DECLARATION

I, HIMA GUPTA student of M.B.A, Sacred Heart Institute of Management &

Technology, Sitapur, hereby declare that the Summer Training project report on “Critical

Analysis Of Housing Loan in Urban Co-Operative Banks .” at Lakimpur is an original and

authenticated work done by me.

HIMA GUPTA

Date:
 PREFACE

MBA program is one of the most professional courses in the field of management. This

course includes both theory and application content of curriculum.

Project work is an integral part of MBA program at “UTTAR PRADESH

TECHNICAL UNIVERSITY” each student is required to do project and has to prepare

and submit report on the work conduct by the student.

This report is the continuation of above tradition. The topic of the project work was

“Critical Analysis of Housing Loan in Urban Co-Operative Banks.”

The number and importance of research report operation is growing at a very fast rate in

the society. We now need input from different specialization area; the research report is

very suitable for detailed study on any area.

 ACKNOWLEDGEMENT

To complete the project is not an easy thing. You have to take the help of others. I

would like to add a few heartfelt words for the people who are the part of this project in

numerous ways people who gave unending support right from the stage the project data

was conceived

My special thanks to MRS. Ruchi Thakur (HEAD OF THE DEPARTMENT) that

provides gentle encouragement and constant support.

I am extremely thankful to MRS. Ruchi Thakur (project guide) for providing me with sense

of direction in building this methodical approach in this report. Continuous source of inspiration

through out the project.

I sincerely thank them for the constant cooperation, guidance and incessant inspiration and

their guidance without which this project would have been like a rudderless boat. Well to put in a

nutshell, without their guidance and support this project would have been futile.

Hima Gupta

M.B.A III- Sem

 Table of Content

Chapter-1

1. Introduction
Introduction of housing loan
Home Loan Procedure in India

2. Importance of Study
3. Objective of Study
4. Limitation of study
5. Executive Summary
6. Company profile
Urban co-Operative Bank introduction
History of Urban co-Operative Bank

Chapter-2

7. Sampling Design
8. Research Methodology

Chapter-3

9. Data analysis & Interpretation

Chapter-4
10. Findings
11. Recommendations
12. Conclusion
13. Bibliography
14. Appendices
 INTRODUCTION

INTRODUCTION TO HOME LOANS

Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and
above all gathering funds little by little to afford one’s dream.
Home is one of the things that everyone one wants to own. Home is a shelter to person
where he rests and feel comfortable. Many banks providing home loans whether
commercial banks or financial institutions to the people who want to have a home.

Many banks are providing home loans at cheapest rate to attract consumers towards them.
The more customer friendly attitude of these banks, currently offer to consumers cheapest
loan over homes.

In view of acute housing shortage in the country, and keeping in mind the social –
economic role of commercial banks in the present times, the RBI advised banks to
encourage the flow of redit for housing finance.

The interest rates of home loans are expected to go down even further according to
analysts who foresee a cut down in the rates by the RBI in the wake of the decision taken
by US Federal Reserve to cut its rates by a significant margin.

There are number of companies offer cheap home loans at a low interest rate. You can
avail loan against existing house for renovation or expansion etc. There are many
nationalized banks that offer finance for affordable housing. India Housing has put
together a comprehensive data to provide you with the cheapest Home Loans available in
the market. We have listed all the important housing finance institutes and some of the
top home finance banks providing lowest interest rates.

In the last few years, housing loan scenario in India has changed drastically. It has taken a
front seat and people are looking forward to owning their own houses. It is no more a
dream that required lifetime saving and a difficult decision to make. Today the new home
purchase loan is much easily available and is much cheaper than what was available
earlier. Banks are now everywhere and the schemes are implemented even in villages and
smaller towns. The housing loans are popular there too, however, the activity
Home Loan Procedure in India :-

Submission of Application Form: - After choosing a particular home loan, the customer
submits the application form to the housing finance company (HFC) along with other
relevant documents as required by the HFC. They comprise documents to establish
income, age, residence, employment, investments, etc. The customer also needs to hand
over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-
1% of the loan amount to the HFC.

Validation of the Information: - In the next stage, HFCs validate the information
provided by the customer on the application form. They usually conduct checks on the
residential address of the customer, the place of employment of the customer, and
credentials of the employer. Some HFCs may insist on a personal interview with the
customer and perform a reference check on the references provided by the customer on
the application form.

Issue of Sanction Letter :- After due appraisal of customer profile, a sanction letter is
issued which contains details such as loan amount, rate of interest, annual / monthly
reducing balance, tenor of the loan, mode of repayment and general terms and conditions
of the loan. This is the actually the approval of the money lending procedure by the
company. However, the money is sanctioned only after the documents and the property
on behalf of which the loan is being granted is thoroughly verified.

Submission of Documents: - Once the sanction letter is passed, the customer is required
to leave the entire set of original documents pertaining to the property being purchased
with the HFC as security for the loan amount sanctioned. These documents remain in the
custody of the HFC till the time the loan is fully repaid. Once the documents are handed
over to the HFC, they send all the documents for a thorough legal scrutiny.

Validation of Property: - Prior to disbursement, the HFC also conducts a site visit to the
customer's property to ensure that all construction norms have been adhered to properly.
Once the HFC is satisfied that the property is legally and technically clear, they disburse
the loan amount. The disbursement from the HFI is on the basis of the stage of
construction of the property.

Payment Procedure: - Once all the above mentioned process, the borrower is entitled to
take the money from the lender party. Until such time that the entire sanctioned amount is
not drawn, the customer is supposed to pay a simple interest on the Actual Amount drawn
(without any principal repayments). The EMI payments commences only after the entire
sanctioned loan amount is drawn.

INTEREST RATES PROVIDED BY VARIOUS BANKS

Loan Period EMI / Lakh EMI / Lakh

Finance Institution Fixed Floating
(in years) (INR) (INR)
 Up to 5 9.00 2076 8.00 2028
6 to 10 9.25 1230 8.25 1227
Bank of Baroda
11 to 15 9.50 1044 8.25 970
16 to 20 9.50 932 8.50 868

Up to 5 9.50 2100 8.75 2064

6 to 10 9.75 1300 9.25 1280
State Bank Of India
11 to 15 - - 9.25 1029
16 to 20 - - 9.75 949

Up to 5 11 2175 9.50 2101

6 to 10 11 1375 9.50 1294
HDFC
11 to 15 11 1137 9.50 1045
16 to 20 11 1033 9.50 933

Up to 5 10.75 2162 9.50 2101

6 to 10 10.75 1364 9.50 1294
ICICI Bank
11 to 15 10.75 721 9.50 1045
16 to 20 10.75 1016 9.50 933

Up to 5 10.50 2149 9.50 2100

6 to 10 11 1373 9.50 1294
LIC Housing Finance
11 to 15 11 1137 9.50 1044
16 to 20 11 1032 9.50 932

Up to 5 9.00 2076 10.50 2150

PNB Housing6 to 10 9.00 1267 10.50 1350
Finance 11 to 15 9.25 1030 10.50 1106
16 to 20 9.50 933 10.50 999

Loans For Housing

Realising the necessity to provide houses and improve housing facilities in the
country, the nationalised banks have been asked to provide funds for housing since 1979.
Initially, they were expected to lend Rs. 150 crores annually, but the target was raised to
Rs. 300 crores for the year 1989-90. For the year 1990-91, individual nationalised banks
housing finance allocation was required to be computed at 1.5% of the incremental
deposits on March 1990, over the corresponding figure of March 1989.

According to the guidelines issued by the Reserve Bank, a bank’s assistance to the
housing sector (including rural areas) may be as follows:
a) 30% of the total housing finance allocation by way of direct assistance to
individuals or a group of borrowers etc., out of which at least half should be given
as direct housing loans in rural and semi-urban areas.
b) 30%of the allocation for landing to HUDCO, Housing Development Boards,
HDFC and other housing agencies for construction of house.
c) The remaining 40% of the assistance may be by way of subscription to the
guaranteed bonds/ debentures of HUDCO, and National Housing Bank.

The terms and conditions etc., for housing finance have been liberalized to encourage the
flow of credit for housing as follows:
a. The loan can be used for purchase of a house or flat, construction of a house or
tenement or for additions or extensions to an existing structure.
b. The loan will be secured by mortgage of the property. Banks also accept security
of adequate value in the form of life insurance policies. Government promissory
notes, shares and debentures or gold ornaments.
c. Terms loans from banks to housing finance companies(other than HUDCO,HDFC
and companies promoted by commercial banks) has been raised to three times
there net own funds in January,1990.
d. The repayment period will be spread over fifteen years.
e. The maximum amount of loan was earlier fixed at Rs 3 Lacks per individuals. But
this ceiling was withdrawn, effective 11th October, 1989
Types of home loans: -

Housing loans offered by banks are of different types:-

• Home Purchase Loans

• Home Construction Loans
• Home Improvement Loans
• Home Extension Loans
• Home Conversion Loans
• Land Purchase Loans
• Stamp Duty Loans
• Bridge Loans
• Balance Transfer Loans
• Refinance Loans
• Loans to NRIs

Home purchase loans:-

This is the basic home loan for the purchase of a new home. If you want to buy a
flat in some society or some already built house, banks and HFCs sanction you home
purchase loans for this process.
Home construction loans:-
This loan is available for the construction of a new home on a said property. The
documents that are required in such a case are slightly different from the ones you submit
for a normal Housing Loan. If you have purchased this plot within a period of one year
before you started construction of your house, most HFCs will include the land cost as a
component, to value the total cost of the property. In cases where the period from the date
of purchase of land to the date of application has exceeded a year, the land cost will not
be included in the total cost of property while calculating eligibility.
Home improvement loans:-
These loans are given for implementing repair works and renovations in a home
that has already been purchased, for external works like structural repairs, waterproofing
or internal work like tiling and flooring, plumbing, electrical work, painting, etc. One can
avail of such a loan facility of a home improvement loan, after obtaining the requisite
approvals from the relevant building authority. the following are coming under the home
improvement loans:
• External repairs
• Tiling and flooring
• Internal and external painting
• Plumbing and electrical work
• Waterproofing and roofing
• Grills and aluminum windows
• Waterproofing on terrace
• Construction of underground/overhead water tank
• Paving of compound wall (with stone/tile/etc.)
• Borewell.

Home extension loans:-

An extension loan is one which helps you to meet the expenses of any alteration
to the existing building like extension/ modification of an existing home; for example
addition of an extra room etc. One can avail of such a loan facility of a home extension
loan, after obtaining the requisite approvals from the relevant municipal corporation.

Home conversion loans:-

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 which some extra funds are required.
Through a home conversion loan, the existing loan is transferred to the new home
including the extra amount required, eliminating the need for pre-payment of the previous
loan.
Land purchase loans:-
This loan is available for purchase of land for both home construction or
investment purposes.

Stamp duty loans:-

This loan is sanctioned to pay the stamp duty amount that needs to be paid on the
purchase of property.

Bridge loans:-
Bridge Loans are designed for people who wish to sell the existing home and
purchase another. The bridge loan helps finance the new home, until a buyer is found for
the old home.

Balance- transfer loans:-

Balance Transfer is the transfer of the balance of an existing home loan that you
availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the
current ROI a lower rate of interest.

Refinance loans:-
Refinance loans are taken in case when a loan for your house from a HFI at a
particular ROI you have taken drops over the years and you stand to lose. In such cases
you may opt to swap your loan. This could be done from either the same HFI or another
HFI at the current rates of interest, which is lower.

NRI home loans:-

This is tailored for the requirements of Non-Resident Indians who wish to build or
buy a home or property in India. The HFCs offer attractive housing finance plans for NRI
investors with suitable repayment options.
On would be entitled for home loans in the range of Rs 5 lakh to a maximum of Rs 1
crore, based on the repayment capacity, previous credit history and the cost of the
property. The bank may provide a maximum of 85% of the cost of the property or the
cost of construction as applicable and 75% of the cost of land in case of purchase of land.
The repayment capacity is calculated taking into account factors such as:
• Age
• Income/Salary
• Qualifications
• Dependant/(s)
• Assets/Liabilities
• Credit History
• Stability / continuity of your employment/business
• Income of co-applicant/(s)
Taking home loans these days has become simpler. With the RBI regularly bring down
interest rates; taking home loans have become extremely easy. Housing loans which were
16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down,
people increasingly number apply to take these loans. Some of the leading banks offering
home loans in India, including ICICI Bank, IDBI Bank, HDFC Bank State Bank, Bank of
Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank
IMPORTANCE OF
STUDY
 IMPORTANCE OF STUDY

The Indian housing finance industry has grown by leaps and bound in few years. total

home loans disbursements by banks has risen which witnesses phenomenal growth from

last 5 years. There are greater number of borrowers of home loans. so by this study we

can find out satisfaction level of customers and problems faced by them in obtaining

home.
OBJECTIVE OF STUDY
 OBJECTIVE OF STUDY

There is no strongest foundation for your dream home, than a cheap loan. Home loans
have become that stronger foundations for people who want to own a home. The main
objectives of the study are as follows:-

• The main objective of this study is to know the Customers perceptions

about home loans.

• To know the awareness of customers about home loan products and

services.

• To make comparative study of Disbursement of home loans by a few

Commercial banks.

• To study the satisfaction level of customers about home loans.

• To study the problems faced by customers in obtaining the home loans.

• To learn about various aspect of home loans

• Giving proper knowledge about home loan interest rates of nationalised

Banks.

• Making a comparative study of the interest rates, maximum loan amount

sanctionable and EMI of the different nationalised banks.
LIMITATIONS OF THE
STUDY
 LIMITATIONS OF THE STUDY:-

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

i) To collect the data from various banks was quite difficult due to non- cooperation
of some banks. This proved to be major limitation of the study.
ii) To access such a large number of customers were difficult because of non-
cooperative attitude of respondents.
iii) Lack of data was also the other limitation of the study as some of banks do not
have proper data on topic.
iv) There was limitation of time to conduct such a big survey in limited available
time.
v) Ignorance and reluctant attitude of customers was also a major limitation in this
study.

Thus above all were the limitations in this research study. The maximum efforts
were made to overcome these limitations in the study.
EXECUTIVE SUMMARY
 EXECUTIVE SUMMARY

In the wake of declines in the manufactured home loan market in recent months,
Consumers Union investigates deals gone awry. We reviewed more than 400 anufactured
home consumer complaints filed with the Attorney General or the Office of Consumer
Credit Commissioner.

Many of these complaints illustrate the reasons why manufactured home loan default
rates have risen sharply. Many consumers could not afford the credit deal they were
offered, or got a home that was probably worth substantially less than they paid. Others
reported loans packed with insurance, financed "points" and other charges that left them
with negative equity for the first several years after their purchase.
Consumers report a variety of dealer problems including falsified down payment
information on credit applications, and misrepresentations about terms, price, or the home
itself. And while dealers are quick to ask for a deposit, they are sometimes slower to
refund it when consumers change their mind after seeing the terms of the final deal.
Deposit requirements and credit checks discouraged buyers from adequate comparison
shopping.
COMPANY PROFILE
 COMPANY PROFILE

Introduction

Today banks have become a part & parcel of life. There was a time when the
dwellers of city alone could enjoy their services. Now banks offer access to even a
common man and their activities extend to areas hitherto untouched. Banks cater to the
needs of agriculturist, industrialists, traders & to all the other sections of the society.
Thus, they accelerate the economic growth of a country & steer the wheels of the
economy towards its goal of "Self-Reliance In All Fields".

Origin Of Banking:

Since the banking activities were started in different periods in different countries,
there is no unanimous view regarding the origin of the word “Bank”.
The word, “bank”is said to have been derived from the French word, 'Banco' or
'Bancus' or 'Banc' or 'Banque' which means a bench. In fact, the early Jews in Lombardly
transacted their banking business by sitting on benches. When their business failed, the
benches were broken and hence the word 'bankrupt' come into vogue.
Another common held view is that the word 'bank' might be originated from the
German word 'Back' which means a joint stock fund. Of course, a bank essentially deals
with funds. In due course, it was Italianised into “banco”, Frenchised into “banc” and
finally Anglicised into “bank”. This view is most prevalent today.
Banking and other Business:
Traditionally, money lenders and indigenous bankers have been
advancing loans. But the don’t receive deposits from the public. They rely upon their own
resources. Moreover, their main business is not banking. They used to combine banking
with trading business. Hence, money lenders and indigenous bankers are not regarded as
bankers in the strict sense of the term.

Classification Of Banks

On the basis of the functions they performed, the banks can be classified into the
following types:

1. Commercial Banks:
The commercial banks mobilise deposits from the public which are repayable on
demand or at short notice. They lend to traders and manufacturers for short periods. They
provide the working capital to the business in the form of overdraft and cash credit.

2. Investment Banks or Industrial Banks:

Investment banks provide medium and long term finance to industries to meet
their fixed capital requirements. For existing industries, they lend for expansion and
modernisation of industries. They help to promote new industries by underwriting the
issue of securities. The industrial banks secure funds through share capital and
debentures. They also receive deposits from the public for long periods.

3. Exchange Banks:
Exchange banks specialise in financing the foreign trade. They supply necessary
foreign exchange required for settlement of transactions in foreign trade. The exchange
banks discount foreign bills of exchange. Nowadays commercial banks themselves
undertake foreign exchange business.

4. Co-operative Banks:
Banks formed on the principle of cooperation are called cooperative banks. They
provide short term credit to agriculturalists, artisans, small farmers, and small scale
industries. Cooperative banks accept all kinds of deposits and make loans to the members
at lower rate of interest
5. Land Development Banks:
Agriculturists require short term and long term loans. Land development banks
provide long term loans to agriculturists for purchasing tools and equipments and cattle
and making permanent improvement. The long term loans granted are against the security
of immovable property such as land. Land development banks are organized on
cooperative basis in India. The banks raise their resources in the form of shares and by
issuing long term securities. There banks are presently known as Agriculture and Rural
Development Banks.

6. Savings Banks:
Savings banks are specialised institutions collecting savings from the poor and
middle income people of the society. These are banks primarily intended to encourage
habits of thrift and savings among people with small incomes. The depositors are allowed
to withdraw the amount in times of need. But there are restrictions on the number of
withdrawals to be made in a month. Separate savings banks are organised in various
countries. In India, the Government runs savings banks and they are managed by the
postal department.

7. Central Bank:
Every country has only one central bank. The central bank acts as the leader of the
money market; supervising, controlling and regulating the activities of the commercial
banks and other financial institutions. It enforces monetary discipline in the country's
economy. It seeks to manage the issue and circulation of currency and control the
creation of bank deposits with a view to safeguard the financial stability in the country.
The central bank functions in close touch with the government and assists in the
implementation of its economic policies. It serves as banker, agent and advisor to the
government. Thus, the central bank is the apex bank of the country in maintaining the
monetary and economic stability.
 INTRODUCTION TO CO-OPERATIVE BANKING

DEFINATION:

“A Co-operative bank, as its name indicates is an institution consisting of a

number of individuals who join together to pool their surplus savings for the purpose of
eliminating the profits of the bankers or money lenders with a view to distributing the
same amongst the depositors and borrowers.”

The Co-operative Banks Act, of 2007 (the Act) defines a co-operative bank as a
co-operative registered as a co-operative bank in terms of the Act whose members –

1. are of similar occupation or profession or who are employed by a common

employer or who are employed within the same business district; or

2. have common membership in an association or organisation, including a

business, religious, social, co-operative, labour or educational group; or

3. have common membership in an association or organisation, including a business,

religious, social, co-operative, labour or educational group; or

4. Reside within the same defined community or geographical area.

CO-OPERTIVE BANKING - AN INTRODUCTION:

Co-operative bank, in a nutshell, provides financial assistance to the people with

small means to protect them from the debt trap of the moneylenders. It is a part of vast
and powerful structure of co-operative institutions which are engaged in tasks of
production, processing, marketing, distribution, servicing and banking in India. A co-
operative bank is a financial entity which belongs to its members, who are at the same
time the owners and the customers of their bank. Co-operative banks are often created by
persons belonging to the same local or professional community or sharing a common
interest. These banks generally provide their members with a wide range of banking and
financial services (loans, deposits, banking accounts…). Co-operative banks differ from
stockholder banks by their organization, their goals, their Values and their governance.

The Co-operative Banking System in India is characterized by a relatively

comprehensive network to the grass root level. This sector mainly focuses on the local
population and micro- banking among middle and low income strata of the society. These
banks operate mainly for the benefit of rural areas, particularly the agricultural sector.

ORIGIN AND OPERATION OF CO-OPERATIVE

BANKING

ORIGIN OF CO-OPERATIVE BANKING:

The beginning co-operative banking in India dates back to about 1904, when
official efforts were made to create a new type of institution based on principles of co-
operative organization & management, which were considered to be suitable for solving
the problems peculiar to Indian conditions.

The philosophy of equality, equity and self help gave way to the thoughts of self
responsibility and self administration which resulted in giving birth of co-operative. The
origin on co-operative movement was one such event-arising out of a situation of crisis,
exploitation and sufferings.

Co-operative Banks in India are registered under the Co-operative Societies Act.
The cooperative bank is also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
OPERATION OF CO-OPERATIVE BANKING:

 Establishments:

 Co-operative bank performs all the main banking functions of deposit

mobilisation, supply of credit and provision of remittance facilities.
 Co-operative Banks belong to the money market as well as to the capital market.
 Co-operative Banks provide limited banking products and are functionally
specialists in agriculture related products. However, co-operative banks now
provide housing loans also.
 UCBs provide working capital loans and term loan as well.

 The chief functions of Co-operative banks are:

a. To attract deposit from non-agriculturist,

b. To use excess funds of some societies temporarily to make up for shortage in
another,
c. To supervise and guide affiliated societies.

 The basic principles on which a Co-operative bank works are:

• A co-operative character of activities and trait of mutual aid

of credit granted.
• Catering for collective organizations and their members.
• Restriction on the number of individual votes.
 As a result, during 2007-08, the Primary Cooperative Agriculture and
Rural Development Banks have again started lending for the Non-Farm Sector including
Jewel Loans.

• Aiming at high rates on deposits and low rates on lending.

• Limitation of dividends out of profits and bonus to depositors

and borrowers or grants to cultural or co-operative endeavour.

These banks are constituted of voluntary association, self-help and mutual aid,
one share one vote and non-discrimination and equality of members. The co-operative
banks are the organizations of and for the people.

. ROLE OF CO-OPERATIVE BANKING

ROLE OF CO-OPERATIVE BANKING IN INDIA:

Co-operative Banks are much more important in India than anywhere else in the
world. The distinctive character of this bank is service at a lower cost and service without
exploitation. It has gained its importance by the role assigned to them, the expectations
they are supposed to fulfill, their number, and the number of offices they operate. Co-
operative banks role in rural financing continues to be important day by day, and their
business in the urban areas also has increased phenomenally in recent years mainly due to
the sharp increase in the number of primary co-operative banks. In rural areas, as far as
the agricultural and related activities are concerned, the supply of credit was inadequate,
and money lenders would exploit the poor people in rural areas providing them loans at
higher rates. So, Co-operative banks mobilize deposits and purvey agricultural and rural
credit with a wider outreach and provide institutional credit to the farmers. Co-operative
bank have also been an important instrument for various development schemes,
particularly subsidy-based programmes for poor.
 The Co-operative banks in rural areas mainly finance agricultural based
activities like:

• Farming
• Cattle
• Milk
• Hatchery
• Personal finance

The Co-operative banks in urban areas finance in activities like:

• Self-employment
• Industries
• Small scale units
• Home finance
• Consumer finance
• Personal finance

Some of the forward looking Co-operative banks have developed sufficient core
competencies to such an extent that they are able to challenge state and private sector
banks.

IMPORTANCE OF CO-OPERATIVE BANKING

Co-operative bank forms an integral part of banking system in India. This bank
operates mainly for the benefit of rural area, particularly the agricultural sector. Co-
operative bank mobilize deposits and supply agricultural and rural credit with the wider
outreach. They are the main source for the institutional credit to farmers. They are chiefly
responsible for breaking the monopoly of moneylenders in providing credit to
agriculturists. Co-operative bank has also been an important instrument for various
development schemes, particularly subsidy-based programmes for the poor. Co-operative
banks operate for non-agricultural sector also but their role is small.

HISTORY OF CO-OPERATIVE BANKING

The origins of the cooperative banking movement in India can be traced to the
close of nineteenth century when, inspired by the success of the experiments related to
the cooperative movement in Britain and the cooperative credit movement in Germany,
such societies were set up in India.

Now, Co-operative movement is quite well established in India. The first

legislation on co-operation was passed in 1904. In 1914 the Maclagen committee
envisaged a three tier structure for co-operative banking viz. Primary Agricultural Credit
Societies (PACs) at the grass root level, Central Co-operative Banks at the district level
and State Co-operative Banks at state level or Apex Level.

In the beginning of 20th century, availability of credit in India, more particularly

in rural areas, was almost absent. Agricultural and related activities were starved of
organised, institutional credit. The rural folk had to depend entirely on the money lenders,
who lent often at usurious rates of interest.

The co-operative banks arrived in India in the beginning of 20th Century as an

official effort to create a new type of institution based on the principles of co-operative
organisation and management, suitable for problems peculiar to Indian conditions. These
banks were conceived as substitutes for money lenders, to provide timely and adequate
short-term and long-term institutional credit at reasonable rates of interest.

The Anyonya Co-operative Bank in India is considered to have been the first co-
operative bank in Asia which was formed nearly 100 years back in Baroda. It was
established in 1889 with the name Anyonya Sahayakari Mandali Co-operative Bank
Limited, with a primary objective of providing an alternative to exploitation by
moneylenders for Baroda's residents.

With gradual growth and also given philip with the economic boom, urban
banking sector received tremendous boost and started diversifying its credit portfolio.
Besides giving traditional lending activity meeting the credit requirements of their
customers they started catering to various sorts of customers viz.self-employed, small
businessmen / industries, house finance, consumer finance, personal finance etc.

TYPES OF CO-OPERATIVE BANKS

CLASSIFICATION OF CO-PERATIVE BANKS:

The Co-operative banking structure in India comprises of:

1. Urban Co-operative Banks

2. Rural Co-operatives

Some co-operative banks are scheduled banks, while others are non-scheduled
banks. For instance, State Co-operative banks and some Urban Co-operative banks are
scheduled banks but other co-operative banks are non-scheduled banks.

Scheduled banks are those banks which have been included in the second
schedule of the Reserve bank of India act of 1934.
The banks included in this schedule list should fulfill two conditions.

1. The paid capital and collected funds of bank should not be less than Rs. 5 lac.
2.Any activity of the bank will not adversely affect the interests of depositors.

Every Scheduled bank enjoys the following facilities.

1. Such bank becomes eligible for debts/loans on bank rate from the RBI
2. Such bank automatically acquire the membership of clearing house.

1. Urban Co-operative Banks:

Urban Co-operative Banks is also referred as Primary Co-operative banks
by the Reserve Bank of India. Among the non-agricultural credit societies urban co-
operative banks occupy an important place. This bank is started in India with the object
of catering to the banking and credit requirements of the urban middle classes.

The RBI defines Urban Co-operative banks as “small sized co-operatively

organized banking units which operate in metropolitan, urban and semi-urban centers to
cater mainly to the needs of small borrowers, viz. owners of small scale industrial units,
retail traders, professional and salaries classes.”

The objectives and functions of the Urban Co-operative banks:

 Primarily, to raise funds for lending money to its members.

 To attract deposits from members as well as non-members.
 To encourage thrift, self-help ad mutual aid among members.
 To draw, make, accept, discount, buy, sell, collect and deal in bills of exchange,
drafts, certificates and other securities.
 To provide safe-deposit vaults.

Area of Operation :
The area of operation of these banks are usually restricted by its byelaws
to a municipal area or a town. In some occasions it exceeds this limit. The study group on
Credit Co-operatives in Non-Agricultural Sectors has recommended that normally, it
would be advisable for an urban co-operative bank to restrict its area of operation to the
municipality or the taluka town where it operates.

2. Rural Co-operatives:

Rural Cooperative Banking plays an important role in meeting the growing credit
needs of rural population of India. It provides institutional credit to the agricultural and
rural sector. The inadequacy of rural credit engaged the attention of RBI and
Government throughout the 1950s and 1960s. One important feature of providing
agriculture credit in India has been the existence of a widespread network of rural
financial institutions. The separate structure of rural Co-operative sector for long-term
and short-term loans has enabled these institutions to develop a specialized institution for
rural credit delivery. The volume of credit flowing through these institution has
increased. The Rural Co-operative structure has traditionally been bifurcated into two
parallel wings, i.e.
I. Short-term Rural Co-operatives,
II. Long-term Rural Co-operatives.

There is a larger network of co-operative banks in the rural sector, consisting of 29

State Co-operative Banks and 367 District Central Co-operative Banks, with 13,025
branches. In addition, there are 92,000 Primary Agricultural Co-operative Credit
Societies , 19 State Land Development Banks and 745 Primary Land Development
Banks, along with 1,847 branches, which are not strictly banks as they are not covered
under the Banking Regulation Act, 1949. The RBI Governor's proposals should,
therefore, encompass the entire Co-operative banking system.

I. Short-term Rural Co-operatives:

The short-term rural co-operatives provide crop and other working capital loans to
farmers and rural artisans primarily for short-term purpose. These institutions have
federal three-tier structure.

At the Apex of the system is a State Co-operative bank in each state.

At the middle (or district) level, there are Central Co-operative Banks also known as
District Co-operative banks.
At the lowest (or village) level, are the Primary Agricultural Credit Societies.

i. State Co-operative Banks:

State Co-operative Banks are the apex of the three-tier

Co-operative structure dispensing mainly short/medium term credit. It is the principal
society in a State which is registered or deemed to be registered under the Government
Societies Act, 1912, or any other law for the time being in force in India relating to co-
operative societies and the primary object of which is the financing of the other societies
in the State which are registered or deemed to be registered. The State Co-operative
Banks receive current and fixed deposits from its constituent banks as well as savings,
current and fixed deposits from the general public and from local boards, other local
authorities, etc. Further, they receive loans from the RBI and NABARD. NABARD is the
supervisory authority for State Co-operative Banks. The state government contributes the
certain portion of their working capital.

ii. Central Co-operative Banks:

Central Co-operative Banks form the middle tier of Co-

operative credit institutions. These are the independent units in as much as the State Co-
operative Banks have control to control or supervise their affairs. They are of two kinds
i.e. ‘pure’ and ‘mixed’. Those banks are the membership of which is confined to co-
operative organizations only are included in ‘pure’ type, while those banks the
membership of which is open to co-operative organizations as well as to the individuals
are included in ‘mixed’ type.

The Central Co-operative Banks draw their funds from share capital,
deposits, loans from the State C-operative Banks and where State Banks do not exist
from the RBI, NABARD and commercial banks. NABARD is the supervisory authority
for Central Co-operative Banks. Deposits constitute the major component of sources of
funds, followed by borrowings. The main function of Central Co-operative Banks is to
finance the primary credit societies.

The central co-operative banks are located at the district headquarters or some
prominent town of the district. These banks have a few private individuals also who
provide both finance and management. The central co-operative banks have three sources
of funds,

• Their own share capital and reserves

• Deposits from the public and
• Loans from the state co-operative banks
iii. Primary Agriculture Credit Societies:
 Primary Agricultural Credit Societies is the foundation
of the co-operative credit system on which the superstructure of the short-term co-
operative credit system rests. It deals directly with individual farmers, provide short and
medium term credit, supply agricultural inputs, distribute consume articles and also
arrange for the marketing of products of its members through a c-operative marketing
societies. These societies form the basic unit of co-operative credit system in India.

The major objective of Primary agricultural Credit Societies is to serve the

need of weaker sections of these society. For this purpose, the people with limited means,
particularly with schedules castes and scheduled tribes, are encouraged to become
members of these societies.

II. Long-term Rural Co-operatives:

The long-term rural co-operative provide typically medium and long-term

loans for making investments in agriculture, rural industries and, in the recent period,
housing. Generally, these co-operatives have two tiers, i.e. State Co-operative Agriculture
and Development Banks (SCARBDs) at the state level and Primary Co-operative
Agriculture and Rural Development Banks (PCARDBs) at the taluka or tehsil level.
However, some States have a unitary structure with the state level banks operating
through their own branches.

i. State Co-operative Agriculture and Development Banks (SCARBDs):

State Co-operative Agriculture and Development Banks

constitute the upper-tier of long term co-operative credit structure. Though long term
credit co-operatives have been allowed to access public deposits under certain conditions,
such deposits constitute a relatively small proportion of their total liabilities. They are
mostly dependent on borrowings for on-lending.
 The main objective of the Co-operative State Agriculture and Rural Development
bank is to finance primary agriculture and rural development banks. The bank undertakes
the following functions to achieve the above objectives:-

(a) Floatation of Debentures,

(b) Receiving Deposits;

(c) Grant of loans to primary cooperative agriculture and rural development banks for
purposes approved by the National Bank for Agricultural and Rural Development and
Registrar of Cooperative Societies;

(d) To function as the agent of any cooperative bank subject to such conditions as the
Registrar may specify;

(e) To develop, assist and coordinate the work of affiliated primary cooperative
agriculture and rural development banks.

The bank issues long term and medium term loans towards agricultural and
allied activities like construction of godowns, cattle shed, farm house, purchase of lands
etc

Structure of Co-operative Banking (March 2007)

 Institution Number of Number of Asset Share
Institute Branch (%)
A. Rural Co-operative Credit
Structure: 107497 112895 67

1. Short term: 106781 111090 58

 State Coop bank 31 938 15
 Central Coop bank 369 12928 29

 Primary Agri Coop soc. 97224 97224 14

716 1800 8.3

2. Long term:
 State Coop Agri and Rural
20 1104 4.4
Dev banks
 Primary Coop Agri and Rural
696 696 3.9
Dev banks

B. Urban Co-operative Banks: 49805 56600 33

STRENGTH AND WEAKNESS OF CO-OPERATIVE BANK

MAIN WEAKNESS OF CO-OPERATIVE BANKS

The main weaknesses of co-operative banks are as follows:

1. The vital link in the co-operative credit system namely, the Primary Agricultural Co-
operative Societies, themselves remain very weak. They are too small in size to be
economical and viable; besides too many of them are
dormant, existing only on paper.

2. With the expanding credit needs of the rural sector, the commercial banks have come
in actively to meet the credit requirements of this sector, and this has aggravated the
difficulties of co-operative banks. The theory that co-operative banks would be buoyed
up by the competition from other financial institutions does not appear to have worked.

3. Co-operative banks are not doing well in all the states; only a few account for a major
part of their business. For example, 75 per cent of total deposits mobilised by State C-
operative Banks was from only seven states in 1987-Andhra Pradesh, Gujarat, Karnataka,
Madhya Pradesh, Maharashtra, Tamil
Nadu, and Uttar Pradesh.

4. These banks still rely very heavily on refinancing facilities from the government, the
RBI, and NABARD. They have yet not been able to become self-reliant in respect of
resources through deposit mobilisation.

5. They suffer from dangerously low or weak quality of loan assets, and from highly
unsatisfactory recovery of loans. They suffer from infrastructural weaknesses and
structural flaws. They do not look like banks and do not inspire confidence in the
potential members, depositors and borrowers.
GOVERNMENT INITIATIVES TO STRENGTHEN THE
DEVELOPMENT OF CO-OPERATIVE BANKS
Even before the submission of the Khusro Committee Report, the government and the
RBI had initiated certain measures to strengthen the development of co-operative banks.
Some of these policy initiatives were as follows:

(i) The NABARD had formulated a scheme for the reorganisation of Primary
Agricultural Co-operative Societies and the implementation of this scheme had started in
those states which have accepted it.

(ii) The programme for development of selected Primary Agricultural Co-operative

Societies into truly multi-purpose co-operative societies has been
implemented in many states and Unionterritories.

(iii) In addition to such programmes, certain state governments like Andhra Pradesh,
Madhya Pradesh West Bengal had also initiated development programmes to strengthen
the working of the co-operative credit institutions at the base level.

SUGGESTIONS FOR EFFECTIVE OPERATION IN CO-

OPERATIVE BANKING:

The following suggestions can be made for improving the effectiveness in operation of
Co-operative banking:

1. It is apparent that the mountain overdue has become a major problem of most of the
co-operative banks and their performance in managing Non Performing Assets is not
satisfactory. Firm measure should be followed to make credit appraisal, documentation,
disbursement, monitoring, etc. The following strategies may help the banks in avoiding
or reducing NPA’s.

 Pre-sanction strategies: Before sanctioning a loan, a bank has to go for detailed

inquiry about borrower and his loan proposal.
 Post-sanction strategies: After the loan is disbursed, proper supervision of loan
utilization is to be ensured. Bank has to maintain proper relationship with the
borrower and ensure that first installment id deposited timely.

2. These banks can also go for such schemes for opening of saving bank and other
accounts treated as low cost deposit base as well as clientele base of the banks will take
remarkable shape. In this respect, banks can introduce effectively various innovative
deposit schemes like women’s savings, children’s savings, savings scheme for youth,
daily collection etc.

Bank Profiles

Industrial Development Bank Of India

IDBI was established in 1964 and it was nationalised in 1969.

Eligibility Criteria:
a) Age 18 to 65 years.
b) Repayment span is maximum 25 years.
c) 90% of cost of construction.
d) Income tax benefit for payment of both Principle and Interest as per I.T.
Rules.
e) For salaried person 75 times net monthly income is the maximum loan amount
sanctionable.

Floating Interest Rates:-

 In this bank, the floating interest rates for home loan for a span of 1 to 25 years is
11.00%

Fixed Interest Rates :-

Tenure Rate of Interest

For 3 years 12.00%
For 5 years 12.25%

Features:
Documents required during application of any home loan:

 Completed application form

 Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License
 Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax
receipt/ Passport/ Voters ID
 Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance
certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to
satisfaction report from our empanelled lawyer)
 Copy of approved plan and approval from the Local Body Statement of
Bank Account/ Pass Book for last 6 months

State Bank Of India

State Bank Of India was established in 1806 and it was nationalised in 1969.

Eligibility Criteria:
 a) Age 18 to70 years.
b) Repayment span is maximum 20 years.
c) 75% of cost of construction.
d) Income tax benefit for payment of both Principle and Interest as per I.T.
Rules.
e) For salaried person 40 times gross monthly income is the maximum loan
amount sanctionable.

Floating Interest Rates:-

Tenure Upto Rs. 20 Lacs Above Rs. 30 Lacs

Upto 5 years 10.50% 10.75%
Above 5 years and upto 15 years 10.75% 11.00%
Above 15 years and upto 25 years 11.00% 11.25%

Fixed Interest Rates :-

In this bank, the fixed interest rates for home loan for a span of 1 to 10 years
are 12.75%.

Features:

a) Free personal accident insurance cover up to Rs.40 Lac.

b) Optional Group Insurance from SBI Life at concessional premium (Upfront

premium financed as part of project cost)

c) Interest calculated on daily reducing balance basis, and starts from the date of
disbursement.

d) Option to avail loan at the place of employment or at the place of construction

e) Complimentary international ATM-Debit card

f) Complimentary SBI Classic/ International Credit Card.

g) Option for internet-banking
 h) Concessional package under ‘Credit Khazana’ for prospective Auto Loan, Student
Loan, Personal Loan borrowers whose accounts are conducted satisfactorily
i) 50% concession in charges in respect of all personal remittances/ collection of
outstation cheques.
j) Equitable mortgage of the property or otherwise other tangible security of
adequate value.

Documents required during application of any home loan:

 Completed application form
 Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License
 Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax
receipt/ Passport/ Voters ID
 Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance
certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to
satisfaction report from our empanelled lawyer)
 Copy of approved plan and approval from the Local Body Statement of Bank
Account/ Pass Book for last 6 months

United Commercial Bank

United Commercial Bank was established in 1943 and it was nationalised in 1969.

Eligibility Criteria:
a) Age 21 to 65 years.
 b) Maximum 75 years of age for senior citizens availing finance to secure shelter
in old age homes.
c) Repayment span is maximum 25 years.
d) 85% of cost of construction.
e) Income tax benefit for payment of both Principle and Interest as per I.T.
Rules.
f) For salaried person 60 times gross monthly income is the maximum loan
amount sanctionable.
g) Monthly income should be equal to/more than EMI + Rs.4,000/- in case of a
family with up to four members – Salaried/Non-salaried and agriculturist and
bank’s own staff are entitled for loan.

Floating Interest Rates:-

Tenure Upto Rs. 20 Lacs Above Rs. 20 Lacs

Upto 10 years 10.25% 10.75%
Above 10 years and upto 20 years 10.75% 11.25%
Above 20 years 11.25% 11.75%

Fixed Interest Rates :-

Tenure Upto Rs. 20 Lacs Above Rs. 20 Lacs

Upto 10 years 10.50% 11.25%
Above 10 years and upto 20 years 11.00% 11.75%
Above 20 years 11.50% 12.25%

Features:
 a) A minimum of 1 guarantor is required whose income is either equivalent to or
more than the applicant.

b) The area-specific maximum limits for construction/purchase are as under :

• Rural Areas : Rs.25 Lac

• Semi-urban/Urban/Metro Areas : Rs.100.00 Lac
• Maximum limits for Repair/Extension/Renovation are Rs.7.50 lacs in
rural areas and
• Rs.25.00 lacs in Metro/Urban/Semi-Urban areas.

c) No processing fees for take over loan.

d) 2% of the prepaid amount, if the loan is prepaid within 3 years. No
prepayment charges thereafter. However, no pre-payment charges are to be
levied if loan is pre-paid from own source.
e) Tax relief on principal and interest components of this loan would be available
as per provisions prevailing under Income Tax Act.
f) Insurance cover on property under UCO Griha Raksha Yojna Scheme of
NICL and personal accident benefit to the borrower is available on death only
to cover the outstanding balance under UCO Griha Lakshmi Yojana Scheme
(UCOGLYS). Group insurance cover to home loan borrowers is available
against any type of death from Rs.50000/- to Rs.100.00 lac under UCOGLYS.

Documents required during application of any home loan:

 Completed application form
 Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License
 Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax
receipt/ Passport/ Voters ID
  Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance
certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to
satisfaction report from our empanelled lawyer)
Copy of approved plan and approval from the Local Body Statement of Bank Account/ Pass
Book for last 6 months.
 Project
Methodology
 Research Methodology
Data Collection

What is Research?
Research is a systematic and refined technique of thinking: Research starts with
problems, collecting data or facts, analysing them critically and reaching a decision based
on the actual evidence.

Research is a science of thinking: Research means discovery of facts, development of

facts and verification of facts.

Advancement of knowledge: Research is the scientific endeavour of the human mind.

Data collection is comprised of Primary and Secondary Data

Primary Data-: For the purpose of collection of primary data, we went to several
nationalised banks and met their PR Managers. We interviewed them about their Home
Loan Schemes.

The main methods for the primary data collection are:

• Observation
• Interview
• Questionnaires

Secondary Data-: For the purpose of collection of secondary data we referred to various
bank websites and researched in newspapers, books and magazines.

The main methods for the secondary data are:

• Internet
• Magazine
• Television
• Newspapers
• Books

COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY

COMMERCIAL BANKS

Disbursement of Home loans by different banks:-

HDFC LTD :-

Years No. of Home Home loan Disbursed

loan (in crore Rs.)
account
holders. Distributed Recovered Balance

2004-05 700 90.07 63.05 27.02

2005-06 950 120.00 91.20 28.8

2006-07 1130 144.67 127.31 17.36

2007-08 1435 180.33 165.90 14.43

2008-09 1594 240.00 228.12 11.88

Interpretation:-
On the above table, it is evident that there are increase in No. of account holders
from 700 to 1594 in the year 2008-09. The loan amount distributed among home loan
account holder has also increased from Rs.90.07 crore in 2004-05 to Rs.240 crore in
2008-09. The recovery procedure for home loans is also strengthening due to increment
in recovered amount, i.e. Rs.63.05 crore to Rs.288.12 crore. So it nut shall there are
upward trend in number of accountholders and disbursement of home loans.
Punjab National Bank :-

Years No. of Home Home loan Disbursed

loan account (in crores Rs.)
holders. Distributed Recovered Balance

2004-05 810 120.15 97.28 22.87

2005-06 950 183.26 150.00 33.26

2006-07 1120 213.65 185.86 28.05

2007-08 1433 240.87 231.07 9.80

2008-09 1500 265.15 265.05 9.10

Interpretation:-

The Punjab National Bank is Public sector Bank. It comes second after State Bank
of India in its branch location and expansion. From the Table, the figures show that there
are increasing trend in customer base from 810 in the year 2004-05 to 1500 in the year
2008-09. The bank also show enhancement in loan amount up to Rs.265.15 crore in the
year 2008-09. The recovery process of loans in past is slow but now it is increasing.
Standard Chartered Bank :-

Years No. of Home Home loan Disbursed

loan (in crores Rs.)
account Distributed Recovered Balance

holders
2004-05 106 6.21 5.27 0.94

2005-06 130 11.55 10.16 1.38

2006-07 154 17.06 14.35 2.70

2007-08 180 20.09 18.68 1.41

2008-09 260 24.10 23.91 0.48

Interpretation:-

The standard chartered bank is a private sector bank. It has also upgraded its
position in banking sector in DEHRADUN. The figures shown in table reveals that there
is upward shift in customer base of Bank from 106 customers to 260 customers. The bank
has also increased its share in housing finance by distributing Rs. 24.10 crores in 2008-
09. The recovery procedure of Home loan is very sound.

ICICI BANK:-
 Years No. of Home loan Disbursed
Home (in crores Rs.)
loan account Distributed Recovered Balance

holders
2004-05 650 104.33 98.12 6.21

2005-06 853 123.24 105.00 18.24

2006-07 1019 150.65 133.46 17.19

2007-08 1132 176.75 144.65 32.10

2008-09 1434 224.00 209.16 14.84

Interpretation :-

The amount reveal that there is tremendous increase in Home loan

accountholders. The amount distributed as home loan is also increased from Rs. 104.33 in
2004-05 to Rs. 224 crore in 2008-09. But the recovery mechanism of the Bank is not so
good that’s why the outstanding amount shows fluctuating trend.

-COMPARATIVE STUDY OF DISBURSEMENT OF HOME LOANS BY

COMMERCIAL BANKS:-
 There are number of schemes and products, offered by commercial banks to
attract the customers. The comparison among different commercial banks which offer
home loans in regard of Disbursement of home loans are as:-

No. of Home loan account holders ;-

Table 5.2(a)

Years HDFC LTD Punjab Standard ICICI

National chartered Ban Bank
Bank
2004-05 700 810 106 650

2005-06 950 950 130 853

2006-07 1130 1120 154 1019

2007-08 1435 1433 180 1132

2008-09 1594 1500 260 1434

Average of No. of accounts holders: - Total of home loan customers

= --------------------------------------
No. of year

GRAPH:- 4.2
 Home loan holders of commercial banks

Interpretation:-

The figure reveals that HDFC LTD is having large number of home loan
accountholders. So it ranks first among other banks. But government sector PNB is not
behind so much with 31% also market leader. The banks have shown increase in their
customers base from 2004 to 2008.but HDFC LTD comes as market leader in the home
loan cases.

Home loans distributed by Commercial banks:-

 Table 4.3 (a)

Years HDFC LTD Punjab Standard ICICI BANK

National chartered Bank
Bank
2004-05 120.15 90.07 6.21 104.33

2005-06 183.26 120.00 11.55 123.24

2006-07 213.65 144.67 17.06 150.65

2007-08 240.87 180.33 20.09 176.75

2008-09 265.15 240.00 24.10 224.00

(Rs.in crore)

Average of home loans granted

Total home loans granted

= ---------------------------------
No. of years

GRAPH:- 4.3
 Home loans granted by commercial banks

Interpretation:-

There is no doubt that every bank tries to maximize its home loan disbursement.
But on the basis of data it is concluded that HDFC LTD shows high average of loan
grants Rs. 20.62 crore as compared to ICICI, standard charted bank and PNB
respectively. Rs155.01, Rs. 15.80 and Rs. 155.79 crores. On this analysis the HDFC LTD
are higher loan provider as compared to other sector banks.

Recovery of Home loans:-

Table4.4 (a)
Years HDFC Punjab Standard ICICI BANK
BANK (Rs in National chartered (Rs in crore)
crore) Bank( Rs in Bank (Rs in
crore) crore)
2004-05 97.28 63.05 5.27 98.12

2005-06 150.00 91.20 10.16 105.00

2006-07 185.86 127.31 14.35 133.46

2007-08 231.07 165.90 18.68 144.65

2008-09 256.05 228.12 23.91 209.16

Average recovery of home loans

Total home loans recovered

= ----------------------------------
No. of years

GRAPH:- 4.4
 Home loans recovered by commercial banks

Interpretation:-

In the previous years the recovery process of granting loans are very unorganized
and inefficient. So there are less recovery of home loans by the commercial banks. But it
is evident from the table that every bank whether public or private showed increase
HDFC LTD has the greatest recovery of home loans i.e. 39%, thereafter Punjab national
bank recovered the 30% of sanction amount. The standard chartered bank is having
lowest recovery of their granted amount as home loans.
 ANALYSIS
&
INTERPRETATION
 ANALYSIS & INTERPRETATION

The analysis is based on the responses given by customers through questionnaires.

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 5.1:

Age group No. of Respondents

18 - 25 years 80
26 - 35 years 64
36 - 49 years 30
50 - 60 years 20
More than 60 years 6

CHART-5.1:

Analysis:- From the chart above we find that 47% of the respondents fall in the age
group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age
group of 36 – 49 years.
Therefore most of the respondents are relatively young (below 26 years of age). and 6%
respondent’s age are 50-60 years and 2% respondent’s age are 60 to above years.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE-5.2
Sr. No. Category No. of Respondents Percentage
1 Married 140 70%
2 Unmarried 60 30%
Total 200 100%
Base 200 respondents

CHART-5.2

Interpretation
From the table and graph above it can be seen that
 70% respondent’s are married.
 30% respondent’s are unmarried.
Educational qualification of respondent’s

TABLE-5.3
 Sr. No. Category No. of Respondents Percentage
1 Under graduate 50 25%
2 Graduate 80 40%
3 Post graduate 70 35%
Total 200 100%
Base 200 respondents

CHART-5.3

Interpretation
From the table and graph above it can be seen that
 25% respondent’s are under graduate.
 40% respondent’s are Graduate.
 35% respondents are Post graduate.

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 5.5:
Customer profile No. of respondents
Student 15
Housewife 10
Working Professional 100
Business 40
Self Employed 20
Government service employee 15
Chart-5.5

Interpretation
From the table and graph above it can be seen that:-
51% of the respondents are working professionals, 22% are into business and 11% are
self-employed, 11% of the respondent’s are government service employee and 3% of the
respondents are student and 2% of the respondents are house-wife.

ANNUAL HOUSE HOLD INCOME?

TABLE-5.6

Sr. No. Category No. of Respondents Percentage

1 Less than 2 lacs 98 49%
2 Between 2 to 5 lacs 62 31%
 3 Between 5to 8lacs 30 15%
4 More than 8 lacs 10 5%
Total 200 100%
Base 200 respondents
CHART-5.6

Interpretation
From the table and graph above it can be seen that
 49% respondent’s annual household income is less than 2 lacs.
 31% respondent’s annual household income is between 2 to 5 lacs.
 15% respondent’s annual household income is between 5 to 8 lacs.
 5% respondent’s annual household income is more than 8 lacs.

Do you know about Urban Co-Operative Bank?

TABLE 5.7:

Category No. of Respondents

Yes 164
 No 36

CHART:-5.7

Awareness about Urban co-operative bank

Interpretation:-
From the table and graph above it can be seen that
 91% respondent’s are known about Urban co-operative bank
 9% respondent’s are not known about Urban co-operative bank
Table 5 .8:-

Reasons for getting the home Loan

Sr.No. Number of Reasons Percentage(%)

a. Non-availability of funds 36

b. Reluctancy to pay cash in one go 35

 c. Tax benefit 24

d. Any other 5

GRAPH:- 5.8

Interpretation:-
To interpret the response of the questions, the figures shows that most of the
customers find the problem in availability of funds i.e. 36% and very less number of
customers found problem in paying cash in one go is 35%, customers get housing loan
for tax benefits is 24%. This was the expected response because a large number of people
find a problem of availability of funds which works as an obstacle in owning a dream
home.
In today's life, people hardly earn both means and ends of life and they don't have
much of money to buy a home or a land to construct house because of cost of property.
So, they take the advantage of home loans provided by different banks at different terms
feasible to the customers. There are very less number of people, who don't own home
even when they have sufficient funds and they take the advantage of home loans because
they don't want to pay huge cash in one go.
On the basis of study, it is concluded that most of people lack of money in
fulfiling their dreams and few of them were reluctant to pay cash in one go and wanted to
pay their home loans slowly in installments.
 Table-5.9

From where you have got your home loan?

Name of Banks / company (%)Percentage of customers

HDFC LTD 55

Punjab National Bank 15

Standard Chartered Bank 07

ICICI BANK 20

Any other 03

To understand the response more effective and closely, it has been showed
diagrammatically as follows :-
 GRAPH:- 5.9

From where you have got your home financed

Interpretation:-
The analysis showed that a large number of customers prefer HDFC LTD as
compared to others. The data shows that 7% of customers took loan from Standard
Chartered Bank, 20% of customers from ICICI BANK, 15% Customers took loan from
Punjab National Bank, 55% of customers took loan from HDFC LTD and a 3% of
customers fall under the category of 'Any other' which included State Bank of India,
Canara Bank, Punjab and Sind Bank, etc.
The data shows that most of people prefer HDFC LTD compared to public sector
banks and other private banks. This is because of the extra services provided by HDFC
LTD. However, there is less difference in figures of ICICI Bank and Punjab National
Bank. But there is considerable difference in figures of the two private sector banks i.e.
ICICI bank and Standard Chartered Bank. As ICICI is the market leader in the home
loans sector. This may be the reason for such difference in Standard Chartered Bank's
percentage and ICICI Bank's percentage. Another reason for specialized services in home
loans, more amounts of loans, and efficient query handling.
 However, the analysis showed that the people prefer HDFC LTD for home loan
because of their services and excessive feat compared to other banks.

Table-5.10

Sources of information about Home Loans Scheme?

Sources of information (%)Percentage of customers

Newspapers 49

Magazines 16

Banners/Hoardings/Pamphlets 11

Word of mouth 20

Any other source 04

CHART:-5.10 percentage of source of information about home loans scheme

Sources of information about Home Loans Scheme

Interpretation:-
The data shows that around 20% of customers got information from source of
'Word of Mouth' which includes information from friends, relatives, colleagues etc. 49%
of customers got information from newspapers, only 16% of customers from magazines
and 4% of customers got information about home loans schemes under 'Any other source'
and 11% through Banners/ Hoardings/Pamphlets .
 FINDINGS

Nearly half of the consumer complaints we reviewed involved allegations of dealer fraud
or misrepresentation. The final deal often looked different from the one consumers
thought they had made. Consumers said:

• the dealer switched the house with a different make, model, year or size or a
completely different home;

• the salesman tried to falsify loan application information, including falsifying the
down payment amount or taking money a consumer borrowed as a down
payment;

• the actual price of the home increased from the original quote to the final loan;

• the terms or conditions of the sale worsened, including additional costs for items
consumers thought they had already covered, additional loan fees, higher interest
and more;

• the dealer refused to give buyers copies of contracts, including loan contracts; and
 RECOMMENDATIONS

• Facilitate shopping by posting prices, notifying consumers of their full refund

rights, and eliminating credit scoring models that penalize rate shopping.

• Provide 5 day "cooling off" period after full disclosure of final loan terms with
cancellation right and full refund.

• Provide standard contracts and standard Spanish translation.

• Prohibit financed points if points and fees together will add more than 3% to the
home price.

• Require independent inspection/appraisal of every home prior to release of loan

funds.
 Bibliography

Websites:
a. www.andhrabank.com
b. www.bankofbaroda.com
c. www.bankofindia.com
d. www.idbi.com
e. www.sbi.co.in
f. www.hdfc.com

Search Engines:
a. www.google.com
b. www.wikipedia.org

Books & Magazines:

a. Business Today
b. The Economic Times
c. The Times Of India
d. Banking Theory, Law & Practice
-Gordon & Natarajan
e. Indian Banking System
-Dr. Mukund Mahajan
f. Banking Law And Practice
-P. N. Varshney
 Annexure

QUESTIONNAIRE:
HOME LOAN INTEREST RATES
[NATIONALISED BANKS]

1. How many kinds of home loans do you offer?

2. How much time is required for a home loan to get sanctioned once
applied?
3. What are the documents required?
4. Are mortgages accepted? If yes, what are the conditions?
5. Is the home loan based on the area of the house or locality? How?
6. How many guarantors are required?
7. What if an installment is not paid?
8. If the salary account is not in your bank then what is the procedure
followed?
9. What if the borrower changes his job?
10.Are loans sanctioned to temporary employees?
11.What if the interest rates change after a period of time (floating)?
12.What if the borrower goes bankrupt?
13.Is insurance covered in home loans plans?
14.Does the loan repayment start directly after it is sanctioned?
15.Can a loan on a single property be sanctioned on 2 or more people?