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ENROLMENT NO. 1511100005



Year 2015-18


chapter Title Pg.no.

preface 4
Acknowledgement 5
1 Introduction 6
2 Literature Review 38
3 Methodology 55
4 Data Analysis 58
5 Findings and Conclusion 64
Recommendation 66
Bibliography 67


This is to certify that the project work titled “A Study on Housing Loan” is confide work
carried out by admission no. 1511100005, a candidate for the examination of the under my
guidance and direction.








While searching for a suitable topic for the MBA Dissertation, I happened to meet a person
from the Retail Sector, who suggested to me the topic on the Banking Sector of India. During
the course of the discussion, it transpired that the problems that this sector faces is with
respect to term loan Aspects and the intense competitive scenario.

The topics having aroused my curiosity, discussions were held with several people in the
banking sector to understand the veracity of the above thought process and also understand
the real issues plaguing the industry.

All these aspects then resulted in the development of the project report titled ‘Housing Loan’
in context of Karur Vysya Bank.

It is strongly hoped that this project covers not only the various requirements of the Project
Study but also of the Industry.

Signature of the Student



I am extremely grateful to my friends and well-wishers for help me out to prepare this project
successfully and their encouragement for this regard.

I want to express my gratitude to my Guru, Teachers, Professors of Institute of management

Technology University and bank manager of karur vysya bank Mr. Rao Girish hanumant
who has directly or indirectly helped me to prepare this project and for their constant
motivation and encouragement to mould me into a researcher in management.

I would like to put on paper the dedication to the spirit of my life, my mother, for her
constant and priceless motivation during my project time, in spite of her unawareness of my
study and its objectives.

I have to say thanks for continuous support and encouragement from my family as a whole. I
sincerely acknowledge and appreciate their valuable cooperation. I have received a great deal
of help, contribution, and advice from many people. I am thankful to all of them. Like most
of the text-cum-reference books, this project is also influenced by a numbers of works of
various researches and different literature reviews. As far as possible, I have tried to
acknowledge all of them.

Specially, I would like to thank my Mentor, who gave me full of support for this project and
provided extensive comments on this regard. Hence, I am filing very proved to perform on
their guidance.

Signature of the student



The crucial role of bank economists in transforming the banking system in India. Economists have
to be more ‘mainstreamed’ within the operational structure of commercial banks. Apart from the
traditional functioning of macro-scanning, the inter linkages between treasuries, dealing rooms
and trading rooms of banks need to be viewed not only with the day-to-day needs of operational
necessity, but also with analytical content and policy foresight.

Banking sector reforms in India has progressed promptly on aspects like interest rate deregulation,
reduction in statutory reserve requirements, prudential norms for interest rates, asset classification,
income recognition and provisioning. But it could not match the pace with which it was expected
to do. The accomplishment of these norms at the execution stages without restructuring the
banking sector as such is creating havoc.

During pre-nationalization period and after independence, the banking sector remained in private
hands Large industries who had their control in the management of the banks were utilizing major
portion of financial resources of the banking system and as a result low priority was accorded to
priority sectors. Government of India nationalized the banks to make them as an instrument of
economic and social change and the mandate given to the banks was to expand their networks in

rural areas and to give loans to priority sectors such as small scale industries, self-employed
groups, agriculture and schemes involving women.

To a certain extent the banking sector has achieved this mandate. Lead Bank Scheme enabled the
banking system to expand its network in a planned way and make available banking series to the
large number of population and touch every strata of society by extending credit to their productive
endeavours. This is evident from the fact that population per office of commercial bank has come
down from 66,000 in the year 1969 to 11,000 in 2016. Similarly, share of advances of public sector
banks to priority sector increased form 14.6% in 1969 to 44% of the net bank credit. The number
of deposit accounts of the banking system increased from over 3 crores in 1969 to over 30 crores.
Borrowed accounts increased from 2.50 lakhs to over 2.68 crores.

Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new challenges
posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of
the country. This is one of the main reasons of India's growth process.

Financial sector reform in India has progressed rapidly on aspects like interest rate deregulation,
reduction in reserve requirements, barriers to entry, prudential norms and risk-based supervision.
But progress on the structural-institutional aspects has been much slower and is a cause for
concern. The sheltering of weak institutions while liberalizing operational rules of the game is
making implementation of operational changes difficult and ineffective. Changes required to
tackle the NPA problem would have to span the entire gamut of judiciary, polity and the
bureaucracy to be truly effective.

In liberalizing economy banking and financial sector get high priority. Indian banking sector of
having a serious problem due non performing. The financial reforms have helped largely to clean
NPA was around Rs. 52,000 crores in the year 2016. The earning capacity and profitability of the
bank are highly affected due to this

Banking in India

Banking in India originated in the last decades of the 18th century. The oldest bank in existence
in India is the State Bank of India, a government-owned bank that traces its origins back to June
1806 and that is the largest commercial bank in the country. Central banking is the responsibility
of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the
then Imperial Bank of India, relegating it to commercial banking functions. After India's
independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the
government nationalized the 14 largest commercial banks; the government nationalized the six
next largest in 1980.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with
the Government of India holding a stake), 29 private banks (these do not have government stake;
they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a
combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA
Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking
industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

Early history

Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now
defunct. The oldest bank in existence in India is the State Bank of India, which originated in the
Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was
one of the three presidency banks, the other two being the Bank of Bombay and the Bank of
Madras, all three of which were established under charters from the British East India Company.
For many years the Presidency banks acted as quasi-central banks, as did their successors. The
three banks merged in 1925 to form the Imperial Bank of India, which, upon India's independence,
became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still
functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honor
belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913,
when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of

When the American Civil War stopped the supply of cotton to Lancashire from the Confederate
States, promoters opened banks to finance trading in Indian cotton. With large exposure to
speculative ventures, most of the banks opened in India during that period failed. The depositors
lost money and lost interest in keeping deposits with banks. Subsequently, banking in India
remained the exclusive domain of Europeans for next several decades until the beginning of the
20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches
in Madras and Pondichery, then a French colony, followed. HSBC established itself in Bengal in
1869. Calcutta was the most active trading port in India, mainly due to the trade of the British
Empire, and so became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in
Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895,
which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of
stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and
other infrastructure had improved. Indians had established small banks, most of which served
particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks and a
number of Indian joint stock banks. All these banks operated in different segments of the economy.
The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian
joint stock banks were generally undercapitalized and lacked the experience and maturity to

compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe,
"In respect of banking it seems we are behind the times. We are like some old fashioned sailing
ship, divided by solid wooden bulkheads into separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi
movement. The Swadeshi movement inspired local businessmen and political figures to found
banks of and for the Indian community. A number of banks established then have survived to the
present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and
Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina
Kannada and Udupi district which were unified earlier and known by the name South Canara (
South Kanara ) district. Four nationalised banks started in this district and also a leading private
sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

From World War I to Independence

The period during the First World War (1914-1918) through the end of the Second World War
(1939-1945), and two years thereafter until the independence of India were challenging for Indian
banking. The years of the First World War were turbulent, and it took its toll with banks simply
collapsing despite the Indian economy gaining indirect boost due to war-related economic
activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following

Years Number of banks Authorised capital Paid-up Capital

that failed (Rs. Lakhs) (Rs. Lakhs)

1913 12 274 35

1914 42 710 109

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1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1


The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal,
paralyzing banking activities for months. India's independence marked the end of a regime of the
Laissez-faire for the Indian banking. The Government of India initiated measures to play an active
role in the economic life of the nation, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. This resulted into greater involvement of the
state in different segments of the economy including banking and finance. The major steps to
regulate banking included:

 In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and
it became an institution owned by the Government of India.
 In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of
India (RBI) "to regulate, control, and inspect the banks in India."
 The Banking Regulation Act also provided that no new bank or branch of an existing bank
could be opened without a license from the RBI, and no two banks could have common

However, despite these provisions, control and regulations, banks in India except the State Bank
of India, continued to be owned and operated by private persons. This changed with the
nationalisation of major banks in India on 19 July, 1969.

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By the 1960s, the Indian banking industry has become an important tool to facilitate the
development of the Indian economy. At the same time, it has emerged as a large employer, and a
debate has ensued about the possibility to nationalise the banking industry. Indira Gandhi, the-then
Prime Minister of India expressed the intention of the GOI in the annual conference of the All
India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper
was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI
issued an ordinance and nationalised the 14 largest commercial banks with effect from the
midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as
a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the
Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it
received the presidential approval on 9 August, 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason
for the nationalization was to give the government more control of credit delivery. With the second
dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on,
in the year 1993, the government merged New Bank of India with Punjab National Bank. It was
the only merger between nationalized banks and resulted in the reduction of the number of
nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace
of around 4%, closer to the average growth rate of the Indian economy.

The nationalised banks were credited by some, including Home minister P. Chidambaram, to have
helped the Indian economy withstand the global financial crisis of 2007-2009.[1][2]


In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization,
licensing a small number of private banks. These came to be known as New Generation tech-savvy
banks, and included Global Trust Bank (the first of such new generation banks to be set up), which
later amalgamated with Oriental Bank of Commerce, UTI Bank(now re-named as Axis Bank),
ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India,

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revitalized the banking sector in India, which has seen rapid growth with strong contribution from
all the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the norms for
Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which
could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used to
the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave
ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this led
to the retail boom in India. People not just demanded more from their banks but also received

Currently (2007), banking in India is generally fairly mature in terms of supply, product range and
reach-even though reach in rural India still remains a challenge for the private sector and foreign
banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have
clean, strong and transparent balance sheets relative to other banks in comparable economies in its
region. The Reserve Bank of India is an autonomous body, with minimal pressure from the
government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without
any fixed exchange rate-and this has mostly been true.


The financial sector reforms in the country were initiated in the beginning of the 1990s.The reforms
have brought about a sea change in the profile of the banking sector. Our implementation of the
reforms process has had several unique features. Our financial sector reforms were undertaken
early in the reform cycle. Notably, the reforms process was not driven by any banking crisis, nor
was it the outcome of any external support package. Besides, the design of the reforms was crafted
through domestic expertise, taking on board the international experiences in this respect. The
reforms were carefully sequenced with respect to the instruments to be used and the objectives to
be achieved. Thus, prudential norms and supervisory strengthening were introduced early in the
reform cycle, followed by interest-rate deregulation and a gradual lowering of statutory

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preemptions. The more complex aspects of legal and accounting measures were ushered in
subsequently when the basic tenets of the reforms were already in place.

The public sector banks continue to be a dominant part of the banking system. As on March 31,
2008, the PSBs accounted for 69.9 per cent of the aggregate assets and 72.7 per cent of the
aggregate advances of the Scheduled commercial banking system. A unique feature of the reform
of the public sector banks was the process of their financial restructuring. The banks were
recapitalised by the government to meet prudential norms through recapitalisation bonds. The
mechanism of hiving off bad loans to a separate government asset management company was not
considered appropriate in view of the moral hazard. The subsequent divestment of equity and offer
to private shareholders was undertaken through a public offer and not by sale to strategic investors.
Consequently, all the public sector banks, which issued shares to private shareholders, have been
listed on the exchanges and are subject to the same disclosure and market discipline standards as
other listed entities. To address the problem of distressed assets, a mechanism has been developed
to allow sale of these assets to Asset Reconstruction Companies which operate as independent
commercial entities.

As regard the prudential regulatory framework for the banking system, we have come a long way
from the administered interest rate regime to deregulated interest rates, from the system of Health
Codes for an eight-fold, judgmental loan classification to the prudential asset classification based
on objective criteria, from the concept of simple statutory minimum capital and capital-deposit
ratio to the risk-sensitive capital adequacy norms – initially under Basel I framework and now
under the Basel II regime. There is much greater focus now on improving the corporate governance
set up through “fit and proper” criteria, on encouraging integrated risk management systems in the
banks and on promoting market discipline through more transparent disclosure standards. The
policy endeavor has all along been to benchmark our regulatory norms with the international best
practices, of course, keeping in view the domestic imperatives and the country context. The
consultative approach of the RBI in formulating the prudential regulations has been the hallmark
of the current regulatory regime which enables taking account of a wide diversity of views on the
issues at hand.

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The implementation of reforms has had an all round salutary impact on the financial health of the
banking system, as evidenced by the significant improvements in a number of prudential
parameters. Let me briefly highlight the improvements in a few salient financial indicators of the
banking system.


The banking industry in India is undergoing a major transformation due to changes in economic
conditions and continuous deregulation. These multiple changes happening one after other has a
ripple effect on a bank (Refer fig. 2.1) trying to graduate from completely regulated sellers market
to completed deregulated customers market.

 Deregulation: This continuous deregulation has made the Banking market extremely
competitive with greater autonomy, operational flexibility, and decontrolled interest rate

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and liberalized norms for foreign exchange. The deregulation of the industry coupled with
decontrol in interest rates has led to entry of a number of players in the banking industry.
At the same time reduced corporate credit off take thanks to sluggish economy has resulted
in large number of competitors battling for the same pie.
 New rules: As a result, the market place has been redefined with new rules of the game.
Banks are transforming to universal banking, adding new channels with lucrative pricing
and freebees to offer. Natural fall out of this has led to a series of innovative product
offerings catering to various customer segments, specifically retail credit.
 Efficiency: This in turn has made it necessary to look for efficiencies in the business. Banks
need to access low cost funds and simultaneously improve the efficiency. The banks are
facing pricing pressure, squeeze on spread and have to give thrust on retail assets
 Diffused Customer loyalty: This will definitely impact Customer preferences, as they are
bound to react to the value added offerings. Customers have become demanding and the
loyalties are diffused. There are multiple choices, the wallet share is reduced per bank with
demand on flexibility and customization. Given the relatively low switching costs;
customer retention calls for customized service and hassle free, flawless service delivery.
 Misaligned mindset: These changes are creating challenges, as employees are made to
adapt to changing conditions. There is resistance to change from employees and the Seller
market mindset is yet to be changed coupled with Fear of uncertainty and Control
orientation. Acceptance of technology is slowly creeping in but the utilization is not
 Competency Gap: Placing the right skill at the right place will determine success. The
competency gap needs to be addressed simultaneously otherwise there will be missed
opportunities. The focus of people will be on doing work but not providing solutions, on
escalating problems rather than solving them and on disposing customers instead of using
the opportunity to cross sell.

Strategic options with banks to cope with the challenges

Leading players in the industry have embarked on a series of strategic and tactical initiatives to
sustain leadership. The major initiatives include:

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 Investing in state of the art technology as the back bone of to ensure reliable service
 Leveraging the branch network and sales structure to mobilize low cost current and savings
 Making aggressive forays in the retail advances segment of home and personal loans
 Implementing organization wide initiatives involving people, process and technology to
reduce the fixed costs and the cost per transaction
 Focusing on fee based income to compensate for squeezed spread, (e.g. CMS, trade


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.

SBI-(State Bank of India) Home Loan, India have been serving the people for around three
decades and providing various housing loan according to their varied needs at attractive &
reasonable interest rates. Owing to their wide network of financing, SBI Housing Loans provides
services at your doorstep and helps you find a home as per your requirements.

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

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
SBI 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

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house over longer duration now; it has been made easy for a person to buy that dream house
which he dreamt of long ago.

SBI 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. SBI finances up to 85% of the cost of renovation (100%
for existing customers).

Current status is that SBI reduced home loan rates by 50 basis points for all its existing floating
rate customers.


The various benefits of home loans arising to the customers are:-

(i) Attractive interest rates:-

The various banks offer attractive interest rates to boost and help their customers. Many banks
provide loans on fixed or floating rates to facilitate consumers as per their needs.

(ii) Help in owning a home:-

The home availed by a person with the help of banks, because they provide technical and
financial assistance to customers for owning their dream home.

(iii) No requirement of guarantor:-

The commercial banks now a day, liberlise their laws regarding home loans. Some of banks
don’t even require the guarantor to grant loan to their consumers. They also make consumers free
by reliving him to find a guarantor to complete the proceedings of availing loan.

(iv) Door-Step Services:-

These door to step services are provided from enquiry stage to the final disbursement takes place
such services are beneficial for customers in present busy life. Banks like ICICI bank and
standard chartered bank provide door to step services to customers to borrow loan.

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(v) Loan period:-

There are many banks which provide maximum loan tenures upto 15-20 years based on the loan
amount and the creatibility of customers. This relieves the customers to repay loan amount till a
long period.

(vi) For accidental death insurance:-

Some banks provide free accidental death insurance with housing loan which is also beneficial
for the customers.

These benefits or advantages of home loans are responsible for making than so popular among
customer that a person who don’t have their home and want to buy, they do it with home loan.
Home loans help such persons in making their dream home.


The main disadvantages of home loans are high lightened as below:

(i) Delays in processing:-

Many times, there are huge delays in processing of providing home loans because various
formulations to be fulfilled in this process. Due to these delays customers feel mentally as well
as financially weak.

(ii) Fluctuating interest rates:-

Some banks give home loans at floating rates, which fluctuate at Different intervals due to some
reasons. These changes sometimes, may lead to increase in interest rate which will increase the
cost of home loans to the customers

(iii) High Cost:-

The public sector banks charge high processing cost for home loan’s sanctioning.

They are forced to pay serious charges at various stages to fulfill the requirements. Some
consumers are not able to pay such charges so such people could not avail the benefits of home
loan schemes.

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(iii) Problems in disbursement:-

There are many problems in disbursement of home loan amount. There are some delay in
disbursement of loan amount to the customers due to legal formalities. This causes problems to
the customers.

These are limitations or disadvantages of home loans. But sometimes some banks charges high
installments to repay loan amount. Such also causes problem to customers.

These limitations can be removed by providing good and promote services to the customers.


The every bank has its own procedure to disburse the loan amount among customers. After
choosing your right home, the next step is disbursement of home loans.

The loan amount is disbursed after identifying and selecting the property or home that are
purchased and submit the requisite legal documents. In the disbursement of home loans a clear
title and full verification to ensure that a person has full rights on his house. The 230A clearance
of seller and /or 371 clearances from the appropriate authority of income tax is also needed.

(I) Eligibility criteria:-

However, if one is a resident or non-resident individual who is planning to buy a house in India,
one can apply for a home loan. If a person has decided to buy a property in the near future,
he/she can apply for a loan before even selecting the property. Once the maximum amount to put
into the property has been decided, the Housing Finance Institutions or Banks will let the
customer know that how much he/she is eligible for and this helps to plan out the budget.

(ii) Conditions regarding co-applicants: -

All Housing Finance Institutions lay down conditions on who can be co-applicants. All co-
owners to the property need to be co-applicants to the loan necessarily. These institutions do not

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permit minors to join in as either co-owner or as co-applicants because a minor is not eligible to
enter into a contact as per law. They do not permit even friends or relatives who are not blood
relatives to take a property jointly. However, Income of co-applicants can be clubbed together to
get higher loan eligibility. Given below is a Table that throw light on acceptable relationship of a
co-applicant for clubbing of income.

Income Clubbing of Co-applicants:- It is as follows:-

Combination Income Clubbing: -

 Husband-Wife: - Income of husband-wife can be clubbed.

 Parent - son: - It can be clubbed if only son is there but not if any male sibling exists.
 Brother-Brother: - If they are currently staying together and intend to stay together in
the new property, then only, their income-can be clubbed for above purposes.
 Brother-Sister: - No clubbing-is possible.
 Sister-Sister: - No clubbing is possible.
 Parent-Minor- Child: - No clubbing is possible in this case also.

(iii) General Terms and Conditions: - The following are the terms and conditions applicable to
the basic home loan product only. These are likely to change on the basis of the variations of the
home loan product. Typically, in general home loans, the following conditions are applicable:-

1) The loan to value ratio (LTV) cannot exceed a particular percentage. This differs from
product to product and from one Housing Finance Institutional Bank (HFI/B) to another.
The components of the value of the Property calculated here are covered under cost of
2) The maximum tenure of the bank is nominally fixed by HFI/Bs. However, HFls/Bs do
provide for different tenures with different terms and conditions.
3) The installment that one pay is normally restricted to about-50-per cent of the monthly
gross income of the candidate.
4) The total monthly outflow towards all the loans that have been availed of, including the
current loan is normally restricted to 50% of the gross monthly income.

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5) One will be eligible for a loan amount which is the lowest as per one's eligibility. This is
calculated as per the LTV norms, the HR, norms and the FOIR norms as mentioned
6) Most HFls/Bs consider the profile before they judge the repayment capacity. The
judgment is based on age, qualifications, number of dependents, employment details,
employer credentials, work experience, previous track record of repayment of any loans
that have been availed of, occupation, the industry to which the candidate's business
relates to, if he/she is self-employed, then the turnover in the last 3-4 years etc.
7) Some HFIs/Bs insists on guarantees from other individuals for the repayment of the loan.
In such cases, the customers has to arrange for the personal guarantee before the
disbursement of the loan takes place.
8) The property should be technically clear before the HFIs/Bs disburses the loans amount.
Most of institutions and banks have a teams of technical experts who visit the site to get a
technical report before the disbursement of loan. This is also beneficial to the customer as
they check for the technical quality and compliance with local laws.
9) The property should be legally clear before one can avail of a disbursement of the loan
amount. Housing-Finance Institutions /Banks (HFIs/Bs) take legal clearance from their
lawyers before the disbursement of amount. This proves to be beneficial to the customers
as a legal expert checks his/her documentation to ensure that he/she get a proper title to
the property.
10) The disbursement of the loan is as per the progress of construction of the property unless
it is a ready property in which case the disbursement will be by one single cheque. PEMI
or simple interest on the loan amount disbursed to the customer in case of a part
disbursement will be payable by the customer on the disbursement.
11) The disbursement in most cases will be favoring the builder or the seller or the society or
the development authority as the case may be. The disbursement will come in the
customer's favour under special circumstances only.
12) The repayment of loan can be made either through deduction against salary, post-dated
cheques, standing instructions or Auto debit instructions to bank.
13) The principle is amortized either on annual reducing or monthly reducing basis as the
case may be.

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The above terms and conditions are generally true for most Housing finance

Institutions/Banks with respect to the general Home Loans. However, the specific terms and
conditions vary with respect to special Housing Finance Institutions or Banks.

(iv) Charges applicable to home loans:-

The different kinds of charges applicable to home loans are discussed below:

a) Processing fees:-

First of all, comes the process fee. This is a charge that is levied by most HFls/Bs.

This has to be paid at the time of submission of the application form. It's normally charged as a
percentage of the loan amount sanctioned. Some HFls also charge a flat fee based on the loan
amount instead of a percentage. When a lower amount is sanctioned the excess fees paid at the
time of submission of the application is adjusted with the charges, which one make to the HFI/B
subsequently. Most HFls/Bs refund the processing fee if the loan application is rejected.

b) Administrative fees:-

This charge is again, normally, a percentage of the loan amount sanctioned. It is collected by the
HFI/B for the maintenance of customer's records, issuing interest certificates, legal charges,
technical charges, etc. though the tenure of the loan. It is payable by the customer when he/she
accepts the offer letter given by the HFI/B. This payment has to be made before the availment of
the disbursement. The mode of collection of these fees varies from one HFI/B to another.

c) Rate of interest:-

This is the rate of interest applicable on the loan amount through the tenure of the loan. It is
charged on the principal monthly reducing method. Most HFIs/Bs give an option to select either
a fixed rate of interest or a variable rate of interest.

d) Legal Charges:-

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Some HFIs/Bs mainly Public Sector Banks levy legal charges that they incur on getting the
property documents vetted by their panel of lawyers.

e) Technical Charges:-

These charges are also levied by certain Housing Finance Institutions/Banks (HFIs/Bs) to meet
their expenses on the technical site visits to the customer's property. This ensures quality of
construction and construction within the norms as stipulated by the respective approval authority.

f) Stamp duty and registration charges:-

HFIs that go in for a registered mortgage pass these charges on to the customer. These are rather
heavy in certain states depending on the laws laid down by the state where one buy a property.

g) Personal Guarantee from Charges:-

Since the personal guarantee provided by the customer need to be stamped, these charges are
also recovered from the customer. They are charged to him by HFIs who demand for Guarantees.

h) Cheque Bounce Charges:-

In case the cheques through which one make a payment to HFls get dishonored, some minimum
charges are levied by the HFI. The same are recovered from the customer.

(i) Delayed payment charges:-

HFls/Bs charge delayed payment charges from the customer if he/she delays the payment of
installments beyond the due date.

(j) Additional charges:-

These are levied as a percentage on the delayed payment charges by most HFls. They are levied
if one fail to pay the dues within the stipulated time after a delay has taken place.

(k) Incidental charge:-

This is payable in case the HFI/B sends a representative from their organization to collect their
outstanding dues. It is normally charged at a flat rate per visit. These charges are levied by most

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l) Prepayment Charges:-

This is a penalty charged by HFls/Bs from when one makes either a part prepayment or a full
repayment of the loan. This charge is levied only on lump sum payments and not on the EMls
that one pays. This charge is levied on the amount prepaid by one and not on the entire
outstanding principal. These charges are gradually being discount. So, these are the charges
levied by most Housing Finance Institutions and Banks while granting home loan to the
customers. Now, the decision on the repayment capacity shall be talked about as follows.

(v) Judgment regarding repayment capacity on the basis of income:-

To understand how the income of a customer is considered to arrive at his repayment capacity, it
is first necessary to classify customers into salaried and self-employed individuals.

a) The income of the salaried individual is considered in the following manner:-

Gross monthly income as it appears on the salary slip

Less: - Any non-regular variable income appearing on the salary slip (including overtime, etc.)

Add: - 50 per cent of the average variable income of the last six months.

Add: - Any fixed cash/voucher payments for which proof can be submitted.

Add: - 50 per cent of the average variable cash/voucher payments with proof like traveling
reimbursement etc.

Add: - HRA receivable if not being received already in the salary slip.

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The above income calculated for the calculation of eligibility using IIR and FOIR norms. For
calculation of FOIR, the installments of all the loans that one has availed of currently for which
repayment is being made is taken into account as well. The lower of the two eligibilities is
considered as the maximum repayment capacity.

b) To consider income of Self-employed individuals we further classify them into

Professionals and non-professionals.

 Professionals: - Comprising doctors, chartered accountants, lawyers, architects, etc. For

calculation of eligibility of professional's income is computed by most HFIs using the
gross professional receipts instead of the Net profit as in the case of selfemployed non-
 Non-Professionals: - The income of non-professionals is normally calculated by HFIs in
the following manner: -

Average of the net profits of last 2 years as it appears in the profit and loss account (Returns need
to be filed for the same. They should be filed regularly before the due date is over).

Less: - Any income, which is unusual and non-recurring in nature like sale of some asset, etc.
which affects profits substantially,

Add: - Any expense that is unusual and non-recurring in nature like repairs and maintenance that
has not been capitalized and effect profit adversely.

Add: - 50 per cent of the average depreciation of the last two years. The above income is
calculated for the calculation of eligibility using IIR and FOIR norms.

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For calculation of FOIR the installments of all the loans that one has availed of currently for
which repayment is being made is taken into account and the eligibility is worked out.

The lower of the two eligibilities is considered as the maximum repayment capacity.

(vi) Credit documentation:-

Given below is the exhaustive list of credit documents- that need to be submitted for a general
home loan product. The documents vary from one HFI/B to another based on one's employer,
qualifications experience etc. the general requirements are as follows: -

(a) Income Documents: -

For salaried slips for the last three months appointments letter-salary certificate retainer-ship
agreement, if appointed as a consultant-Form 16 issued by the employer in customer's name
income document for self-employee - last three years profit and loss account statement duly
attested by Chartered Accountants. Last three years Balance Sheets duly attested by Chartered
Accountant, last three years Income Tax Returns with computation chart duly filed and certified
by the Income Tax authorities.

b) Proof of employment: -

Identify card issued by the employer- Visiting card.

(c) Employer's details (In case of private limited companies): -

Profile of employer on employers letterhead (to be signed by a senior person in the organization)

• Name of promoter/directors

• Background of promoters/directors

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• Nature of business activity of your employer

• Number of employees

• List of branches/factories

• List of suppliers

• List of clients/customers

• Turnover of employer

• Annual reports of the employer for the last two to three years.

(d) Proof of age (Anyone of the following): -

Passport- Voter's ID card-PAN card-Ration card-Employer's identity card-School leaving

certificate-Birth certificate.

(e) Proof of residence (Anyone of the following): -

Ration card-Passport- PAN card-Rent agreement, if the customer is staying currently on rent-
Bank Pass book-Allotment letter from the company if he/she is residing in company quarters.

(f) Proof of name change (If applicable): -

A copy of the official gazette –A copy of a newspaper advertisement publicizing the name
change-Marriage certificates.

(g) Proof if investment (If required):-

Bank statement for the last six months of all operating and salary accounts – Bank statements for
the last six months of all current accounts, if self-employed-any other photocopies of investments
held, if required by the HFC.

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(vii) Legal documentation:-

Legal Documentation the typical legal documents that need to be submitted to the HFC arc
discussed here. Given below is a list of legal property documents that need to be submitted to the
HFC for mortgage of the property. The name and the list of documents vary from state to state
and also depend on the type of property being financed. A broad outline of the documents
required is given below.

a) Acceptance copy of the offer letter issued by the HFC/B.

b) Title documents of the property that include -sale agreement duly
c) Registered-Own contribution receipts - Allotment letter-Registration receipt-Land
documents indicating ownership, if applicable- Possession letter-Lease agreement, if
applicable (Property bought from a development authority) - Mortgage deed if the HFC
opts for a registered mortgage.
d) No Objection Certificate from the developer, society or development authority as
e) Personal Guarantees, if applicable.
f) In case of alternator additional security, documents for the same depending upon the
security details.
g) Postdated cheques for the EMls.
h) The above documents are only indicative in nature and do not cover the entire list. It may,
also be noted that in a resale case, the previous chain of agreement also need to be taken.

(viii) The tax benefits that are applicable to housing loans for individuals:-

Currently Tax Benefits to individuals are available only for the Home Loans and Home

Extension Loans products. The benefits available are covered under these sections.

Property Insurance:-

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Is it compulsory to insure the property? Some HFls insist on a mortgage redemption life
insurance policy. In this case the customer gets a benefit of an interest rate reduction. Though the
HFI may not insist, it is better to go in for property insurance to safeguard the asset against any
sort of damage or loss. The customer can select the tenure for the property insurance. The
insurance premium is changed up front. Most insurance companies provide for huge discounts on
the rate of premium for larger tenures. The premium charged currently is seventy-seven for every
lakh of property for a year. So a customer has to fulfill various conditions to be eligible for
availing home loan from a Housing Finance Institution/Bank After fulfilling these conditions, a
customer can avail loan at low interest rate i.e. fixed rate floating rate. A decision on whether one
should go in for a fixed-rate loan or a floating-rate loan now is a function of two factors i.e.
One's perception of where interest rates in the economy are headed and one' capacity to ride the
interest rate changes.

A floating-rate loan let one take advantage of further falls in interest rates but one stand to lose if
interest rate, rise again. However this decision is based on the perception of the consumer.



Home loans in India have made people Buy Property in India in spite of the skyrocketing
prices. Today, we find considerable Real Estate Investment in India, either in the field of
Residential Property in India or Commercial Properties in India. Home Loans in India are
disbursed by many Banks as Loan Banking is one of the most important function of the
Financial Services in India. Property Dealers and Real Estate Consultants in India usually
recommend that we undertake appropriate Home Loan or Mortgage Loan counseling so that we
can Buy Apartment in India at an affordable Mortgage Rate. Purchasing the home of your
dreams is not an easy task. Especially when you plan to buy a home on loan. Home loan means
that you buy a house on installments. In simpler terms when you want to own a home and can’t
afford to pay the amount in lump sum, you can pay it in monthly installments with an interest

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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 of building flats is little slow. It would not be
wrong to say that there has been a boom in the home loan market and with this boom; there is
also a boom in the Number of home loans mortgage brokers in India.

The main reason for this boom in home loan market is the change in government policies. It is
our government’s motivation that the home loan interest rates in India have fallen considerably.
Lot many banks are offering home loans and this is available at low EMIs (Equated monthly
Installments). High EMIs are now a thing of past. Today lending rate is in the range of 7.5 to 15

Again, there are different types of home loans available today. The interest rate available is also
of two different types. One is the fixed rate loan and the other is the floating rate loan. In the
fixed rate loan, whatever interest is fixed on the start of loan is carried on for the complete
period. However, in the other one, the interest rate is not fixed and as the interest rate goes up or
low the effect is directly transferred to the person who is taking the loan. In the last few years the
floating interest rate has been a favorite among most of the people taking home loans.

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There is also a trend to opt for home construction loan. This loan is available to those who want
to design their homes according to their requirement and taste. In other words, this loan is meant
for those who themselves want to construct their new home.

As shared earlier, taking a loan is not a difficult task. However, before taking a loan, one must
realize that the relationship with the bank will be for a longer period usually 15 to 20 years so
one must ensure faith and integrity in bank. Apart from low rate of interest, the bank should also
provide some value added services. The other thing is to look into is the property that is to be
brought. Making sure that the builder has all sanctions and facility to build a good building is
very important.

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 , Bank of Baroda, SBI, Standard Chartered Bank
and Axis Bank .

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.

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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

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.


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

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Up to 5 9.50 2100 8.75 2064
6 to 10 9.75 1300 9.25 1280
11 to 15 - - 9.25 1029
State Bank of India
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
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

6 to 10 9.00 1267 10.50 1350
PNB Housing Finance 11 to 15 9.25 1030 10.50 1106
16 to 20 9.50 933 10.50 999
16 to 20 11 1032 9.50 932

Up to 5 9.00 2076 10.50 2150

6 to 10 9.00 1267 10.50 1350
Karur Vysya Bank
11 to 15 9.25 1030 10.50 1106
16 to 20 9.50 933 10.50 999

The above table illustrates the comparison between the interest rates from various Housing
Finance Companies and banks. It can be seen that if one wishes to go for floating loans, the bank
which gives the best deal as far as the interest rate is concerned is HDFC followed by PNB
Housing Finance with the lower rates.

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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

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:-

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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 and investment purposes.

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Stamp duty loans:-

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

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

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 Dependant/(s)
 Assets/Liabilities
 Credit History
 Stability / continuity of your employment/business
 Income of co-applicant/(s)


Karur Vysya Bank is an Indian old private-sector bank, headquartered in Karur in Tamil Nadu. It
was set up in 1916 by M. A. Venkatarama Chettiar and Athi Krishna Chettiar. The bank primarily
operates in treasury, corporate/wholesale banking and retail banking segments. KVB provides
services such as personal, corporate, agricultural banking and services to NRIs and MSME. Under
personal banking, the bank provides housing loan, personal loan; insurance; and fixed deposits
among others. Under corporate banking, KVB provides services like corporate loans; demat
account, multicity current account and general insurance among others. Schemes provided by
KVB under agricultural banking include Green Harvester, Green Trac and KVB Happy Kisan
among others. Under MSME, the bank provides products such as KVB MSME Cash, KVB MSME
Term Loan, KVB MSME Vendor Bill Discounting and KVB MSME Standby Term Loan among
others. The bank had added more branches and 10 ATMs during the year thus bringing the total to
798 branches and 1,780+ ATMs as on 1 July 2018. It introduced a number of initiatives in FY16
like reloadable cards, kisan credit cards, automatic passbook kiosk, e-book, etc. The latest being
introduction of fast tag and UPI based payment system. Total business volume is 1,00,000+ crore
as on Dec, 2017

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The Bank has put in place a Code of Conduct and Ethics which is applicable to all its employees.
The Code articulates the ethical principles and acceptable behaviour that the Bank’s employees
are expected to demonstrate to uphold the Bank’s values. The Code covers aspects related but not
limited to ethics, accountability, conflict of interest, bribery and corruption. The Bank has put in
place a Vigilance policy relating to ethics / bribery / corruption which is applicable to all its
employees. The Bank has adopted a “zero tolerance” approach to bribery and corruption and
employees who commit such acts are dealt with firmly by imposing deterrent punishments as per
the provisions of bi-partite settlement (workmen) and Discipline and Appeal Regulation (Officers).
The Bank’s HRD policy-vision document highlights building of a strong team with integrity and
aligning human resources with business goals. The Bank has also adopted Code of Conduct and
Conflict of Interest Norms in respect of Board of Directors to guide the Board members in ensuring
highest ethical standards in managing the affairs of the Bank. The Bank has adopted ‘Model Code
of Conduct for Direct Selling Agents’ and is applicable to all persons involved in marketing and
distribution of any loan or other financial product of the Bank.Similarly the Bank in its
procurement policy has stipulated code of business conduct and ethics to act with utmost integrity
from employees and suppliers as well.Bank is having executive level Committees to ensure the
accountability viz. Product Development, Standing Committee on Customer Service, Staff
Accountability and Outsourcing Committee and the bank has constituted various Board level
committees such as Audit Committee, Customer Service Committee, CSR Committee, etc., to
periodically review and to take necessary actions to protect behavioural and ethical standards in

Loan growth trajectory should pick up: KVB’s loan book reported a healthy CAGR of 17% over
FY2011-16. However, FY2017 has been a lackluster year so far with loan growth of only 3.3%.
Nevertheless, we expect the growth trajectory to pick up from FY2018 onwards. While the bank
is still largely dependent upon corporate loans for its growth, it has been scaling up its presence
in the retail loans segment gradually. Retail as a % of total loans has gone up to 16% at the end
of 3QFY17 as compared to 8% in FY2012, and this is likely to see further improvement in the
years to come. Fairly stable deposit growth further boosted by demonetization: KVB’s deposits
have reported a healthy 15.2% CAGR over FY2011-16. The growth in deposits got a further

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boost owing to demonetization. During demonetization the bank received strong flows in the low
cost CASA base and the share of CASA in total deposits thus went up to 30.8% at the end of
3QFY2017 v/s 23.3% in FY2016 end. Though incrementally the growth in CASA could taper
down, we expect overall deposits to grow at a CAGR of 9% over FY2017-19. Asset quality
issues to subside gradually: KVB had maintained a fairly stable asset quality in a challenging
economic environment, however prolonged slowdown in the core sector took a toll on its asset
quality and GNPAs went up from 1.30% (FY2016) to 2.66% at the end of 3QFY2017, while
NNPAs went up to 1.68% v/s 0.55% over the same period. We expect NPAs issues to subside in
the quarters to come. Moderate credit costs will lead to earnings pick up and gradual recovery in
RoE: Historically KVB had maintained a moderate credit cost of 40-45 bps, which jumped in
FY2014/15 to 130/133 bps. However, it has moderated subsequently and we expect this to
further moderate to 70 bps by FY2019. Lower incremental slippages, pick up in business growth
and moderate credit cost should help earnings to grow by 12% & 26 % in FY2018 &19

Outlook and valuation: KVB’s earnings were impacted due to higher provisions and lower
business growth, however, we expect gradual recovery on both the fronts going ahead. While in
FY2018 we expect earnings recovery to be visible, sharp growth is expected in FY2019. At the
CMP the stock is trading at 1.1x its FY2019 BV. We have valued the stock at 1.4x its FY2019E
BV and recommend BUY with a Target Price of `140 over the next 12 months.

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Loan growth remained moderate over the last few years, likely to see revival from FY2018
KVB’s loan book reported a healthy CAGR of 17% over FY2011-16. However, FY2017 has
been a lackluster year so far with loan growth of only 3.3%. Too much reliance on the corporate
side has impacted the growth of the bank in the recent quarters, as incremental demand from
corporate segment has been muted due to the lack of fresh capex. Further, looking at the stress in
asset quality, the management has further slowed down the loan book expansion

While the bank is still largely dependent upon corporate loans for its growth, it has been scaling
up its presence in the retail loans segment gradually. Retail as a % of total loans has gone up to
16% at the end of 3QFY17 as compared to 8% I FY2012, and this is likely to see further
improvement in the years to come. Further, political instability in its home state Tamil Nadu also
had been one of the key reasons for the lack of credit growth, however with stability in
Government now, investments should revive, leading to better credit off take.

Company Background

Based out of Karur, Tamil Nadu, Karur Vysya Bank is one of the oldest private sector banks in
India. The bank has strong presence in its home state Tamil Nadu and in other southern states of
India. However, in the last few years the bank has also been scaling up its operations in other
states of India. At the end of 3QFY2017 the bank had a customer base of 6.09 million and
operated through 706 branches and 1,711 ATMs.

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The main purpose of this study is to attain the knowledge of the processing system of home
loans. The main purpose of the study are as follows:-

 To know the ideas of customers about home loan products and services.
 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 Karur Vysya Bank home loan.


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

 The main objective of this study is to know the Customers perceptions about home loans
of Karur Vysya Bank.
 To analyze the history of Karur Vysya Bank.

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 Generating good business to the company by promoting and selling the products of Karur
Vysya Bank.
 To know the ideas of customers about home loan products and services.
 To make comparative study of Disbursement of home loans by Commercial banks.
 Fixing the appointments with the customers.
 To study the satisfaction level of customers about home loans.
 To study the problems faced by customers in obtaining the home loans.
 Visiting the customers and closing the deal.
 To learn about various aspect of Karur Vysya Bank home loan.


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.

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After going through previous studies of Home loans I came to conclude that-

 There is growth of home loans after 2001.

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

Now after this conclusion the details of reviews are below-

Berstain David (2009) examined in his study taken from 2001 to 2008 that in this period there is
increase use of home loans as compared to private mortgage insurance (PMI).he have divided his
study into four sections. Section 1 describes why people are going more for home loans than
PMI. the main reason for this that now home loans market provide Piggybank loans for those
people who don’t have 20% of down payment. Section 2 tells the factors responsible for the
growth of home loans and the risks on shifting toward home equity market without any PMI
coverage. PMI can protect lenders from most losses up to 80% of LTV and the absence of PMI

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will result in considerable losses in an environment. Section 3 tells the measures in changes of
type of loans. For this he have taken the data from the 2001 and 2007 AHS a joint project by
HUD and Census The results of this analysis presented in Table One reveal a sharp increase in
the Prevalence of owner occupied properties with multiple mortgages among properties with
Newly originated first mortgages. Section 4 describe the Financial status of single-lien and
multiple-lien households and for this he have taken the survey of consumer finance and show
that financial position is more weaker in multiple loans than the single loans.

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

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

La cour Micheal (2006) examined the home purchase mortgage product preferences of LMI
households. Objectives of his study to analysis the factors that determined factors their choice of
mortgage product, is different income groups have some specified need to meet particular
product. The role pricing and product substitution play in this segment of the market and do
results vary when loans are originated through mortgage brokers? For this they have use the
regression analysis and the results are high interest risk reduce loan value. Self-employed
borrower chooses reduce documented loans than salaried workers. Use of this product type

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seems to be more prevalent among borrowers with substantial funds for down payment and
better credit scores. In case of pricing Multi families requires price premium and larger loans
carry lower rate. And the role of time, particularly, the time required for the loan to proceed from
application to closing it is find that government lending taking the longest time and Nonprime
loans the shortest time. Multifamily properties take longer time in closing. And during peak
season take longer time to close. And for last objective it is find that broker originated loans
close faster. The effect of mortgage brokers on pricing and other market outcomes is fertile
ground for additional research.

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

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

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

Helen, A.P (2006), in her study, has made a comparative analysis of the schemes of HDFC and
KSHB and tried to see how far the economically weaker section in the three metro cities in
Kerala (Trivandrum, Kochi, Kozhikode) benefited the services rendered by these two
institutions. She also made an evaluation of the cost effective and conventional housing

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examined the awareness of the low cost housing technology and recommended the need for cost
effective eco-friendly housing. She opined that in Kochi low cost housing means low quality
housing meant for the poor and hence there is urgent need to popularize low cost housing so as to
change the mind set of people.

Hasanbanu, S and Jeya Shree (2006) studied the various factors which influence the people for
availing housing loan from public and private sector banks. They concluded that there is vital
scope for housing promotion in India, and banks can play a vital role in promoting house
building activities in villages by introducing more dynamic and innovative housing loan

Dangwal,R.C (1999) assessed the performance of various financial institutions and their
different housing finance schemes. He also assessed the further need of finance in order to fill up
the gap between the demand and supply of housing finance in India.

According to Carole Rakhodi (1991) the finance for house construction and purchase is in
many limited supply in the third world. The formal sector housing finance is only available to a
small portion of the urban population. This has led to increase in finance systems including
surveys of international literature.

Plavia,C.M (1969) stated that housing finance is not as self-liquidating as agricultural finance
and industrial finance.

Koshy George (2000) conducted a study among the salaried class in Kerala and examined their
house construction activities and the proportion of their investment in housing. He also examined
the socio economic impact due to the drainage of funds to other states in respect of employing
labourers from other states and importing building materials from other states

Varghese, K.V (1983) explained that the main housing problem is linked with financial sector.
He opined that housing is very expensive which needs heavy capital outlay.

David Drakakis (1981) speaks of the necessity of slum improvement programmes by stating
that approaches to the housing shortage of the third world, broadly encompasses government
subsidized programmes which are involved in varying degrees.

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In the opinion of Claude Gruen (1970) urban renewal has not provided equivalent price
standard dwelling units to supplement competitive function of the slums. The economic
determinants of housing quality work within the parameters of income and willingness to spend
for housing exhibited by the population of urban area.

As we find in Economic Review, Government of Kerala (1995) Kerala State Co-operative

Housing Federation is an apex financing agency in the co-operative sector. It extends financial
assistance for the construction of houses through its 207 affiliated primary societies. Kerala State
Nirmithi Kendra has been established with the objective of promoting low cost housing and
habitat development.

Vijaya Bhole (1986) in her research thesis cites that the economic factors seem to have placed
severe impediments in the house building activity. Among the most important factors, rising land
value seems to be major constraints in house building activity.

Sivalingam,T (1999) in his study titled “A Study of the Performance of Multi-Agency Housing
Finance Institutions with Particular Reference to HDFC, LIC and Housing Co-operatives”
analysed the different loan schemes of HDFC, LIC and Housing co-operatives. He observed that
the proportion of investment in public sector housing has declined while the same in the private
sector has increased. He also observed that the borrowers of all the three housing finance
institutions were not satisfied with regard to the rate of interest charged by them.

Aron Chaze (2000) in his article on HDFC in the Financial Express stated that while HDFC has
reported a growth in business volumes, it does very little to inspire stock market. In his opinion,
the effect of lower lending rates has been absorbed and interest spreads have begun to improve.

Krishnamurthy, K.V (2002) in his article titled “Housing Finance: A Safer Avenue” raise a
question- why banks are keen on housing finance sector today? He highlighted the reasons for
this changed phenomenon as the present market condition which forces the banks to park this
surplus resources profitably; housing finance is relatively safe and secure gives better average
yield; to tap the potential as a result of change in life style wide publicity by banks and financial
institutions, demand from wider reach (smaller towns) all have resulted in attracting banks to
enter into this sector. He feels that there is small hope for business for the banks in housing

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segment. Further, the mortgage-backed nature of housing finance helps the bank to look for
securitisation, which generate cash flow and thereby improve capital adequacy.

Mistry,K.M (2002) Managing Director, HDFC, in his article, “Future Perfect”, emphasizes the
importance of housing sector in the economy by stating that it has backward and forward
linkages with as many as 269 industries and is the second largest employment generator in the
country. He affirmed that HDFC is superior to Banks in terms of its ability to render expert
counseling and legal advisory services. He also stated that HDFC has an effective risk
management technique so that its spread remains protected. Though banks have access to low
cost funds, it is totally unstable and over a period of time it will face an issue of mismatch by
borrowing short and lending long.

Gireeshkumar, G.S (2000) in his study analysed the views of member beneficiaries and
managerial personnel with regard to the various aspects of housing loan and examined the
problems faced by primary housing cooperative societies.. He suggested implementation of
professionalism in management and reduction in the proportion of share linking.

In the article titled, “Growth at a Brisk Pace”, Rao,R.V.S (2003), stated that the housing
finance sector has been growing at a brisk pace due to the increased demand for housing
consequent to the lowering interest rates, tax concessions and increasing incomes. To meet the
increased demand for housing and the lower probability of losses prompted varied players to
enter the sector. He opined that however, not all players are likely to succeed and to withstand
competition they should render technology-enabled value added services.

In the article titled “Huge Untapped Potential”, Nitin Palany (2004) described the evolution of
housing finance industry and stated that there is a huge potential for housing finance which can
be tapped across the country. He also stated that there is room for every player in the housing
finance market. He opined that in the midst of the information explosion, borrowers sometimes
find it difficult to decide the right lender for which he has given a check-list to borrowers to take
a right decision.

In the article, “Housing Loans – Choose the Best Deal”, Kumar,M (2004) discussed the
option (fixed, floating or mixed) that may be considered as the best for the borrower. He opined
that mixed option might be the best in the present scenario as the market is highly uncertain so

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far as change in interest rate is concerned. So borrowers should plan their financial needs in an
effective manner to get the best deal and to decide the proportion depending upon the risk
bearing capacity.

Manoj, P.K. (2004) in his article, “Dynamics of Housing Finance in India”, made an attempt
to study the growth and development of housing finance system in India. He also emphasized the
importance of housing to the economy and prospects of housing finance industry. He examined
the risk factors and issues involved in aggressive lending to housing due to cut throat
competition and the peculiar features of the existing regulatory and legal system. He concluded
that measures should be taken to promote active mortgage backed securitization market in India
which can further strengthen our Housing Finance System and make it more competitive.

Varghese, K.V (2004) in his article entitled “The Existing Housing Finance System”, viewed
that as a result of mal-allocation of funds, the finance is inadequate. This is mainly due to the
absence of country wide institutions to combine savings with the provision of housing finance.
He opined that housing is a costly commodity which requires huge investment. The present
housing finance system lacks facilities of mortgage loan and insurance for housing credit. Poor
people (pavement dwellers) are outside the purview of all financial institutions and hence some
sort of financial arrangement may be made to meet their financial requirement of housing.

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

understood as a science of studying how research is done scientifically. It is necessary for the
researcher to know not only the research methods but also the methodology.

This Section includes the methodology which includes. The research design, objectives of study,
scope of study along with research methodology and limitations of study etc.

 To know the Customers perceptions about home loans of KVB.

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


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


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

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

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

• Sample size;-

For the questionnaire I have taken the sample size of 100 customers of KVB.

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


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


Large sample gives reliable result than small sample. However, it is not feasible to target entire
population or even a substantial portion to achieve a reliable result. So, in this aspect selecting
the sample to study is known as sample size. Hence, for my project my sample size was 100.

The Sample Size consists of both the Professional and Business class people. IT peoples,
Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample.


Random sampling technique was used in the survey conducted.


Data has been presented with the help of bar graph, pie charts, line graphs etc.

52 | P a g e

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


The mode of collection of data will be based on Survey Method and Field Activity. Primary data
collection will base on personal interview. I have prepared the questionnaire according to the
necessity of the data to be collected.


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

1) The sample size of 100 customers and 4 banks might prove a limitation because of
difficulty in generalization of results.
2) 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.
3) To access such a large number of customers was difficult because of non-cooperative
attitude of respondents.
4) Lack of data was also the other limitation of the study as some of banks do not have
proper data on topic.
5) There was limitation of time to conduct such a big survey in limited available time.
6) Ignorance and reluctant attitude of customers was also a major limitation in this study.
Thus above all were the limitations in this research study. The maximum efforts were
made to overcome these limitations in the study.

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


TABLE 4.1:

Age group No. of Respondents

18 - 25 years 127
26 - 35 years 67
36 - 49 years 46
50 - 60 years 24
More than 60 6


Analysis: -

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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.



Sr. No. Category No. of Respondents Percentage

1 Married 140 70%
2 Unmarried 60 30%
Total 200 100%



From the table and graph above it can be seen that

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 70% respondents are married.
 30% respondents are unmarried.

Educational qualification of respondent’s


Sr. No. Category No. of Respondents Percentage

1 Under graduate 50 25%
2 Graduate 80 40%
3 Post graduate 70 35%
Total 200 100%



From the table and graph above it can be seen that

 25% respondents are under graduate.

 40% respondents are Graduate.

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 35% respondents are Post graduate.


TABLE 4.4:

Customer profile No. of respondents

Student 7
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 24


Customer Profile

11% 3%2% Student

11% Housewife
Working Professional
22% 51%
Self Employed
Government service employee


From the table and graph above it can be seen that:-

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51% of the respondents are working professionals, 22% are into business and 11% are self-
employed, 11% of the respondents are government service employee and 3% of the respondents
are student and 2% of the respondents are house-wife.



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%



From the table and graph above it can be seen that

 49% respondent’s annual household income is less than 2 lacs.

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 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 KVB?


Category No. of Respondents

Yes 164
No 16

Awareness about KVB




From the table and graph above it can be seen that

 91% respondents are known about KVB

 9% respondents are not known about KVB

Reasons for getting the home financed

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Table 4.7

Sr. No. Number of Reasons Percentage

a. Non-availability of funds 36

b. Reluctance to pay cash in one go 35

c. Tax benefit 24

d. Any other 5

GRAPH: - 4.7

Reason for Home Finance


24% Non-availability of funds

Reluctancy to pay cash in one go
Tax benefit
Any other



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.

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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 fulfilling’s their
dreams and few of them were reluctant to pay cash in one go and wanted to pay their home loans
slowly in installments.

From where you have got your home financed


Name of Banks / Percentage of

company customers
KVB 55

Punjab National Bank 15

Standard Chartered 07

Any other 03

GRAPH: - 4.8

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From where you have got your home


7% Punjab National Bank

Standard Chartered Bank
Any other


The analysis showed that a large number of customers prefer KVB 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 SBI 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 KVB compared to public sector banks and other
private banks. This is because of the extra services provided by KVB. 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 KVB for home loan because of
their services and excessive feat compared to other banks.

Sources of information about Home Loans Scheme

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Sources of information Percentage of customers

Newspapers 49

Magazines 16

Banners/Hoardings/Pamphlets 11

Word of mouth 20

Any other source 04


Sources of information

49% Magazines

16% Word of mouth

Any other source


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

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information about home loans schemes under 'Any other source' and 11% through Banners/
Hoardings/Pamphlets .

Opinion about the services of KVB


Services of KVB Percentage of customers agreeing

Strongly Agree Neutral Disagree Strongly

agree disagree

a. Professionally 86% 10% 4% - -


b. Reliable & 67% 33% - - -


c. Socially responsible 75% 10% 15% 4% -

d. Customer care 20% 68% 8% - -

e. Query handling 20% 76% 4% - -


Customers from KVB are quite satisfied from their services like query handling and customers
social responsibility of banks towards customers and professionally managed services. They
don't give so good response to reliability and transparency services of banks. So, customer's
satisfaction level toward KVB services is lightly satisfied.

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Opinion of customers about home loan schemes


Services of KVB Percentage of customers agreeing

Strongly Agree Neutral Disagree Strongly

agree disagree
a. Amount of loan 60% 35% 5% - -

b. Legal formalities 42% 45% 14% - -

c. Interest rates 32% 56% 12% - -

d. Repayment options 26% 64% 10% - -

e. Security demanded 20% 32% 48% - -

f. Installments 55% 40% 5% - -

g. Services 45% 30% 18% 6% 1%

h. Processing for 55% 24% 18% 3% -

sanction of loan


The analysis shows that the customers of KVB gave 60 percent of amount of loan and legal
proceedings, 56% to interest rates, 45% to proceedings and services, 55% to installments. So,
customer of KVB didn't give response regarding the services of the bank / company except to the
amount of loan and legal formalities.



TABLE: - 4.12

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KVB 78 78
2 2
PNB 7 7
SBI 3 3
TOTAL 100 100




7% 3%
10% KVB
78% PNB


From the table and graph above it can be seen that:-

78% of the people contacted prefer KVB to any other and therefore it is ranked no.1 by that
percent of respondents.

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There are everything in the world has good or bad points. No doubt banking industry/ company
has made many efforts to enhance the customer satisfaction but customer still faced some
problems. These are high lightened as below:

1) The customer does not have proper knowledge about different home loan products so
they face problem in making a good deal.
2) There are procedural delays, which harass the customers’ lot. This will crush the curtsy of
customers to avail the home loan.
3) The attitude of bank employees sometimes non cooperative and it creates a hurdle in
building trust and Confidence among customers about banks.
4) The banks do not take into account the paying capacity of customers. So some customers
are not able to get amount of loan needed by them.

So above discussed are the problems which faced by customers while availing home loans.

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 KVB having good brand image in the minds of customers.

 Majority of the people got loans from KVB only
 Most of the customers are not aware of the products of KVB home loans
 Some of the customer’s felt that the interest rates are somewhat high
 Some of the customer not having good faith on private banks like Standard chartered
bank, HSBC bank etc.
 Most of the people are directly go to KVB to apply a home loan
 Some of the customer of KVB already benefited through KVB home loan products and
 Customer awareness is medium about KVB products.
 SBI providing good services to their customers.


These suggestions have been discussed as follows:-

 To increase their customers, the KVB should provide specialized services in this sector.
These services can be such as proper guidance to the customer regarding the processing
of loans, especially for the customers who are illiterate.
 To satisfy their customers and for good dealings in future, the KVB should make prompt
disbursement of loan amount to the customers so that they can buy or construct their
dream home as early as possible.
 The KVB should use easy procedure, or say, less lengthy procedure for the sanctioning of
loan to the customer. There should be less number of legal formalities, in case this exists,

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then, these should be completed in less time. This will be helpful in attracting more
 Although the interest rates on specific norms, yet customers seek less interest rate which
can lower their cost of house. So banks should try to lower their interest rates. Needless
to say, that the bank which is having lower interest rates, have the maximum clients for
 KVB provide loan according to the repaying capacity of the customer and his/her
eligibility. Due to which, some customers are not able to get amount of loan needed by
them. So, the KVB should soften their norms regarding the loan amount.
 Create awareness: The Company has to take care of awareness creation about the
products and services among the customers.
 Charges: The Company has to reduce the mortality and administration charges.
 The company has to reduce their interest rates on home loan products and services.
 The company has to identify the potential customers.
 Company should consider the present competition and should act according to the
customer needs.
 The KVB should try to provide proper knowledge regarding their home loan schemes,
even to people who don't know about such schemes and their benefits especially in rural
areas. So they should provide knowledge to the ignorant customers, especially in rural
areas and backward urban area so, above are the main suggestions provided to the KVB.
By considering these suggestions, the KVB can strengthen their customer base in home
loans sector. They should improve their services and reduce legal proceedings and should
be friendly to their customers. All this will be helpful to satisfy their customers.

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1) In my study we came to know that many peoples are interested to take a home loan from
KVB to construct their homes.
2) Home loans have long period when compare to other personal loans and other loans. So
peoples are confused to take a home loan.
3) Even though the interest rates are high peoples are willing to take a loan from KVB due
to some reasons.
4) The interest rates also somewhat high when compare to other banks
5) The loan sanction process is low when compare to other banks.
6) For disbursement process is also it will take low time when compare to other banks

Finally the whole research was carried out in a systematic way to reach at exact results. The
whole research and findings were based on the objectives. However, the study had some
limitations also such as lack of time, lack of data, non-response, reluctant attitude and illiteracy
of respondents, which posed problems in carrying out the research. But proper attention was
made to carry out research in proper way and to make accurate conclusion for the KVB which
may beneficial for banks to enhance their customer base.

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 Berstain David(2008), “Home equity loans and private mortgage insurance: Recent
Trends & Potential Implications”, Vol.3 No.2, August 2008, Pp. 41 - 53

 Dr. Rangarajan C. (2001), “A Simple Error Correction Model of House Price”.Journal of

Housing Economics Vol. 4, No. 3,pp 27 – 34

 Fanning (1982), “The Demand for Home Mortgage Debt” Journal of Urban Economics,
Vol 11 No 2, November, pp. 770-774

 Godse (1983), “looking a fresh at banking productivity”, Journal of Real Estate

Literature, Vol. No. 13, Page 141 to 164.

 Haavio, Kauppi(2000) , “Residential Lending to Low-Income and Minority Families:

Evidence from the 1992 HMDA Data," Federal Reserve Bulletin,Vol no 80(2), December
2000 Pp-79-108

 Kulkarni (1979), “Development responsibility and profitability of banks” Journal of

Economic Perspectives, Vol 9 No 1, pp. 26-32.

 La courr, Micheal(2007) , “Economic Factors Affecting Home Mortgage Disclosure Act

Reporting” The American Real Estate and Urban Economics Association, Vol.2 No. 2
May 18, 2007, Pp. 45 -58

 La cour Micheal(2006) , “The Home Purchase Mortgage Preferences Of Lowand-

Moderate Income Households”, Forthcoming in Real Estate Economics , Vol 18, No 4 ,
December 20, 2006, p. 585.

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 Vandell, Kerry D (2008), “Subprime lending and housing bubble: tail wag dog?
“International Journal of Bank Marketing, vol. 21, no 2, pp. 53-7

 Brochure on home loans from KVB


 The Times of India

 Financial Express

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Guide Resume
Girish H.Rao

Mobile: 9930874145, 8452815945 * E-Mail: girishao1234@gmail.com

~ Banking Professional ~

Banking Operations * Banking Processes * Customer Relationship Management * Credit


~ Professional Snapshot ~

An astute professional with 5 Years in entire Banking Operations, Client Relationship

Management, Credit Operations.
Currently associated with The Karur Vysya Bank Ltd, as Assistant Manager
Adept at performing banking operations effectively & efficiently, coordinating with various
branches & managing a variety of branch banking operations.
Demonstrated business acumen in managing the operations, effectively discharging the functions
and achieving higher rate of growth.
Proficient in handling quality customer service operations, organizing process strategies and
building relationship with various groups.
Ability to handle various audits in the branch and ensuring compliance of the same.
Possess strong communication, analytical, analysis/mapping and negotiation skills.

~ Competencies Overview ~

Banking Operations

Managing banking operations with focus on excelling business targets & service delivery

Following the process/procedure of the bank & ensuring compliance to rules and regulations

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of the bank including latest circulars and notifications.
Implementing policies/procedures for all round development of the bank as well as reducing
overall costs to the bank through various means.
Client Relationship Management

Managing customer centric operations, forwarding customer instructions to the concerned

department and ensuring customer satisfaction by achieving delivery & service quality norms
with minimum TAT
Managing the overall functioning of process, identifying improvement areas and
implementing adequate measures to maximize customer satisfaction level.
Interfacing with clients for understanding their requirements and cultivating relations with
them for customer retention and securing business.
Credit Operations

Well versed in end to end loan processing from intial receipt of loan application to loan
disbursement stage with TAT parameters.
Well versed in Loan Post Sanction Process, completion of required documents for
individual/firm Loan.
Evaluation of credit proposal for working capital requirement, Retail Loan like Home Loans,
Car Loan.
Team Management

Leading, mentorign and monitoring the performance of the team members to ensure
efficiency in process operations and meeting of individual and branch targets

~ Organisational Scan ~
Since July 2012 with The Karur Vysya Bank as Assistant Manager

Significant Accomplishments

Holds the distinction of controlling counter activity for smooth processing at counter

Working as Deputy Branch Head

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~Previous Assignment~

October 2011 to June 2012 as a SAP Consultant at Binayak Tex Procesors Ltd, Mumbai

Academic Credentials

MBA – Finance From Manipal University

BE from Viseswaraiah Technological University


SAP SD Certified

Personal Details

Date of Birth : 23rd November 1985

Residential Address : D-5/404, Lok Dhara CHS Ltd, LOK DHARA, Kalyan East – 421 306

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