A Study of HOUSING LOAN Borrowers of Selected Public And Private Sector Banks In Badlapur - Kalyan Region

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A Study of HOUSING LOAN Borrowers of Selected Public And
Private Sector Banks In Badlapur - Kalyan Region
Project Submitted to
H & G H Mansukhani Institute of Management
In partial fulfilment of the requirements for
Master in Management Studies
By
AKSHAT MAHENDRA
Roll No. – 2
Finance
Batch: 2018 – 2020
Under the guidance of
Internal Guide: Dr. ANJU VASWANI

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A Study of HOUSING LOAN Borrowers of Selected Public And
Private Sector Banks In Badlapur Region
Project Submitted to
In partial fulfilment of the requirements for
Master in Management Studies
By
AKSHAT MAHENDRA
Roll No. – 2
Finance
Batch: 2018 – 2020
Under the guidance of
Internal Guide: Dr. ANJU VASWANI

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Ulhasnagar
March 2020
Student’s Declaration
I hereby declare that this reportis submitted in partial fulfilment of the requirement of MMS
Degree of University of Mumbai to H.& G. H. Mansukhani Institute of Management.
This is my original work and is not submitted for award of any degree or diploma or for
similar titles or prizes.
Name : AKSHAT MAHENDRA
Class : SYMMS
Roll No. : 2
Place : Ulhasnagar
Date :
Student’s Signature:

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Certificate
This is to certify that the project submitted in partial fulfilment for the award of MMS
Degree of University of Mumbai to H. & G. H. Mansukhani Institute of Management
is a result of the bonafide research work carried out by Mr. AKSHAT MAHENDRA
under my supervision and guidance, no part of this report has been submitted for award of
any other degree, diploma or other similar titles or prizes. The work has also not been
published in any journals/Magazines.
Date:
Place:Ulhasnagar
External Guide Director
(Signature & Name of the Guide) (Signature & Name of Director)
Faculty Guide
(Signature & Name of Faculty)

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Acknowledgement
First of all, I want to thank my college for giving me a platform to commence and
gain knowledge about my chosen course for my career ahead.
Its justification will never sound good if I do not express my gratitude to the ones who
helped me gain knowledge. I would like to mention one of few such persons, my Project
Guide, Dr. Anju Vaswani without whose help my project would have neither begun
nicely nor would have reached this destination of successful completion.
I would like to raise my immense gratitude towards all those people who made my
internship experience as well as projecting it all in this report possible.
And lastly, I would like to thank my parents, friends for being pillars of supportthroughout
and gratitude in abundance to the Almighty.
AKSHAT MAHENDRA

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Table of Contents
Executive Summary........................................................................................................................................ 8
Chapter- 1: Introduction................................................................................................................................ 8
1.1 Introduction:........................................................................................................................................... 8
1.2 History of Loans: - ............................................................................................................................... 11
1.2.1 Pre-Independence Era:-................................................................................................................... 12
1.2.2 Post-Independence era:- .................................................................................................................. 14
1.3 History of Loan: -................................................................................................................................ 15
1.4 Types of loan:-.................................................................................................................................... 16
1.5 Types of Home Loan: -........................................................................................................................ 18
1.6 Advantages of Home Loan................................................................................................................... 21
1.7 Dis-advantages of Home Loan:-........................................................................................................... 22
1.8 Security required for home loan:- ......................................................................................................... 23
1.9 Charges of home loan:-........................................................................................................................ 23
1.10 EMI (Equated Monthly Installments) .................................................................................................. 23
1.11 Types of interest rates:-...................................................................................................................... 25
1.12 Steps involved in taking home loan:- .................................................................................................. 27
1.13 Determination of Loan amounts:- ........................................................................................................ 34
1.14 Role of Government:-......................................................................................................................... 39
1.15 Government Scheme of Housing :-...................................................................................................... 40
1.16 Housing policies in India:- .................................................................................................................. 46
Chapter-2: Review of Literature: ................................................................................................................. 52
Chapter 3: Research Methodology ............................................................................................................... 54
3.1 Statement of the problem:...................................................................................................................... 54
3.2 Objectives of the research:..................................................................................................................... 54
3.3 Methodology and Data collection:.......................................................................................................... 54
3.4 Hypothesis:........................................................................................................................................... 54
3.5 Scope of the study:................................................................................................................................ 56
3.6 Limitations of the study:........................................................................................................................ 56
Chapter-4: Analysis and Interpretation........................................................................................................ 57
4.2 Anova Analysis..................................................................................................................................... 80
4.4 Chi – Square Analysis ........................................................................................................................... 83
Chapter-5: Findings ..................................................................................................................................... 90
5.1: Findings relating to Home Loan. ........................................................................................................... 90
5.2: Findings relating to Anova & Chi – Square Analysis. ............................................................................. 90
Chapter-6: Conclusion & Suggestions .......................................................................................................... 93
Chapter-7: Bibliography............................................................................................................................... 94

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LIST OF TABLES: -
Table 4. 1 Gender....................................................................................................................................... 57
Table 4. 2 Age ............................................................................................................................................ 58
Table 4. 3 Marital status ............................................................................................................................. 59
Table 4. 4 Monthly Income......................................................................................................................... 60
Table 4. 5 Reasons for taking Home Loan ................................................................................................ 61
Table 4. 6 Type of bank loan taken from.................................................................................................... 62
Table 4. 7 Period required for to pass a loan................................................................................................. 63
Table 4. 8 No. of documents required for obtaining Home Loans are ...................................................... 64
Table 4. 9 Types of problem faced during documentation ........................................................................ 65
Table 4. 10 Satisfied by the Service Provided by Public Sector Bank ...................................................... 66
Table 4. 11 Satisfied by the Service Provided by Private Sector Bank..................................................... 67
Table 4. 12 Period of Home Loan taken .................................................................................................... 68
Table 4. 13 Level of Importance – (a) Location ......................................................................................... 69
Table 4. 14 Level of Importance – (b) Processing Fees............................................................................ 70
Table 4. 15 Level of Importance – (c) Advertisement................................................................................ 71
Table 4. 16 Level of Importance – (d) Fast sanctioning ............................................................................ 72
Table 4. 17 Level of Importance – (e) Good Service Provider .................................................................. 73
Table 4. 18 Level of Importance – (f) Low Rate of Interest ....................................................................... 74
Table 4. 19 Level of Importance – (g) TAX benefit .................................................................................... 75
Table 4. 20 Rate of Interest charged by Bank ........................................................................................... 76
Table 4. 21 Language used while taking Home Loan................................................................................ 77
Table 4. 22 PMAY scheme is beneficial? .................................................................................................. 78
LIST OF CHARTS: -
Chart 4. 1 Gender....................................................................................................................................... 57
Chart 4. 2 Age............................................................................................................................................. 58
Chart 4. 3 Marital Status............................................................................................................................. 59
Chart 4. 4 Monthly Income ......................................................................................................................... 60
Chart 4. 5 Reasons for taking Home Loan................................................................................................. 61
Chart 4. 6 Type of bank loan taken from.................................................................................................... 62
Chart 4. 7 Period required for to pass a loan ................................................................................................. 63
Chart 4. 8 No. of documents required for obtaining Home Loans are....................................................... 64
Chart 4. 9 Types of problem faced during documentation......................................................................... 65
Chart 4. 10 Satisfied by the Service Provided by Public Sector Bank ...................................................... 66
Chart 4. 11 Satisfied by the Service Provided by Private Sector Bank ..................................................... 67
Chart 4. 12 Period of Home Loan taken..................................................................................................... 68
Chart 4. 13 Level of Imp – (a) Location...................................................................................................... 69
Chart 4. 14 Level of Imp – (b) Processing Fees ........................................................................................ 70
Chart 4. 15 Level of Imp – (c) Advertisement ............................................................................................ 71
Chart 4. 16 Level of Imp – (d) Fast sanctioning......................................................................................... 72
Chart 4. 17 Level of Imp – (e) Good Service Provider............................................................................... 73
Chart 4. 18 Level of Imp – (f) Low Rate of Interest.................................................................................... 74
Chart 4. 19 Level of Imp – (g) TAX benefit ................................................................................................ 75
Chart 4. 20 Rate of Interest charged by Bank............................................................................................ 76
Chart 4. 21 Language you use while taking Home Loan........................................................................... 77
Chart 4. 22 PMAY scheme is beneficial?................................................................................................... 78

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Executive Summary
Home is where the heart is-owning a home lifelong dream for most of the people. Home is
more orless oflifetime investment and hence home loan are an integral part ofevery person
who dream and wants to have a living space of his own. Buying a home is probably the
biggest purchase most of us will never make in our lifetimes. Owing our own home is a
watershed event in our life. You are the master of your own space, your comer in the
universe. But the process of finding your little nest is a stressful one. A one in a lifetime
investment needs a loan and that is how a home loan comes into the scheme of things in your
life. Almost all public and private sectorbanks are offering home loans at attractive rates for
purchasing their dream home. Home loan usually cover a variety of type. All banks have
come out with home loan products studded with features and value addition that make the
schemes not only attractive but also serve as a substantial to the borrows following their
dream home.
Chapter- 1: Introduction
1.1 Introduction:
India’s banking sector is constantly growing; there has been a noticeable change in
transactions through ATMs, and also internet and mobile banking. Following the passing of
the Banking Laws (Amendment) Bill by the Indian Parliament in 2012, the landscape of the
banking industry began to change.
The bill allows the Reserve Bank of India (RBI) to make final guidelines on issuing new
licenses, which could lead to increase the banks in the country. Some banks have already
received licenses from the government, and the RBI's new norms will provide incentives to
banks to spot bad loans and take requisite action to keep rogue borrowers in check.
Over the next decade, the banking sector is projected to create up to two million new jobs,

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driven by the efforts of the RBI and the Government of India to integrate financial services
into rural areas. Also, the traditional way of operations will slowly give way to modern
technology. Home is the mostimportant human need, next only to food, clothing and shelter.
Home is an important facet of economic development; it is a basic need of a human being.
It is a place where everyone can relax after returning home from day’s tiring work. It is a
place where everyone can give time to his/her family and spend beautiful moments with
family members. It is a fundamental demand for living and one of the keys to peace and
happiness. Every creature yearns for a home.
The first and the best training ground for human beings’ development of their varied
facilities is home. It constitutes a very significant part of the social and physical environment
where the individuals grow and mature as good citizens. It also plays an important role in
creating employment, maintaining health, social stability and preserving decent human life.
Definition of Home:-
“Home is the social unit formed by a family living together.”
– Merrian Webster Dictionary
“Home is the place where your parents live and where you grow up”
– Macmillan Dictionary
Home full fills many requirements. Home provides aesthetic satisfaction, emotional
satisfaction, mental health, physical health, comfort and safety. It provides shelter from the
dangers of fire and vagaries of weather, it creates conditions promoting good health such as
pure water and disposal of all kinds of waste, it provides adequate space of privacy, it
creates/provides congenial surroundings in which a person can work and relax.
Housing is a highly complex product. It is a bulky, durable and permanent product. It has
fixed location, being used only in the place where it is built. Once built, it tends to remain
in existence for many years. The houses range from single – family houses to many other

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types. But housing is more than acomplex product. Itis bothan economic and socialprocess.
It plays a tremendous role in the economy.
Housing has highly significant social implications because it provides the shelter for our
basic unit – the family. Almost every personis affected in his day-to-day living by the kind
of house in which he lives. In popular imagination a house is a building with a kitchen, a
bathroom, bedroom and a lounge. It will be built sturdily enough to withstand natural
elements, and it will have an address on the register of the post-office.
Some of the housing in India’s largest cities fit this sort of description. But many city
dwellers do not live in such places. Some of the poorestare housed in spaceon a pavement,
near to their low-paid work. Others will have a roof, walls and a door, set in a wasteland
along river banks, close to railway lines, or in any place where there is a patch of land
available.
It is a shelter, it is related to capital markets, it is within state roles, it has connection to
urbanization in development as a whole, and it is somewhat tied to structural condition in
the economy. It can beviewed as consumptionbut to see it as productionyields insights into
its structural and gender inequalities and its productivity in society. After discussing what a
‘home’ is and what ‘housing’ let is us now discuss ‘housing’ in a historical perspective.
Every citizen of the country dreams of having his own house. Home is a basic need of a
human being; it is an important facet ofeconomic development. The dream home is not very
far away with home loan, which will fulfill the dream into reality. The demand for home
loans has increased manifold in the last decade. There are number of housing finance
companies and banks offering cheap home loans at a low interest rate. The home loan
schemes offered by both public and private sector banks are very competitive.
The study aimed at comparative analysis of home loans schemes offered by public sector

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and private sectorbanks in Badlapur Region. The paper also examined the satisfaction level
and problems faced by customers while availing home loan.
A home loan is a long-term commitment which is critical. The demand for home loans has
increased manifold in the last decade. The reason for this growth is not hard to see, changing
mindset with globalization and integration with the developed economies, where mortgages
rule the roost, income tax sops in the Union Budgets and substantial rise in the income-
generating capacity of Indian youth. So, the present scenario of home loans shows good
amount of growth and is heading for a bright future.
There are number of banks and housing finance companies offering cheap home loans at a
low interest rate. The home loan schemes offered by both public and private sector banks
are very competitive. Mostly people prefer public sector banks for home loans, especially
because they believe that it is more secure bank and interest rate is lower.
On the other hand, the private sector banks are coming daily in our country and the
preference of younger population is changing because of services & facilities provided by
them.
And the most important thing is that the customer should know about each and every term
related with Home Loans beforeapplying for a Loan. There are different types ofhome loans
tailored to meet customer needs like Home Purchase Loans, Home Improvement Loans,
Home Construction Loans, Home Extension Loans, Home Conversion Loans, Land
PurchaseLoans; Bridge Loans &Mortgage Loans offered by public and private sectorbanks.
1.2 History of Loans: -
In India, the banking system is as old as early Vedic period. The book of Manu contains
reference regarding deposits advances, pledge policy of loan, and rate of interest. From the
beginning of 20th century banking has been so developed that in fact, has come to be called
“LIFE BLOOD” of trade and commerce.
In India, banking has developed from the primitive stage to the modern system of banking

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in a fashion that has no parallel in the world history. With the dawn ofindependence, changes
of vast magnitude have taken place in India. After independence India launched a process
of planned economic activity in order to overcome the multitude of problems it faced as an
underdeveloped nation. The increasing tempo of economic activity lead to tremendous
increase in the volume and complexity of banking activity. Therefore, the role of banks has
had to expand at a fast pace
As engines of development and vehicle of silent Socio-economic revolution in the country,
Indian banks have assumed new responsibilities in the fields of geographical expansion,
functional diversification and personal portfolio. Indian banking transformed itself from
‘Class banking to Mass banking’ 1991) and Post-liberalization period (1991 till date).
The banking system, the most dominant segment of financial sector, accounts for over 80%
of the funds flowing through the financial sector.
A banking sector performs three Primary functions in an economy: The operation of the
payment system, the mobilization of savings and the allocation of savings to investment
projects. By allocating capital to the highest value use while limiting the risk and cost
involved, the banking sectorcan exert a positive influence on the overall economy, and thus
of broad macro economic importance.
The origin of the Indian banking industry may be traced to the establishment of bank of
Bengal in Calcutta (now Kolkata) in 1786. The growth of banking industry in India may be
studied in terms oftwo broad phases. Pre-independence (1786-1947) and Post-independence
(1947 till date). The Post-independence phase may be further divided into three sub phases
such as pre-nationalization period (1947-1969). Post nationalization period (1969 to 1991)
and Post-liberalization period (1991 till date).
1.2.1 Pre-Independence Era:-
At the end of late 18th Century, there were hardly any bank in India in the modern sense of

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the term’ banks’. Somebanks were opened at that time which functions as entities to finance
industry, including speculative trade. With the large exposure to speculative ventures, most
of the banks opened in India during that period could not survive and failed. The depositors
lost money and lost interest in keeping deposits with the bank. Subsequently, banking in
India remain the exclusive domain of Europeans for the next several decades until the
beginning of 20th Century.
At the beginning of 20th Century, the Indian Economy was passing through a relative period
of stability. Around five decades have elapsed since the India’s first war of Indian
independence and the social, industrial and other infrastructure have developed. At that time
there were very small banks operated by Indians and mostof them were owned and operated
by particular community.
The banking in India was controlled and dominated by the presidency banks, namely, The
bank ofBombay, The bank of Bengal and the bank ofMadras-which later onmerged to form
the imperial bank of India. The objectives of banks in the colonial era were mainly helping
the colonial rulers in raising the resources for their empire building activities and facilitating
training activities of the numerically small mercantile.
India has a long history of both public and private banking. Modern banking in India began
in the 18th century, with the founding of the English Agency Housein Calcutta and Bombay.
In the first half of the 19th Century three presidency banks were founded. After the 1860
introduction of limited liability, private banks began to appear and foreign banks entered
into the markets.
The beginning of the 20th Century saw the introduction of Joint stock banks. In 1935, the
presidency banks were merged together to form the Imperial Bank of India, which was
subsequently renamed the State Bank of India. Also that year, India’s Central Bank, The

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Reserve Bank of India began operation.
When India emerged as an independent nation, it inherited a war-torn economy bedeviled
by shortage of food grains, unemployment and the pangs of partition. The banking system,
with shareholder orientation, was not well organized. The banks till then were discharging
the functions of a traditional financial intermediary. To reorient them as instruments of
economic change was indeed a stupendous task considering the narrow objective adopted
by the banks at the time of Indian independence.
1.2.2 Post-Independence era:-
With the dawn of Independence changes of vast magnitude have taken place in India. At the
time of Independence in 1947, the banking system in India was fairly well developed with
over 600 commercial banks operating in the country. However soonafter independence, the
view that the banks from the colonial heritage were biased in favor of working capital loans
for trade and large firms and against extending credit to small scale enterprises, agriculture
and commoners, gained prominence.
To ensure better coverage of banking needs of larger parts of economy and the rural
constituencies, the Government of India nationalized the Imperial bank which was
established in 1921 and transformed it into the State Bank of India with effect from 1955.
Despite the progress in 1950s and 1960s, it was felt that the creation of SBI was not far
reaching enough since the banking needs of small scale industries and the agricultural
structure was still not covered sufficiently.
This was partially due to the existing close ties commercial and industry houses maintained
with the established commercial banks, which give them an advantage in obtaining credit.
Additionally, there was a perception that banks should play a more prominent rule in India’s
development strategy by mobilizing resources for sectors that were seen as crucial for
economic expansion.

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As a result, the policy of social control over banks was announced. Its aim was to cause
changes in the management and distribution of credit by commercial banks.
1.3 History of Loan: -
The term loan is a type of debt. Like all debt instruments, a loan entails the redistribution of
financial assets over time, between the lender and the borrower. In a loan the borrower
initially receives an amount of money called the principal amount. The amount of money is
paid back in regular instalments or partial repayment on an annual basis each instalment
being of the same amount.
There is no certainty about how the loans started, but one can easily assume that ever since
the concept of ownership came into existence people have been practicing lending and
borrowing. Various forms of lending are found to be existing in ancient Greek and Roman
times and even the bible mentioned monetary loan.
However, the modern history of loan started much later. In the history of loans the
“Indentured loan” was one ofthe earliest forms of lending which was practiced in the middle
ages till the 19th century by the land owners and rich people who allowed poor people in
need of money to borrow in exchange of indentured servitude.
The borrower had to work for several years to clear their debt. They had no rights and were
considered by many rich people as “Slave labour”. However, money lenders played an
important part in the history of loans and both the English word “Bank “and “Bankrupt”
have origin in the Italian money lenders.

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1.4 Types of loan:-
Both the private and public sector banks offer different types of loan, some of them are as follow:-
1. Personalloan:-This loan can be availed to meet the expenses related to marriages, travel,
honeymoon, holiday, and medical expenditure or for any other personal use .It is also
available to pensioners, defense pensioners. As the name suggests, loans received as
personal could be utilized by the recipient for any requirement. For example – marriage,
home improvement, travel or any miscellaneous expenses. The interest rate is highest for
this category of loan.
2. Home loan: - IT is usually taken for a very long duration. It is a life time dream of every
individual to have his/her own house. It is a primary human need next in importance only to
food and clothing, however, is a major expenditure and cannot be funded out of a family’s
normal monthly income or saving.
A home loan is based on mortgage and is like any other loan which is offered to a borrower
against a security. In case of home loan security is the home loan is offered to a borrower to
purchase or to build a new house on the basis of his/her eligibility and the bank’s lending
rules. Normally, 80% of property value is granted as the loan amount. in exceptional cases,
Types
of loan
Personal
loan
Home
loan
Car loanBussines
loan
Education
loan

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it can reach to 85-90% also.
According to National Association of Home Builders, the housing industry as a whole
contributes about 17% to 18% of the nation’s GDP. Home loan is the funds buyers have to
borrow usually from a bank or other financial institution to purchase property. Generally
secured by a registered mortgage to the bank over the property being purchased.
3. Car loan: - For those individuals who prefer to travel more conservatively or to get to
their destination faster, a two wheeler is as much faster. With newer models coming out each
year the options available to the customers are both attractive as well as convenient. All
resident Indians, salaried people, professionals, and self- employed businessmen and framers
can apply for this loan.
These days’ automobile companies have ventured into finance by setting up separate
subsidiary companies solely for this purpose. They are able to offer the best interest rates
often with zero interest rate schemes. They usually undercut any bank’s finance terms since
they are able to eat into their profit margin on the underlying vehicle.
4. Educationloan:- Education is the mostimportant investment onecanmake in life.Higher
studies and specialization in certain fields call for additional financial supportfrom time to
time. Just like personal loans, the rate of interest is really high for this category.
However the big advantage here is that most banks will give you a grace period before your
EMI’s or repayment terms start. The grace period takes into account the duration for which
your education lasts i.e. repayment starts once you complete your education and get into job
market.
5. Business loan:- Again, the interest rate is really high for this category mostly becauseof
the risk involved. Business loan facility enables individuals, proprietorships such as
partnership firms and co-operative societies to avail of working capital or undertake

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development of shops orbyway of loan / overdraft. The loan is provided against the security
of tangible collateral securities in the form of mortgage land and building.
1.5 Types of Home Loan: -
Lenders offer home loans, not only for buying a house but also for a variety of other
purposes. Some of the popular types of home loans available in the financial market are
described below.
 Loans for Purchase of Land
Several banks offer loans for land purchase. Purchasing a land is a flexible option, the buyer
can save funds and construct a house whenever his finances allow or just have the land as
TypesofHomeLoan
Purchase
Extensionm
Construction ofa House
House Expansion or
Extension Loans
Home Conversion Loans
Loans for Home
Improvement
Balance Transfer Home
Loans
NRI Home Loans
Bridged Loans
Stamp Duty Loans

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an investment. Up to 85% of the cost of the land is given as loan by lenders like ICICI Bank
and Axis Bank.
 Loans for Home Purchase
The most popular type of home loan is the loan for purchase of a new or a pre-owned home.
This loan is also commonly available and is offered by many banks in different variants. The
interest rate is either floating or fixed and generally ranges anywhere between 9.85% and
11.25%. Also, 85% of the total amount is offered as a loan by many banks.
 Loans for Construction of a House
This loan is specially designed for people who want to construct a place according to their
wishes rather than buying a pre-constructed house. Theapprovalprocess forthis type of loan
is different for it takes into account the cost of plot also.
The mostimportant clause when applying for a home constructionloan is that the plot must
have been purchased within a year for the plot cost also to be included in the loan amount.
The loan amount is decided based on a rough estimate of the construction cost.
The amount may be disbursed at one go or in multiple instalments. Popular home
construction loans include the schemes offered by Bank of Baroda, UCO Bank and Canara
Bank.
 House Expansion or Extension Loans
Want another balcony or an additional bedroom? No worries, some banks also offer loans
for house expansion including alteration of current structure and construction ofnew rooms.
HDFC Home Extension loan and house renovation loan offered by Bank of Baroda are
popular in this category.
 Home Conversion Loans

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People who have already availed a home loan and have purchased a house with it but want
to move to a new house can optfor home conversion loans. By transferring the current loan
to new house, borrowers can fund the purchase of the new home and also need not repay the
previous home loan. Though it offers convenience, this segment of home loan is also very
expensive.
 Loans for Home Improvement
Renovation and repair works like external and internal repair, painting, construction of
overhead water tank and electrical renovation certainly will make your house look better.
But if you lack the finances for repair and renovation, banks like Union Bank ofIndia, ICICI
Bank and Vijaya Bank offer specialized home improvement loans.
 Balance Transfer Home Loans
This optioncan be availed when an individual wants to transfer his home loan from one bank
to another bank owing to reasons like lower interest rates or better services offered by the
other bank. This is done to repay the remaining loan at a revised, lower interest rates offered
by the other lender.
 NRI Home Loans
Specially designed to supportnon-resident Indians in buying a residential property in India,
the formalities and application procedure for this type of loan is different from the others.
Generally, most of the private and public sector banks offer NRI loans as a productof their
housing loan portfolio.
 Bridged Loans
Bridged Loans are short term loans that are designed for existing homeowners who are
planning to purchase a new property. It aids borrowers to fund the purchase of new house
until a buyer is identified for the existing property. This type of loan usually requires the

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mortgage of new house with the bank and is extended for less than two years. Several banks
like Vijaya bank and HDFC Bank offer bridged loans.
 Stamp Duty Loans
Not a widely known segment of home loans, stamp duty loans are offered to coverthe stamp
duty charges during the purchase of a property.
With home loans becoming the norm of the day when it comes to purchasing a home, it also
becomes equally important to identify your requirement and apply for the right type ofhome
loan. Not only will it reduce the paperwork and simplify the loan approval process, it will
also allow you to enjoy a loan at reduced interest rates.
1.6 Advantages of Home Loan
The various benefits of home loans arising to the customers are:-
(1) Attractive interest rate:- The various banks over attractive interest rates to boost and
help their customers. Many banks provide loans on fixed or fluctuating rate to facilitate
customers as per their needs.
(2) Help in owning a home:- The home availed by a personwith the help of bank because,
they provide technical and financial assistance to customer for owing their dream house.
(3) Capital Appreciation:- For each one of us who has seen property prices boom over
the last five years, the prospect of mouth-watering capital appreciation is the biggest
argument for buying a home.
Construction costs alone, which account for more than 70 per cent of the flat's cost, have
risen at 15 per cent annually in the past decade. Rents too seem to keep up with inflation;
making a home one of the few investments can shield you from inflation for the long term.

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(4) Tax benefit on home loan:- Your home loan principal and interest repayment fetch
you attractive tax breaks. And remember, renting actually is more expensive than just the
rent you pay.
Your costis higher since you are not earning any interest on the deposit amount paid to the
landlord (which is quite high in premium locations) throughout the lease term.
(5) Loan period:- There are many banks which provide maximum loan tenure of 15-20
years based onthe loan amount and creditability ofthe customers .This relives the customers
to repay loan amount till a long period.
(6) Foraccidentaldeathinsurance:- Some banks provide free accidentaldeath insurance
with housing loan which is also beneficial to the customers. These benefits or advantages
of home loan are responsible for making so popular among customers that a person who
don’t have home of their home would like to buy and they do it with home loan.
1.7 Dis-advantages of Home Loan:-
(1) Delay in processing:-
Many times, there are huge delay in processingof providing home loan because
various formulations to be fulfilled in this processes. Due to these delay customers fell
mentally and financially weak.
(2) Problem of disbursement:-
There are many problems in home loan disbursement amount. There are
some delays in disbursement of loan amount to the customers due to legal formalities. This
causes problems to the customers.
(3) High cost:-
The public sector bank charges high processing fees for home loan
sanctioning. They are force to pay serious charges at various stage to fulfil their
requirements. Some customers are not able to pay such charges so such people cannot avail

23
the benefits of home loan.
(4) Fluctuating interest rates:-
Some banks give home loan at floating rates which fluctuates at different
interval due to some reasons. These changes may some time lead to increase in interest rate
which will increase the cost of home loans to the customers.
1.8 Security required for home loan:-
1. A simple registered mortgage which is taken as a security against the loan.
2. In case of jointly owned properties it should be ensured that all the co-owners and co-
applicant execute their documents.
3. In case of flat of a group housing society triparilite agreement shall be entered into.
1.9 Charges of home loan:-
Obtaining a home loan involves different types of fees charged on it like processing fees,
administration fees etc.
1. Processing fees:- It is a fee payable at a time of submitting loan application to the bank
which is normally non-refundable.
2. Repayment penalties: - When the borrower re-pays the loan before the loan tenure bank
charges a penalty which is normally 1%.
3. Delaypayment charges:-When there is delay in payment of the EMI bank charges takes
payment fees to the borrower.
4. Cheque bounce charges: - When there is a lack of fund in your account than the bank
charges about 250 to 500 rupees penalty.
1.10 EMI (Equated Monthly Installments)

24
When customer takes a loan, he has not only to pay back the amount of money he has
borrowed, but also the costof borrowing, which is the interest rate on the loan. The costof
the loan will vary depending upon the number of years.
Customers are borrowing for, usually, a longer-term loan which will be more expensive,
than a shorter loan, because simply put, the lending institution has taken a risk, over a longer
period of time. An EMI's amount is dependent on the principal amount borrowed and the
interest that is levied. The number ofEMIs onthe other hand, will bedependenton the tenure
of the loan.
The longer the loan period, the greater number of EMIs customer needs to pay. The EMI
usually remains constant throughout the period of the loan. However, what of this is used to
pay off interest and what part to pay off the principal varies.
In the beginning of the loan repayment period, the interest component of an EMI is higher
and the principal amount is lower. Later on, as the years go by, the principal amount becomes
higher and the interest becomes lower.
Calculation of EMI
An EMI can be calculated on a daily reducing, monthly reducing, quarterly reducing, and
half yearly or yearly reducing basis. The EMI will be lowest, if it is calculated on a daily
reducing basis.
Daily Reducing Basis:Even better than a monthly reducing calculation is a daily reducing
method, which some banks apply.
Monthly Reducing Balance: Now, let us take a real life example of an EMI calculated on
a monthly basis. Keeping the loan amount at ` 1 Lakh the period as 15 years and the rate of

25
interest as 12%, the bank will change the principal outstanding every month.
After the customers pay their EMI for the month, the new reduced amount will be calculated
only for the next month. Similarly, in a quarterly, half yearly or annual reducing balance the
interest is levied according to principal outstanding at the end of these periods.
Progressively, the EMI works out to be more, with the highest being in an annual reducing
basis.
Computation of EMI is calculated with the help of the following formula:
EMI = L×r×(1 + r)n/((1 + r)n - 1)
Where, L - Loan Amount
r - Rate of Interest in Decimals
n - Period of loan (in years).
1.11 Types of interest rates:-
There are two basic kinds of interest rates. Interest rate also called adjustable rate loan or
floating rate.

26
Fixed Rate: - A fixed interest rate simply implies that a borrower would be repaying his home
loan in fixed, equal amount instalments throughout the tenure of his loan. The key feature of the
fixed interest rate is that it remains unaffected bythe fluctuations in the market, giving the borrower
a sense of certainty in uncertain market conditions. It is ideal for people who prefer to plan their
budget meticulously since it requires you to pay the same monthly instalment, year on year, until
the end ofthe loan tenure.
That said, one must remember that the main difference between floating and fixed interest rates is
that the former is usually 1% - 2% points lower than the latter. Also, in case the rate of interest
decreases in the market, you cannot take advantage of the decreased interest rate if you choose
a fixed rate ofinterest. You must continue paying the same monthly instalment even if the rates are
reduced in the market. In some cases, depending upon the tenure ofthe loan, your fixed interest rate
is applicable only for a certain number of years, after which your loan is auto converted into one
with a floating rate of interest. As such, it is very important to read the fine print of your loan
agreement and understand the conditions of the loan. If you are uncertain about the economic
Types of Interest Rates
Fixed
Interest Rate
Fluctuating
Interest Rate

27
scenario of the country and you expect the rates of interest to rise in the future, it is best to optfor a
fixed interest rate.
Fluctuating Rate: - As is clear from the context, a floating interest rate is one that changes or
fluctuates along with the market condition. If you choose the floating interest rate on your home
loan, youwill have to pay abaseinterest rate, while afloating element is added to the loan. The base
rate is simply the minimum interest rate set bythe lender or the benchmark ofinterest rates. Banks
and NBFCs are not allowed to lend below the base rate. As such, when the base rate is changed,
the floating rate also varies.
The major difference between floating and fixed interest rate is that the floating interest rate works
out to becheaper than the fixed one. Forinstance, if the fixed rate ofinterest in 15% and the floating
interest rate is 12.5%, the borrower ends up saving a lot ofmoney, even when the interest rate rises
by 2.5%. That said, the floating interest rate can also overtake the fixed interest rate, but even such
a scenario is temporary in nature and does not prevail for the entire loan tenure. However, the
floating rate of interest is not ideal for individuals who prefer to plan their budgets in advance since
the interest rate can keep changing frequently. This type ofinterest rate makes it difficult for one to
plan their financials in the long term.
1.12 Steps involved in taking home loan:-
1. Application Form
Filling up the application form is the first step towards the home loan. The look of
application form may differ from bank to bank, but nearly 80 per cent of the information
they need is similar. Most of this pertains to customer’s personal and professional
information, details ofcustomer financial assets and liabilities and the details of the property
(if finalized) including the estimated cost and the means of financing the same. While
submitting the application form, each bank would ask for documents to establish customer
income.

28
This will need to be backed up by proofs such as copies of last three years’ income tax
returns (along with copies of computation of income / annual accounts, if any), Form 16 /
Form 16A, last three months’ salary slips and copies of the last six months’ statements of all
customer active bank accounts in which customer salary / business income details are
reflected.
Along with the application form and the credit documents, banks will charge processingfee.
This fee varies from bank to bank, but is usually around 1 to 2 per cent of the total loan
amount. Most banks have flexible fee structures, and it is advisable that customer negotiate
hard to find out the bank’s minimum fees though it is unlikely that a bank will agree to
provide a loan without any upfront fee at all.
Some banks have zero upfront-fee loans but that advantage may be negated as their other
charges such as ‘legal charges’ and stamp duty’ are normally higher. The bank statements
are scrutinized for:
 Level of Activity
In case of self-employed persons, this gives information about the extent of their
business activities.
 Average Bank Balance
A customerrelation is to beestablished with the bank after scrutinizing average bank balance
maintained in a savings bank account speaks volumes about the spending and saving habits
of any individual.
 Cheque Returns
A small charge debited by customer bank in the statement indicates that a cheque issued by
customer was returned by customer bank. Many such returns can have a negative impact on
customer loan sanction.

29
 Cheque Bounces
Cheque deposited by customer are returned by the issuer’s bank they will be visible in
customer bank statement and banks have specific norms as to how many such returns are
acceptable in a period of one year.
 Regular Periodic Payments
The existence of periodic payments to other finance companies/banks indicates an existing
liability and customer will need to provide full details to the lender.
 Customer Age
Proofof customerage, suchas, license / passport/ ration card / PAN card / Election Identity
Card will need to be submitted.
 Identification Proof
Same as above but with customer photograph. Sometimes the same document, if it contains
a photograph, the current residential address and the correctage canbe the proofforall three
things.
 Customer Employment Details
If Customer Company is not well known, then a short summary about the nature of the
company, its business lines, its main customers, its competitors, number of offices, number
of employees, its turnover and profits may be needed. Usually the company profile that is
available on the standard website of the company is enough.
 Customer Investments
This helps the bank to estimate customer ability to pay for the down payment as well as
customer savings habit.
2. Personal Discussion
Some banks insist on meeting customer after receiving the application form, and before the
loan sanction, together more details about customer that may not be mentioned in the
application form.

30
If the bank calls customer for personal discussion (this is normally to reassure them of
customer repayment capacity) make sure customer carry all the original documents
pertaining to the information provided on the application form. Banks process loans only
after they are convinced favorably about customer.
3. Bank’s Field Investigation
Every bank validates customerinformation, including customer existing residential address,
customer’s place of employment, CIBIL report, employer credentials (if customer’s work
for a small organization) and residence and office telephone numbers. This is normally done
by sending representatives to customer workplace or residence.
Theserepresentatives are usually employees ofsmall firms to which the bank has outsourced
this activity. The ability of these personnel is uneven and the interaction with them may not
always be smooth. Banks also do a quick check on the references customers have provided
in the application form.
4. Credit Appraisal and Loan Sanction
The bank establishes customer repayment capacity based on customer’s income, age,
qualification, experience, employer and nature of business (if self-employed). Based on
these parameters, customer maximum loan eligibility is worked out and the final loan
amount communicated to customer, then issues a sanction letter.
This letter may either an unconditional letter, or may have certain terms and conditions
mentioned. Customer has to fulfill these conditions before the loan is disbursed.
5. Offer Letter
Once the loan is sanctioned, an offer letter is sent mentioning details like loan amount, rate
of interest, whether fixed or variable rate of interest is linked to a reference rate, tenure of
the loan, mode of repayment, if the loan is under some special scheme, the details would be
mentioned, general terms and conditions of the loan and special conditions, if any.

31
 Acceptance Copy of the Offer Letter
If customer accepts the offer letter the bank will ask customer to sign a duplicate letter for
the same bank’s records.
6. Submission of Legal Documents
Once customer selects property, the bank requires customer to hand over the entire set of’
original documents pertaining to customer property so that it can keep them as security for
the loan amount given to customer. These documents would remain in the bank’s custody
until the loan is fully repaid.
 Legal Check
Every bank conducts a legal check on customer documents (including draft sale documents
that customer will be entering into with customerseller) to validate their authenticity. These
documents normally include:
 The title documents of customer seller which prove the seller’s title including the
chain of title documents if he is not the first owner.
 NOCs from the legal owners such as Cooperative Housing Societies, statutory
development authorities, or the leaser of the land in the case of leasehold land.
NOCs are not required where the property is situated on freehold land and the entire land is
being transferred along with the structure. The banks send these documents to a lawyer on
their panel (either In-house or outsourced)for a thorough scrutiny. Some banks will charge
a special fee to cover these cost while some banks will ask customer to pay these directly to
the concerned lawyer though for most banks the upfront fee covers these fees as well.
The lawyer’s report either gives a go-ahead if the documents are clear, or it may ask for a
further set ofdocuments. In the latter case, customer are expected to handover the additional
documents to the bank for a clear title.

32
Since property documentation in India is non-standard and non-transparent, it helps if
customer buy property from a reputed builder since the builder would know the process
inside out, and keep all the documents ready. In fact, the maximum customer service issue
arises at this stage because of a lack of standardization.
Also, as per the laws of several states, there are heavy transfer charges on sale of property
and / or very heavy stamp duties. This has given rise to sale of property by showing lower
consideration than agreed for, with the balance being paid either on an amenities agreement
or in cash.
Moreover, the concept of sale by executing ‘Irrevocable Power of Attorney’ has gained
ground especially in the National Capital Region. All this could restrict the choice of
customerlenders and may therefore increase the costofthe loan which customermight want
to keep in mind while finalizing these kinds of properties.
7. Valuation of Property
Valuation has becomeakey parameter in determining the loan amount that can besanctioned
by the bank. The valuation process is quite subjective and dependent on the quality and
ability of the person sent by the bank for valuation.
In many cases, the valuer determines the value of the property at an amount that is lower
than the documented cost of the property and this would result in the loan amount being
decreased since the bank funds a certain percentage of the costor valuation of the property
whichever is lower. Now a day, valuation of property is determined according to “Jantri
Value”. Valuer could not exceed the value of property if valuer had proper evidence for
higher value.
8. Registration of Property Documents

33
After the legal and technical / valuation check, the draft documents as cleared by the lawyer
need to be finalized and signed and the stamping and registration of the documents need to
be done. Also if any No Objection Certificates (NOCs) are pending these need be obtained
in the format approved by the bank’s lawyer.
9. Disbursement
The best part is when customer actually received the cheque. This happens once the bank
has ensured that the property is legally and technically clear and after customer has handed
over all the original documents pertaining to the transfer of ownership of property in
customer favor, having executed the necessary loan agreements with the bank.
But at this stage, customer should also provide documents to prove that customer have paid
customer personal contribution towards the property, since banks normally fund only up to
85-90 per cent of the total cost of the house.
In case customer are expecting money from other sources to fund customer own
contribution, customer need to provide sufficient evidence for the same. It is only after
submitting this proof that the bank will release part disbursement of the loan.
The cheque will be in the name of the reseller (for resale flats), builder, society or the
development authority. It is only in exceptional circumstances, that is, if customer provides
documents to support that customer have made an excess payment from customer own
account that the cheque will be handed over to customer directly by the bank.
Usually, loans are disbursed on the basis of the stage of construction of the property. This
would mean that the disbursement could either be full and final (in the caseof resale orready
possession properties) or part disbursement (in the case of under construction properties).

34
Each option would have different disbursement processes. Customer should keep
photocopies of all documents / agreements / letters submitted to the bank to avoid any
misunderstandings later. Apart from home loan process, the following flow charts shows
home acquisition process and booking process which are important for a home loan buyer.
1.13 Determination of Loan amounts:-
Loan eligibility is based on two separate calculations:
1. The amount of Loan repayment that a customer can afford to make every month.
2. A specified percentage of the costof the property.
The amount of the loan sanctioned will be the lower of the two figures arrived at after
making these two calculations.
It is possible that while the customer’s income (and hence, customer’s ability to repay)
could make customer eligible for a higher loan, the bank will almost always cap the
sanctioned loan amount at 80 to 90 per cent of the property cost.
[i] Repayment Ability - The Most Important Determination
Determination
of loan
amount
Repayment
ability
Determination
of income
Clubing of
income
Cost of
property

35
Customer’s ability to repay is based on income and expenditure pattern. For instants, if a
customer’s monthly income is ` 10,000 and his monthly expenses is ` 8,000the customer can
certainly pay ` 2,000 towards any potential home loan he can take. This amount can now be
used as the installment amount and the customer’s eligibility can be reverse – calculated.
The larger customer’s repayment capability, the higher will be customer’s loan eligibility.
[ii] Determination of Income
Banks need to be sure about income stability of customer. Which is why, they may not
consider the following categories of income while calculating loan eligibility: Performance
bonus, medical reimbursements or leave travel allowance, as these are not certain, any case
annual perks are not available every month to help in monthly repayments.
Some banks, however, are willing to consider these amounts either partially or fully as
‘income’. Overtime may be of temporary nature. Again, if the overtime is shown as being
received consistently for a long period of time, some banks may consider at least a part of
this as ‘income’. Interest income since the underlying investments on which these incomes
are earned may be liquidated to pay for customer contribution required towards the cost of
the house.
But if a customer can convince some bank that the interest income will remain even after
customer have bought the house, the bank may be persuaded to include the interest income
while calculating loan eligibility. Conveyance or entertainment / other allowances paid in
cashthrough vouchers, unless customer regularly deposits the cashreimbursement in his/her
salary account.
Banks will hesitate to consider it for a loan since they have no document to verify whether
such an allowance is indeed paid. Earnings from non-verifiable sources such as tuition /
tailoring are not considered as ‘income’ by the banks unless business of this kind is carried
on in a verifiable manner.

36
Agricultural income, since this is non-taxable and non-stable as well, mostbanks do not give
this any weight age or give significantly lower weight age. Rental income is being
consistently received and shown in the income tax (IT) returns and copies of the rental
agreements are available, banks may considerpartorwhole ofthis as ‘income’. Ifa customer
is a salaried employee, somebanks apply the normative percentage onthe gross salary, while
some apply it on customer’s net salary.
Having said that, mostbanks go by gross salary as the net salary varies from month to month
(deduction of festival advances, medical reimbursements given, or grant of leave travel
allowance that month). These banks allow a smaller percentage of customer income as
available forpayment ofloan installment; while thoseapplying it onnet salary allow a higher
percentage of the salary. In case of customer is self-employed, the difference in eligibility
norms can be glaring.
Some banks strictly consider only returned income, that too an average of last two or three
years of income, to smoothen out any sharp increases in reported incomes. Some banks will
add full/half of the depreciation to calculate the base income. Recognizing this, quite a few
banks have evolved eligibility norms that work around these issues. Let us call these banks
‘self- employed-friendly banks’.
Some of the things they might have for calculating eligibility norms that are self-employed
friendly are:
 Considering customer’s ‘actual income’ as multiple of customer’s ‘disclosed
income’.
 Estimating customer’s ‘actualincome as a percentage of‘gross receipts’ and ignoring
customer’s ‘disclosed income’.

37
 Clubbing the income of entities controlled by customer such as private limited
companies or partnership firms in which customer have substantial stakes or are a
partner by making such entities joint borrowers to the loan.
Some banks do not consider that part of income which forms customer’s yearly investment
which is allowed as deduction under section 80C. This amount is not considered as income.
However some banks have considered this as income if investment is liened by bank
authority.
Mostforeign banks are ‘self-employed friendly’ onthe above lines. Mostbanks do empower
local level officials with discretionary powers to enhance loan eligibilities based on their
subjective assessment of customer’s true income.
[iii] Clubbing of Incomes of Relatives
Eligibility is also calculated by clubbing the customer’s income with that of his relatives .
All banks allow clubbing of the spouse’s income to work out the loan eligibility. In such
cases, they insist on making the spouse a joint borrower (or co borrower).
The basic premise behind using pooled incomes for calculating eligibility is that bothparties
will actually combine their income and pay off all expenses (including the home loan
instalment ). However, banks are selective in extending this conceptof pooling of incomes
to other relations. Some banks allow parents, children and brothers to be joint borrowers.
[iv]Cost of the Property
The bank naturally wants customer to put in a contribution towards the costof the house so
that customer has a stake in its continued maintenance. This also ensures that if the value of
the house goes down in future, the bank’s outstanding loan amount is lower than the market
value of the property.
The amount the customer is expected to put in is called ‘margin money’ or ‘downpayment’.

38
Generally bank gives loan amount of 85% to90% of the agreement value of the property.
Even if a customer’s incomeis enough to justify a higher loan, the bank will give a maximum
loan based on its margin requirements.
 Age of the Building
The down payment can also vary depending on the age of the property. If the property is
older, the down payment requirement may be higher. Most banks have a cap on the
maximum age of the building at the end of the loan tenure.
This would normally be fifty years. So if a customer is buying a property on resale and the
current age of the building is thirty-eight years, the probability of getting a tenure higher
than twelve years is very low despite the fact that the customer may otherwise be eligible
for a twenty-year loan. This reduction of tenure would reduce the loan eligibility.
 Unaccounted Component
In some real estate transactions, a portion of the cost is not accounted for in any of the
documents related to the purchase.
Thankfully, this practice is on the decline especially where the property is bought from
reputed builders. No bank takes this unaccounted amount in calculating the cost of the
property while determining the loan amount eligibility.
 Resale Value
The resale value of a property is taken into consideration before the bank lends money to
buy a property. It ensures that in the unlikely event of a default, should the bank need to
dispose the property to recover its dues, the bank is well covered to the extent of the home
loan provided.
This is more of a problem in case of resale properties and lesser one in case of properties
purchased from reputed builders.
 Independent Valuation of the Property
Every bank has practiced that bank will not give a loan (or give the loan at a higher rate)

39
when the property is being bought from a relative. Also, the bank insists on an independent
valuation of the property and the maximum loan amounts are based on this valuation rather
than on the agreement value.
1.14 Role of Government:-
Provision of housing facility to each and every individual in the society by using the
Government funds may not be possible even in a well developed economy. Indian economy
is not yet well developed, it is a developing economy. So it has to resolve many issues in the
process of development. Housing is only one among the many issues before the Government.
So the Government is regulating its housing financial assistance in such a manner that, it is
directed towards the poorest of the poor in the society. Government is trying to find a
solution by joining hands with the private sector. Therelative role played by bothpublic and
private sector over the different five-year plans is given in the following table:
Relative role of Public and Private in
Housing investment over the plan periods
(Figures in Crores)
Sr. No. Plan
Number
Plan
period
Public Private Total
Amount
Amount Percentage Amount Percentage
1
1st Five year
plan
1951-56 250 21.74% 900 78.26% 1,150
2
2nd Five year
plan
1956-61 300 23.08% 1,000 76.92% 1,300
3
3rd Five year
plan
1961-66 425 27.42% 1,125 72.58% 1,550
4
4th Five year
plan
1969-74 625 22.32% 2,175 77.68% 2,800
5
5th Five year
plan
1974-79 1,044 22.31% 3,636 77.69% 4,680
6
6th Five year
plan
1980-85 1,491 11.48% 11,500 88.52% 12,991

40
7
7th Five year
plan
1985-90 2,858 8.97% 29,000 91.03% 31,858
8
8th Five year
plan
1992-97 7,750 10.03% 69,476 89.96% 77,226
9
9th Five year
plan
1997-02 10,430 7.63% 1,26,170 92.36% 1,36,600
10
10th Five
yearplan
2002-07 1,26,694 34.89% 2,36,447 65.11% 3,63,141
11
11th
Five year
plan
2007-12 2,54,500 32.78% 5,22,000 67.22% 7,76,500
(Source: Shodhganga)
It is clear from the table that total investment in housing has increased form Rs. 11.5 billion
in the first plan to Rs. 7.76 trillion in the eleventh plan. Compared the public sector the
private sector is contributing more to the housing sector. During the ninth five year plan the
share of public sector was minimum (7.63%) and the same made by the private sector was
maximum (92.36%). Fromtenth five year plan onwards the share ofpublic sectoris showing
an increasing trend. On the other hand, the absolute investment in housing as a percentage
of the total plan investment has declined due to the shift in the government’s emphasis from
provider to facilitator. A progressive shift from a subsidy based housing schemes to cost
sharing or cost recovery cum subsidy scheme for rural housing is insisted by the National
Housing Policy.
1.15 Government Scheme of Housing :-
Within the capacity as a facilitator for the housing development, the central government has
developed various housing schemes in orderto wipe out the housing shortage in the country.
The table shows the various housing schemes launched by the government of India. The
important housing schemes launched by the Central government, which were proved to
resolve the issue of housing shortage in the country, are briefly discussed below.

41
Affordable Housing Schemes in India
A number of housing schemes are currently available throughout the country, which has
been introduced by the central and state government at various points of time. The
government's stand at present for housing is very encouraging has it plans to achieve
'Housing For All' by the end of the year 2022. Given the present situation of real estate in
the country, housing for all by 2022 sounds very ambitious. However, there are multiple
housing schemes currently in operation to help achieve this.
1. Pradhan Mantri Awas Yojana (PMAY)
The initiative of 'Housing for All' was implemented on 17th June 2015. Pradhan Mantri
Awas Yojana Scheme is the driving force to achieve the desired result in urban areas. It is
a type of credit linked subsidy scheme wherein; interest subsidy will be provided on
acquisition and construction of the house. The benefit of the program can also be availed
to for the addition of rooms, toilet, kitchen, etc.
The amount of subsidy is based upon the income criteria as per the scheme. The key
parameters are:

42
 Household income (p.a): Upto Rs. 3 Lakhs for Economically Weaker Sections, Rs. 3.01
– 6.00 lakhs for Lower-Income Group, Rs. 6.01 – 12.00 lakhs for Middle-Income Group-
I, and Rs. 12.01 – 18.00 lakhs for Middle-Income Group-II.
 The eligible loan amount for subsidy: Upto Rs. 6 lakhs for EWS and LIG, upto Rs. 9
lakhs for MIG-I, and upto Rs. 12 lakhs for MIG-II.
 Quantum ofinterest subsidy: 6.50% for EWS and LIG, 4% for MIG-I, and 3% forMIG-
II.
 Maximum tenure: The maximum tenure of the loan is 20 years for all income groups.
 Maximum dwelling unit carpetarea: 30 sq.mfor EWS, 60 sq.m for LIG, 160 sq.m for
MIG-I, and 200 sq.m for MIG-II.
2. Pradhan Mantri Gramin Awas Yojana
In view of achieving 'Housing forAll' by 2022,the governmentof India launched this
welfare scheme to provide low-costhousing for people in rural areas. PMAY-G has
increased its target to 1 crore homes. Under PMGAY concession of 3% on the
interest rate of home loans of upto Rs. 2 lakhs. The concession can be availed for
upgrading an existing home or constructing a new house in rural areas.
Some key features of the scheme are:
 Schedule tribe, schedule casts, free bonded laborers, non SC/ST under BPL
category can avail benefit under this scheme.
 The family must not have a pucca house.
 The family should only be consisting of a beneficiary's spouse and, or
unmarried children.
3. Delhi Development Authority (DDA) Housing Scheme
Each year, DDA launches a new scheme to target specific parts of Delhi to

43
provide DDA Housing Scheme for Economically Weaker Sections. For the year
2019,18,000 flats were targeted in Dwarka, Vasant Kunj, Rohini sector-34,Kalkaji,
and South Delhi.
The registration fee for LIG house is Rs. 1 lakh, for MIG and HIG houses it is Rs. 2
lakhs, for Janta flat it is Rs. 10,000, for 1BHK its Rs. 15,000, and for EWS it is Rs.
25,000.
Some of the key eligibility criteria for DDA housing scheme are:
 The minimum age required is 18 years.
 The applicant must not own a flat or any other residential property in Delhi on
his/her name or the name of spouse or dependent children.
 In case you have already been allotted any house/flat under DDA or through
any other agency, then you are not eligible for the scheme.
The application process of DDA is straight forward.
 Fill the application form,
 Provide id proof like Aadhaar card, PAN card, (mandatory)
 Registration fee as per flats.
4. Rajiv Awas Yojana
The Rajiv Awas Yojana was launched in 2009 with the aim to bring illegal
constructions within the legal framework and encourage slum-free India. The plan
under RAY is first to prepare a Slum Free City Plan and then prepare the projectof
the selected slum.
Some key objectives of the scheme are:
 To improve the provisioning of houses, basic civic infrastructure, and

44
amenities in the slum.
 To facilitate a supportive environment to expand institutional creditlinkage for
urban poor.
 Institutionalize the mechanism of preventing slums along with the creation of
affordable housing stocks.
 As part of Rajiv Awas Yojana, on 3rd March 2013,the government introduced
the scheme of Affordable Housing in Partnership
 Support from the central governmentis provided to EWS/LIG atthe rate of
Rs. 75,000 per dwelling unit of size 21 to 40 sqm.
In 2015, this scheme was revamped by Central Government to Pradhan Mantri
Awas Yojana scheme.
5. NTR Housing Scheme
Through this NTR Housing Scheme, Andhra Pradesh's government aims to build
around 10 lakhs houses with an expenditure of Rs. 16,000 crores.The second and
third phases of the scheme initiated in January and June 2018, respectively.
Under this scheme, 1% of the total urban land will be reversed for housing for the
poor. The beneficiary list is expected to be out by December 2019, whereas the
housing scheme will get into action on 25th March 2020 on the occasion of Ugadi.
The Andhra governmentmanaged to save Rs. 105 crores byinviting contractors for
constructing 65,000 houses through reverse bidding. Also,the centre has promised
Rs. 1,869 crores under the Pradhan Mantri Awas Yojana along with LIC Housing
Finance agreeing for Rs. 5,000 crores.
The scheme is for people who are below the poverty line (BPL)who do not possess

45
any land or house under any governmentscheme and are also a citizen of the state
(A.P).
6. Tamil Nadu Housing Board Scheme (TNHB)
Through this Tamil Nadu government scheme provides flats for sale to LIG, EWS,
MIG, and HIG at affordable prices.The government has launched various projects
through the Tamil Nadu Housing Board Scheme, some of them are:
 Trichy unit of TNHB is providing shops, commercial units, nursery schools,
secondary schools, and other public amenities through an auction in areas
like Pudukottai, Navalpattu, Manapparai, and Valavanthankottai. The
application money for it is 15% of the total price.
 The Besant Nagar division of TNHB is providing flats through a draw of lots in
Indira Nagar and Sholinganallur. While applying 5% of the unit cost needs to
be deposited.
 The Thanjavur Housing Unit of TNHB is providing units under various
schemes suchas Tamil University Campus Self Finance Scheme,Pattukottai
Self Finance Scheme,Thanjavur Scheme,and Tamil University Campus NH
Scheme. The applicant should be above 21 years of age and must not have
any property throughout the country.
7. Maharashtra Housing and Area Development Authority (MHADA)
Lottery Scheme
Maharashtra government, through this MHADA Lottery Scheme, is providing 1384
houses in differentcategoriesacross Pune,Mumbai, Nagpur, and Aurangabad. The

46
flats are to be allotted through the lottery. The price of EWS flatis Rs.14 lakhs; price
of LIG flat ranges between Rs. 20-25 lakhs, the price of MIG flats ranges between
Rs. 35-60 lakhs and price of HIG apartments range betweenRs.60 lakhs to Rs. 5.8
crores.
Key eligibility factors are:
 The applicant must be of 18 years or above.
 The applicant should have stayed in Maharashtra for a continuous period of
15 years or more.
 PAN card is mandatory.
To apply for the MHADA Scheme, you need to register through online portal by
creating an account and then filling the form along with the necessary details and
documents.The application fee required can be paid through card or NEFT/RTGS
transactions. In case you want to submit a demand draft, then you need to visit a
branch of the designated bank along with the print copy of the application form.
1.16 Housing policies in India:-
Housing in India has been in focus of the planners since Independence. Each of the 12 five
year plans allotted specific fund to the housing needs of the country. However, specifically
from the Seventh Five Year Plan onwards i.e. 1985 onward, urban housing shortage and
slum development programs have been receiving special focus.
Broadly, the policy framework followed for housing in India can be briefed as under:

47
The firstpolicy specific to urbanhousing was the National Urban Housing and Habitat policy
in 2007 (Ministry ofHousing and Urban Poverty Alleviation, 2007). It focused onaffordable
housing as a key objective for sustainable urban development. A brief account of policies
are as follows:
i. National Housing Policy (NHP) 1988: The March 1987 Preamble to the Draft
National Housing Policy (DNHP) had for the first time recognized shelter as a basic human
need. This can be regarded as the first steps towards recognizing the right to shelter or right
to housing, but this particular emphasis was removed from the draft. The policy looked at
land, materials, finance, technology and targeted poverty alleviation as part of an integrated
and comprehensive solution to the housing. Development of the housing sector as a whole
was emphasized (NHP, 1988).
ii. National Housing and Habitat Policy (NHHP) 1998: The policy envisaged and
emphasized ona major shift in government’s role to act more as facilitator than as a provider.
The objective of the policy was to create surplus housing stockand facilitate constructionof
two million dwelling units each year in pursuance of the National Agenda for Governance.
It also sought to ensure that housing along with supporting services is treated as a priority
sector at par with infrastructure.

48
The Planning Commission suggested modiﬁcation of the housing policy to incorporate
affordable housing programme for the urban poor. Considerable efforts were made during
the Ninth and Tenth plan to enlarge the resource base and initiate innovative institutional
mechanisms to augment housing delivery in urban areas (NHHP, 1998).
iii. JawaharlalNehruNationalUrban RenewalMission(JNNURM) was launched in
December 2005 with aim to cover construction of 1.5 million houses for urban poorduring
the Mission period (2005- 2012). It was launched in collaboration with various State
Governments and Urban Local Bodies, supported 63 cities across the country. The focus of
the programme was on improving efﬁciency in urban infrastructure services delivery
mechanism, community participation and accountability of Urban Local Bodies.
JNNURM had two Sub-Missions:
 Basic Services forthe Urban Poor(BSUP)which aimed to provideseven entitlements/
services i.e. security oftenure, affordable housing, water, sanitation, health, education
and social security in low income segments in the 63 Mission Cities.
 The Integrated Housing and Slum Development Programme (IHSDP) provided the
above mentioned seven entitlements and services in towns/cities other than the
Mission Cities.
The two components ofJNNURM were mandated to pursue 3 key pro-poorreforms, namely
(a) earmarking of25% of municipal budget for the urban poorforprovision ofbasic services
including affordable housing to the urban poor.
(b) implementation of 7 Point Charter, namely provision of land tenure, affordable housing,
water, sanitation, education, health and social security to the poor in a time-bound manner
ensuring convergence with other programmes and
(c) reservation of 25% of developed land in all housing projects, public or private, critical
for slum improvement.

49
The Scheme was succeeded by Atal Mission for Rejuvenation and Urban Transformation
(AMRUT). The focus of the Mission is on infrastructure creation that has a direct link to
provision of better services to the citizens.
The purposeof “AMRUT” mission is to (i) ensure that every household has access to a tap
with assured supply of water and a sewerage connection (ii) increase the amenity value of
cities by developing greenery and well-maintained open spaces e.g. parks and reduce
pollution by switching to public transport or constructing facilities for non-motorized
transport.
There is maximum allocation of2.5% of project costfordevelopment of parks with children
and elderly friendly features. The Mission covers 500 cities that include all cities and towns
with a population of over one lakh with notified Municipalities. Total outlay for AMRUT is
750,000 crores for five years from FY 2015-16 to FY 2019-20 and the Mission is being
operated as Central Sponsored Scheme.
The project fund is divided among States/UTs in an equitable formula in which 50:50
weightage is being given to the urban population of each State/UT and number of statutory
towns. The Mission is encouraging and supportingthe States in conducting reforms that will
improve the financial health of the ULBs, delivery of citizen services, transparency and cut
the cost of services.
iv. National Urban Housing and Habitat Policy (NUHHP) 2007: The policy
emphasizes on housing and habitat sector in the urban context and views housing as a tool
of productivity, equity, safe environment, pro-poordelivery of civic services and shelter as
well as employment opportunities and has emphasized bottom – up planning.
The Policy has been formulated keeping in view the changing socio-economic parameters
of the urban area and growing requirement of shelter and related infrastructure. It also seeks

50
to promotevarious types of public-private partnerships forrealizing the goal of “Affordable
Housing for All” with special emphasis on the urban poor (NUHHP, 2007).
v. Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) was launched on
December 26, 2008 to improve the affordability of housing loans among the EWS/LIG
segments in urban areas, by MoHUA (earlier Ministry of Housing and Urban Poverty
Alleviation). Under the Scheme, interest subsidy of 5% per annum for whole duration of the
loan (15-20years) was provided on loans up to 71 lakhs extended to EWS/LIG beneficiaries
by the Primary Lending Institutions (PLIs).
The maximum loan amount was 71 lakhs for a EWS individual and 71.60 lakh for a LIG
individual. The interest subsidy was provided on NPV and upfront basis. The Scheme was
implemented through Banks and HFCs. The Scheme envisaged the appointment of State
Level NodalAgencies (SLNAs) byvarious States to facilitate the identification and selection
of eligible beneficiaries for effective implementation.
NHB and HUDCO were designated as Central Nodal Agencies (CNAs) for implementation
of the Scheme. NHB as Nodal Agency for the aforesaid Scheme had taken various measures
to bring awareness through wider publicity, sensitization programmes and coordinating with
various agencies for facilitating effective implementation of ISHUP. The Scheme ceased to
exist on 30-09-2013.
MoHUPA, Government of India in October 2013, revised Interest Subsidy Scheme and
renamed it as Rajiv Rinn Yojana (RRY), as an additional instrument for addressing the
housing needs ofEWS/LIG segments in urban areas with increase in limit ofeligible housing
loans from 71 lakh to 75 lakh. Under RRY, the amount of loan has been revised upto 75 lakh
for EWS and 78 lakhs for LIG beneficiaries.
The eligible lending institutions under the scheme are SCBs, HFCs and RRBs. NHB and

51
HUDCO are the two nodal agencies under the Scheme. An interest subsidy of 5% was
provided to the eligible borrowers availing housing loans from the ﬁnancial institutions, on
quarterly basis for the loan tenure of 15-20 years.
vi. Rajiv Awas Yojana (RAY): aimed to enable provision of credit to Economically
Weaker Sections (EWS) and LIG households and to encourage the States to adopt policies
for creation of a slum free India. The RAY scheme emerged from the vision statement of
President of India in 2009, placed in parliament for “Slum Free India”. In May 2015, Rajiv
Awas Yojana (RAY) was rolled over into the Housing for All (HFA) by 2022 policy.
vii. Affordable Housing in Partnership (AHP): The Government launched a scheme of
AHP as a part ofRAY in 2013 to increase affordable housing stockwith an outlay of 75,000
crore for construction of one million houses for EWS/LIG/MIG with at least 25% for EWS
category. The Scheme facilitated partnership between various agencies/
Government/parastatals/ Urban LocalBodies/ developers for realizing the goal ofaffordable
housing for all.
viii. Housing for All by 2022 -PradhanMantri Awas Yojana (Urban): PMAY (U), the
affordable housing scheme, declared that 50 million houses will be built for the poor by
2022, out of which 30 million houses will be in rural areas and 20 million in urban areas.
The Mission is being implemented during 2015-22 and provides central assistance to Urban
Local Bodies (ULBs) and other implementing agencies through States/UTs for:
a) In-situ Rehabilitation of existing slum dwellers using land as a resource through
private participation
b) Credit Linked Subsidy Scheme is being implemented through PLIs and monitored by
Central Nodal Agencies namely NHB and HUDCO
c) Affordable Housing in Partnership
d) Subsidy for beneﬁciary-led individual house construction/enhancement.

52
As per the mission guidelines, an ‘affordable housing project’ shall have a minimum of 35%
of the houses for the Economically Weaker Section (EWS) category. EWS households are
those having an annual income up to 73,00,000 and a dwelling with a carpetarea of up to 30
sq. m.
Low Income Group (LIG) is deﬁned as having an annual income between 73,00,001 up to
76,00,000 and a dwelling unit having carpetarea up to 60 sq. m. Slum is deﬁned as a compact
area of at least 300 population or about 60-70 households of poorly built, congested
tenements in unhygienic environment, usually with inadequate infrastructure and lacking in
proper sanitary and drinking water facilities.
The PMAY provides an interest subsidy of 6.5% on housing loans with tenure of up to 20
years for EWS & LIG and recently has also incorporated the interest subsidy of @ 4% for
the MIG I (6 lakh to 12 lakh) and interest subsidy of @ 3% for the MIG II (12 lakh above
to 18 lakh). It also envisages to make all statutory towns slum free, i.e. to prepare Slum
Free City Plan of Action (SFCPoA) for in-situ redevelopment of slums.
Chapter-2: Review of Literature:
 Subburaj (2010) has articulated that the housing sector plays an important role in the
economic development of the country. It is important to know about the home loan
agreement clauses before signing in it as it will help the borrower to bargain with the
lenders. The result indicated that the majority of the consumers are not aware about
the various clauses in the home loan agreement and majority of the customers do not
know the importance of reading it.
 Bandyopadhay (2011) has demonstrated the importance of borrower specific
characteristics as well as local situation factors in determining the demand prospects
as well as the risk of credit, loss on residential housing loan repayment behavior in
India. This paperattempts to find outthe critical factors that drive demand for housing
and its correlation with borrower characteristics using a panel regression method.
 Sangwanand Bhan(2012) this study can find out the satisfaction level of customers
and problems faced by them in obtaining home loans. For this purpose, they have

53
taken four commercial Banks in Chandigarh city namely H.D.F.C. Bank, Punjab
National Bank(P.N.B.), Union Bank of India and Industrial Credit and Infrastructure
Corporation of India(I.C.I.C.I). Bank.
 Thakur G. (2014) this study concluded that people prefer H.D.F.C. bank more than
S.B.I. bank for home loan. As private banks are coming daily in our country still,
mostly people prefer government banks for loan especially older persons are more
dependent on government banks. It is true that younger population preference is
changing and they prefer more private banks because of services and facilities
provided by private banks. The interest rate is lower in public (S.B.I.) bank in
comparison with private (H.D.F.C.) bank but services are not up to the mark.
 Gupta and Sinha (2015) they examine on the respondent regarding the purchase of
home loan and low rate of interest, easy accessibility, status/ reputation of the
institution and scheme offered by the company are the major factor for selection of
the housing finance institution comparative study on Factor Affecting consumer’s
Buying Behavior towards Home Loan (with special reference to S.B.I. and
L.I.C.H.F.L.)” and found that fixed rate of interest is most preferred option by the
customers.
 Chithra and Muthurani (2015) they conducted study on customer perception
towards home loan in H.D.F.C are done Chennai with the 85-sample size and simple
random sampling. The study shows that H.D.F.C. bank home loans has product
portfolio for satisfying different consumer needs. The bank has got goodwill and this
can be used for promoting its services. If new promotional activity and services
introduced, it will help very much to organization to increase the business.
 Murugan and Jansirani (2017) a study carried out in Chennai to Customer
perception towards home loan by selecting the 500 customer onrandomly basis. Their
study made an attempt to evaluate in depth the performance and operational problems
faced by the banking sector in extending finance to the housing sector and based on
findings; identify the areas of concerns and strategic interventions required.

54
Chapter 3: Research Methodology
3.1 Statement of the problem:
The objective is to assess the services offered by banks and what the customer wants.
3.2 Objectives of the research:
The objectives of this study are as under:
1. To study the preference of consumers towards home loan.
2. To study the problems faced by the consumers in obtaining home loan.
3. To study the service provided during the procedure of obtaining home loan by Private
sector and Public sector banks.
3.3 Methodology and Data collection:
a. Research Design: Descriptive
b. Sampling Design: Random Sampling
c. Sample Size: 100
d. Data Type: Primary & Secondary.
e. Analytical Tool: Chi – Square, Anova
3.4 Hypothesis:
The hypotheses formulated for testing are as follows:-
Hypothesis1:
H0 – There is no significant difference in Period required for passing of Loan with Monthly
Income while taking Home Loan.
H1 – There is significant difference in Period required for passing of Loan with Monthly

55
Hypothesis 2:
H0 – There is no significant difference in No. of Documents required with Monthly Income
while taking Home Loan.
H1 – There is significant difference in No. of Documents required with Monthly Income
while taking Home Loan.
Hypothesis 3:
H0 – There is no significant difference in Service provided by Public Sector Bank with
Monthly Income while taking Home Loan.
H1 – There is significant difference in Service provided by Public Sector Bank with
Hypothesis 4:
H0 – There is no significant difference in Service provided by Private Sector Bank with
H1 – There is significant difference in Service provided by Private Sector Bank with
Hypothesis 5:
H0 – There is no significant difference in Tax Benefit with Monthly Income while taking
Home Loan.
H1 – There is significant difference in Tax Benefit with monthly income while taking Home
Loan.
Hypothesis 6:
H0 – There is no significant difference in PMAY Scheme with Monthly Income while
taking Home Loan.
H1 – There is significant difference in PMAY Scheme with Monthly Income while taking
Home Loan.

56
Hypothesis 7:
H0 – There is significant difference in Financial and Non-Financial Factors with Monthly
H1 – There is significant difference in Financial and Non-Financial Factors with Monthly
3.5 Scope of the study:
Scope of the study is limited to Private sector banks and Public sector banks. While other
banks is excluded from the study as the policies and regulations of other banks (like Foreign
Banks, Schedule Co-operative Banks, Urban & Rural Banks, etc.) are different from the
other Indian banks. It is used to get first- hand knowledge about the home loans facilities of
Private and Public banks in India.
The scopeof the present study is to know about the procedures of home loan, the problems
faced by the customers while taking loans from either public or private banks, to known
about the awareness of the home loan facility in Indian. The study of this kind will help the
respondents to get the ideas about the various problems and the ways to deal with the
problems that arise while taking a home loan.
3.6 Limitations of the study:
Any study based on sample survey, whatever the nature and size of the sample can
only be suggestive and prescriptive.
This research study was limited only to Public Sector and Private Sector Banks.
This research study was taken in a limited area only (i.e. Badlapur - Kalyan city) and
findings may vary if the area of study is changed.
The data of 3-5 months is been provided.
The respondents were very much keen to disclose personal information.
This research study was time bound and due to this only a few aspects ofthe problem
were taken up for study.

57
Chapter-4: Analysis and Interpretation
1)Gender
Table 4. 1 Gender
Gender
Basis Frequency Percentage
Male 40 40.00%
Female 60 60.00%
Total 100 100
Chart 4. 1 Gender
From the above table, it can be inferred that 60% of Male has taken Home Loan,
while 40% has been taken by Female
Male
40%Female
60%
Gender
100 Respondents
Male Female

58
2) Age
Table 4. 2 Age
Age
Lessthan 25 Years 30 30.00%
25 - 30 Years 21 21.00%
31 - 40 Years 26 26.00%
41 - 50 Years 15 15.00%
Above 50 Years 8 8.00%
Total 100 100%
Chart 4. 2 Age
From the above table about 30% of the respondents have taken home loan between the age
group of Less than 25 Years. 21% of the respondents have taken home loan at an age group
of 25-30 Years. There is only 8% ofthe respondents who taken a loan at age group of Above
50 Years.
Less than 25
Years
30%
25 - 30 Years
21%31 - 40 Years
26%
41 - 50 Years
15%
Above50 Years
8%
Age
Less than 25 Years 25 - 30 Years 31 - 40 Years
41 - 50 Years Above 50 Years

59
3) Marital Status
Table 4. 3 Marital status
Marital status
Married Single Total
No of respondent 56 44 100
Percentage of respondent 56.00% 44.00% 100%
Chart 4. 3 Marital Status
From the above table 56% of the respondents who have taken home loan are
married people and 44% of the respondents are Single.
Married
56%
Single
44%
Marital Status
100 Responses
Married Single

60
4) Monthly Income
Table 4. 4 Monthly Income
Monthly Income
Less Than Rs. 25,000 22 22.00%
Rs. 25,000 to Rs. 50,000 30 30.00%
Rs. 50,000 to Rs. 1,00,000 19 19.00%
Above Rs. 1,00,000 13 13.00%
No Comment 16 16.00%
Total 100 100%
Chart 4. 4 Monthly Income
From the above it is inferred that 30% of salaried persons take home loan, while 22% takes
who are less than 25 years of age, 19% take home loan of ₹50,000 to ₹1,00,000, while only
16% of people have said that they do not prefer to tell their income.
Less Than Rs.
25,000
22%
Rs. 25,000 to
Rs. 50,000
30%Rs. 50,000 to
Rs. 1,00,000
19%
Above Rs.
1,00,000
13%
No Comment
16%
MonthlyIncome
Less Than Rs. 25,000 Rs. 25,000 to Rs. 50,000
Rs. 50,000 to Rs. 1,00,000 Above Rs. 1,00,000
No Comment

61
5) What are the reason for taking home loan?
Table 4. 5 Reasons for taking Home Loan
What are the reasons for taking home loan?
Purchase of Flat 56 56.00%
House Expansion or Extension Loans 12 12.00%
Bridge Loans 6 6.00%
Purchase of Land 17 17.00%
Others 9 9.00%
Total 100 100%
Chart 4. 5 Reasons for taking Home Loan
It is observed from the above table that maximum of the respondents take home loan for the
purposeof Purchase of Flat is 59%, while 12% of the respondent take home loan Purchase
of Land. And just 6% of the respondent take home loan for Bridge Loans that means “is a
type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the
arrangement of larger or longer-term financing. It is usually called a bridging loan in the
United Kingdom, also known as a "caveat loan," and also known in some applications as a
swing loan.”
Purchaseof Flat
56%
House
Expansion or
Extension Loans
12%
Bridge Loans
6%
Purchaseof Land
17%
Others
9%
What are the reason for taking home loan?
100 Repomndents
Purchase of Flat House Expansion or Extension Loans
Bridge Loans Purchase of Land
Others

62
6) Loan is taken from which type of bank?
Table 4. 6 Type of bank loan taken from
Type of bank loan taken from
Public Bank Private Bank Others Total
No of respondent 54 42 4 100
Percentage of respondent 54.00% 42.00% 4.00% 100%
Chart 4. 6 Type of bank loan taken from
From the above table majority of the people take home loan from Public Banks that is
54%. The reason for taking home loan from Public Banks may be because Public Banks
provide loan within a limited period of the time as compared to the Private Banks. Some of
them take a loan from Public Banks because they are staff and as staffs get loan at a low
interest rate as compared to other banks. About 42% of the respondent takes home loan
from the Private Banks.
Public Bank
54%
PrivateBank
42%
Others
4%
Loan is taken from which type of bank?
100 Repondents
Public Bank Private Bank Others

63
7) What is the period required for passing of Loan.
Table 4. 7 Period required for to pass a loan
Period required for to pass a loan
No of respondent Percentage of respondent
Less than 10 Days 20 20.00%
10 - 15 days 24 24.00%
15 says - 1 month 31 31.00%
1 - 2 months 16 16.00%
More than 2 months 9 9.00%
Total 100 100%
Chart 4. 7 Period required for to pass a loan
It can be seen from the above that minimum period required to pass a home loan is about 15
days - 1 month. During this period various documentation of the respondents is been done
after everything is been verified by the bank. After proper and satisfactorily verification by
the bank, the bank grants a home loan to the respondents. And maximum period required to
pass loan is More than 2 months. If the loan is taken by staff of the bank than the loan can
be processed and passed between 10-15days.
Less than 10
Days
20%
10 - 15 days
24%
15 says - 1
month
31%
1 - 2 months
16%
More than
2 months
Period required for to pass a Loan
100 Repondents
Less than 10 Days 10 - 15 days 15 says - 1 month
1 - 2 months More than 2 months

64
8) No. of documents required for obtaining Home Loans are
Table 4. 8 No. of documents required for obtaining Home Loans are
No. of documents required for obtaining Home Loans are
No of respondent Percentage of respondent
Too Many 38 38.00%
Many 30 30.00%
Normal 25 25.00%
Less 6 6.00%
Too Less 1 1.00%
Total 100 100%
Chart 4. 8 No. of documents required for obtaining Home Loans are
About 38% of the respondents tell that documentation required during home loan are “too
many”, about 30% of the respondents tell that documentation required during home loan is
“Many”, while 25% of the respondents tell that documentation required during home loan
id “Normal”.
Too Many
38%
Many
30%
Normal
25%
Less
6% Too Less
1%
Too Many Many Normal Less Too Less
No. of documents required for obtaining Home Loans are 100
Respondents

A Study of HOUSING LOAN Borrowers of Selected Public And Private Sector Banks In Badlapur - Kalyan Region

A Study of HOUSING LOAN Borrowers of Selected Public And Private Sector Banks In Badlapur - Kalyan Region

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A Study of HOUSING LOAN Borrowers of Selected Public And Private Sector Banks In Badlapur - Kalyan Region