep et.al. (2005) The objectives of this study were: to study the operational performance, and the financial performance of the selected institutions. The study covers three institutions viz. HDFC, LIC & PNB. The study is based on secondary data that have been collected from the annual reports and web sites of the institutions selected under study. It covers the period from 1990-91 to 2002-03. The

performance of the selected institutions has been studied by using percentages, compound growths rates and various ratios. Findings of the study are: HDFC comes at the top among all the institutions as far as loan sanctioned, disbursements and the loan outstanding are concerned, PNB has the last rank for both loans sanctioned and disbursed. However, the compound growth rate for the loan sanctioned, disbursement and outstanding has been highest in the case of LICHF. It stood at 26.49%, 30.89%, 36.16%. Against PNB showed the lowest compound growth rates of 18.62% and 19.90%, for the loan sanctioned and disbursement over the same period. However, the compound growth rate of the loan outstanding in the case of PNBHF was higher than the growth rate of HDFC. The ratio of loan disbursed to loan sanctioned shows that the ratio of PNBHF showed the highest variations from 53.37% to 96.52 % over the given period, followed by LICHF for which the ratio varied from 56.88% to 95.65%. On the other hand, the ratio for HDFC showed the lowest range of variation from 81.07% to 88.19 in the same period. Number of housing units assisted by the selected institutions and its percentage to the total units financed during the year showed that HDFC and PNBHF financed more than 64% and less than 3% of the total units financed during the entire period of the study, respectively. HDFC has provided the highest proportion of loans to individuals. The highest variation in the composition of loan outstanding has been in the PNBHF. The loan outstanding to individuals in the case of HDFC ranged from 66.89% to 81.99% whereas it ranged from 89.58% to 100% for LICHF for the same period. HDFC has been a major market share holder among the HFIs selected under study. PNBHF has disbursed less than 4% of the total loan disbursed by HFIs. It is found that during almost all the years under study, all the HFCs earned more than 80% of their interest income from the interest on housing loans. LICHF earned the maximum proportion of total income from the interest on housing loans. It was followed by PNBHF and HDFC. As far as ratio of interest expense to total expenses is concerned, it ranged from 89.15% to 93.13% for HDFC over the period 1990-91 to 2002-03. It ranged from 65.74% to 92.45% for PNBHF and from 83.39% to 94.31% in case of LICHF over the same period. PNBHF spent in the range of 0.63% to 4.57% of the total expense on establishment over the period of the study which was the highest among all the institutions. LICHF spent the lowest proportion ranging from 0.42% to 0.89% on establishment expenses during the same period and the ratio showed a declining trend in the case of HDFC cover the same period. The interest paid to loans funds showed much variation in the case of PNBHF. The ratio for HDFC increased in the initial period but decreased later on. Among all the institutions under study PNBHF paid the highest cost for raising loan funds. The assets of LICHF constituted the highest proportion of outstanding housing loans followed by PNBHF and HDFC. During the period, investments comprised less than 25% of the total assets for all

the institutions. LICHF has a comparatively low ratio of investments to the total assets the ratio of HDFC has been the highest over the same period. PNBHF showed a considerably increasing trend in the earlier years but it declined in the later years. The net profit margin of PNB was higher than that of LICHF in the initial years, but the ratio of LICHF shows improvement over PNBHF in the later period. In the case of HDFC the net profit margin was in the range of 11.32% to 23.20% over the period of study. Return on net worth: - The ratio had considerable variation in the case of PNBHF from 49.23% to 40.26%. The ratio also showed a comparatively little variation and was at a reasonable level for both HDFC and LICHF during the period of the study A Paper entitled Retail Banking Emerging Issue in Home Loan by Rao K. N. et.al. (2005) In this paper the authors revealed that during 2002-03 housing loans by banks grew at a hefty growth rate of more than 100%. The factors that contributed to this aggressive growth in the portfolio of housing loans of banks and HFC are: Tax intensives on repayment of principal and interest, rising income level of middle class, falling interest rate, stable real estate prices, easy availability of housing loans, low returns on the investment opportunities available in the market. They also concluded that although there is strong growth in housing loans by financial situations in India, we are still behind the developed countries in terms of housing loans to GDP ratio. In India it is around 2.5% compared to 57% in the UK and 54% in the US. It shows that there is a vast scope for housing loans in India. One economist has argued that every rupee spent on the housing sector will increase the GDP by more than 75 paise. It also creates a labour intensive. Despite the immense growth in housing loans there are certain challenges that the banks might face in the time to come, e.g. falling rate of interest, rising mismatch in the assets and liabilities of the bank, rising NPA in the housing loan portfolio, etc. A Research Article entitled Housing Loan Frauds in Banks: Some Precautionary Measures by Phogat M. (2006) This article gives the measures for the housing loan frauds in banks. The author concluded that housing for all envisaged 2 million houses every year out of which 0.7 million are in the urban sector. Government provided certain relief under Income Tax Act. It motivated many people to avail housing loan. The author thinks that different frauds committed on various banks can be divided into the following two categories. i.e. Pre sanction and Post Sanction. KYC related due weakness in pre inspection, Benami A/c, forged title deeds, by selling same flat to different people, inflated salary certificate, filing of IT return for the last three years in one lot and particularly by paying a nominal amount of tax, valuation of the property is manipulated to manage margin money are post sanction fraud. The precautions may be taken at the bank level to avoid the assurance of fraud i.e. KYC norms be followed, main salary A/c should be verified, loan should be granted against the flat / houses built by reputed builders only. An undertaking from the builders

for not been sold to any other person, search report of property to be conducted by the advocate, original title deeds, property tax, electricity bill, kept on records. Disbursement of loan should be made after spot verification, title deed should be scanned through ultra violet ray machines before mortgage and bank should independently verify the report and no middle man should be involved in the process and entire KYC. So the author points out that above mentioned precautions will enable the bankers to curb frauds and public money can be saved. A Paper entitled Housing Finance A Global Perspective by Rao K.N. (2006) According to Rao, housing finance is a long term proposition involving many risks for the lenders, borrowers and even for the economy in general. As housing finance is a long term game, it requires proper asset-liability management strategy, the borrowers also face interest rate risk, especially when they are locked in fixed rates when interest rates are falling and floating rates are rising. The author mentions in this article that home loans have been registering exponential growth in India during the last six years. Easy liquidity conditions, low interest rates, availability of tax shelters on repayment of principal and interest surging demand from middle income group borrowers, lower regulatory capital, the comfort of tangible security have all collectivity contributed to the spurt in home loans. HDFC, ICICI and SBI are the major players in disbursement of home loans. These banks sanction upto 85% of the cost of the property as home loan for a maximum period of 20 to 30 years. In US, GSE that are instrumental in the high percentage of home ownership. These two enterprises enjoy implicit government guarantee and consequently raise long term funds globally at low interest. Consequently, the interest rates on home mortgage loans have become relatively cheaper and affordable for middle and low income groups. Europe has a very advanced mortgage market. In Italy foreclosure will fructify in 120 months whereas it takes just 6 months in Sweden and 9months in the Netherland. Securitization route is employed by banks essentially to raise finance securitization process have given tremendous thrust to housing finance in countries like the US and Europe. It is a process of selling homogeneous loans for cash by the financing banks, to a special purpose vehicle. The SPV in turn collects money by selling bonds, which have the security backing in the form of home mortgages. Chinese banks do not have any significant exposure to housing loans. The Latin American countries do not have an efficient institutional mechanism for disbursing housing loans. A Paper entitled Is Housing Finance Safe as House? Or Delinquency in Housing Finance Authored by Srinivas S.P. (2006) The study revealed that disbursement of home loan increased at increasing growth rate during the growth rate of disbursement in 2000-01 compared to the earlier year was 13.7% which increased up to 76% in 2002-03. The reasons behind the growth in housing loans are, (i) Easy availability of housing loans (ii) Growing population (iii) Nuclear family system (iv) Newer segments for finance (v) Urbanization of Indian economy

(vi) Shortage of dwelling units (vii) Declining of cost of house to income ratio etc and, (viii) Tax benefits. The study revealed that banks have also concentrated on housing loans because the housing loans are totally secured as the mortgage on the property securities the loan. Also the capital adequacy requirement for general lending is at 100% for housing loans. The processing and documentation of housing loan is very easy due to extensive utilization of technology. But there are also some common frauds occurring in housing finance like an individuals inflate their income statement, manipulate the income tax returns, inflate the value property, lack of appraisal & follow up etc. The researcher has also explained the new concept of NPL (Non-performing loan). The housing finance has been associated very low risk. But empirical evidence suggest that non-performing loan in the Indian housing finance sector are much higher than in a developed market. NPL rise in India because of willing defaulters and an emerging population of fraudsters. This is also a reflection of industrys aggressive marketing and some inadequacies in appraisal standards and system. Such high NPL have two-fold impact i.e. they depress yield and entail a credit cost in the form of provisioning and write-off. The researcher also found that the NPL of housing finance companies are higher than the banks. The suggestion given by researcher is that if the banks have not taken the prudential norms for housing loans they have to conduct recovery mela instead of present loan mela. A Research Article entitled Housing Finance in India A Case Study of LIC Housing Finance Limited by Singh Fulbag et.al. (2006) In this paper, the authors have studied the housing finance in India. Housing, as one of the three basic needs of life, always remains on the top priority of any person, economy, government and society at large. In India, majority of the population lives in slums and shabby shelters in rural areas. From the last decade, the Government of India has been continuously trying to strengthen the housing sector by introducing various housing loan schemes for rural and urban population. The first attempt in this regard was the National Housing Policy (NHP), which was introduced in 1988. The National Housing Bank (NHB) was set up in 1988 as an apex institution for housing finance and a wholly-owned subsidiary of Reserve Bank of India (RBI). The main objective of the bank is to promote and establish the housing financial institutions in the country as well as to provide refinance facilities to housing finance corporations and scheduled commercial banks. Moreover, for the salaried section, the tax rebates on housing loans have been introduced. The paper is based on the case study of LIC Housing Finance Ltd., which analyzes region-wise disbursements of individual house loans their portfolio amounts and the defaults for the last ten years, i.e., from 1995-96 to 2004-05 by working out relevant ratios in terms of percentage and the compound annual growth rates. A Research Article entitled Housing Loan Frauds: Are they Avoidable? by Padhi Manohar (2007) This article addressed the key issues of housing loan frauds. Aggressive growth

in housing finance by the banks is for the reasons of Tax incentives on repayment of principal and interest, rising income level of the middle class, affordable interest rate, completion amongst banks and housing finance institutions, low returns on other investments, low incidence of NPA, and housing as priority sector lending for banks. Housing loans as a percentage of GDP, is 57% in UK, 54% in USA and it is only 2.5% in India. It shows vast scope for housing loans in India. Increased focus of banks in housing finance is also not free from fraud. Fraud is one of the reasons for turning the housing loan account to NPA. The main reason for housing loan turning NPA are loss of job, closure of the factory/company, illness of the borrower, dispute between builder and borrower, over-finance to the borrower, agents approaches the bank for section of housing loans in bunches, sections of loan on fabricated documents without proper verification (Benami A/C, submission of fake title deeds of immovable property, colored Xerox copy of the title deed, subject of fake income certificate etc.) but the precautionary measures prevent the frauds in housing finance like pre-sanction appraisal, documentation and creation of charge and post-sanction follow-up. The other preventive measures like Identification of Borrower, Guarantor and Branch should insist opening of bank A/C as per KYC Norm, pre sanction verification report, site verification, existence of property, valuation of property photo of the immovable property, approval of map and cost-estimate, scrutiny of title, end-use verification of amount disbursed. Pay order should be issued in the name of banker, cross verification with balance sheet document of title should be in DEMAT form, in case of large value of loan bank approach subregistrars office to verify, Bank should develop in-house expertise etc. A Research Article entitled Reverse Mortgage - A Novel Financial Product for Elderly People by Bhattacharjee K. (2007) A reverse mortgage is a home equity loan offered to senior citizens that permits them to convert home equity into cash while they retain ownership. A reverse mortgage works like a traditional mortgage loan, only in reverse direction. A borrower does not make regular payments to a lender; instead he/she receives payments from the lender. The first reverse mortgage loan launched by Dewan housing in 2006. Reverse mortgage product name was Saksham. Then ICICI and NHB launched a new product of reverse mortgage. Reverse mortgage can provide a valuable income source for seniors who own property but lack liquid assets. So it is mainly meant for home-rich senior citizens who are otherwise cash-poor. This is precisely the scenario where reverse mortgage products can be a boon to senior citizens and a business for the lenders. A Research Study entitled Housing Advances and Commercial Banks: A Review Authored by Vimala P. (2007) The objectives of the study were: 1) To review the housing advances of commercial banks in Kerala. 2) To compare the performance of different bank groups in respect of housing advances. The study covered a period of seven years from March 2000 to March 2006 and the secondary data are used in the study. For the purpose of the study, commercial banks are grouped into four categories. The study revealed that there is no significant

difference in the growth rate of housing advances by different bank groups in state. Kruskal Wallis (H-Test) was applied to arrive at this conclusion. The amount of housing loan disbursed by RRB which was ` 6.09 crore in 1999-2000 rose to 236.35 crore in 2005-06 showing a CGR of 85% which was the highest amount of all categories. A Paper entitled Housing Finance Sector in India An Overview by Sreelaxmi P. (2007) The author stated that housing has always been an important agenda for the Government of India. It generates national income by creating employment and helps the individuals in their socio economic development. It gives impetus to the economy by enhancing capacity utilization of related industries such as steel, cement, transportation, etc. The home loan sector in India is on a boom. The new class of young buyers, whose affordability is high, is spending a little more on paying EMI rather than spending huge amounts on the rents, thereby owning a house. The government is also encouraging this sector by allowing tax benefits. The housing finance sector shows an exponential growth as compared to the other areas of credit. The annual growth rates (in %) of direct housing finance disbursals by the Primary Lending Institution during 2001-02, 2002-03, 2003-04 and 2004-05 were 25,76,29 and 32 respectively. While housing finance is experiencing exponential growths, the menace of bad loans cannot be ignored. These loans required better monitoring, fair assessment of property and compliance with end use principles and because of the Securitizations Act, banks are now able to overcome the problem of non- performing Assets e.g. In 2004-05, percentage of NPA in housing finance was only 1.4 compared to 2.80% in case of banks total retail credit. Once the loan is sanctioned the job of the lender is not over. He has to exercise vigilance and monitor the payments of installments by the borrowers. It is advisable to make periodical review of the borrowers financial position to ensure his capabilities of prompt payments of installments. The researchers suggest that the industry has been constructing stories on a safe foundation. It will continue to thrive so long as it plays safe averting NPAs. Necessary measures like takeover of bad loans, fair assessment of property and employee morale may be taken by the financial institution by improving their performance and avoiding NPAs. A Research Paper entitled Risk in Real Estate Financing Authored by Bagchi S. (2008) The author has analyzed the factors affecting risk and suggests that real estate financing will be the order of the day in a new age bank / Institution lending in the interest of the development of the country. Real estate financing is no longer untouchable as it used to be before 1990s. It is also a fact that this sector contains a higher order risk of default and lower order scope of eventual recovery since the fate of real estate is interwoven with macro-economic fundamentals and volatility of asset prices. The researcher has given the following suggestions to avoid risk factors in real estate financing. Land records at the land registration offices have to be streamlined and brought under the contemporary technology support system. Bank/Financial institutions should create a special cadre of credit investigation offices who need to perform like private detectives to ascertain the track record of

the borrowers. No loan/advance should be granted by way of equitable mortgage but a simplified registered mortgage system can be devised with provision for low registration fee for loans against any real estate. Title Insurance system should be devised to enable lenders to obtain insurance cover from any approved insurance company. At the Corporate head quarters of each banks/financial institution there should be a cell known as Real Estate Financing Cell which should be involved in the entire cycle starting with sanction and disbursement of such loan to periodical monitoring and recovery thereof. A Paper entitled Rural Housing in India: Problem and Prospects Authored by Dinesha P. et.al. (2008) The data released by the census of India on house, households, amenities and assets for 2001, indicate that total number of household in rural area is 138.27 million as against the availability of 135.05 millions house of which nearly 11.14 million house were non-serviceable kuchcha/temporary houses needing replacement. Thus, they consider the requirement of houses in rural area is about 14.6 million units. There is also regional imbalance in rural housing in India. Most of North Eastern states have achieved better performances in housing production and have successfully mitigated the problem of housing shortage to a very large extent. Apart from this, Tamilnadu, Bihar and Andhra Pradesh have also successfully mitigated the housing shortage programmes by 2001. However, unfortunately housing problem has either become aggravated or has remained unchanged in states like Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Uttar Pradesh and West Bengal. Another serious dimension of housing problem is related to housing amenities like drinking water, sanitation, lighting and drainage connection. The number of rural household deprived of all four amenities has increased from 73.1 to 78.5 million although the deprivation percentage was reduced to 56.80 from 65.53. Priority should be given to rural area while allocating resources as they represent countrys worst housing situation. Institutional finance at affordable rate is one of the prerequisites for accelerating the availability of housing finance. However government also adopted many strategies but it has not reached interior and most needy part of the country. So all-round efforts and developments as well as from people to achieve the goal of housing for every household with sustainable manner is the need of the hour. A Paper entitled Housing Finance: Problems and Prospects Authored by Rajasekhar D. et.al. (2008) The objective of the study was to analyse the trend in the growth and structure of LICHFL in Chennai city and to evaluate the relative performance of LICHFL in providing housing loans in Chennai city. One hundred respondents have been selected on the basis of random sampling technique. Researcher used conventional statistical tools like percentage and average for analyzing perception of the borrowers about the LICHFL. Linkert scaling test was used. The study revealed that in Chennai, 34% of the respondents have reported that the institution provides loan at low rate of interest, 33%

have reported easy installments, 31% reported that they approached for simple procedure and formalities and only a negligible 2% of the respondent represents located near to their house. The other findings of the study are: 45% of the respondents have bought loan for purchase of house, 37% of have bought the loan for purchase of flat, 16% for construction of house and remaining 2% for other reasons. 93% of the sample respondents preferred the flexible type rate and 7% preferred fixed rate of interest. The researchers suggest that the deposit of title deed is the most required document at the time of getting loan from the institution. The study shows that 54%, 36% and 10% of the respondents preferred the repayable period of more than 10 years, more than 15 years and more than 5 years respectively. So, the majority of the respondents preferred more than 10 year to settle their loan amount. 53%, 27% and 14% of the respondents were paying their loan amount through ECS, through postdated cheque and through the collecting bank respectively. So, it may be concluded from the above result that majority of the respondents preferred to pay their loan amount through the Electronic Clearing System. A large majority i.e. 75% of sample respondents reported that there is delay in sanction and disbursement of loan amount. A Paper entitled Whether Todays Customers are satisfied? A Study with Banks Authored by Ashok Kumar M. et.al. (2009) The objective was to rank the banks on the basis of customers satisfaction and to find out the problems faced by the present day customers with the banker and to make suggestions for better working of the banking services. The study is restricted to Coimbatore headquarters only. Only 105 customers were considered as sample for the study which was conducted during the months of May and June, 2008. SBI and its associate bank were taken for the study. The findings of the study are: 42.86% of the respondents are in the age group of 31-40 years. 68-57% are married, 42.86% have post-graduate education, 36.19% are businessman, and 35.24% are employed. 37.14% respondents income range between `1,000 to `15,000. With infrastructure 51% of the respondents were found to be satisfied. With regard to location of the bank, 25% of their customers are highly satisfied. Regarding attitude of the bankers toward its customers, only 59% are found to be satisfied and only 6.7% were found to be highly satisfied. Regarding investment opportunities, 35% of the respondents are satisfied 16.19% of the respondents were dissatisfied regarding advice towards investment. 51% of the customers are satisfied with the banks the behaviour towards customers by the bank employees. Regarding Evening Banking services, phone banking services & Sunday banking services there were 33%, 18% and 11% dissatisfied customers respectively. With regards to the core banking service only 28.9% of the respondents were aware of the functioning of CBS, with regards to online banking services 70% and

the functions of smart card, digital cash and e-purse 69% respondents are satisfied. 80% of the customers are satisfied with the proximity of the ATM. 41% are satisfied regarding the approach of banks towards redressal. Overall rate compared to age and income was found to be significant whereas rest of the factors considered do not have significant influence on the other. The researcher suggested that, - The facilities of the bank should be made more convenient for customer comforts. - The ATM services should be extended with few more cabins. - Customer meets should be organized at reasonable intervals so that they can establish better rapport with the customers and educate them about the latest advancement made in the bank. - Additional branches can be opened to reduce the burden of work on the existing branch. - The banks should improve the working performance of operations. Research Article entitled Multiple Home Loans Systematic Gaps Suggested Therapy Authored by Bagchi S. (2008) Institutional provision of home loans is a societal compulsion and, as such, is a full scale national priority of emerging economy like India. The existing regulatory and institutional framework in India for meeting the growing needs of the people to own their nest is fairly adequate and should continue. But recent reports from various sources indicate that some home loan borrowers have been playing foul with banks in offering mortgage of the same property to a number of banks by providing false ownership deeds / documents. Usually this type of fraud appears because Banks, generally, prefer to obtain simple deposit of title deeds i.e. (mortgage by deposit of title deeds) but it was found that title deeds of some property were offered by having multiple registrations of the property, false income details, credit officer not investigating properly borrowers income level,genuineness of title deeds etc. Bank lending the loan before accepting mortgage of landed property as a security cover, title scrutiny and non-encumbrance report from banks approved lawyer. Generally, the lawyer goes through the ownership records of the house for the past 30 years and submits his reports but in practice, lawyers generally scrutinize only of photocopies of title deeds so, the recent incidents of fraudulent mortgage practices need to be dealt with firmly. For this purpose, an external protection for banks by way of title insurance is an immediate necessity. Skilled and experienced officials may be entrusted to handle home loan account. Only registered mortgage should be accepted. In the light of increasing credit risk in home loan accounts, repayment period should not go beyond 10 / 12 years. If in the process, the quantum of loan is not found justified in consideration of income level, the applicant should go in for lower-cost home or alternatively raised unsecured funds. This is the suggestion made by Bagchi in his article. Safe, sound and healthy loan portfolio in a bank is the product of a robust credit risk management system duly aided / supported by regulatory supervision and control.

The Study entitled Housing Finance in India Problems and Prospects Authored by Chaubey M. (2009) The objectives of the study were: (i) To Study the customers views on housing finance offered by HDFC in Varanasi, and (ii) To know about the relative performance of HDFC in providing housing loans in city. The sample of the study was selected on the basis of random sampling techniques. For analyzing the perception of the borrowers, Likert scaling test was used. The study reveals that, 42%, 32%, 22% and 4%, opted for loans because of low interest rate, easy installment scheme, simple procedure and other reasons respectively. 26%, 34%, 38%, and 2% respondents have borrowed loans for purchase of flats, purchase of house, construction of house and other reasons respectively. 100% respondents made the repayment in equated monthly installments. 43% respondents knew about the interest rate. 92% respondents preferred floating interest rates and 8% respondent preferred fixed interest rates. 72%, 18% and 10% respondents came to know about bank through print and electronic media, friends and relatives and Builders/Developers respectively. 50%, 24%, 20% and 86% respondents have reported of mortgage of finance through property, gold and others insurance policy equal to the loan sanctioned, deposit for the title deed and additional collateral security respectively. 58%, 28% and 14% respondents opted for more than 15 years, 5 years and 10 year as the term of loan, respectively. 40%, 38% and 18% respondents repaid their loan amount through postdated cheques, through ECS and through salary deduction and 4% were paying directly to the bank. 70% respondents agreed that there is a delay of loan approval that there is a delay of loan approval and disbursement.
66

The researcher suggested that, Option of repayment of EMI in monthly, quarterly or half yearly basis should be given. To win the confidence of customers and bring transparency in all the transactions, it is necessary that the details of their loans accounts should be available online. Most of the customers suggested that the loan processing / sanctioning time should be reduced. Customers suggested that the bank should provide online approval of application. As far as the opinion of respondents about various facilities and policies of the bank is concerned, it is found that:- 72% of the respondents opined that the government is encouraging the housing sector - Only 50% said that the officials of the institutions were helpful. - Only 28% of them reported that they were getting entire cost of flat as a

loan. - Only 40% of the respondents felt that rate of interest changed by the institutions is reasonable. - Only 42% of them were satisfied with the existing facilities for obtaining loan. - Above half of them (52%) stated that the loan also covered life or fire insurance benefit. - Only 42% reported that repayment period is adequate. - 48% respondents stated that they were regular in making prompt payments. Thus, by and large, opinion of the respondent is not very much in favor of the institutions, because except in two cases in all the remaining cases a favorable opinion was expressed by less than 50%. Similarly, regarding various problems faced by the customers, it was found that more than half of the respondents either strongly agreed or agreed with the statements about delay in approval and disbursement, inadequate guidelines, tedious procedure lack of interest on part of officials, difficulty in getting security, inconvenience in paying EMI, irrelevant securitization, illogical approach and insufficient amount sanctioned. Thus, majority of the respondents face most of the problems listed above. A Research Paper entitled Prospects and Problems of Housing Microfinance in India: Evidence from Bhavanashree Project in Kerala State Authored by Manoj P.K. (2010) He has examined the exact nature of housing microfinance in India, its problems and prospects and particularly deterrents to its growth, with a view to suggesting suitable remedial strategies for its faster development; based on an empirical study of Bhavanshree. The Objectives of this study were: To make an overall study of the housing microfinance initiatives the world over their performance track record, trends and patterns. To critically study the extent and nature of housing problem in India, and to examine the need for alternative financing models. To make an empirical study of activities of Bhavanshree. To identify the major problems of existing Bhavanshree Schemes and also suggest suitable strategies for its fast and healthier growth. The study is based on primary and secondary data. Primary data were collected using two separate interview schedule viz. for the Bhavanashree beneficiary and respective bankers for the Bhavanashree unit concerned. Secondary data were collected from various publications. This study concluded that in spite of various shortcomings of the housing microfinance scheme Bhavanashree sponsored by the Government of Kerala, has got immense potential to come up if suitable strategies are adopted. Due to the wide range of microfinance activities currently being undertaken by Kudumbashree and the excellent nexus with banks, initiating productive housing scheme and obtaining better terms from banks like fixed rate loans appear to be quite feasible. A Research Study entitled A Study on Customers Preference and Satisfaction of

Four Basic Banking Services in Coimbatore and Erode Authored by Vetrivel T. (2010) The objectives of the study were: To know the overall satisfaction and dissatisfaction levels of bank customers with respect to four-dimensional banking services Loan services, deposit scheme services, Insurance services and value added services. To know the customers opinion and preferences about various supporting factors of four dimensional banking services. For this purpose, 300 customers of two major cities of Coimbatore and Erode were selected at random and the study period was for nine months. (August 2009 to April 2010). Chi-square test was used to analyze the data. The important findings of the studies were: - As far as overall satisfaction is concerned out of the 172 bank loan customers i.e. 50% of customers were satisfied and the remaining 50% dissatisfied due to poor services, penalties for late payment, fear of threats, interest rate confusion, hidden cost, unknown deduction etc. - Overall satisfaction on bank deposit schemes resulted positively. - Banking insurance services still need to be given attention by focusing on customer issues. The study reveals that new innovative schemes, strategies to cater to non-users of insurance services have to be adopted, in value-added services. Customers preference for net banking was least ranked and if the bankers wish to increase net banking traffic, bankers should take maximum efforts to educate the consumers by offering online training instead of handing out instruction manuals. The researchers suggest that if the banks want to sustain customers on a long-term basis, bankers should work towards 100% customers satisfaction.

Section-B Research Methodology

Importance of the Study
This section explains the research methods, procedures and analytical frame work of the present study. The research methods have been designed to fit the main objectives of the study. Since not much research work has been done in the area of housing finance provided by various types of bank from the customers point of view, it was decided to undertake one such study in Surat city which is the fastest growing city in India, as per the latest census data. It was decided to select one nationalized bank namely; Bank of Baroda and Co-operative bank namely The Surat Peoples Co-operative Bank Ltd., so that a comparative analysis can be undertaken.

Sources of Data

The study is based on primary as well as secondary data. a) Collecting Primary Data Primary data are collected through the responses of the customers through questionnaires which were specially prepared for this study. The questionnaire contained questions regarding the general and socio-economic characteristics of the respondents such as age, religion, educational qualification, etc. and also about their reason for taking home loan, term, rate of interest, procedure etc. I conducted the pilot study by selecting five respondents each banks including HDFC bank. On the basis of

their responses, some questions were modified and the modified questionnaire was finally canvassed among the 100 selected respondents. A sample size of 100 respondents is taken for detailed study because it is not possible to cover the whole universe consisting of all the customers. Among these 100 respondents 50 respondents were selected from the Bank of Baroda and another 50 respondents were selected from The Surat Peoples Co-operative Bank Ltd. Primary data also included information collected by personal interview with managers of Bank of Baroda and The Surat Peoples Co-operative Bank Ltd. Sampling Technique The sample was selected using a convenient sampling. b) Collecting Secondary Data There was extensive use of secondary information in the form of books, articles published in magazines, journals, newspaper, reports of Bank of Baroda and The Surat peoples co-op Bank Ltd., websites, circulars, pamphlets of the banks, clippings etc. Period of study The questionnaires were filled up during the period of September 2009 to February 2010.

Statistical Techniques

The collected data were scrutinized and edited. The edited data were analyzed using the software Statistical Package for Social Sciences (SPSS) and meaningful conclusion were arrived by constructing simple and two-way tables and by using statistical techniques like chi-square test. Simple table were constructed for analysing the general information of the sample. Two-Way table were constructed for the comparative analysis and to know the relationship between two factors. At last the associations between different variables were tested by using the chi-square test. Objectives of the Study Objectives of the study are as under: 1) To study the concept of Home Loan /Housing Finance in todays scenario. 2) To examine types of retail loan in India. 3) To study government policy regarding to the Housing Finance in India. 4) To examine the procedure of Housing Loan. 5) To know the reasons for taking the home loan in Surat city. 6) To study the customers` satisfaction levels towards banks in Surat city. 7) To understand why customers preferred the BOB/SPB for home loan in Surat city. 8) To conduct a Comparative study of the Bank of Baroda and the Surat Peoples Co-op Bank Ltd in respect of the various aspects of the home loans in Surat. 9) To understand about polices and practices of banks for home loan.

Hypotheses

Some of the Hypotheses that are tested in this study are as follows: 1) There is no association between Age, Educational Qualification, Profession, Yearly Income, Type of Banks and Various Reasons for Home Loan. 2) There is no association between Age, Yearly Income, Type of Banks and Amount of Loan Sanctioned.

3) There is no association between Utilization of Various types of Bank Services,

Age, Mode of Repayment and Type of Banks. 4) There is no association between Education, Profession of the Respondents and Mode of Repayment. 5) There is no association between Reason for Selecting Bank and the Type of Banks. 6) There is no association between Type of Banks (Nationalized or NonNationalized) to which respondents would like to switchover, if he is asked to do so and Type of Banks. 7) There is no association between Age, Educational Qualification, Profession, Yearly Income of Respondents and the Amount of Loan Applied for. 8) There is no association between the Age, Yearly Income, Profession, Educational Qualification of Respondents and Sanctioned Loan Amount. 9) There is no association between Days taken for Sanctioned Loan and Type of Banks.

Limitations of the study

This research study was time bound and due to this only a few aspects of the problem were taken up for study. This research study was taken in a limited area only (i.e. Surat city) and findings may vary if the area of study is changed. Some of the respondents might have been biased in their responses and as such the analysis and conclusion based on it could vary to some extent. Some of the conclusions also depend upon secondary data. To the extent these data are reliable, the conclusion derived from them are valid. This research study was limited only to nationalized and co-operative banks due to non-availability of data on private banks.

SUMMARY, FINDINGS AND SUGGESTIONS

Introduction The objective of this chapter is to present the summary, findings and suggestions of the study. The chapter consists of three sections. The first section gives the summary of all the chapters of the study. The summary includes a brief inference of the study. The second section gives the findings of the study. Of the secondary and primary data collected, analyzed and interpreted, some important findings are enlisted. The last section gives some suggestions to overcome problems that have been identified from the study. Summary of the Study: The marketing is regarded as the pivotal force behind strategic planning and business operations. The effective marketing calls for managers to have adequate information for planning and allocating resources to different market products, territories and marketing tools. The firm must be suitably staffed to enable it to perform marketing analysis, planning and implementation. The marketing effectiveness is contingent upon the adoptness of managers to deliver profitable strategies from its philosophy, organization and information resources. The issue of marketing effectiveness is particularly significant to those associated with the management of financial services. The financial service organization, should study the market, recognize the numerous opportunities, select the most appropriate market segments, and offer superior value to meet the selected customers' needs and wants. In financial services, good customer relations and their satisfaction is the single major factor contributing to the success of an organization. The successful financial services companies share a strong focus and a heavy commitment towards marketing. The modern marketing seeks to attract new customers by promising superior value and to keep current customers by delivering satisfaction. The sound marketing is critical to the success of all organization, whether large or small, profit or non-profit, and domestic or global. The people mostly think of marketing as only selling or advertising. But marketing companies do many activities like market research, product development, distribution, pricing, advertising, personal selling. The consumers' focus and satisfaction are driving forces for surviving or thriving in the twenty first century. A consumer is anyone who typically engages in one or all the decision processes and physical activities when evaluating, acquiring, using, or disposing of economic goods and services. A customer is always defined in terms of a specific product company. However, the t e n consumer is a far wider term encompassing not only the actual buyer or customer but also all its users that is customers. The customen' satisfaction has been conceptualized in several ways. It consists of customers' expectations, performance interactions, pleasure or

displeasure, and the evaluation of the benefits of consumption. The financial services companies therefore need to consider market characteristics, which consist of consumer contact. There are many problems posed to financial services sector. The increased customer demands, and sophistication of market puts the financial sector in a competitive environment. The financial services market requires new strategies to survive in the competitive market. The housing finance is a special category of financial services industry. In India, there is an everwidening gap between the demand and supply of housing. The government of India has been supporting the housing sector through a series of fiscal incentives in the budgets. The Five-year plans have emphasized the need for promoting housing finance schemes to the society. The major factor responsible for growth of housing finance in India is a massive shortage of housing in the country. The demand for houses has gone up due to population growth, a shift towards urbanization, rising income of the families, and the distinct trends towards nuclear families. The other factors that contnbuted to the demand for housing are scarcity of developed land, hike in the construction cost, and non-availability of building materials, and skilled manpower, and the highly speculative trend in the cost of land. The increasing demand for housing naturally has increased the demand for housing finance also. There is an exponential growth in housing finance market. This has prompted many new players to enter the housing finance market. These players have become very aggressive apart from the already established ones. The declining rates of interest, easier terms of consumer credit, availability of housing finance from sufficient sources with multiple options, and rebate in payment of taxes are few of those developments that have made a very positive impact of housing finance activities in India. The above said factors have prompted commercial banks, public sector and private sector housing finance companies to become active in housing finance. These developments have increased in an unforeseen competition among the various players and triggered an interest rate war in the housing finance industry. It appears that the hous~ngfi nance sector will continue to grow at a steady rate in the near future. The major groups of consumers of housing finance are individuals, builders, corporate and housing cooperatives. The major players of housing finance are divided into four groups as government housing finance institutions, specialized housing finance institutions, banks and housing finance cooperatives. Today, most of the consumers choose between two important sources of housing finance agencies that are banks and housing finance companies. The lending rates of banks are comparatively lower for housing finance, whereas consumers can get better consumed services from housing finance companies. The other important considerations in selecting a housing finance institution are methods of interest calculation, documents requirement, processing time and relevant charges attached to housing finance.

The Indian housing finance sector is crowded with players of all sizes and nature. Due to the decreasing interest rates, the interest rates have become more or less similar among all types of housing finance providers. At this moment, it is impossible for the housing finance institutions to make a long-term call on interest rate differentials as a competitive tool. So the only competitive tool to differentiate one housing finance company from the other in the current scenario is customer satisfaction. This requires innovative marketing strategies. The marketing mix strategy of housing finance consists of variables relating to key elements like product, price, place, promotion, people, procedure and physical evidence. The housing finance being a financial service is considered to possess a high level of marketing effectiveness if it has a close association with its customers. This will lead to the institutions' increased financial performance. The past literatures on marketing effectiveness reveal that the majority of empirical studies have been based upon the investigation of similarities and differences in effective marketing practices in firms across different countries. The empirical findings of this nature are crucial for business practitioners. They can provide guidelines for the formulation and implementation of effective marketing strategies. The findings of such type will constitute a source of useful information. The managers can learn about the marketing attitudes and marketing organization structures of superior performing firms. The research that links customer satisfaction to other business measures usually defines satisfaction as a Customer's overall evaluation of the consumption experience. The customer satisfaction research demonstrates a positive impact of Satisfaction on both market value and accounting returns. Because of a 'front loading" of customer costs and a 'back loading" of revenues over the course of one's relationship with customers, satisfied and loyal customers are more profitable. This predicts the framework that is the relationship from customer satisfaction to business results. The research study was carried out mainly to measure and evaluate the effectiveness of marketing on the business performance. The inside-out performance measure and the outside-in customer satisfaction were taken as business performance measures with regard to housing finance activities in Pondicherry region. The other objective is to study the relationship between customer satisfaction, customer loyalty and performance of the housing finance institutions. Five housing finance institutions were selected for the study. They were State Bank of lnd~a Home Loans (SBI), a commercial bank, LIC Housing Finance (LIC), an insurance company, lClCl Bank Home Loans (ICICI), a t e n lending institution, Housing Development Finance Corporation (HDFC), a public sector housing finance company and Dewan Housing Finance Limited (DHFL), a private sector housing finance company. The total numbers of respondents were 50 marketing personnel, 10 from each institution, and 500 customers, 100 from each institution were selected. The various statistical tools used for the study were chi-square test, Kendall's coefficient of concordance, multiple discriminant analysis, factor

analysis, cluster analysis, and multiple regression analysis. The findings of the analysis using the above said statistical tools are summarized in the following section. Findings of the Study : The marketing effectiveness of the housing finance institutions in Pondicherry is relatively good among the selected housing finance institutions. (1) The performance reported by the marketing personnel of the housing finance institutions is better for all the five housing finance institutions selected for the study. The satisfaction of the customers of the selected housing finance institutions in Pondicheriy region was appreciable in spite of hefty competition. It is more or less equal in all the institutions. (2) Among the selected housing finance institutions, the customers of HDFC reported a high level of satisfaction than other housing finance institution. Among the other four housing finance institutions, the satisfaction levels of the customers are more or less the same. The customers of LIC housing finance reported a low level of satisfaction relatively with other selected housing finance institutions. The customers of SBI are facing lot of problems, while the customers of HDFC are facing very fewer problems. The customers of ICICI, LIC and DHFL are facing fewer problems than SBI. (3) The customers in general while choosing a housing finance institution, give first preference to the amount of loan available from the housing finance providers. They consider the interest rate as very least important one to select a housing finance institution. This may be due to the indifference interest rate. The customers of hodsing finance institutions seek loan through housing finance than any other source of finance because the housing finance is easily affordable to the customers in these days. The housing finance providers are coming up with various schemes and services. This attracts the customers towards housing finance institutions. (4) Now various types of institutions are providing housing finance to all types of customers. All these schemes were implemented to satisfy the customers and to increase their turnover. But the customers' expectations are countless from housing finance institutions. They expect a courteous service from personnel of the institution. They expect a prompt and quick selvice. Their expectations many times fat1 below what they experience from the housing finance institutions. But sometimes they are experiencing a good level of service beyond their expectation. It varies from institution to institution. (5) The marketing activity has a direct relation to overall performance of the housing finance institution. In general, two of the marketing effectiveness components are contributing to at least two of the business performance measures examined, although their relative influences vary according to the specific performance dimension. The only one dimension of marketing effectiveness that is contributing to all the business performance measure is strategic orientation (6) The outcome of a sound customer philosophy is perceived to be a

positive influence on customer retention. The most significant factors contributing to the market share and customer retention is the customer philosophy followed by the strategic orientation. The factors contributing more to sales growth and return on investment are the operational efficiency followed by strategic orientation. (7) The customer satisfaction is determined by customer philosophy, strategic orientation, operational effciency and adequate marketing information. The customer satisfaction is strongly predicted by the customer philosophy. The strategic orientation is strongly influencing both the customer satisfaction variables. (8) The emphasis placed upon each dimension of marketing effectiveness appears to be determined by the performance objective set by the housing finance institutions. The results deduced that customer philosophy is of primary importance in a housing finance services. The housing finance companies appear to be trading in an environment where the endorsement of a clear customer philosophy offers rewards in terms of customer retention and increased profits. (9) The operational efficiency is identified as an important predictor of both performance measures as well as customer satisfaction. This signifies that firms not only take efforts to achieve good sales and return on investment, but also subscribe to good community relations and are committed to marketing excellence. The sound operational efficiency shows 'the ability of executives to effectively manage marketing resources, to regularly and systematically seek improvement. (10) The strategic orientation is a dimension of marketing effectiveness, which tends to contribute much to the business performance. The firm is well positioned relative to its competitors, if it provides a good quality service and focuses on long-range growth. It strongly influences the business performance. (11) The dimension of marketing effectiveness that appears to contribute least to business performance of the selected housing finance institutions is adequate marketing information. The dimension of marketing effectiveness that appears to contribute nothing to business performance is the integrated marketing organization. This shows that the housing finance institutions would have felt the importance of adequate information and integrated marketing information but failed to implement it successfully. (12) The customer of a housing finance institution, if satisfied tends to stay with the institution showing his strong loyalty towards the institution. This has a very strong impact on the increased performance of a housing finance institution. (13) The underpinning alternate hypotheses, as stated earlier are clearly substantiated by the results of this study. In general, the marketing effectiveness influences the degree of business performance. The marketing effectiveness components contribute to the performance measures examined, although the relative influences vary according to the specific business performance dimension.

Suggestions : The following are the suggestions given based on the findings of the study. (1) The customer satisfaction should be the main focus of any financial services firms especially to the housing finance institution. These will then result in customer retention leading to improved profitability and growth of the housing finance institutions. (2) The marketing personnel at all levels should appreciate the significant components of marketing effectiveness. The sufficient fund allocation has to be made for the execution of marketing function in any housing finance institution. (3) The housing finance institutions should ensure effective marketing information and communication facilities. The strategic planning should be adopted deliberately to identify and satisfy the customen' needs and wants. (4) The customer goodwill will count for nothing if housing finance institutions lose sight of their customers' needs and wants. The housing finance institutions should solve the problems faced by the customers and understand their needs, preferences and attitudes. (5) The housing finance institutions should educate their personnel for a pleasing behavior. This can create a good image among the housing finance customers about the institutions. It will be appropriate to spend huge sums of money for promoting the housing finance services, when the services offered do not attract and satisfy the customers' need. (6) The sewices of ,housing finance do not reach majority of the customers in the rural areas. The rural mass should be exposed to the availability of housing finance and its benefits. This is possible by personal selling. Most of the customers of housing finance in general do not understand the clear and correct calculation of floating and fixed rates. So the housing finance institutions should educate their customers clearly about the interest rate calculations without confusions. (7) The legal actions and the penalty charges for default payment by the customers of housing finance institutions should be well informed to the customers in advance. (8) A greater attention has to be shown for developing the organizational variables such as customer philosophy, strategic orientation, operational efficiency, adequate marketing information and integrated marketing organization. This could result in high performance levels in terms of customer retention, customer satisfaction, return on investment, sales growth and market share of the housing finance companies. (9) To withstand in the competitive housing finance market in the long run, every housing finance institutions should adopt new and innovative marketing strategies to attract, satisfy and retain the customers. This will definitely increase the bottom lines of the company. The marketing strategies that can be adopted by these institutions are personal selling through direct selling agents, and conducting selling camps in big organizations to meet the a mass of employees of that organization at one

time directly. This will make the institution to cover a wide range of customers. 6.5 Conclusion In this research, the relationship between marketing effectiveness and business performance has been evaluated. The relationship between customer satisfaction, customer loyalty and performance of the housing finance institutions has also been studied. The statistical tools were used to fulfill the objectives of the study. The four constructs used in the study were marketing effectiveness, performance measures, customer satisfaction and customer loyalty. The link between these constructs has been examined in the housing finance industry in Pondicherry. Three of the five market~ng effectiveness variables are strongly contributing to the business performance. The first alternate hypothesis has been substantiated by this result. The same way the customer satisfaction is strongly contributing to customer loyalty that in turn strongly contributes to the performance. The second alternate hypothesis has been substantiated by this study. The results showed that the housing finance institutions should adopt well-planned marketing activities to improve the financial performance as well as the customer satisfaction. The study also evidenced that the loyal customers will increase the financial performance of the housing finance institution. As further research the present study can be extended by adding the objective measures for evaluating the performance from the financial statements of the company. This will reveal the actual impact of marketing effectiveness on business performance. The study also motivates for future research by examining the satisfaction level of customers during different period of time to see the difference in their satisfaction level and its impact on business profitability. The present study evidences the strong relationship between marketing effectiveness and business performance in the financial services industry.

Bibliography
www.licindia.com http://lwww loansnews.info/home-loan http://lwww.thikplaninvest.com http://lwww wikipedia.org http://lwww hdfc.com http://lwwwmonycontrol.com