A COMPARATIVE STUDY OF HOME LOANS OF STATE BANK OF

INDIA (S.B.I) AND HOUSING DEVELOPMENT FINANCE

CORPORATION (H.D.F.C) BANKS: AN EMPERICAL STUDY OF
BATHINDA, PUNJAB

SYNOPSIS

Submitted to Eternal University

in the partial fulfillment for the

degree of

MBA (FINANCE)

by

RAJU KAUR (BS15MB004)

Department of Management

Akal College of Commerce, Economics and Management

Eternal university, Baru Sahib, Sirmour, (HP)

July, 2016
 CHAPTER - 1

Introduction of Home Loan

Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries
and above all gathering funds little by little to afford ones dream.

Home is one of the things that everyone one wants to own. Home is a shelter to
person where he rests and feels comfortable. Many banks providing home loans
whether commercial banks or financial institutions to the people who want to have
a home.

The demand of home loans has increased dramatically. Part of the reason for this
increase is because the accessibility of loans has gotten bigger. Today, home loans
are available in the market at very low interest rates that meet the demands of
many home buyers. A home represents the largest asset that typically people have
and this is why home loans have such a huge impact in the loan market today.
When a person purchases a home, he or she will be investing a huge amount of
cash. Many people cant come up with the whole money to pay out the house,
while some others cant even afford to invest money for the house they will like to
purchase. When getting a home loan, the individuals should consider taking care
of different aspects related to the home loan.

Types of Home Loan

There are different types of home loans available in the market to cater borrowers
different needs.
Home Purchase Loan
Home Improvement Loan
Home Extension Loan
Home Conversion Loan
Home Construction Loan
 Land Purchase Loan
Bridge Loan

Home Purchase Loan

These are the basic home loans for the purchase of a new home. These loans are
given for purchase of a new or already built flat/bungalow/row-house

Home Improvement Loan

These loans are given for implementing repair works and renovations in a home
that has already been purchased by the customer. It may be requested for external
works like structural repairs, waterproofing or internal works like tiling and
flooring, plumbing, electrical work, painting, etc

Home Construction Loan

These loans are available for the construction of a new home. The documents
required by the banks or bank for granting customer a home construction loans are
slightly different from the home purchase loans. Depending upon the fact that
when customer bought the land, the lending party would or would not include the
land cost as a component, to value the total cost of the property.

Home Extension Loan

Home Extension Loans are given for expanding or extending an existing home. For
example addition of an extra room, etc. For this kind of loan, customer needs to
have requisite approvals from the relevant municipal corporation.

Home Conversion Loan

It is that loan wherein the borrower has already taken a home loan to finance his
current home, but now wants to move to another home. The Conversion Home
Loan helps the borrower to transfer the existing loan to the new home which
requires extra funds, so the new loan pays the previous loan & fulfills the money
required for new home.

Land Purchase Loan

Land Purchase Loans are available for purchase of land for both home construction
or investment purposes. Therefore, customer can be granted this loan even if
customer is not planning to construct any building on it in the near future.
However, customer has to complete construction within tenure of three years on
the same land.

Bridge Loan

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

ADVANTAGES OF HOME LOANS

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

Attractive interest rates

Help in owning a home

No requirement of guarantor

Door-Step Services

Long loan period

For accidental death insurance

DISADVANTAGES OF HOME LOANS

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

Delays in processing

Fluctuating interest rates

High Cost

Problems in disbursement

These are limitations or disadvantages of home loans. These limitations can be

removed by providing good and prompt services to the customers.
https://www.scribd.com/doc/31654891/Comparitive-Study-of-Home-Loans-sbi-
and-icici

PROCESS OF TAKING A HOME LOANS

The process of taking a home loan can be daunting, especially if you have never
applied for any loan earlier. And ignorance on your part can not only make it an
unpleasant experience, but also prove to be costly.

Here is a step-by-step guide to equip you with the right info, so you know what to
expect.

From applying for a home loan to getting it involves various stages. These are:

Step 1: Application form

Step 2: Personal Discussion

Step 3: Banks Field Investigation

Step 4: Credit appraisal by the bank and loan sanction

Step 5: Offer Letter

Step 6: Submission of legal documents & legal check

Step 7: Technical / Valuation check

Step 8: Valuation

Step 9: Registration of property documents

Step 10: Signing of agreements and submitting post-dated cheques

Step 11: Disbursement

1. Applying for a loan

Filling up the application form is the first step. The look of an application form
may differ from bank to bank, but nearly 80 per cent of the information they need
is similar. Most of this is basically your personal and professional information,
details of your financial assets and liabilities and the details of the property (if
finalized) including the estimated cost and the means of financing the same.

Documents to submit

While submitting the application form, every bank asks for several documents.
And most banks these days provide doorstep service, so that you dont have to
spend time visiting their office to submit the documents. However, some banks still
insist on the customer visiting their offices at least once.

Proof of income: This will need to be backed up by proof 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, copies of the last 6 months statements of all your active bank accounts in
which your salary/business income details are reflected, etc. Other documents that
you need to provide with your application form include age proof, address proof
and identification proof. You may also be asked to give your employment details.

Age proof: Copy of your school leaving certificate/Driving license/Passport/ration

card/PAN card/Election Commissions card/etc.

Address proof: Similar documents need to be provided to prove that you are
actually staying at your current address.

Identification proof: Same as above, but with photograph. Sometimes, the same
document if it contains a photograph, the current residential address and the correct
age can be the proof for all 3 things.

Your employment details: If your 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, turnover, profit, etc. may
be needed. Usually, the company profile that is available on the standard website of
the company is enough.

Financial check -

All the income-related documents you submit serve a specific purpose. The lending
institution uses them to study your financial status.

The bank statements you submit are scrutinized for:

Level of activity in the case of self-employed persons, this gives a very good
clue about the extent of business activities.

Average bank balance - a cursory glance at the average bank balances maintained
in a savings bank account speaks volumes about the spending/saving habits of any
individual.

Cheque returns a small charge debited by your bank in the statement indicates
that a cheque issued by you was returned by your bank. Many such cheque returns
can have a negative impact on your loan sanction.

Cheque bounces - if cheques deposited by you are returned by the issuers bank,
they will be visible in your bank statement and again, 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 etc. indicate an existing liability and you will need to provide full
details to the lender.

Your investments also come under the scanner. This helps the bank to estimate
your ability to pay the down payment as well as your savings habit.

Processing Fee:

Along with the application form and the credit documents, banks ask for a
processing fee. This fee varies from bank to bank, but is usually around 0.25% to
0.50% of the total loan amount. For instance, if you take a loan of Rs 10 lakh, you
will have to pay around Rs 2,500 to Rs 5,000 as processing fee. The agent dealing
with you earns a commission from the bank, which to some extent is also affected
by the amount of fees paid by you.

Most banks have flexible fee structures, and it is advisable that you negotiate hard
to find out the banks minimum possible 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.

This fee is collected to maintain your loan account, and includes work like sending
Income Tax certificates every year, maintaining post-dated cheques, etc.

2. Personal discussion: Face to face.

After youve formally and successfully completed the application process, all you
have to do is wait till the home finance institution evaluates your papers. The wait
normally lasts only a day or two or sometimes even less. However, some banks
insist on meeting you after receiving the application form, and before the loan
sanction. This is to gather more details about you that may not be mentioned in the
application form and to reassure them of your repayment capacity.

Again, this stage is insisted upon only in very few cases these days.

3. Field Investigation: Checking you out

Thousands of people apply for loans everyday. And however eager a bank is to
complete its targets, every loan is a risk. So, it is only natural that it confirms or
validates the details you provide. The bank checks all your information including
your existing residential address, your place of employment, employer credentials
(if you work for a small organization), residence and work telephone numbers.
Representatives are sent to your workplace or residence to verify the details.

Even the references you have provided in the application form are checked out.
While this may sound irritating and an invasion of your privacy, banks are forced
to undertake validation in the absence of any credit bureau. Once your credentials
are validated, it helps establish trust between you and the bank.

4. Credit appraisal and loan sanction: Getting the nod.

This is the make-or-break stage. If the bank is not convinced about your
credentials, your application may get rejected. If it is satisfied, it sanctions your
loan.

The bank or the home financier establishes your repayment capacity based on your
income, age, qualifications, experience, employer, nature of business (if self-
employed), etc. and based on these, works out your maximum loan eligibility, and
the final loan amount is communicated to you. The bank then issues a sanction
letter. This letter may either be an unconditional letter, or may have certain terms
and conditions mentioned, which you have to fulfill before the loan disbursal.

5. Offer letter: I do

Once the loan is sanctioned, the banks sends you an offer letter mentioning the
following details:
 loan amount

Rate of Interest

Whether fixed or variable rate of interest linked to a reference rate

Tenure of the loan

Mode of repayment

If the loan is under some special scheme, then the details of the scheme

General terms and conditions of the loan

Special conditions, if any

Acceptance copy:

If you agree with what is mentioned in the offer letter from the bank, you will have
to sign a duplicate letter of the same for the banks records. Earlier, banks used to
charge administrative fees along with the offer letter. However, with rising
competition, administrative fees have virtually disappeared from the home loan
market.

6. The legal angle: Property and papers.

Now, the focus of the banks activities shifts from you to the property you intend to
buy. Once you select your property, you need to hand over the entire set of original
documents pertaining to your property to the bank so that it can keep them as
security for the loan amount given to you. These normally include:

The title documents of your seller, which prove the sellers 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, the lessor of the land in the case of leasehold land, etc.
NOCs are not required where the property is situated on freehold land and the
entire land is being transferred along with the structure.

These documents remain in the banks custody until the loan is fully repaid.

Legal check:
Every bank conducts a legal check on your documents to validate their
authenticity. Even the draft sale documents that you will be entering into with your
seller will be scrutinized.

The documents are sent to a lawyer in their panel (either in-house or outsourced)
for a thorough scrutiny. The lawyers report either gives a go-ahead if documents
are clear, or it may ask for a further set of documents. In the latter case, you are
expected to hand over the additional documents to the bank for a clear title.

So, if a bank decides to disburse your housing loan, you have every right to smile,
since you can safely assume that your property documents are clear and the
transaction is safe.

7. Technical / Valuation check: Making doubly sure:

Banks are extremely careful about the property they plan to finance. They send an
expert to visit the premises you intend to purchase. This expert could either be a
bank employee or he could belong to a firm of architects or civil engineers.

Site visit: The site visits to your property are conducted to verify the following:

In case of under construction property:

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

given to you by the builder.

Quality of construction

Satisfactory progress of work.

Layout of flats and area of property is within permissions granted by the

governing authority.

The builder has the requisite certificates to start construction at the site.

Valuation of the property in relation to other deals in the surrounding areas.

In case of ready/resale construction

External / internal maintenance of the property.

The age of the building.

 Will the building last the loan tenure? This has a direct bearing on your loan
eligibility, since the loan tenure will be restricted to the maximum age of the
property as decided by the banks engineer and this will impact your loan
eligibility.

Quality of construction.

Surrounding area (development).

Whether the builder has received the requisite certificates for handing over
possession of the flat.

There is no existing lien or mortgage on the property.

Valuation of the property in relation to other deals in the surrounding areas.

These inspections are carried out to protect consumer interests in terms of

construction quality, adherence to local laws, approved building plans, etc. A
technical inspection also lets the bank understand the progress of
construction so as to release the staggered disbursements.

8. Valuation: Reality check

Since housing loans are cheaper than other loans, there have been cases where
individuals have shown purchase of properties from related entities at inflated
prices to obtain cheap loans.

Since the risk associated with diversion of funds is higher than if the loan was used
for genuine purposes, banks carry out an independent valuation to find out whether
the transaction is in line with the existing market price of the area.

Valuation has become a key parameter in determining the loan amount that can be
sanctioned by the bank. The valuation process is quite subjective and depends on
the quality and ability of the person sent by the bank for valuation.

Valuation of real estate as a profession is still in its infancy in India and is still non-
standardized. 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 lower, since the bank funds a certain percentage of
the cost or valuation of the property, whichever is lower.
This practice has led to severe consumer issues in an increasing number of cases,
as the valuation is normally done only after the consumer takes a sanction (by
paying a fee) and after identifying and committing to buy the property.

The valuation issue rarely arises when a property is purchased through a reputed
builder directly or if the property is pre-approved. In both the cases, the banks
would have already completed the valuation and therefore, you can safely assume
that there is no difference between the documented cost of the property and the
banks valuation amount.

9. Registration: Sealing the deal

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 NOCs are pending, these need to be
obtained in the format approved by the banks lawyer.

10. Signing the home loan agreement: In black & white.

All borrowers need to sign the home loan agreement. You also need to submit post-
dated cheques for the first 36 months (if that is the agreed mode of repayment).
The original property documents have to be handed over to the bank at this stage.
Some banks also create a document recording the handing over of the property
documents to them as security for the due repayment of the home loan.

This document is also called a memorandum of entry and attracts significant stamp
duty depending on the amount of the loan in some states. The stamp duty payable
on such a memorandum is naturally recovered from you.

Not all banks create this memorandum and hence the stamp duty may or may not
be payable, depending on the practice of the specific bank. However, even where
no such memorandum of entry is created, the state government concerned may, in
the future, demand a stamp duty on the loan transaction, which naturally is
recoverable from you as per the home loan agreement signed by you.

11. Disbursement: The big payout.

After the bank has ensured that the property is legally and technically clear, all the
original documents pertaining to transfer of ownership of property in your favour
have been submitted and all the necessary loan agreements have been executed,
finally, it is payment time! You will now actually receive the cheque in your hand.
Time to celebrate! But hold on a second. Before the big moment arrives, you need
to submit documents to prove that you have paid your personal contribution
towards the property, since banks normally finance only up to 85-90 per cent of the
total cost of the house.

In case you are expecting money from other sources to fund your own
contribution, you 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 you
provide documents to support that you have made an excess payment from your
own account that the cheque will be handed over to you directly by the bank.

Quick tips:

All banks charge interest on the loan amount from the day on which the cheque has
been made and not from the day on which the cheque is handed over to you/seller.
So, take delivery of the cheque the same day or the very next day to avoid paying
extra interest on money.

Disbursement in stages:

Usually, loans are disbursed on the basis of the stage of construction of the
property. So, in case of resale or ready possession properties, the disbursement is
full and final. However, in case of under-construction properties, the payment is
made in parts, also known as part-disbursement.

Each option would have different disbursement processes.

Part disbursement: When a loan is partly disbursed, the bank does not start EMIs
immediately, since it is calculated on the total loan amount at a particular rate of
interest and for a given tenure. Moreover, it normally does not start breaking up the
installments into its principal and interest components until the entire loan amount
is disbursed.

To overcome this difficulty, banks charge simple interest on the partly disbursed
loan amount. For instance, if you have a sanctioned loan of Rs10 lakh, but the
property is under construction and the bank has disbursed only Rs4 lakh, you will
be charged a simple interest only on the disbursed amount. This process continues
until the final disbursement takes place. The simple interest paid is called Pre-emi
interest or Pre-emi.

At this stage, banks may take only around three to six post-dated cheques on
account of Pre-emi.

Full and final disbursement: If it is a ready-possession property, the bank

disburses the entire loan amount in favour of either the reseller or the builder.

The relationship continues

The final disbursement does not end your relationship with the bank. In fact, it is
just the beginning. And there are various issues / situations that arise in between
the beginning of the relationship and its end.

These include:

Post-disbursement documents

Repayment

Income tax certificate

Prepayment

loan pre-closure/satisfaction

Post-disbursement documents

Payment receipt: Once the bank hands over the pay order to you, you in turn are
expected to hand it over to the reseller or the builder. You should get a receipt from
them for the payment and hand it back to the bank, as it will become part of your
mortgage documentation.

Share certificates: In case your property is part of a society, you will need to get the
flat transferred to your name by asking the society to issue the share certificate in
your name and recording the transfer of ownership in their books.

This normally happens at the first AGM/EGM after the sale transaction. This
transferred share certificate also happens to be a part of the mortgage
documentation and has, therefore, to be handed over to the bank after the transfer
takes place.

Repayment

The loan is generally repaid by equated monthly installments, using post-dated

cheques. Banks usually ask for 12, 24 or 36 PDCs, after which you need to repeat
the process until you have repaid the loan. Some banks may also insist on a cheque
for an amount equivalent to the loan outstanding at the end of PDC period to
ensure timely replenishment of PDCs for the next 12, 24 or 36 months as the case
may be.

In case your installments are to be deducted against your salary, you need a letter
from your employer accepting this arrangement and directly remitting the amount
to the bank every month. This is possible only if your organization has an
arrangement with the bank for all employees.

Some banks allow you to give standing instructions to the bank where you have
your savings/current account to deduct money each month crediting your home
loan account.

Some banks allow the monthly installments to be paid by convenient ECS facility.

Another possible mode of payment is by cash or demand draft (not all banks offer
this). You can deposit the EMI every month at the banks office.

Income Tax certificate:

Every bank issues an income tax certificate that serves as requisite proof to let you
avail of tax benefits that accrue on repayment of a home loan. This will typically
contain the total amount of interest and capital repaid during the year.

This is mandatory to claim the tax benefit in respect of self-occupied property. You
will have to file this with your tax returns and submit this to your employer or
chartered accountant to calculate your tax liability.

Prepayment:

You can prepay a loan either in part or in full at any given point of time. You can
also prepay it even when it is only partly disbursed. However, most banks have an
upper limit on the number of times a person can prepay his loan in a year as well as
on the minimum amount you can prepay each time.
Until recently, banks charged a penalty for part or full prepayment. But increased
competition has forced most banks to allow partial prepayment at nil charge.

Most banks levy a prepayment charge if you make full repayment and ask for
release of your property documents.

Loan pre-closure/satisfaction:

You also have the option of completely repaying the loan at any time. Of course,
each bank has its conditions for pre-closure. Also, the loan will get completely paid
off on the expiry of the tenure of the loan if you have paid all your installments on
time.

Once you have completely repaid your loan, ensure that the entire set of original
property documents is handed back to you. You should also ask the bank for a No-
Objection Certificate saying the account has been cleared. As an option, the bank
may issue a consent letter stating that the property is now free from mortgage.

If you have guarantors, the bank will issue a separate letter for each of the
guarantors stating that their liability has come to an end. Only after you receive
these documents can you say that the property is now completely free of mortgage.

At this stage, in some cases, you may discover that the original documents have yet
not been received by the bank from the registrar. In such cases, you will need to
follow up with the registrar and get the documents from them directly by showing
them a copy of the banks clearance certificate.

Sometimes, (and we must stress only sometimes) the bank may misplace your
original property documents leading to avoidable stress. In fact, the bank may
claim that these documents were never given to them at all. Hence the importance
of insisting on a proper receipt of title documents while handing them over to the
bank.

Remember that receipt will come in very useful when the loan is fully paid off.
Also, it is extremely useful when you want to shift your loan to a new lender.

Introduction:
 The origin of western type commercial Banking in India dates back to the 18th
century. The story of banking starts from Bank of Hindustan established in 1770
and it was first bank at Calcutta under European management. It was liquidated in
1830-32. In 1786 General Bank of India was set up. The Bank of Calcutta
established in 1806 immediately became Bank of Bengal. In 1921 these 3 banks
merged with each other and Imperial Bank of India got birth. Imperial Bank of
India was later renamed in 1955 as the State Bank of India. Thus, State Bank of
India is the oldest Bank of India. After the independence, Reserve Bank of
India(RBI) was nationalized and given wide powers. The operations of all the
banks in India are controlled by the Reserve Bank of India. All the Indian banks
are governed by the Reserve Bank of India(RBI). This governing body took over
the reasonability of formally regulating the Indian banks in 1935. In 1949, Reserve
Bank of India was announced as the official Central Banking Authority for the
smooth supervision of the banking industry in India.

PROFILE OF SBI

The evolution of State Bank of India can be traced back to the first decade of the
19th century. It began with the establishment of the Bank of Calcutta in Calcutta,
on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later,
on 2 January 1809. It was the first ever joint-stock bank of the British India,
established under the sponsorship of the Government of Bengal. Subsequently, the
Bank of Bombay (established on 15 April 1840) and the Bank of Madras
(established on 1 July 1843) followed the Bank of Bengal. These three 7 banks
dominated the modern banking scenario in India, until when they were
amalgamated to form the Imperial Bank of India, on 27 January 1921.

An important turning point in the history of State Bank of India is the launch of the
first Five Year Plan of independent India, in 1951. The Plan aimed at serving the
Indian economy in general and the rural sector of the country, in particular. Until
the Plan, the commercial banks of the country, including the Imperial Bank of
India, confined their services to the urban sector. Moreover, they were not
equipped to respond to the growing needs of the economic revival taking shape in
the rural areas of the country. Therefore, in order to serve the economy as a whole
and rural sector in particular, the All India Rural Credit Survey Committee
recommended the formation of a state-partnered and state-sponsored bank.
The All India Rural Credit Survey Committee proposed the takeover of the
Imperial Bank of India, and integrating with it, the former state-owned or state
associate banks. Subsequently, an Act was passed in the Parliament of India in May
1955. As a result, the State Bank of India (SBI) was established on 1 July 1955.
This resulted in making the State Bank of India more powerful, because as much as
a quarter of the resources of the Indian banking system were controlled directly by
the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in
1959. The Act enabled the State Bank of India to make the eight former State-
associated banks as its subsidiaries. . S.B.I offer various types of loans produced
such as:-

1. SBI Home Loan Scheme

2. SBI Pre-approved Home Loan

3. SBI Yuva Home Loan

4. SBI Max Gain Home Loan

5. SBI Realty Home Loan

6. SBI NRI Home Loan

7. SBI Gram Niwas/Sahyog Niwas/Tribal Plus

8. SBI Green Home Loan

Products and Services

Personal Banking

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

Other Services
Agriculture/Rural Banking

NRI Services

ATM Services

Demat Services

Corporate Banking

Internet Banking

Mobile Banking

International Banking

Safe Deposit Locker

RBIEFT

E-Pay
E-Rail

SBI Vishwa Yatra Foreign Travel Card

Broking Services

Gift Cheques

. http://shodhganga.inflibnet.ac.in/bitstream/10603/6893/4/04_chapter
%201.pdf

Company Profile of H.D.F.C

History of HDFC

The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995. The Housing
Development Finance Corporation (HDFC) was amongst the first to receive an 'in
principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBI's liberalization of the Indian Banking Industry in
1994.

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

network of over 1416 branches spread over 550 cities across India. All branches
are linked on an online realtime basis. Customers in over 500 locations are also
serviced through Telephone Banking. The Bank also has a network of about over
3382 networked ATMs across these cities.

Housing Development Finance Corporation (H.D.F.C)

Housing Development Finance Corporation (H.D.F.C) Bank Limited is an Indian
financial services company based in Mumbai, Maharashtra. It was incorporated in
1994. Aditya Puri is the Managing Director of H.D.F.C Bank. The bank currently
has a nationwide network of 4,014 Branches and 11,766 Automated Teller
Machine (ATM) in 2,171 Indian towns and cities. H.D.F.C Bank is the second
largest private bank in India as measured by asset. ICICI Bank is the first largest
Private Bank in India as measured by asset. H.D.F.C offer various types of loans
produced such as:-

Home Loan
Smart Draft
Loan against Rent Receivables
Personal Loan
Gold Loan
Tractor Loans
Two Wheeler Loan
Education Loan
Health Care Finance
Car Loan Loans against
Securities Commercial Vehicle Finance
Old Car Loan
Loans against Property
Construction Equipment Finance

Services offered by the company:

Personal Banking
Accounts & Deposits
Loans
Cards
Forex
Investments & Insurance

NRI Banking
Accounts & Deposits
Remittances
Investments & Insurance Loans Payment Services

Wholesale Banking
Corporate
Small & Medium Enterprises
Financial Institutions & Trusts
Government Sector
http://profit.ndtv.com/stock/hdfc-bank-ltd_hdfcbank/reports

Objectives of the study

To comparative study of home loan between S.B.I and H.D.F.C bank

To evaluate the customer satisfaction between S.B.I and H.D.F.C bank in
context of home loans.

4. Review of Literature

David C. (2008) concluded that many states compulsory pauses on both farm and
nonfarm residential mortgage foreclosures. Although moratoria reduced farm
foreclosure rates in the short run, they appear to have also reduced the supply of
loans and made credit more expensive for subsequent borrowers. The federal
government took a number of steps to relieve residential mortgage distress and to
promote the recovery and growth of the national mortgage market. Ashwani,
Parvinder and Pushpinder (2009) studied the effect of various selected independent
variables (i.e Interest income, interest expenses, Non-interest income, operating
and administrative expenses and employee costs) on profitability of selected HFCs.
Bi-variate Correlation analysis was used to study the correlation between various
variables. As per their study, it was concluded that the overall profitability of the
housing finance companies has gone down as observed in falling trend of return on
capital employed. Santoso and Sukada, (2009)Even though housing is the largest
asset owned by Indonesian households, most home owners intend to leave their
houses to their children rather than to reap the benefits of rising house prices.
Bandyopadhyay and Saha (2011) suggested that the borrower defaults on housing
loan payments is mainly driven by change in the market value of the property vis-
-vis the loan amount and EMI to income ratio. They also identified that default on
home loans also gets triggered depending upon the borrower characteristics like
marital status, employment situation, regional locations, city locations, age profile
and house preference. Ghosh S.(2012) in his study mainly focused on the
guidelines followed by commercial banks in India regarding the appraisal process
of housing loans with specific reference to Indian Overseas Bank. Gupta J. and
Jain S. (2012) focussed on the various practices adopted by cooperative banks in
India and made a comparison of the cooperative banks with respect to their
efficiency with respect to lending practices. The major findings of the study
showed that majority (32% as per the study) of the respondent were having
housing loan for the bank under study, most (64% as per the study) of the people
prefer to take long term loan which is more than 3 years, there is a very simple
procedure followed by bank for loan, easy repayment and less formalities are the
main factors determining customers selection of loans, quality of services provided
by the staff is satisfactory because bank is catering to a small segment only and the
customers are properly dealt with, customers are satisfied with the mode of
repayment of instalments, average time for the processing of loan is less i.e approx
7 days. The authors also suggested measures to improve the efficiency of the
Cooperative banks. Rao T. S. (2013) discussed about the perception and problems
of home loan takers in Andhra Pradesh. The author has focused on research by
taking into account HDFC and SBI bank. The paper discussed about the Housing
Policy frame work, trends and progress in Housing Finance, the operational
performance of HDFC and SBI with regard to providing housing finance to
individuals, perception and problems of home loan takers in the State of Andhra
Pradesh. The author concluded by stating that the Housing Finance in India faced a
number of set-back in decades but the designing of a shelter policy, the
organization of the housing finance market, the introduction of fiscal incentives
have bought about a number of changes in the housing finance. The services and
product innovations are the key tools for success. Kumaraswami M. and Nayan J.
(2014) discussed about the importance of housing finance and the institutions
providing housing finance. A detailed discussion of the marketing strategies
adopted by financing institutions have been discussed by taking into account the
loan criteria eligibility, loan amount, interest rate, security, loan tenure, margin and
processing fee. Finally the paper highlights the performance of the housing sector,
major findings and suggestions to improve the effective marketing of housing
finance for both public and private sector banks.

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