A

PROJECT REPORT
ON
“STUDY OF HOME LOAN & PROCEDURE OF DISBURSEMENT OF HDFC
BANK IN PUNE CITY”
BY
SIDDHANT PRAKASH POWLE
(ROLL NO 171127)
SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY

TOWARDS FULFILLMENT FOR THE POST GRADUATE DEGREE IN

MASTER OF BUSINESS ADMINISTRATION STUDIES (MBA)
AS PER
UNIVERSITY OF PUNE.

UNDER THE GUIDANCE OF

PROF.T.SHRINIVAS

MASTER OF BUSINESS ADMINISTRATION

Institute of Business Management and Research ( IBMR )

CHINCHWAD PUNE 411019
(2017-2019)

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 ACKNOWLEDGEMENT

The presentation of this project has given me the opportunity to express my

gratitude to all those who have made it possible for me to accomplish this
project.
I thank HDFC BANK for giving me this opportunity to undergo a project study
program in their esteemed organization.
I am thankful to Mr.CHANDAN SINGH SALES MANAGER of HDFC Bank
Personal loan and Home loan, special thanks to my project guide Mr. AMIT
MASKE SIR, Home Loans Officer, HDFC BANK for giving an Opportunity to
do this project work.
I express my gratitude to the project guide, PROF.T.SHRINIVAS SIR, senior
faculty for his valuable guidance and assistance in taking me through the project.

Date: Signature:

Place: Pune Student Name: Siddhant Powle

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 DECLARATION

I Siddhant Prakash Powle hereby declare that the project entitle

“STUDY OF HOME LOAN & PROCEDURE OF DISBURSEMENT OF
HDFC BANK IN PUNE CITY submitted in partial fulfilment of the requirement
for Degree of Master of Business Administration. Has been prepared by me and
submitted to A.S.M. Institute of business management & Research (IBMR). By
under Savitribai Phule pune University is original work done by me under the
supervision of Prof.T.Shrinivas sir.

I also declare that internship report has been submitted by me fully or partially
for the award of any degree, Diploma, title or recognition.

Date: Signature:

Place: Siddhant P.Powle

(Roll No. 171127 )

3
 INDEX

Sr. No. Particulars Page No.

Executive Summary 05

1 Introduction 11

2 Company Profile 21

3 Objectives of the study 23

4 24
Research Methodology

5 Data analysis & Interpretation 26

6 Findings 46

7 Suggestion/ Recommendation 47

8 Limitation 48

9 Conclusion 49

10 References/Bibliography 50

11 Annexure/Questionnaire 51

4
 Executive Summary

In today’s fast paced business environment, banks operating in retail

space require a change resilient vertically integrated value chain for delivering the
most competitive products and services. This need is redefining the boundaries of
a banks value chain creating greater thrust for this value add, right from the lowest
end of the delivery channels. In the loans and advances product space, this
requires an integration strategy right from Sourcing, Evaluation and Servicing to
Collections, Recoveries and Write-Off Management. This case study elaborate the
delivery capability of a bank, operating in home loans space which is faced with
challenges of rapid changing products and business processes and also to handle
large transaction volume handling due to high business volumes.
This case study focuses on the business challenges faced by one of the
largest bank having 3000 concurrent users and with over 3 million customers
worldwide. The bank needs to implement a business process with the needed level
of automation and to build up service capability for tapping a nationwide market
for Loans & Advances business of secured and unsecured portfolio.

The bank was aggressively seeking to become the leader in the banking &
financial services space in India amongst the largest private banks in the retail-
banking segment. To implement the same, the bank tapped the retail banking space
by offering various deposit as well as loan products. The lending side of their
business offered loans for automobiles finance, housing loans, personal loans,
finance against securities and other hire-purchase loans.
The bank has a nationwide sourcing of loans applications through a mix of
branch and Direct Selling Agent (DSA) network. They have also appointed a
number of Field Investigation / Contact Point Verification Agencies to provide the
geographical coverage for field investigation for the sourced applications. They also
have a large automobiles dealer network as business partners, who act as sourcing
channel for home loans.

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HOME LOAN & SCHEME AND ITS EXTENSIONS

A home loan scheme is generally offered to the person to accommodate

finance for purchasing the house or for renovation or extension of the existing
house.
The various extensive schemes, which are included in the home loan portfolio, are:

Home Purchase Loan:

This is the basic home loan for the purchase of a new home.
Home Improvement Loans:
These loans are given for implementing repair works and renovations in a home
that has already been purchased by you.
Home Construction Loan:
This loan is available for the construction of a new home.
Home Extension Loan:
This is given for expanding or extending an existing home.
For e.g.: addition of an extra room etc.
Home Conversion Loan:
This is available for those who have financed the present home with a home
loan and wish to purchase and move to another home for with some extra funds
are required. Through home conversion loan, the existing loan is transferred to the
new home including the extra amount required, eliminating the need of pre-
payment of the previous loan.

HDFC offers:

• Attractive loan interest rates.

• Home Loan amounts starting from Rs.10 lack and ends maxima depend on
property cost and property valuation.
• Tern loans up to 25 years.
• Free personal Accident Insurance (Terms & Conditions).
• Insurance options for your home loan at attractive premium.
• Special 100% funding for select properties.

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ELIGIBILITY CRITERIA FOR HOME LOANS

How much an applicant can borrow?

Home Loans range from Rs.10 lakh to depend on customer salary for eligible to
take loan. Your repayment period can vary from 1 year to 25 years depending
upon your capacity to repay.

Eligibility:
Age: - Min: You should be at least 21 years of age.

Max: At the time of loan maturity, you should not exceed 65 years or your
retirement age, whichever is earlier.
Individuals:

You should have completed a minimum of 2 years of service (with a minimum

of 1 year in the current job)

Businesspersons/Self-employed professionals:
You must have an established business or professional practice of not less
than 3 years, with a positive net worth and must have posted a net profit for the
last 2 years. Note: Minimum net take home salary of Rs. 20000/- p.m. for
salaried employees or annual income of not less than Rs.5 lakh for businessperso
ns/ self-employed professionals. (Spouse/co-applicant’s income can be included
in the income computation).

1. Individuals who are salaried or self employed, professionals, businessmen are

eligible. Proprietary concerns, HUF, partnership firms or limited companies are
not eligible for this loan, where partners at their individual capacity are free to
avail this loan.

2. As a customer to enhance the loan eligibility, all HFIs lay down conditions to
who be co applicants, al co owners to the property should necessarily be co-
applicant. Income of the co owners can be clubbed together to get higher loan
eligibility. Minors are not eligible to become co owners, as also friend and
relative’s only blood relatives are eligible to take a property jointly.

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DOCUMENTS INVOLVED IN EVALUATION OF HOME
LOAN:

The documentation requirement for various categories of applicants depends on

their status. For this purpose, all HFIs segregate their employees in different
categories. They are:

• Salaried
• Professional or Businessman
The criteria of evaluation changes according to their status. The general
documents, which remain same for all the categories, are as follows:
1. Proof of age
Any one of the following is considered for proof of age, they are:
Passport
Voter’s ID card
PAN card
Ration card
Employer’s identity card
School leaving Certificate
Birth Certificate

2. Copy of bank statements for the last one year:

Bank statement for the last one year of all operating and salary accounts.
Bank statements for the last one year of all current accounts, if self
employed. Any other photocopies of investments held, if required by the
HFIs
3. Copy of latest credit card statement.
4. Passport size photograph
5. Signature verification by your bankers.
6. Proof of residence:
• Ration Card
• PAN Card
• Passport

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 • Rent agreement if any, if you are currently staying on rent.

• Allotment letter from your company if you are residing in

company Quarters.

The documents required to be provided by the salaried class are as follows:

• Salary slips for the last three month.
• Appointment letter
• Salary certificate
• Retainer ship agreement, if appointed as consultant.
• From-16 issued by the employer in your name.

Proof of Employment:
The proof of employment is verified by the
• Identity card issued by the employer
• Visiting card.

Employer’s details (in case of private limited companies):

The employer’s details are to be provided in addition to the above
documents for documents for a private sector employee, they are:
• Name of promoters / Directors
• Background of promoters / Directors
• Number of employees
• List of branches / factories
• List of clients / Customers
• Turnover of your employer
• Annual reports of your employer for the last two to three years

9
The documents required to be submitted by the businessmen as follows:

a. Last three years Profit & Loss Account Statement duly attested by a
Charted Accountant
b. Last three years Balance Sheets duly attested by a Chartered Accountant
c. Last three years Income Tax Returns duly filed and certified by
Income Tax authorities

Proof of Investments:
1. Bank statements for the last six months of all current accounts.

2. Any other photocopies of investments held, as required by the

HFI.
The above are the various documents required by the businessman in addition to
the documents, which are common to the entire category.

The businessman is also judged on the basis of the business conducted by him, if
his Business profile is in the negative list, he will be thoroughly considered for his
credibility before dispersing loan, the organization and property location should
not be in the negative list.

These are the additional documents which are required to be looked at before
going on for completing the pre sanction formalities with respect to dispersing of
the home loans to the business class.

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 INTRODUCTION

Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries
and above all gathering funds little by little to afford one’s dream. Home is one of
the things that everyone one wants to own. Home is a shelter to person where he
rests and feels comfortable. Many banks providing home loans whether
commercial banks or financial institutions to the people who want to have a home
.HDFC -(Housing Development And Finance Corporation) Home
Loan, India have been serving gather people for around here decade sand
providing various housing loan according to their varied needs at
Attractive & reasonable interest rates. Owing to their wide network of financing,
HDFC Housing Loans provides services at your doorstep and helps you find a
home as per your requirements. Many banks are providing home loans at cheapest
rate to attract consumers towards them. The more customers
Friendly attitude of these banks, currently offer to consumer’s cheapest loan over
homes. In view of acute housing shortage in the country, and keeping
in mind the social – economic role of commercial banks in the present times , the
RBI advised banks to encourage the flow of credit for
Housing finance with the RBI reducing bank rate, the home loan market rates
nose-diving by 50 basis points. The HDFC Bank and Standard chartered bank has
become the first player in this sector to announce a housing loan for a 20 years’
period. No doubt it will enhance the end cost people to plan their house over longer
duration now; it has been made easy for a person to buy that dream house which
he dreamt of long ago. HDFC also provides with Home Improvement Loan for
internal and external repairs and other structural improvements like painting,
waterproofing, plumbing and electric works, tiling and flooring, grills and
aluminium windows. HDFC finances up to 85% of the cost of renovation (100%
for existing customers). Current status is that HDFC reduced home loan rates by
50 basis points for all its existing floating rate customers.

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

Housing Finance Evaluation:

Housing Development Finance Corporation (HDFC) was the first housing finance
Company to setup operations in India in 1977. After the National Housing Bank
Act, 1987, was passed NHB came into existence as a Subsidiary of the Reserve
Bank of India (RBI) to regulate housing finance companies and provide them with
refinancing to supplement their fund requirements.

Public sector banks were allowed to provide housing loans directly to retail clients
only in 1988.

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THE PARAMETERS INVOLVED IN HOUSING LOAN EVALUATION

There are a number of parameters on which the housing loans are built:
They are:
1. TENURE
The tenure of the home loan refers to the time limit for a customer to repay the
loan Generally, the maximum tenure of home loans is 20 years, with a few
lenders offering tenure of 20 years or more (HDFC has recently launched a 30
years loan). The longer the tenure, more a customer pays in total interest, but
monthly payments will be less. So depending on the earning potential and bank
balance of the customer, an appropriate can be chose. An important requirement
of most banks/ HFIs is that they pay up the entire loan before you retire. The
customer can always prepay the entire loan amount before it is due.
As long as the tenure goes up a customer pays more interest which is up to 0.25 –
0.5%, generally above the home loan rates.

2. AMOUNT PAID BY THE FINANCER/ MARGIN REQUIREMENTS

The financer does not pay the entire amount of the loan, they request the customer
to maintain margin, most banks go in for a 85% funding of the property value
including the stamp duty and charges, it however varies among various banks.
This is also treated as the margin money or own contribution required to be put by
the prospective loan seeker as the contribution towards the purchase of the house.
Most HFIs believe the amount paid is upfront before they release any
disbursement.
As a rule of thumb, depending upon the HFC, the prospective loan seeker has to
cough up 15% - 20% of the loan amount as a down payment. For smaller amounts,
this may not be much. But for figures running into lacks, this could make loads of
difference.
For example: An apartment costing Rs. 10lacss may get 85 per cent financing. So,
customer has to arrange for the remaining Rs 1.5lacs.
Some banks however make way for the payment for 90% of financing and about
100% financing for some new projects, however they are subjected to a large
number of factors and constrains.

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3. INTEREST RATES
Without doubt the most important parameter to factor into home loan calculations.
The interest rates may vary from institutions to institutions and generally range
from about 8.50% – 9.00% to around 9.00% Repayment is in the form of EMIs
(Equated Monthly instalments). The longer the tenure, the more you pay in
interest, but your monthly payment will be less.
The two kinds of interest rates available to a customer are:
• Fixed interest rates
• Floating interest rates
Fixed interest rates remain fixed over the tenure of the loan.
Floating interest rates are affected by the rates in the market, they fluctuate
according to the rates issued or changed by the RBI from time to time.

The finance minister’s diktat on home loans does not hold for private banks.
India’s largest home loan provider and second largest bank — HDFC Bank.

As per the new rate structure, customer will have to pay 8.5% on the home loans
with a floating rate, while the fixed home loan will now invite an interest of 8.7%.
With this increase, the monthly instalment on an Rs.1lakh loan for 20 years goes
up by Rs70.
Some public sector banks do so only once in 12 months while some private sector
lenders do it as frequently as a quarter. Though the current interest rate quotes
maybe lower, over the life of the loan, a customer will be able saved more in the
case of a lender who resets your floating rate more frequently.

The investors are also given the option of changing their option from fixed rate
loan to a floating rate loan, of course by paying a penalty.
4 ) MISCELLANEOUS CHARGES:

All banks charge certain amount of processing fee which cannot be ignored,
it should be understood that along with monthly payments, the customer should
also ensure that he has to pay these charges, so he should careful in choosing his
HFC. Miscellaneous charges generally range amt Rs11800.
A 1% administration fee and 0.8% processing fee on, say RS. 5, 00,000
loan, would amount to RS 10.000. Other times, it could be just one fee (either

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administration or processing) but could yet work out to be much more if it is
considerably higher at, say, 2.5 per cent or 3 per cent. The various other fees,
which you are required to be paid along with the margin amount, are:

a) Processing fee:
It’s a fee payable to the lender on applying for a loan. It is either a fixed
amount not linked to the loan or may also be a percentage of the loan amount. The
loan amount received by customer can be less than the processing fee. It is charged
at the submission of the application form and covers expenses incurred for
processing the application form.
b) Prepayment Penalties:
No prepayment charges are levied on floating interest rates.
c) Administrative Fees:
An administrative fee is charged by the HFI on the loan amount sanctioned to
customer. This fee is normally payable at a time of accepting the offer letter. It is
charged mainly to meet the operating expenses of the loan amount of the entire
tenure.
d) Others:
It is quite possible that some lenders may levy a documentation or consultant
charge. In case of HDFC Bank the processing fee is 0.25% of the loan amount
and the administrative fee is approximately 0.50% of the loan amount.

15
16
 Home loan Limited Period Offer w.e.f June 4, 2018
Adjustable Rate Home Loan

Home/HIL/HEL/Refinance/Plot loans Salaried/SEP Self Employed

Upto 30 Lakh
Applicable interest rats
Women 8.50% 8.55%
Other 8.55% 8.60%
30.01 Lakh & Above
Woman 8.60% 8.65%
Other 8.65% 8.70%

TRU-FIXED LOANS-2 YEARS

Home/HIL/HEL/Refinance/Plot Loans Salaried/SEP Self Employed
Applicable Interest Rates
Woman 8.60% 8.65%
Other 8.65% 8.70%

Self-Employed Value Plus Home Loans

Home/HIL/HEL/Refinance Applicable Interest Rate

All Loan Amounts 9.50%

Top-Up Loans
Applicable Interest Rate
Top-Up Loans For existing Customers 8.70%

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 Good CIBIL score

CIBIL is one of the four authorized credit bureaus in India which provide a credit score, the
others being Equifax, Experian and CRIF High Mark.
A CIBIL score ranges from 300-900. A good CIBIL Score to qualify for a home loan is 700 and
above. The closer you are towards 900 the better chance you have of being approved for a loan.
Moreover, a higher credit score means that you can avail of more attractive offers including
lower interest rates, larger loan amounts, simpler documentation, and longer repayment periods.
You can get up to 80% of the total cost of the property.

CIBIL score important when applying for a HOME LOAN.

If you want to apply for a loan and avoid the prospect of rejection, then you need to know the
importance of a CIBIL™ score in the loan-approval process.
The first thing a lender checks when you are applying for a loan is your CREDIT Score. If you
have a low credit score there is a good chance the lender will reject your loan application?
However, if you have a good CREDIT score (above 700), then the lender looks into the
application further to check the credit worthiness of the borrower before making a final lending
decision. Your credit score gives lenders a quick impression of your probability of default based
on your past repayment behavior.

If you have a low CIBIL™ Score how can you improve it?
• Never make any late or missed payments.
• Keep a balance between secured and unsecured loans.
• Keep an eye on your Credit Report and check your credit score on a regular basis.
• Do not apply for too many loans at the same time.
• Do not use more than 50% of your credit limit.

Lenders make use of my Credit Score

Earlier, lenders needed to make a partly-subjective internal assessment and do background
checks in order to sanction a loan. But now with the help of a Credit Score and a Credit Report, it
has become very easy for the lender to access accurate, data-based credit information on the
applicant.
• CIBIL has a database of the credit related activity of customers. This is used to calculate their
individual credit score.

• If you have a low score, (less than 700) lenders might see you as a high risk customer with
history of defaulting on payments and might be unwilling to approve your loan application.

18
• If you have a high score, lenders see you as a low-risk customer with low probability of default
and will be willing to lend to you with attractive terms.

• While there is no fixed minimum CIBIL score to apply for a card, it is recommended that you
ensure that you have a score of at least 700 before you apply for a home loan.home loan
CIBIL home loan

CIBIL score Condition under which loan application is Condition why loan
approved application is rejected

700 and Generally considered as best CIBIL score for loan -: FOIR of greater than 65%
above FOIR of less than or equal to 50% for people with Company or sector in which
salary upto Rs. 40,000 per month and upto 65% for you work is black listed by
those with salary above Rs. 40,000 with new home bank
loan EMI Delayed payment of salary by
your employer
Higher proportion of unsecured
loan compared to secured loans
Monthly income less than Rs.
25,000 per month
Property documents not
satisfactory to bank
Income history and job
continuity of less than 3 years
(except for some professionals)

650 - 750 Satisfactory justification for delayed payments on No proper justification for
existing or past loans and credit cards. payment delays
FOIR of less than or equal to 65% after taking into Company or sector in which you
account new home loan EMI work is black listed by banks
Low proportion of unsecured loans and low credit Delayed payment of salary by
card outstanding your employer
Average credit card outstanding not more than 50% Not maintaining minimum
of credit limit balance in savings account
Property documents not
satisfactory to bank
Income history and job
continuity of less than 3 years
(except for some professionals)

Less than • Unable to provide justification

650 for delayed payments
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Very low chances of loan application getting
approved
Low loan to value (LTV) - less than 50%
EMI payment by joint applicant with good income,
low obligation and clean CIBIL record

20
THE LOAN PROCEDURE FOLLOWED AT HDFC BANK
The procedures involve in the disbursement of home loan by any bank entails the
following steps:

• Home loan application form is first submitted by the customer

covering all details.

• Checklist of requirements is requested for from the customer, and

all documents are required to be submitted (copies), they are then
verified whether the details are failed in correctly and whether all
the documents are submitted.

• Additional loans, if any are applicable. Many banks provide for

supplementary loan as a part of their comprehensive home loan
scheme.

The following diagram indicates the loan procedure at the

Customer

Branch manager

Legal opinion, valuation

Loan Department And Technical

Branch manager

For large borrows

bank
Regional Officer

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 PROFILE OF HDFC BANK
About HDFC BANK

HDFC Bank was incorporated in August 1994, and, currently has an

nationwide network of 4,715 Branches and 12,260 ATM's in
2,657 Indian towns and citie.
The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an 'in principle' approval from the Reserve Bank of
India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation
of the Indian Banking Industry in 1994. The bank was incorporated in August
1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai,
India. HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995.
HDFC is India's premier housing finance company and enjoys an
impeccable track record in India as well as in international markets. Since its
inception in 1977, the Corporation has maintained a consistent and healthy growth
in its operations to remain the market leader in mortgages. Its outstanding loan
portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments and also
has a large corporate client base for its housing related credit facilities. With its
experience in the financial markets, a strong market reputation, large shareholder
base and unique consumer franchise, HDFC was ideally positioned to promote a
bank in the Indian environment.

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

MISSION STATEMENT OF HDFC BANK

• World Class Indian Bank.

• Benchmarking against international standards.

• To build sound customer franchises across distinct businesses

• Best practices in terms of product offerings, technology, service levels, risk management
and audit & compliance

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OBJECTIVES OF THE STUDY OF HOME LOANS

▪ To study and understand the concept of home loan scheme and the
eligibility criteria of the customers.

▪ To study and understand the documents involved in the home loan

scheme and the repayment methodology adopted by HDFC BANK.
▪ To examine the essential dimensions of service quality i.e. RATER-
Reliability, assurance, tangibles, empathy and responsiveness of HDFC
bank and its effect on customer’s satisfaction.

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 RESEARCH METHODOLOGY
Research in common sense refers to a search for knowledge. Research simply put is an
endeavor to discover the answer to problems through the application of scientific method to the
knowledge universe. Research is important for systematic enquiry seeking facts through objectives
and eligible method in order to discover the relationship among them and from broad principles or
laws. It is really a method of critical thinking. The defining and redefining problems, formulations
hypothesis or suggested solution and at least, carefully testing the conclusion to determine whether
they fit the formulated hypothesis. Thus, the term research experimentation or examination having
as its aim the revision of accepted conclusion, in the light of facts discovered newly.

Company has undergone rapid changes in the past 5 years due to many policy decisions
relating to capital markets, banking sector & licensing policy.

The study is limited to only HDFC Bank This study is mainly related to the individuals who are
interested in taking home loans from banks to fulfil their dreams.
The study focuses on prevailing rate of interest, percentage of funding , tenure of home loan ,fee
etc being charged by other banks comparison to HDFC.

METHODS OF COLLECTION OF DATA

The “STUDY OF HOME LOAN & PROCEDURE OF DISBURSEMENT OF HDFC BANK IN

PUNE CITY”. The whole procedure of the disbursement of loan, various schemes, interests rates
etc. Factors were obtained from various bank. Research methodology is an important part of every
project. Because it helps in knowing how to select the representative sample from the world or the
general population, the right research tools and techniques to complete the research. The study of
the consumer behaviour is important because he is the king. The research process is based upon
survey method, so in order we go to service provider and services user which is the customers.

SECONDARY DATA

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Secondary data refers to the one which has already been collected by someone elses.The
secondary data was collected from the office record and report of the Bank..

• Brochures and Magazines

• Annual report of Home loan department

• Sale Manager and relation manager, executives of Banks deal in housing loans.

PRIMARY DATA

Primary data is collected from bank of HDFC Pune regarding the procedure of disbursement of home loan
offered by HDFC Bank. The primary data was collected by means of a survey. Questionnaires were
prepared and customers of the banks at two branches were approached to fill up the questionnaires.
The questionnaire contains 20 questions which reflect on the type and quality of services provided
by the banks to the customers. The response of the customer and the is recorded on a grade scale
of strongly disagree, disagree, uncertain, agree and strongly agree for each question. The filled up
information was later analyzed to obtain the required interpretation and the findings.

26
 Data analysis & Interpretation

(1)Age of the Respondents

Age of the Number of %

Respondents (years) Respondents
Below 30 16 16.0
31 to 40 48 48.0
41 to 50 22 22.0
Above 50 14 14.0
Total 100 100.0

Interpretation
Age of the Respondents the first characteristic of the respondents that is taken into
account is the age of the respondent. Table.1.given below shows the age distribution of
the respondents. It can be seem from the table that almost half (48%) respondents belong
to the age group of 31 to 40 years, whereas the next age group in terms of the number
was 41 to 50 years to which (22%) of the respondents belonged. 14% of the respondents
were above 50 years of age of which 3 were above 60. Thus, 70% of the respondents
belonged to the middle age group, i.e. 31 to 50 years.Sex of the Respondents Out of the
100 respondents surveyed, 78% were males and the remaining 22% were females. Thus,
the sample was male dominated.

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(2)Occupation of the Respondents

Types of occupation Number of %

Respondents
Business 50 50.0
Services 39 39.0
Profession 11 11.0
Total 100 100

Interpretation
Table 2 given below shows the profession of respondents which may also be an
important factor affecting the decision making of customers. It was found that half of the
respondents (50%), were from the business class, 39% were doing some sort of service,
while only 11% were professionals like doctors, C.A., Engineers, etc.

28
3) Annual Income of the Respndents

Income Group( in No.of Respondents (%)

lakh)
<1.8 28 28.0
1.8 to 2.4 21 21.0
2.4 to 3.6 32 32.0
>3.6 19 19.0
Total 100 100.0

Table no.3 Annual Income of the Respndents

Interpretation
Annual Income of the respondents is the most important factor determining their
demand for home loan. Table 3 gives information on the annual income of the
respondents in which the respondents are divided into four income groups. It is found
that the maximum number of respondents (32) were in the income group of ` 2.4 lakhs to
3.6 lakhs and the next important income group was less than ` 1.8 lakhs. There were 19
respondents earning more than ` 3.60 lakhs. The minimum and maximum annual income
were ` 72, 000 and ` 30,00,000 respectively.

29
4) Types of Loan taken in the Past
Table no.4 Types of Loan taken in the Past

Types of Loan No.of Respondent (%)

Home loan 3 8.82
Personal loan 6 17.65
Vehicale loan 20 58.82
Home loan & 1 2.94
Vehicale loan
Personal loan & 2 5.88
Others
Others 2 5.88
Totale 34 100.0

Table No.4 Types of Loan taken in the Past

Interpretation
It would be interesting to know which types of loans were taken by the
Respondents earlier. The information on the type of loan taken earlier by the respondents
Are shown in table 4.

The above table reveals that most of the respondents viz. 62.0% (21 out of 34)
had taken loan for buying vehicles. The next important type of loan was the personal
Loan. Only 8.82% (3) respondents had taken home loan earlier. This indicates that most of
The respondents selected in the sample were taking home loans for the first time.
30
5) Year in which the loan was Taken.
Table No.5 given below gives information regarding the year in which loan was
Taken by the respondents. It is clear from this table that a large majority of them (76) had
Taken home loan in the year 2016, 24 had taken the loan in the year 2017.

Loan Taken No.of Respondents (%)

During 2016 42 42.0
During 2017 58 58.0
Total 100 100.0

Table No.5 Year in which the loan was Taken

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6) Term of Loan
The respondents were asked to provide information on the term of loan taken
By them. On the basis of the replies given by them, table no. 6) given below was
Constructed.
Table no.6 Term of Loan

Years No. Of Respondents (%)

5 to 10 54 54.0
11 to 15 40 40.0
>15 06 06.0
Total 100 100.0

Term of Loan

Interpretation
It can be seen from the table that slightly more than half (54%) of the respondents
had taken home loans with terms ranging from 5 to 10 years. For 40 respondents the term
was between 11 to 15 years and for the remaining 06 the term was more than 15 years.
In the study of M.Chandan Singh (2015) in Mumbai, it was found that 28%, 14%
and 58% respondents opted for, 5 years and 10 years, more than 15 years as a term of
loan respectively.
In the study of Amit Maske (2016) in Punei city, it was found 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.
But in this study only 6% respondents opted for loan for more than 15 years. It
may be assumed that in Nagpur city the level of income is so high that the customers are
able to repay home loan in a short period of time.

32
7) Amount of Loan Applied For.
It will be instructive to know about the amounts of loan the customers had applied
for. Table 7. given below provides information on the amounts of loan applied for.

Amount ( ‘ Lakhs ) No. Of Respondents (%)

10 to 20 32 32.0
20 to 40 33 33.0
40 to 60 27 27.0
>60 08 08.0
Total 100 100.0

Interpretation

As shown in the table, out of 100 respondents almost 1/3 each had applied for the loan
Amount between ` 1 to 5 lakhs and ` 5 to 10 lakhs. Thus, about 2/3 of the sample
Customers had asked for home loans below ` 10 lakhs. On the other hand, only 8
Respondents had applied for a loan amount of ` 20 lakhs or more.

33
8) Amount of Loan Sanctioned

As against the amount of the loan applied for, one would like to know the amount
of loan sanctioned by the respective banks. Table 8 gives the necessary information.

Amount (‘ in lakhs ) No.of Respondents (%)

10 to 20 32 32.0
20 to 40 33 33.0
40 to 60 27 27.0
>60 08 08.0
Total 100 100.0

Interpretation
According to this table, in case of 33, 36, 23 and 08 customers, the amounts of loan
sanctioned were in the range of ` 10 to 20 lakhs, ` 20 to 40 lakhs, ` 40 to 60 lakhs and more
than ` 60 lakhs respectively.
Comparing with the earlier table (table 8 ), only in the case of range ` 40 lakhs
to 60 lakhs, 4 customers were denied amounts of loan in this range. All the customers
who applied for home loans amounting to more than ` 60 lakhs were sanctioned the loan
of similar amounts.

34
The findings of analysis of simple frequency tables may be summarized as
follows:
• About 60% of the respondents were middle aged, i.e. 30 to 50 years of age
• The sample was dominated by males. (78%)
• A majority of (55%) respondents were graduates.
• Exactly 50% of the respondents were from business class. While 39% were from
service class.
• The maximum number of respondents (32%) had annual income of ` 3.5 to 6.5
lakhs and 19% had income more than ` 6.5 lakhs.
• 77% respondents lived in nuclear family.
• 32% of the respondents had taken some kind of loan from the bank earlier and
59% of them had taken vehicle loan earlier.
• Most of the respondents availed the information about the home loan from other
sources like C.A. / loan consultant / friends, etc.
• In case of only 6% of the respondents the term of loan was more than 15 years
and for the remaining 94% the term of loan was less than 15 years.

35
 9) Reasons for Rejection of Application
Table No.9 Reasons for Rejection of Application
Reasons No. Of Respondents (%)
Due to Less Income 02 16.67
Plan not Sanctioned 02 16.67
CIBIL Report 07 58.33
Other Reason 01 8.33
Total 12 100.0

Interpretation
Table 9 . Gives the reasons for the rejection of applications.
It indicates that the application of 12 respondents were rejected, in case of 07 respondents
(58.33%) the reason for rejection was negative CIBIL (Credit Investigation Bureau of India Ltd.)
Report. The other reasons were less income (16.67%), plan of the property not sanctioned
(16.67%) and other reasons (8.33%).

36
RISK CAPTURING MECHANISM

One of the important aspects in the home loan financing is to ensure that the loan
seeker is worthy and credible. HDFC follows the credit score model to male home
loan disbursements.
Credit score model is a risk capturing mechanism, which is used to assess the risk
perspective of the loan seekers.
The prospective loan seeker is assessed on a number of parameters which helps in
the evaluation of his profile and each parameter is assigned a score based on which
the decision is taken.
A score of 100 is fixed, and a score of 75 is considered to be good, score of 55 is
considered above average and score of 25 to be average. The prospective loan
seeker on a scale of 100 is expected to get 55 avail the home loan.

The parameters on which risk is assessed are:

1. DEMOGRAPHIC PROFILE

The demographic profile includes a number of sub-parameters they are basically:

• Age
• Educational Qualifications
• Number of Dependents
• Marital status
The demographic profile of the loan seeker is allotted a maximum score of 15.

2. RELATIONSHIP WITH HDFC BANK

The relationship with the bank is also considered for the benefit of its customers.
The sub-parameters considered here are:
• Value of relationship (in terms of deposits)

37
 • Number of years
The relationship with the bank is given a weight of 10 on the total score of 100.

3. INCOME MODEL
The income module of the bank includes parameters such as:
• Gross Eligible Monthly Income
• IRR ( Income to Instalment Ratio)
• FOIR (Fixed obligations to income ratio)
• Net take home
The income model is given the highest score of 50 points.

4. STABILITY AND CONTINUITY

The stability and continuity factors are based on
• Organization Profile : Govt. / public sector companies / public limited or
private limited companies or partnership or others
• Length of service in Present job / organization.
This module is provided with maximum score of about 15 points.

5. ASSET MODULE
The asset module include factors like
• Margin
• Net-Worth ( Total assets – Total Liabilities)
The asset module is given a weight of 10 on a scale of 100.

The various parameters of the credit score model and their respective
weights are depicted in the following chart.

The abbreviations of the above term are:

DM – Demographic profile
RHDFC – Relationship with the HDFC
IM – Income Module
SC – Stability and Continuity

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SCRUTINY OF THE DOCUMENTS

The retail processing is a procedure, which involves careful scrutiny of accounts.

HDFC Bank uses a specialized system to go through the accounts, before
dispersing the loan to the customer. The basic groups set up in the process of loan
application are:

RETAIL MANAGER ENTERER GROUP:

This group does the data entry. Upon completion of the data entry the group
forwards the same to the RM Verifier group to verify and resends it to the former
in case of tiny discrepancies for editing.

The Loan officer enterer group and the RM Verifier group should ensure, confirm
and verify the following:
• The organization is in the appropriate list.
• The organization is not in the negative list
• The property location is not in the negative list.

Applicant Details:
• Name and the personal details
• Identity details Address
• Employment details – salaried
• Financial details: Income asset ownership, Existing bank account details
and credit card details
• Employment details: Business
• Financial details: Existing bank accounts and credit card details.

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Existing Loan details:
The name of the financial institution (in case of take over) type of loan,
purpose of loan amount etc, as per the home loan application form.

Loan request:
Including the disbursement details.

Acquisition details:
Gee details, loan amount recommended, name of the customer preferred branch.

Reference details:
Entry of at least one reference is mandatory.

Property details:
The RM enterer group and the RM Verifier group shall affix their initials
on the home loan process note.

Upon completion of the above activities, the field investigation, legal opinion
and the technical appraisal process shall be initiated by the RM.

The basic scrutiny checks followed by the bank:

• Field investigation study.
• Technical Feasibility
• Legal Feasibility

Field Investigation Study:

The manager RM shall go through the documents and inform the same to
the field investigation agency the details:
a) Field Investigation Report:
• Residence and Reference (Tele – Check)
• Name, Address, Office or Business telephone number of the
applicant and
• Co-applicant.

40
 • Income Tax return.

The reports are to given on the letterhead of the respective approved agency by
their authorized employee with agency’s rubber stamp. The RM should ensure
from the field investigation agency in case of Residence and reference (Tele-
check)
The details in the report should match with the information given in the home loan
application form.

IT-Return:
It should be tallied as per the office records.
The manager RM shall make a tele-check to cross verify the investigation made
by the agency in case, for the salaried applicants where the disbursement is greater
than 10 lacks and in case of the businessman where the disbursement is greater
than 10 lacks.

2. LEGAL FEASIBILITY

The bank should arrange for the legal opinion.

The manager RM should forward it to the bank’s empanelled lawyer various

documents for scrutiny.
Some of the documents required for the scrutiny by the lawyer are:

• Sale agreement duly registered

• Own contribution receipts
• Allotment letter
• Land documents indicating ownership, if applicable registration receipt
• Possession letter
• Lease agreement, if applicable (Property bought from a development
authority)
• No objection certificate from the developer, society or development authority.
• In case of the construction of the house the agreement of construction of
the house between the land owner and the contractor.

41
The above are the list of documents to be referred to by a lawyer. The manger has
to provide the copies of the documents should be provided by duly specifying the
name of the applicant, particulars of property and list of documents attached.

All correspondence with regard to the legal opinion must be carried forward
between the lawyer and the RM only.

3. FINANCIAL SCRUTINY

Prior to disbursement, the HFI also conducts a site visit to the customer’s property
to ensure the following:
In case of under construction property:

• Stage of construction is the same as that mentioned in the payment notice

given to the builder.
• Quality of construction
• Satisfactory progress of work.

• Lay out of the flats and area of property is within the permission granted
by the governing authority
• Requisite certificate have been received by the builder to start the
construction at the site.

In case of ready / Resale construction:

• External maintenance of the property.

• Internal maintenance of the property.
• Age of the building
• Whether the building will last the tenure of the loan
• Quality of construction

42
 • There is no existing lien or mortgage on the property

The list of valuation engineers empanelled by the bank need to take up these
various documents and ensure that the report is furnished in the prescribed format
and that loan amount requested by the applicant is sufficient to complete the
project. The details in the property report given by the technical term and compare
it with the legal opinion and application and ensure that there are no discrepancies.
After completion of the above checks and scrutiny the manager RM must forward
the home loan process not along with the home loan application and other
enclosures Legal opinion, technical appraisal report, for further processing to the
Loan Manager term, after retaining in the customer’s file, copy of the following
papers:
• Home loan application
• Legal opinion with all enclosures
• Technical appraisal report
Loan Department has to send the documents and papers to the RM for further
scrutiny and processing of the proposals. This would increase the turnaround time,
of processing and also additional charge towards the courier charges and also
losing the documents in transit, In order to avoid the above discrepancies the
documents are verified by the document imaging system.

Newgen document imaging system is introduced to facilitate electronic

transmission of documents for processing of proposals by RM.

• It facilitates scanning and maintenance of scanned images.

• It also provides the provision of linking the documents if the same

document is required for multiple loans
• Provisions to make remarks, on the document without disturbing the original.
• Scanned images can be attached to any mail

This facilitates easy transmission of data and other documents and also provides
the flexibility in loan processing and helps in fast transmission of data, these all
advantages helps in easy disbursement of loans.

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HOME LOAN FACILITIES WITH VARIOUS ADD-ON BENEFITS

The banks have buckled for the completion of the home loan products
by providing various add-on benefits, which has also become a key
factor in the competitive era of home loans.
The banks have also tied up with various property insurance companies
in order to make their home loan competitive.
The ABN-AMRO bank which has entered the home loan segment in
October 2003, launched its product “All Smiles Home Loans” with the
lowest interest rate of 6 percent in the first year and 6.5 per cent in the
second year has added a number of value added services like:

• SMS alert to help the customers keep track of their loan

sanctions and disbursement status.
The bank also offers its smart Gold credit card to the borrowers
and concessional rates on personal loans and auto loans.

GIC housing finance limited has offered the consumer loans for the
purchase of home equipment at the same rates of interest at the of the
home loans and lower than the other consumer loans.
The tenure of consumer loans is restricted to the tenure of 5 years.
Many banks have also done away with the guarantor for provision of
home loans for amount less than RS.10 lakes, like HSBC housing loan
scheme, HDFC bank.

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THE FUTURE OF HOME LOANS
Home loans are a commodity that banks are dying to sell. After all, 30 years of
consumer indebtedness secured with a very tangible asset makes for a great profit,
when you consider the compounding of interest. Yet because of the subprime
mortgage crisis, home loan applications are no longer as easily and quickly
approved as lending institutions used to do.

As a matter of fact, those applying for mortgage loans now must prove their
income and ability to repay the loan before they can even hope to get an
interested lender to take a closer look.

The interest rates on home loans have started coming down after the Reserve
Bank of India (RBI) decision to reduce the repo rate last month. The repo rate is
the short-term lending rate on which the RBI extends short-term loans to banks.
The repo rate is one of the major factors that decide a bank's lending rate. The
lowering of the repo rate has reduced the cost of funds for banks and hence there
was a drop in loan interest rates.

The rates on new loan accounts have come down more than the interest rates on
existing loans. This is because new accounts are viewed as fresh sales. Hence,
banks float many promotional schemes and go aggressive on them. The rate cut
happens on existing loans only when banks get comfortable on their overall
cost of funds and are sure about maintaining their net interest margins

45
CHANGES IN THE TREND

HFCs may lose against banks in gaining market share race. From 23% of the
incremental market, the share of these companies is likely to fall to 20% at the
end of the financial year. However, banks seem to be on safer side this time
because of their resource profile. They can easily attract deposits and also have
current and saving accounts. Contrary to this, HFCs are largely dependent on
wholesale borrowings.

Small companies are in a look out for making a base tier II and tier III cities,
where banking does not have a strong presence. They may also try to raise
loan pools, securities and sell them to generate large fund for future
disbursals.

The ratings on HFCs do not show any significant changes. But the large
companies like LIC Housing and HDFC are still in a better situation,
concerning 70% market share among housing companies.

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 FINDINGS

❖ HDFC Ltd having good brand image in the mind of customer.

❖ Majority of the people got loans from HDFC bank only.

❖ Most of the customer is not aware of the products of HDFC home loans.

❖ Some of the customers are felt that the interest rates are somewhat high.

❖ Some of the customers not having good faith on private bank like standard chartered

bank, HSBC bank etc.

❖ Most of the people are directly go to HDFC to apply a home loan.

❖ Some of the customers of HDFC already benefited through HDFC home loan products

and services.

❖ Customer awareness is medium about HDFC products.

❖ HDFC Ltd providing good services to their customers.

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SUGGSTIONS AND RECOMMENDATIONS

• All one need is the courage to innovate, the skill to understand clientele and the desire to
give them the best. Likewise following are some of the suggestions which would help
HDFC in improvising there working style and performance.

• Most of the customer faces problems regarding the rate of interest. HDFC must inform its
customer about the change in ROI, it automatic areas changes but there is decrease in rate
of interest, it doesn’t change automatically.

• Any change in the policies must be intimated to all the customers. HDFC should provide
proper information to its customers.

• There is lot of formalities in the loan disbursement process. Too much documentation is
done. Customer is no aware of all formalities. Therefore paperwork should be more
friendly and clear.

• Customer should be given proper information about EMI. They are generally not told
how their EMI are calculated they should know EMI is calculated and of what amount.

• Website of HDFC should be more prompt towards customer’s grievances and problems.

• HDFC should provide personalized services to customers.

• HDFC should increase their reach by penetrating into rural and semi urban areas. They
should also capitalize on present customer base generating deferrals.

48
Limitations of study:

The study was restricted in understanding the home loan as concept so the
practical implications of the study have been difficult.

The Take Over home loans of high interest rate for low interest rates and their
inherent risks on the bank’s lending profile has not been undertaken in the study.

The mortgage home loans and its scope on the home loan lending portfolio were
not studied as this would lead into a relatively new kind of home loan segment.

49
CONCLUSION

o In my study we came to know that many people are interested to take a

home loan from HDFC Bank.
o Home loan have long period when compare to other personal loans and
other loans. So peoples are confused to take a home loan.
o The study shows that HDFC Home loan has product portfolio for satisfying
different consumer needs in lucrative manner but, the bank provide the
benefits like SMS alert and other features so as to make the home loans
more attractive. The home loan segment can be extended to the NRI
segment; this would provide the bank a cutting edge and larger share of the
home loan market.
o The bank can contemplate on decentralizing the operations however taking
into consideration the experience and expertise of the members at Loan
Department enters.
o All one need is the courage to innovate, the skill to understand clientele and
the desire to give them the best.
Advantages of home loans

• Attractive interest rates

• Helping in owning a home
• Less documents required
• Door step service
• Loan period

50
References
1. Berstain David (2008) “Home equity loans and private mortgage
insurance; Recent Trends & Potential”
2. Dr.Rangarajan C. (2001) , “ Simple Error Correction Model Of House
Price” Journal of Housing Economics .
3. Guidance provided by Mr.Chanden sir & Ashok sir ( Sales Manager
Of HDFC Bank )
4. Study material provided by Relationship manager (HDFC) Bank Amit Maske &
Mahendra Kemble.

BIBLIOGRAPHY

1. www.HDFCbank.com
2. http://www.hdfcindia.com/
3. http://www.HDFCbank.com/pfsuser/loans/homeloans/hlhomepage.htm
4. http://www.loansnews.info/Home -loan-loans/
5. www.wikipedia.org
6. www.moneycontrol.com

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 Annexure

Dear Sir/ madam,

I am Siddhant P.Powle doing MBA from ASM’s IBMR Institute. I am preparing a project on
STUDY OF HOME LOAN & PROCEDURE OF DISBURSEMENT OF HDFC BANK IN
PUNE CITY. For this I have designed a Questionnaire to know your views and satisfaction level
and requirement information for home loans,

1) Name:_________________________

2) Age:_________

3) Occupation:_____________
a)Professional b) Self employed c) Salaried d) Others

4) Which income group do you belong? (per annum )

a) Below 2 lakhs b) 2-4 lakhs c) 4-6 lakhs d) 6 lakhs & Above

5) Have you ever taken Home loan before?

a) Yes b) NO
6) If Yes, from which Bank / Company?
a) ICICI b) HDFC c) UTI d) Others

7) While taking loan which things attract you most?

a) Interest rates b) Service Provided c) Payback period d) Schemes & Others

8) Even if the Interest rate is high for the personal loans, you will go for it?
a) Yes b) No

9) How much loan amount you took/ will taking?

a) Less than 10 lakhs b) 10 to 15 Lakhs c) More than 20 Lakhs

52
 10) Do you own a Home?
a) Yes b) No ( If YES , then Proceed )

53