INTRODUCTION

The origination of the banks in India began in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786.among the present banks SBI, holds the title of the oldest. The SBI was established in 1806 in Calcutta as the bank of Bengal. As the no. of banks increased there arose a need for centrally regulating the banking system in India. This gave birth to RBI in 1935. In 1969, 14 largest commercial and privately owned banks were nationalized. In 1980, 6 more banks were nationalized a decade later the new generation IT banks came into existence. These were UTI (axis bank), ICICI bank, and HDFC bank. The banks in India have flourished not just in no. but also in their services, products and client base. They have succeeded in reaching out to rural India through the mobile banking and ATMS. There are 67000 branches of scheduled banks with an extensive network of over 32000 ATM counters combing every inch of country. the bank offer innumerable kinds of services and facilities to their customers. It is difficult to find a bank which doesnt provide varied kinds of loans to the people. The mortgage loans are one of the types of loans which is hugely popular with the loan seekers. Some of the kinds of mortgage loan include the fixed rate loan. The mortgage loans are not one of the best loans which anyone looking to buy a house could think of availing. The repayment period for the mortgage banking for a house is usually 15 to 30 years.

Banks provide home loans in India:AbnAmro Bank Allahabad Bank American Express Bank Andhra Bank Bank of India Canara Bank Central Bank of India Citibank Corporation Bank HDFC Bank HSBC Bank ICICI Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank State Bank of India (SBI) Standard Chartered Bank IDBI Bank United Bank of India Axis bank

STATE BANK OF INDIA (HOME LOAN)

The State Bank of India (SBI) is one of the largest banks in India founded in 1955. The state bank of India is known for best of its banking service in India as well worldwide. SBI provides a wide range of products and also has a vast network all around the world and also in India. A SBI home loan is one of the best in the Indian market today because of the fact that SBI is very experienced in handling this kind of loans and they have a very big backing from the government. The state bank of India is one of the banks to be fully computerized at every part of the country. That is why it has the tag line attached to it State bank of India means only banking nothing else. The state bank of India, have widen their business more than banking because it also provides mortgage loan program which will give amazing services to their potential customers.

PRODUCTS
SBI ADVANTAGE HOME LOAN For loan amount above RS. 30 Lakhs & up to RS. 75 lakhs SBI PREMIUM HOME LOAN - Above Rs. 75 Lakhs SBI EASY HOME LOAN for loan amount up to Rs. 30 Lakhs.

FEATURE OF HOME LOAN

Loan sanctioned within 6 days of submission of required documents. Option to club income of your spouse and children to compute eligible loan amount. Free personal accident insurance cover up to rs. 40 lakhs.

ELIGIBILITY
Minimum age should be 18 years as on the date of sanction

Maximum age should be 70 years. I.e. The age by which the loan should be fully repaid, subject to availability of sufficient, regular and continuous source of income for servicing the loan repayment.

PUNJAB NATIONAL BANK(HOME LOAN)

Punjab national bank is the third largest bank in India. It was registered on May 19, 1894 .Punjab National Bank (PNB), the leading Indian public sector bank has been a pioneer in facilitating home loans to the burgeoning middle class Indians. Punjab national bank home loan solutions are tailor made to suit the needs of the Indians. The home loans offered by Punjab National Bank are easy to avail and are offered at competitive rate of interest.

PRODUCTS 1. PNB apnagharyojna provides housing finance to individuals for construction or for acquisition/ purchase of house/ flat. Minimum loan amount would be Rs.50, 000/- and maximum loan amount depends entirely on the repayment capacity of the borrower(s). In case of joint application, Income of borrowers / co-borrowers shall be clubbed together for calculation of loan eligibility / the level of finance.

2. PNB "GharSudharYojna provides housing finance to individuals for up gradation, renovation or repair of house/flat. It includes among others, internal & external repairs, water proofing, roofing, flooring, electrical, woodwork etc. Minimum amount of loan is Rs. 50,000. Maximum amount of loan shall not exceed Rs. 10, 00,000. Borrowers minimum contribution will be 25% of the estimated cost of repairs/renovations. Actual loan amount shall be calculated on the basis of repayment capacity of the borrower as determined by PNBHFL.

3. PNB commercial property provides loans to individuals against mortgage of their existing residential immovable property situated in urban/semiurban/metro centers. Finance would be made available for personal requirements of borrowers such as education, marriage of children, family function, foreign travel, medical expenses, furnishing the house, buying a computer or other consumer durables, etc. by mortgaging their existing immovable property.

Purpose of Home loan:1. Construction or purchase of residential flat or house. 2. Repairing, extending, renovating and even modification of existing residential flat or house.

Some features of Punjab national bank home loan:1.

Bank provides home loan for the construction of house or purchase of flat or house Up to 75% of cost. If an individual avails home loan from the bank for the purpose of repairs, extension, renovation, addition and modification of flat or house, then 75% of the estimated cost is financed by the bank, subject to a maximum limit of rs.20 lakhs. The bank provides loan Up to Rs. 20 lakhs for purchase of land meant for the purpose of construction of house. Up to Rs. 20 lakh is being facilitated for the purpose of furnishing.

2.

3. 4.

ELIGIBILITY:1. Individuals who are in permanent service or self-employed or have their own business can apply for PNB Ghar sudhar yojna. Age of the applicant should not be more than 60 years 2. To qualify for PNB Apna ghar yojna, individuals (Resident or nonresident) should be in permanent service or having their own business .In case of service sector, age of the applicant should not be more than 60 years and 65 years in case of businessman or self-employed. 3. In case of commercial property, individual having regular source of income can apply for the loan. Age of the applicant should not be more than 55 years.

HDFC (HOME LOAN)

HDFC bank limited is an Indian commercial that was incorporated in 1994, right after the Reserve Bank of India permitted the establishment of banks for the private sector. This particular bank was promoted by the Housing Development Finance Corporation that is said to be one of the premier housing finance company in India. An HDFC Home Loan is said to be the best in the market today because of its terms and of course its interest rates.

PURPOSE OF HOME LOAN:1. Purchase of a house 2. Home extension loan 3. Home improvement loans

FEATURE OF HOME LOAN: The company helps in finding the best home possible under the circumstances of their customers. Multiple repayment option. Widest range of home loan products Pioneers of Housing Finance in India with over 33 years of lending experience. HDFC finances up to 80% of the cost of the property (including the cost of the land) based on the repayment capacity of the customer.

AXIS BANK (HOME LOAN)

Axis Bank, formerly known as UTI bank, is a financial services firm that had begun operations in 1994, after the government of India allowed new private banks to be established. . The bank changed its name to Axis Bank in April 2007 to avoid confusion with other unrelated entities with similar name.

Feature of home loan

Attractive interest rates Balance Transfer facility Doorstep service Nil Prepayment charges

ELIGIBILITY The individuals who are in permanent service, professionals or selfemployed are eligible for the loan. The applicant in all the cases should be above 24 years of age at the time of loan commencement and up to the age of 60 Years or superannuation, whichever is earlier at the time of loan maturity.

ICICI BANK(HOME LOAN)

ICIC bank began its retail banking venture in mid 1999.by January 2000 it had moved on to introducing home loans. It is the largest private sector bank in India by market capitalization. The bank also has a network of 2,016 branches in different cities. PRODUCTS

ICICI MaxMoney Home Loans offer the unique advantage of higher loan eligibility, with a lower initial installment. One can get up to 30% higher amount against one's current income and the installment amount gets stepped up over the years. ICICI 'SmartFix' Home Loans combine the safety of fixed rates plus the advantages of floating rates. For the first 3 years the borrower gets a fixed interest rate and the fourth year onwards, the loan gets switched to the prevailing floating interest rate. ICICI Bank offers Home Improvement Loans for renovation /refurbishment of one's home. One can avail of loan up to Rs. 50 Lakhs and the interest rate is same as that of the Home Loans. The loan covers up to 70% of the cost of improvement and the repayment period is 15 years.

PURPOSE OF HOME LOAN:

ICICI bank offers home loans for the first purchase in ready construction. For under construction property. Purchase in re-sale, self-construction and extension of existing living space.

Features:

The loan amount can be up to 80% of the Cost of Property. The applicant can conveniently repay the loan over a period up to 25 years. The bank provides the choices of both Floating rate of Interest or at the Fixed rate of Interest or at the combination of both Fixed & Floating rates, for the repayment of the home loan.

CPM MATRIX FOR HOME LOAN

RATING = MAJOR WEAKNESS=1, MAJOR STRENGH=4

PARTICULARS

Weight

SBI BANK

PNB BANK

ICICI BANK

HDFC BANK

AXIS BANK

Rating

Score

Rating

Score

Rating

Score

Rating

score

Rating

Score

Interest rate

.20

.60

.45

.45

.45

.45

Processing fee E-banking Consumer perception Networking Market share

.10 .10 .05

4 3 4

.40 .30 .20

3 3 3

.30 .30 .15

3 3 1

.30 .30 .05

3 4 3

.30 .40 .15

2 3

.20 .30
.10

.20 .05

4 2 4 4

.60 .10 .20 .20

4 3 2 4

.60 .15 .10 .20

3 2 4 3

.45 .10 .20 .15

3 4 3 4

.45 .20 .15 .20

2 2 3 3

.30
.10 .15 .15

Advertisement .05 Marketing strategy Deposit rate Operational efficiency Total .05

.10 .10

4 3

.40 .30

4 2

.40 .20

3 4

.30 .40

4 4

.40 .40

1 2

.10 .20

3.30

2.85

2.65

3.10

2.05

EXPLANATION:-

1. INTEREST RATE:Interest rate plays a very important role in success of home loan. The interest rate is decided by the demand and supply. Demand and supply also have an effect. When the economy is good then demand for home loans is increased so the interest rate will also rise. And if demand of mortgage is less than the interest rate will also drop. The interest rate is decided by RBI. The interest rate is differs from one bank to another. There are basically two types of rate available for home loans. These are:-

Fixed Home Loan rates: Under Fixed Rate Home Loans the rates remain fixed throughout the tenure of the loan no matter what. These kinds of rates are very expensive (13.50%+ for a 20 year home loan in November 2010) and are offered by a limited number of lenders in the market. Availing this type of loan is beneficial only when there is an expectation that the interest rate will upward revision in the near future.

Floating Home Loan rates:- it is also called variable rate loans or adjustable rate loans. The effective rate is linked to the Bank's Base Rate. The base rate would have to be declared by the banks at least once every quarter. Floating home loans are subject to market conditions and hence they are constantly revised by the banks. Floating rates are beneficial only if the interest rate falls in the future.

The following are the different interest rates of different banks:-

Financial institution Loan period

SBI BANK 6 t0 10 YEARS 11 TO 15 YEARS 16 TO 20 YEARS PNB BANK

Fixed rate Floating rate

8.75% 9.25% 9.25% 9.25% 10.00% 10.25% 10.25% 10.50% 9.50% 9.75% 9.75% 9.75% 9.75% 9.75% 9.75% 9.75% 9.50% 9.75% 9.75% 9.75% 9.75% 9.7% 9.75%

UP TO 5 YEARS 9.5%

UP TO 5 YEARS 9.00% 6 TO 10 YEARS 11 10 15 YEARS 16 TO 20 YEARS 9.00% 9.25% 9.25%

ICICI BANK

UP TO 5 YEARS 16% 6 TO 10 YEARS 11 10 15 YEARS 16 TO 20 YEARS 16% 16% 16%

HDFC LTD.

UP TO 5 YEARS 11.5% 6 TO 10 YEARS 11 TO 15 YEARS 16 TO 20 YEARS 11.5% 11.5% 11.5% 14% 14% 14% 14%

AXIS BANK

UPTO 5 YEARS 6 TO 10 YEARS 11 TO 15YEARS 16 TO 20 YEARS

2. PROCESSING FEE:Processing fee is also an important factor in the success of housing finance. When we apply for a home loan, the bank charges us a certain amount as the processing fees. That will be included in the total home loans amount. Normally the processing fees differ from each bank to another bank like 0.5% 1.0%.Processing fee is generally a percentage of the loan amount. Customers do not want to pay a large amount on processing fee. While applying for a loan, customer also notice the processing charges decided by the bank The following are the processing charges of different banks:Financial institutions SBI BANK Loan amount Up to Rs.5 Lac Above Rs.5 Lac and up to Rs.10 La Above Rs.10 Lac and up to Rs.20 La Above Rs.20 Lac and up to Rs.50 Lac Above Rs.50 Lac and up to Rs.1cr Above Rs.1 cr and up to Rs.5 cr Processing fee Rs.1000/Rs.2000/Rs.5000/Rs.7000/Rs.8000/Rs.10000/-

Above 5 cr.
PNB BANK ICICI BANK HDFC BANK AXIS BANK -

Rs.20000/0.5% of loan amount, maximum rs.20000/0.5% of loan amount 0.50% to 1% of loan amount, maximum Rs 10000. 1% of loan amount

3. NETWORKING:Networking means branches of a firm. the banks are now a days covering each corner of the world. the banks in India has flourished not just in numbers but also in their services. In 1969 there are only 14 commercial banks and privately owned firms in India. But now a days there are 88 commercial banks are providing services with 67000 branches. a huge networking covers the entire world and capture more markets. the huge networking is also a success factor for the industry. Customers prefer those banks PNB Banks has 5000 branches in India and it plans to add around 350 more branches before end of the year. SBI has 26,500 branches, including branches that belong to its associate banks. It also includes 99345 offices in our India. Axis bank has a very wide network of more than 1281 branches and Extension Counters HDFC Bank has an network of 1725 branches spread in 780 cities across India. ICICI bank also has a network of 2,016 branches.

4. E-BANKING:E-Banking means online banking. Now a days customer can get loan without steeping outside from their home through E-Banking. Net banking has opened new avenues for both the customer and as well as the banks. There is no need of standing in the queue and wait for our turn for applying the home loan. At present only 55 Indian banks are offering different types of online banking services such as basic promotional materials, company's profile, online funds transfer, capital management services, etc. PNB provides internet banking facility to its net savvy customers who want any time banking services at their own convenience. To avail the PNB net banking facility the customer is required to have an account at any of the CBS branch of PNB. After registering yourself with the

internet banking service provided by PNB the account holder has to follow a set of procedure as prescribed by the bank the PNB internet banking services is also available to NRI customers all they required to do is download the application form from PNB website and submit the duly filed up form along with certain documents that bank demands at a branch where they have an account. Customers can access to various information through net banking: Accounts details Funds transfer Requests Account opening Request Cheque Book Request DD Request Breaking an FD FD Account Opening FD Renewal Statement of Account

Punjab National Bank has also started two specialized services through online banking. These are Payment of railway tickets that are reserved through IRCTC Payment Gateway Project Payment of utility bills through internet banking. Such utility bills include electricity bills, telephone and mobile bills and insurance premiums.

 SBI provides various online facilities: Online fee collection facility for Staff Selection Commission (SSC) and Union Public Service Commission (UPSC). Discover a Simple, Secure and Convenient way to pay all your Utility Bills. E-Rail reservation service using SBI accounts. Mutual Funds investments handled with SBI accounts. SBI e-Tax: Online payment facility for retail users and corporate. VISA Money Transfer.

SERVICE PROVIDED BY ICICI:-

Services provided by ICICI are BILL PAYMENT, FUND TRANSFER, ACCOUNT INFORMATION, SMART MONEY, ORDER SERVICE REQUEST, AND CONVERT TO EMI A/C TO CARD TRANSFER PREPAID, MOBILE RECHARGE ACCOUNT TRANSFER.

All branches of the bank boast of online connectivity with the other, ensuring speedy transfer of funds for the clients. Free online banking facility on the site is provided to the customers. One can easily get the information about the loans. Around 3.3 million people are connected with e-banking. The best facility of e-banking is provided by HDFC bank.

5.CONSUMER PERCEPTION:It is very important for any industry to know the perceptions of the customer about it. Companys main aim is to satisfy the customers by their products and services. Customer loyalty regarding a industry can be a success factor for the industry. Customers have more faith in public sector banks as compare to private sector banks. As public sector banks gives a clear picture of information to its customers. The customers have more faith on SBI and PNB and having less trust on ICICI and HDFC bank.

Customers perception towards SBI Customers of SBI banks are more satisfied with their banks. They say that bank provides all true information regarding the home loan. The rates charged by the bank is decided by the customer and if there is any changes made by RBI than same is communicated to the customers also. They have the faith on bank that ifthere is any reduction in base rates, that will automatically apply to the old customer as well as new customers without any discrimination

Customers perception towards PNB The customers are not much satisfied with the bank. The customer of PNB home loan says that some time amount of EMI is incorrectly debited from their savings account even if they pay the whole amount of loan their money cannot be refunded.

Customers perception towards HDFC

Even if the customers are happy with the services provided by the HDFC but they are not fully satisfied as they say that the information is not correctly provided to them. While applying for the home loan there are many hidden charges which are not disclosed to the customers. Customers perception towards ICICI bank 1. Customers say that ICICI bank keeps rising the home loan rates. The floating rates of the banks look like the forwarding rates. 2. Customers feel that ICICI bank misguiding not only to the public but also to the media. 3. The customer care services of the bank are also very poor. They always try to avoid the problems of customer and never give satisfaction to the customer. 4. The correct information is not provided by the banks. And the terms are disclosed only when the whole processing of the loan is being done.

6. OPERATIONAL EFFICIENCY:Operational efficiency means services provided by the banks to its customers. The success of the firm is also depending on the efficiency of the firm to serve its customers. So its also a major factor responsible for the success of the industry. Each firm differs from other firm in their services provided to the customer ICICI bank provides speedy services to its customers. The ICICI bank provides doorstep services to its customers. The customer need not walk to the banks. The banks also provide services for 24 hrs. Home Loans can be sanctioned even before selecting a property. The home loan is provided to the customers with in 24 hrs of submission of documentation.

 The HDFC provides services through direct agent. It also provides doorstep services to its customers. The loan is provided with in the 3 days of the submission of documentation. It also provides better deals to the customers and helps in finding the suitable loan scheme to suit the customers requirement The SBI bank is a public sector bank so it follows the procedure of RBI. SBI provides loan to its customers within 6 days of the submission of the document. The operational efficiency of the PNB bank is less than others.PNB bank provide home loan to its customers within 7 days of the submission of the documentation. The AXIS bank also provides loan to its customers with in the 7 days of submission of the documentation.

7. MARKETING STRATEGY (Promotion):Promotion means new techniques adopted by the bank to attract the customers. The innovation strategy or new schemes introduced by the industry increases its demand for the product. all the firms in banking industry provides certain benefit to the customers along with the home loan which helps in increasing the market share of the firm. The following are the marketing strategy adopting by various banks:-

Marketing strategy of SBI bank: State bank of India (sbi) has adopted an innovative strategy to expand its home loan portfolio and at the same time ensure good credit quality. The countrys largest bank is in talks to buy home loans given by state government to their employees. it also has a tie up with sbi life covers at one time premium/ sbi provides special home loan schemes which is known as teaser rate schemes to attract the customer. In this scheme interest the

initial rate is fixed for a certain period and then the applicable floating rate is applied after a 1-5 year period. SBI organised an event called SBI Utsav. The bank showcased a bouquet of home loan products. Around 60 real estate developers /builders and auto dealers will participate in the utsav. The bank offered 0.25% concession on the interest rate in the fourth year of the home loan if it is availed at the SBI Utsav. it has also tied up with public sector undertakings such as Indian oil corporation(IOC) to offer home loan packages for their employees. the credit quality of such organisations is better as they are end-users of home loan purchased.

Marketing strategy of HDFC bank: 1. HDFC bank had introduced its own version of dual rate housing loan. Under this scheme the borrower was charged the same rate till the period of march 2012 & floating rate thereafter. This special rate was applicable to all new home loan customers who applied before jan.10 2010. 2. HDFC provides a new scheme for its customers of home loan. Under this scheme the existing home loan customer can avail of other loans such as personal loan, car loans at a lower interest rate. 3. HDFC offers a choice to choose your loan as party fixed or partly floating. Marketing strategy of ICICI bank: ICICI bank offers free personal accident insurance with home loan. Marketing strategy of PNB bank: PNB offers life insurance cover at one time premium. Lower rate of interest is charged for housing finance schemes from employees of several companies like MTNL, BSNL, ONGC, OIL, MUL, BHEL, IOC, MRPL, IBP, AIR INDIA etc.

Marketing strategy of AXIS bank:AXIS bank provides a special type of calculators to its customers, so that the customers can easily calculate the EMI of home loan.

8. ADVERTISEMENT:Advertisement creates awareness in the mind of people. by seeing the advertisement individual come to know what are the products in the market and what is beneficial for them. So its also an important success factor for the industry and company should spend on advertisement and take the benefit out of it.

Expenses made by different firms on advertisements are as follows: SBI bank has made expenses of Rs. 251 crore on advertisement in 2009.because of this the SBI home loan grew by 24.43% ICICI bank also made expense of rs. 185 crore on advertisement. The advertisement is done through T.V it is helpful in creating awareness among rural people. HDFC bank spends Rs. 127 crore on advertisement. HDFC bank says that it spends have a direct sales & phone banking rather than main stream advertisement. PNB bank spends rs. 100 crore on advertisement.

9. MARKET SHARE:In the last few years the home loan segment has increased tremendously. The market shares captured by various firms are: Market share of HDFC bank is 37% of total home loan. Market share of SBI is 16%home loan.

 Market share of PNB bank is 30 % in home loan segment. Market captured by ICICI bank is 6% the growth rate in market share is 25%. Market share of Axis bank is 3.5% in home loan segment.

8. DEPOSIT RATE:Deposit rate is also an important success factor for banks. Banks would be able to provide home loan only if there is sufficient funds available with the bank. So if the deposit rate of the bank is high, customers will get attracted and it will also increase the loaning capacity of the bank, which creates a positive impact on housing finance.

Deposit rate SBI BANK PNB BANK AXIS BANK HDFC BANK ICICI BANK

1-2 YEARS 7.75 8.75 8.75 8.00 8.00

2-3 Years 8.25 8.5 8.25 8.25 8.25

3-5 years 8.25 8.5 7.00 8.25 8.50

EXTERNAL EVALUATION MATRIX OF BANKING INDUSTRY

PARTICULARS

Weight

SBI BANK
Rating Score

PNB BANK
Rating Score

ICICI BANK
Rating Score

HDFCBANK
Rating Score

AXIS BANK
Rating Score

OPPORTUNITIES

Income of middle class

Economic growth

.10

.40

.20

.40

.20

.30

.20

.60

.60

.40

.80

.40

Social culture 1% subsidy in interest rate Customer awareness

.10 .10

3 4

.30 .40

3 3

.30 .30

4 1

.40 .10

3 4

.30 .40

1 3

.10 .10

.10

.40

.30

.30

.30

.30

THREATS

Increase in repo rate Inflation rate total

.15 .25 1

4 2

.60 .50 3.20

3 1

.45 .25 2.40

2 1

.30 .25 2.15

2 2

.30 .50 2.80

1 1

.15 .15

1.50

1. ECONOMIC GROWTH:Economic growth can be an opportunity for the banking industry. By 2009 India has established itself as the worlds second fastest growing major economy. If we look at the consumption pattern in last 5 years people were moving from being savers to consumers, which have more emphasis on benefits gained today rather than gain received through saving in future. This changing attitude is one of the reasons for the higher growth in lending compare to deposit. The GDP growth rate is 8.2% in 2011.the growth rate in financing, insurance, real estate and business services is at 11.2 per cent. With the economy poised for strong growth and confidence returning to the capital market, most players expect the demand of home loans to grow in 2011. State Bank of India (SBI), the largest bank of India, has set its eye on a higher target in the current fiscal. In next nine months, bank targets are planning to sanction home loan worth Rs2, 640crore in the state. Till June 2010, the home loan portfolio of SBI's Ahmadabad circle stood at Rs5, 060crore. "Till March 2011, we have set a target to take our home loan portfolio to Rs7, 700crore. 2010-11, we are expecting to sanction new home loans to more than 30,000 accounts, Similarly, loan approvals by the largest housing finance company of the country, HDFC during the first three quarters of the financial year of 2009 stood at rs. 41110 crore, against 33820 crore in the corresponding period last year, thereby registering a growth of 22 per cent. The demand for housing loans has been good and the industry expects to maintain the tempo going forward.

2. INCOME TO MIDDLE PEOPLE: It is very much clear that the demand for housing loan is more among the middle class people. So the rise of income in the middle people can be an opportunity for the banking industry. In India 13.1 % of Indian population fall in the middle group. As per the findings, the percentage of the middle class in the country's total population, will increase to 20.3 percent by 2015-16 The percentage of rural population in the total middle class of the country is 37.4 percent at present. And they are moving towards urban areas which provide an opportunity for housing finance.

3. SOCIAL CULTURE: As the culture of society is changing. People of India now believe to live in nuclear family rather than living in the joint family. so because of the changing trend in the society there could be more demand for house. And for purchase of house people needs money. And this need of people can be fulfilled by purchase of home loan. So there is an opportunity for the bank home loan to its customers. Urban infrastructure can be an opportunity for the banks. As people of village and towns are migrating to the cities in search of employment. So this will raise the demand for more houses.

 The rich class category will touch 33 million people (6.6 million households) by 2015-16, up from the current 16 million people or 3.2 million households. This will also be an opportunity for the banks.

4.1% SUBVENTION IN INTEREST RATE: -

The government has proposed to enhance the housing loan limit under the priority sector to Rs 25 lakh, and the limit for interest rate subvention of 1% on home loans to Rs 15 lakh where the cost of the house does not exceed Rs 25 loch. These measures are expected to help banks achieve their priority sector lending targets and offer lower lending rates to borrowers. SBI interest rate is 8.75 % which is lower than the other banks. So SBI can easily grab the opportunity and make the profit out of it. HDFC is the largest housing finance company of the country. As HDFC is already providing very good services to the customer, cut in the interest rate of 1 % will attract more customers.

5.CONSUMER AWARENESS:-

Previously in rural areas more number of people were taking loans from sahukaars and mahajans and their mental thinking was that taking loans from bank is not beneficial and they will end up paying interest whole of their life. But now this trend is changing, people are becoming more educated about home loans. As the education level of people are increasing, their living of standard is increasing and they are moving towards urbanization their level of awareness is also increasing.

RBI for commercial banks and National Housing Bank for Housing Finance Companies should take initiatives to make the consumer aware about the various clauses on home loan agreement.

THREATS FOR THE BANKING INDUSTRY FOR HOME LOANS:-

1.INFLATION RATE:-

Inflation means rising in the prices. As in todays scenario there is hike in the prices of food which will create an impact on economy in the country. Inflationary pressure led to gradually hikes in interest rate. As a result, the demand for homes started slowing down .Many borrowers werent able to pay the loan amount and as a result the liability of the bank increases. This will pose a threat to banking industry. Individual spend most of his money in the food products. The latest data puts the food inflation is 10.39 per cent in the year-long period Hike in petrol prices by state-run oil firms pushed up the fuel index by 11.61% on Jan 22 from a year ago.

2.INCREASE IN REPO RATE:Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. The repo rate and the reverse repo rate are decided by the RBI. IF the repo rate increases

borrowing from RBI becomes more expensive. And there is a high chance of increase in interest rate. This poses a threat to banking industry.

Increase in repo rate doesnt pose any major threat to SBI. SBI have sufficient deposits in the bank. Customers have trust on the services provided by the SBI. And in todays scenario SBI is charging a low rate of interest comparative to others so if in future sbi increases the interest rate on home loan then it will not create much affect on the customer. Customers have the perception towards private sector banks that the banks didnt provided the full and correct information to the customers. And if the interest rate is also get increased then

PORTERS FIVE FORCES MODEL

PORTERS FIVE FORCES OF BANKING INDUSTRY

Porters five forces model is a simple tool that supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of a firms current competitive position, and the strength of a position a company is looking to move into. Despite the fact that the five forces framework focuses on business concerns rather than public policy, it also emphasizes extended competition for value rather than just competition among rivals. Main aspect of porters five forces analysis:-

The threat of new entrants in the market. Bargaining power of suppliers. The power exerted by the customers in the market. Availability of the substitute products in the market. The rivalry between existing sellers in the market.

1. THREAT OF NEW ENTRANT: High threat of entry

 High service differentiation High capital requirements High government interference Access to distribution channel 1. The average person can't come along and start up a bank, because for that the person needs a huge capital and also has to seek the permission from RBI. 2. The service provided by the several banks is different from each other, so the services differentiation is also an important entry barrier in banking industry. 3. Another trend that poses a threat is companies offering other financial services. If insurance company start offering mortgage and loan service than this will pose a threat to housing finance companies. 4. Access to distribution channel is also a major threat to the industry as existing company has huge networking, well brand image or consumer loyalty so it is very difficult for the new entrants to sustain in the market and capture the market. 5. Government regulations are also one of the important factors which pose a threat to the entry. For startup a bank one has to seek the permission of RBI and have to fulfill the conditions of the government.

2. BARGAINING POWER OF SUPPLIERS:1. Suppliers of funds(sources of funds): Loan from govt. RBI Fixed deposit from individuals & institutions

2. Suppliers of computers to the banks: Dell Acer Intel Hp Espon Canon Alliant computer system pvt. Ltd. 3. Suppliers of accounting software: Satyam InfoTech Wipro Tata consultancy services Adrenalin 4. Man power suppliers Esource global HR Mumbai

The suppliers of funds to the banks are having high bargaining power as bank has no other option of funds providers than the RBI and fixed deposits of public. the suppliers of computers and softwares are having a moderate power as banks has so many options available with them The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human capital does. If a talented individual is working in a smaller regional bank, there is the

chance that person will be enticed away by bigger banks, investment firms, etc

3. BARGAINING POWER OF BUYERS:The bargaining power of the banking industry is low. Main buyers are: House constructing companies NRI s comes to india for job End users High switching cost. House constructing companies in India: HCC infrastructure ltd. Gammon india ltd. Civitech housing group india ltd. Eldeco housing group of co. Relconbuilderspvt.Ltd.

BUYERS ARE WEAK:1. Buyers are fragmented; no buyers have any particular influence on the interest rates or services of the banks as this is set by the RBI or industry. 2. The major factor offering the power of buyer is relatively high switching cost. If a person has a mortgage loan with one particular bank, it can be extremely tough for that person to switch to another bank.

3. The switching cost is high because everyone takes home loan once in his life and he has to repay the loan amount to bank with interest so a person can not avail two home loans at a time and after taking a loan from one bank cannot move to the other bank.

BUYERS ARE POWERFUL:As buyers of home loans are having full knowledge about the interest rates prevailing in the markets & they are having a clear picture of the bank, so buyers are in a greater position to insure that it receives the most favorable rates offered by the banks.

4. AVAILABILITY OF SUBSTITUES: Industry has High threats from substitutes. Substitutes are non-banking financial institutions provide home loans. Tata group of services Reliance financial services Latha & seethe association. Indian property loans pvt. Ltd. Maple financial solutions pvt. Ltd. Provides home loan, business loans, education loan.

There are plenty of substitutes in the banking industry. Banks offer a suite of services over and above taking deposits and lending money, but there is a nonbanking financial services companies also that are offering similar services. On lending side of the business, banks are seeing competition rise from unconventional companies like RELIANCE MONEY, TATA GROUP OF FINANCIAL SERVICES. All offer preferred financing to the customers.

5. COMPETITIVE RIVALRY:1. High competition 2. High rivalry among the firms. 3. Low exit barriers.

The banking industry is highly competitive. The financial services industry has been around for hundreds of years & just about everyone who needs banking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, preferred rates and attractive schemes. \There is a cut throat competition in the financial services mainly from European banks like ABN AMRO, HSBC, STANDARD CHARACTER BANK, & CITI BANK. The banking industry is growing day by day. The growth rate is 25%.the share of commercial banks in direct housing finance sector has increased from 27 % to 60&. The banking sector for home loans has a growth of 78% now days. The industry has made a share of about US $ 18 billion. The demand for loan has also increased due to liberalization, improving economic condition, changing consumer demographic & large segment of untapped population.

6. GOVERENMENT AS A FACTOR TO THE BANKING INDUSTRY

Government plays a vital role for the banking industry. Each things in a bank is regulated by the gov The followings are the functions of government: Main functions Formulates implements and monitors the monetary policy. Objective: maintaining price stability and ensure adequate flow of credit to productive sectors. Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within which the countrys banking and financial system functions.

 Objective: maintain public confidence in the system, protect depositors interest and provide cost-effective banking services to the public. The banking ombudsman scheme has been formulated by the reserve bank of India (RBI) for effective redressal of complaints by bank customers.

Manager of exchange control: Manages the foreign exchange management act,1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. Issuer of currency: Issues and exchanges or destroys currency and coins fit for circulation. Objective: the main objective is to give the public adequate supply of currency of good quality and to provide loans to commercial banks to maintain or to improve the GDP (gross domestic product).

The basic objectives of RBI are to issue bank notes, to maintain the currency and credit system of the country to utilize it in its best advantage, and to maintain the reserves. RBI maintains the economic structure of the country so that it can achieve the objective of price stability as well as economic development, because both objectives are diverse in themselves. Development role: Performs a wide range of functions to support national objectives and industries .The some of the problems are results of the dominant part of the public sector. Related functions:-

 Banker to the government: performs merchant banking function for the central and the state governments, also acts as a banker. The national hosing bank (NHB) was established in 1988 to promote private real estate acquisition. Bank to banks: maintains banking accounts of all scheduled banks.

COMPLIMENTS: Compliments are those aspects which supports the existence of our industry. Economic growth Societies cultures Income of the people Funds

CONCLUSION

The banking industry is a very capital intensive industry. The industry requires huge investment. If the new firms enter in the market than it is very hard for them to survive in the market. The industry is dominated by some big players like SBI, ICICI, & HDFC. It is very difficult to challenge the existing position of current market players. The industry is regulated by the government. The new firms cant enter into the industry without the permission of govt. The consumer perception towards private sector banks is not very good

BIBLIOGRAPHY
INTERNET: 1. www.sbi.com. 2. www.hdfc.com 3. www.pnb.com 4. www.axis.com 5. www.icici.com 6. www.guide2homeloan.com 7. www.search.ebscohost.com 8. www.zeenews.com 9. Www.moneycontrol.com 10.Www.timesofndia.com

ACKNOWLEDGEMENT

I give my heart filled thanks to my project guide MR. ANKUR ROY for spending his valuable time with me in encouraging my project. He is the driving force behind me right from the beginning till the submission.

I express my gratitude to MR. ANKUR ROY for his expert supervision and valuable guidance without which the project would never have been a success. Also I thank my friends and family members who helped me in all required data and information.

All suggestion for the improvement of the project will be gratefully acknowledged.

JYOTSNA KHURANA Section A MBA 1st year

CONTENTS
INTRODUCTION Profile National scenario Current scenario MAJOR PLAYERS IN BANKING INDUSTRY HDFC BANK ICICI BANK SBI BANK PNB BANK AXIS BANK

CPM MATRIX FOR HOME LOAN

EXTERNAL EVALUATION METHOD

PORTERS FIVE FORCES ANALYSIS Bargaining power of suppliers Bargaining power of buyers Threats to new entrants Threats of substitutes Competitive rivalry

GOVERNMENT AS A FORCE CONCLUSION BIBLOGRAPHY