To understand the loan patterns of the rural client and help a private bank develop a new product.

1. “Cross-sectional study of loan
availing consumers in rural India”
Abhisek Nayak
Jeevan Lohar
Safayet Karim
Shweta Singh
Subhasis Dutta Gupta
1

2. Agenda
• Background & Objective
• Data sanitation process
• Demographic analysis
• Loan taking behaviour
• Attributes affecting Overall satisfaction
• Segment Analysis on Psychographics
• Recommendations
2

3. Project Background and Objective
3
Project owner: A private Bank
Research design: Cross Sectional study
Data Collection Method: Primary data
Research Instrument: Questionnaire
Target Group: Loan taking people living in town, where population is less than 1 lakh.
Objectives:
1. To understand demography at all sample level and zone level.
2. To understand loan taking behavior at all sample level and compare the behavior for North and
South India
3. To evaluate important attributes affecting overall satisfaction
4. To understand the psychographic segmentation

4. Data Sanitation
• After checking all the values, all the miscoded values were assigned as “NA”
• Imputed this missing values with multivariate imputation method
• Use “KNN” method to impute the miscoded values
4
No. of observations Total no. columns Total no. of missing values % of missing value
1550 55 4291 5.03

5. All level demographic analysis
5
2.6
13.7 13.9
5.0
13.7
7.4
1.9
31.4
1.3 2.2 2.7 4.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
%
Occupation
Occupation Level
1.5
3.1 2.7
15.7
27.0
15.1
31.5
3.4
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Illiterate Literate, but no
formal
education
Up to Class 4 Class 4 – Class 9 SSC/HSC HSC+, but not
graduate
(Diploma etc.)
Graduate / Post
graduate
(General - BA,
MA, B.Sc. etc.)
Graduate / Post
graduate
(Professional –
B.E, B. Tech,
M.B.B.S, etc.)
%
Education
Education Level
27.4
51.2
21.4
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Less than 3 3 to 5 More than 5
%
Dependency
Dependent Level
81.5
18.5
0.0
20.0
40.0
60.0
80.0
100.0
Yes No%
Earning
Earning Regular Income

6. 6
4.8
17.0
38.8
27.8
11.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Less than
75,000
75,000 –
1,50,000
1,50,001 –
3,00,000
3,00,001 –
5,00,000
More than
5,00,000
%
HH Income
Annual Household Income
45.6%
36.3%
50.0%
2.3%
4.6% 4.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Agricultural
land
Residential
plots
Pucca house Kutcha
house
Shop Others
%
Properties
Immovable Properties
61.4%
46.0%
14.8%
46.4%
6.4%
26.5%
9.2%
21.0%
2.3% 2.1% 1.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Two –
wheeler(s)
Four –
wheeler(s)
Tractor(s) Commercial
vehicle(s)
Machinery
(Thrasher,
harvester,
sugarcane
crusher)
Home
appliances
(Refrigerator,
TV)
Livestock
(cattle,
poultry)
Bank / Post-
office
Deposits
Company
shares
Government
or Company
Bonds
Others
%
Properties
Movable Properties

7. North
Occupation: Self Employed Professional (38.3)
Education Level: Graduate / Post graduate (General
- BA, MA, B.Sc. etc.) (39.1%)
Dependent Members: 3-5 (46.4%)
Regular Income: Yes (96.2%)
Annual Household Income: 1,50,001-3,00,000 (39.1%)
South
Occupation: Self Employed Professional (39.7%)
Education Level: Graduate / Post graduate (General
- BA, MA, B.Sc. etc.) (33.3%)
Dependent Members: 3-5 (61.1%)
Regular Income: Yes (74.9%)
Annual Household Income: 1,50,001-3,00,000
(40.8%)
East
Occupation: Self Employed Professional (32.6%)
Education Level: Graduate / Post graduate (General
- BA, MA, B.Sc. etc.) (29.5%)
Dependent Members: 3-5 (48.2%)
Regular Income: Yes (78.8%)
Annual Household Income: 1,50,001-3,00,000 (37.8%)
West
Occupation: Businessman/Industrialist with no
employee(29.6%)
Education Level: SSC/HSC (30.2%)
Dependent Members: 3-5 (49.0%)
Regular Income: Yes (83.1%)
Annual Household Income: 1,50,001-3,00,000 (38.2%)
Zone wise Loan
Taker’s Profile
7
Zone-wise demographic analysis

8. 8
Two –
wheeler(s)
Four –
wheeler(s)
Tractor(s) Commercial
vehicle(s)
Machinery
(Thrasher,
harvester,
sugarcane
crusher)
Home
appliances
(Refrigerator,
TV)
Livestock
(cattle,
poultry)
Bank / Post-
office Deposits
Company
shares
Government or
Company
Bonds
Others
23.91
20.45
9.17
17.21
4.16
8.89
5.99
8.46
0.63 0.78 0.35
22.25
14.38
4.63
26.75
1.25
12.00
2.75
11.63
1.25 1.63 1.50
30.85
22.20
2.54
18.31
1.36 0.51
12.37
10.17
0.85 0.68 0.17
29.11
20.37
5.52
17.61
2.53
3.68
13.35
5.98
1.38 0.46 0.00
Movable Property
East West North South

9. 9
Zone-wise Immovable property segmentation
East
West
North
South
Agricultural land Residential plots Kutcha house Shop Pucca house Others
36.07
21.04
0.58
3.82
36.18
2.31
30.50
22.97
1.16 1.54
38.42
5.41
24.46 24.46
4.28
2.75
41.90
2.14
30.91
35.63
1.97
4.33
24.80
2.36
East West North South

10. 10
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Less than
or equal to
1,00,000
1,00,001–
3,00,000
3,00,001 –
5,00,000
5,00,001-
10,00,000
More than
10,00,000
14.3
23.5
25.9
21.0
15.2
Percentage
Loan Amount
Loan Amount of all sample
0.0
5.0
10.0
15.0
20.0
25.0
3 months
before
3-6 months 6 month - 1
year
1-1 and a
half years
before
2 or more
years before
22.3
20.1
22.7 23.0
11.9
Percentage
Loan Period
Time when loan was availed
0.0
20.0
40.0
60.0
80.0
Less than 2
weeks
3 – 4 weeks 5 – 6 weeks More than 6
weeks
70.1
22.1
6.3
1.5
Percentage
Period
Duration for processing of loan by bank
0
10
20
30
40
50
60
70
80
9.5
0.5
72.8
4.4
0.3
6.9 4 1.6
Frequency
Type of loan
Breakup of loan type
Loan-taking Behaviour: At all sample

11. 11
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Less than 3
years
3 – 5 years 5 – 10 years More than
10 years
28.8
58.3
8.8
4.1
%
Period
Tenure of loan repayment period
0.0
20.0
40.0
60.0
80.0
100.0
Up to 2
banks
Up to 5
banks
Up to 7
banks
More than
7 banks
89.0
10.0
.6 .4
%
Banks
Banks visited
0.0
10.0
20.0
30.0
40.0
50.0
0 – 25% 25 – 50% 50 – 75% 75 – 100%
4.8
11.5
34.9
48.7
%
Requirement
Requirement met by loan
0.0
20.0
40.0
60.0
80.0
Gold Vehicle Land House
6.5
63.4
20.4
9.7
%
Property
Property Mortgaged
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
11.0
5.3 8.6
66.1
9.0
%
Objective
Objective fulfilled with the loan

12. 12
Overall Summary
Vehicle Loan is the leading loan category and Livestock is the least
Average Loan Amount is 3-5 Lakhs
Most of them took loan one and a half years back
Loan Processing took 2 weeks for approval
Average duration of loan repayment period is 3-5 Years and maximum of 2 banks were approached
Mortgage Property is Vehicle to get the loan approval

13. 13
Independent Samples Test
Levene's Test for Equality
of Variances
t-test for Equality of Means
F Sig. t df Sig. (2-tailed)
Mean
Difference
Std. Error
Difference
95% Confidence Interval of the
Difference
Lower Upper
Q9
(Loan Type)
Equal variances assumed
.423 .516 -.051 608 .960 -.006 .126 -.253 .241
Equal variances not assumed
-.051 517.096 .959 -.006 .124 -.250 .238
Q10
(Loan Amount)
Equal variances assumed
.064 .801 .216 608 .829 .024 .110 -.193 .241
Equal variances not assumed
.217 503.671 .828 .024 .110 -.192 .240
Q11
(Loan Taken)
Equal variances assumed
4.875 .028 -1.656 608 .098 -.183 .110 -.399 .034
Equal variances not assumed
-1.628 468.657 .104 -.183 .112 -.403 .038
Q13
(Loan Processing
Time)
Equal variances assumed
1.770 .184 -.368 608 .713 -.022 .059 -.138 .094
Equal variances not assumed
-.380 550.258 .704 -.022 .057 -.134 .091
Q14
(Repayment
Period)
Equal variances assumed
5.744 .017 1.528 608 .127 .100 .065 -.028 .228
Equal variances not assumed
1.544 512.997 .123 .100 .065 -.027 .227
Q15
(Bank Visits)
Equal variances assumed
1.260 .262 .655 608 .513 .022 .034 -.044 .088
Equal variances not assumed
.660 508.923 .510 .022 .033 -.043 .087
Q16
(Requirement
Met)
Equal variances assumed
.085 .771 -.451 608 .652 -.030 .066 -.159 .099
Equal variances not assumed
-.454 506.301 .650 -.030 .065 -.158 .099
Q17
(Property
Mortgaged)
Equal variances assumed
53.866 .000 -.085 608 .932 -.006 .072 -.147 .135
Equal variances not assumed
-.093 605.558 .926 -.006 .066 -.135 .123
Q18
(Loan Purpose)
Equal variances assumed
48.640 .000 3.026 608 .003 .268 .089 .094 .442
Equal variances not assumed
3.256 596.648 .001 .268 .082 .106 .430
Difference of Loan-taking Behaviour: North vs South

14. Key differences:
• Significant difference (at 95% C.I.) observed for loan purpose for people between North-India and South-India
 Q18 (Loan Purpose)
Agriculture purpose
Purchase of land
Purchase/Construction of houses
Business/shop set up
• As the F-value for Q17 (Property Mortgaged) is significant, so further investigation revealed at 95 % confidence level
difference for property Mortgaged for people between North-India and South-India.
 Q17 (Property Mortgaged)
Gold
Land
House
14

15. 15
Model Summary
Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
1 .849a
.721 .721 .417
2 .880b
.774 .773 .376
3 .886c
.785 .784 .367
4 .888d
.789 .789 .363
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.
95.0% Confidence Interval for
B
Collinearity Statistics
B Std. Error Beta Lower Bound Upper Bound Tolerance VIF
1 (Constant) .923 .049 18.996 .000 .828 1.019
Q19A .785 .012 .849 63.265 0.000 .761 .810 1.000 1.000
2 (Constant) .373 .053 7.098 .000 .270 .476
Q19A .671 .013 .726 52.831 0.000 .646 .696 .775 1.290
Q19E .253 .013 .260 18.959 .000 .227 .279 .775 1.290
3 (Constant) .195 .055 3.549 .000 .087 .303
Q19A .616 .014 .666 44.539 .000 .589 .643 .622 1.608
Q19E .205 .014 .211 14.562 .000 .177 .232 .663 1.509
Q19C .146 .016 .141 8.950 .000 .114 .178 .560 1.787
4 (Constant) .101 .057 1.768 .077 -.011 .212
Q19A .611 .014 .661 44.546 .000 .584 .638 .620 1.614
Q19E .175 .015 .180 11.714 .000 .145 .204 .579 1.727
Q19C .117 .017 .113 6.888 .000 .083 .150 .508 1.967
Q19D .090 .016 .087 5.722 .000 .059 .121 .589 1.698
a. Dependent Variable: Q19F
a. Predictors: (Constant), Q19A
b. Predictors: (Constant), Q19A, Q19E
c. Predictors: (Constant), Q19A, Q19E, Q19C
d. Predictors: (Constant), Q19A, Q19E, Q19C, Q19D
e. Dependent Variable: Q19F
Evaluation of important attribute of overall satisfaction

16. Results of Multiple Regression analysis:
16
• For overall satisfaction the attributes which are most significant in terms of ranking are:
1. Time taken for your loan application processing
2. Customer service
3. Timely disbursement of funds
4. Loan collection process
 Inclusion of variable Q.19B (Documentation and proof requirements) in the model does not improve the adjusted
R² and also enhances multicollinearity problem.
• The overall adjusted R² is 0.789 for the model
• The fitted Regression line:
Ovarallstatisfaction= 0.661 * (Time taken for your loan application processing) + 0.180* (Customer service) +
0.113 * (Timely disbursement of funds) + 0.087 (Loan collection process)
Variable % of Importance Rank
Q19A.
Time taken for your loan application processing
63.50 1
Q19E.
Customer service
17.29 2
Q19C.
Timely disbursement of funds
10.85 3
Q19D.
Loan collection process
8.36 4

17. 17
Psychographic Segment
Parameters
Cluster
1 2
Job is the greatest source of security for me. Agree Neutral
I spend within the amount I earn and do not believe in borrowing money or taking credit. Agree Neutral
Borrowing money is a source of discomfort; I would like to pay it back immediately. Agree Neutral
If I have to take loan, I can mortgage my property. Agree Neutral
I will take loan even at a quite high interest rate to meet my goals (business expansion or asset purchase). Neutral Disagree
I prefer banks which provides me loan for less collateral, even if interest rate is higher. Agree Disagree
I would always like to take more loans to expand my business. Agree Neutral
I would prefer to take loans from banks which require no guarantor. Agree Agree
I prefer obtaining loans from public sector banks rather than private banks. Agree Neutral
I prefer taking loans from the same bank every time. Agree Neutral
I take loans based on the suggestions by relatives, friends etc. Agree Neutral
Money lenders in need are friends indeed. Agree Neutral
I believe I have a strong credit worthiness to get loans. Agree Agree
Non-Banking Financial Companies (NBFCs) understands customer requirements very well. Agree Neutral
I will go to organised lenders like NBFC for loans, before approaching local moneylenders. Agree Agree

18. 18
ZONE wise Cluster Break-up
Cluster Number of Case
Total
1 2
ZONE
East 303 276 579
West 147 214 361
North 100 135 235
South 156 219 375
Total 706 844 1550
• Cluster 1 : 706 respondents
• Cluster 2: 844 respondents
• The respondents of Cluster 1 are Risk-averse individuals whereas in Cluster 2 the respondents
are smart and tactful individuals.
Final Cluster Centers
Cluster
1 2
Q20A 3.8 3.1
Q20B 3.7 3.1
Q20C 4.0 3.1
Q20D 3.6 2.6
Q20E 3.4 2.2
Q20F 3.6 2.5
Q20G 3.8 3.1
Q20H 4.0 3.6
Q20I 3.7 3.4
Q20J 3.6 3.3
Q20K 3.8 3.2
Q20L 3.8 2.9
Q20M 3.9 3.5
Q20N 3.9 3.5
Q20_O 4.0 3.6

19. Cluster 2 Characteristic compared to Cluster 1
 Demographic
Smart people are more into proprietary business and industry with high regular income and annual HH income.
There are more graduate/post graduate among smart people
They have more number of movable properties with respect to two wheeler, four-wheeler and commercial vehicles but less
number in tractors.
In terms of immovable property they have investment more on Puccha house.
 Loan taking
Smart people have higher tendency to take more amount of loan in vehicles.
They frequently mortgage their vehicles to take their loan
Their main purpose is to take loan for purchase of vehicles.
19

20. Recommendation
• North zone in cluster 2 respondents will be more profitable for the following reasons:
1. Within North zone in totality 96.2% of respondents have regular income and thus will have better
repayment capacity.
2. North zone Cluster 2 respondents are both smart and well educated and thus proper loan schemes
will be attractive for them.
• Based on the findings we can perform further zone-wise campaigning for loan promotion
20

21. 21