House Loan

CHAPTER 1 - INTRODUCTION TO THE TOPIC

The roof over one's head and ground beneath one's feet count as the bare necessities of

life. There's nothing quite like owing a home, however humble to give that warm and

glowing feeling. But when one buys a home, one has much more than a feel good

purchase in mind! It's also a crucial investment decision, perhaps the biggest spending

decision of one's life.

There are ample opportunities today for young salaried investors to plan their moves

early and buy a house at right time- and at right price. In the process, not only do they

fulfill that cherished dream of owning a house, but also put themselves on the path to

acquiring property that would meet the needs and aspirations of their growing family,

even as it leads to wealth creation. Every individual aspires to own a home. But many

either spend a lifetime saving to purchase a house or exhaust money on monthly house

rents.

Housing is a primary human need next in importance only to food and clothing. A first

priority for a youngster who begins life is therefore to plan for a house. This takes

precedence over other household expenditure and creature needs. Housing, however, is a

major expenditure and cannot be funded out of a family's normal monthly income or

savings.

The prospective homeowner must look for a loan substantial in size and so structured that

he can repay it over a longer period of time, in many cases almost one's entire working

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life. Loan is offered to a borrower to purchase or build a new house on the basis of

his/her eligibility and the bank's lending rules. One of the important basic human needs is

shelter. House is the ultimate dream of every middle class family.

Government gave encouragement for house finance subsidiaries by offering number of

tax concessions to individuals. With the overall encouragement given to this sector, a

number of players entered in housing finance. One of the most important benefits of

taking a home loan is the interest rate that is allowed on the home loan. Fixed and

variable interest rate options are also available for home loans. Many financiers also offer

home improvement loans at the same interest rate as they offer the home loans.

Home loans work like any other debt. That is, loans are simply specific money that we

borrow from a bank, a private lender, or some other type of lender. Afterwards, we must

repay our debts with interest. However, unlike other types of loans, home loans are

different in several respects. Owning a piece of land or property is a lifetime dream for

every individual. There are many home loans provider in the market. There are different

types of home loan, i.e.

Home purchase loans: These are the basic forms of home loans used for purchasing of a

new home. With about a million home lenders and mortgage brokers it's becoming a

tough challenge as the days are progressing. But at the same time, when the sites are

coming up with all the latest tools and relevant information for us, and with all such

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conveniences, obtaining a home purchase loan or mortgage has become really pretty

simple. However, at the same time though, we may be flummoxed to look so many

attractive rates and offers in the market, not to forget the hidden costs associated with

each of them.

Home improvement loan: Home improvement loans are used to finance improvements

and add on to the existing set of credentials of beauty on your owned house, recently

purchased property or rented accommodation. Home improvement loans are used to

maintain or enhance the value of your house. In general it includes: repairs, remodeling,

energy-related items (permanent in nature), repairs, a new kitchen, a new bathroom,

terrace, an extension or general property improvements. Luxury items and fireplaces are

generally not eligible, though.

Land purchase loan: Land Purchase loans are used by customers who wish to purchase

a plot of land for commercial or residential purpose. Everyone has his/her dream

perfectly sketched in his souls and so is his ambition to get his house erected on the exact

location he dreamt that to be. If you have found and shortlisted the piece of land, and

have arrived here for finance, you have come to the best place you could have arrived in

the web. Now, that you have decided to purchase a land as an investment or for your own

dream home, you will realize that a land purchase loan is one you will cherish.

Loans that are strictly for land purchase can be as scarce as good residential plots. While

many lending firms around the nation compete to provide mortgages for the purchase of a

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house on a lot, only local institutions typically will be interested in lending for an empty

lot.

Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and

above all gathering funds little by little to afford one's dream. Home is one of the things

that everyone one wants to own. Home is a shelter to person where he rests and feel

comfortable. Many banks providing home loans whether commercial banks or financial

institutions to the people who want to have a home.

Many banks are providing home loans at cheapest rate to attract consumers towards them.

The more customer friendly attitude of these banks, currently offer to consumers cheapest

loan over homes. In view of acute housing shortage in the country, and keeping in mind

the social - economic role of commercial banks in the present times, the RBI advised

banks to encourage the flow of credit for housing finance

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COMPANY PROFILE

The Sub-Group on Housing Finance for the Seventh Five Year Plan (1985-90) identified

the non-availability of long-term finance to individual households on any significant

scale as a major lacuna impeding progress of the housing sector and recommended the

setting up of a national level institution. The Committee of Secretaries considered' the

recommendation and set up the High Level Group under the Chairmanship of Dr. C.

Rangarajan, the then Deputy Governor, RBI to examine the proposal and recommended

the setting up of National Housing Bank as an autonomous housing finance institution.

The recommendations of the High Level Group were accepted by the Government of

India.

The Hon'ble Prime Minister of India, while presenting the Union Budget for 1987-88 on

February 28, 1987 announced the decision to establish the National Housing Bank (NHB)

as an apex level institution for housing finance. Following that, the National Housing

Bank Bill (91 of 1987) providing the legislative framework for the establishment of NHB

was passed by Parliament in the winter session of 1987 and with the assent of the Hon'ble

President of India on December 23, 1987, became an Act of Parliament.

The National Housing Policy, 1988 envisaged the setting up of NHB as the Apex level

institution for housing. In pursuance of the above, NHB was set up on July 9, 1988 under

the National Housing Bank Act, 1987.NHB is wholly owned by Reserve Bank of India,

which contributed the entire paid-up capital.

5

The general superintendence, direction and management of the affairs and business of

NHB vest, under the Act, in a Board of Directors.

The Head Office of NHB is at New Delhi.

NHB has been established to achieve, inter alia, the following objectives -

a. To promote a sound, healthy, viable and cost effective housing finance system to

cater to all segments of the population and to integrate the housing finance system with

the overall financial system.

b. To promote a network of dedicated housing finance institutions to adequately

serve various regions and different income groups.

c. To augment resources for the sector and channelise them for housing.

d. To make housing credit more affordable.

e. To regulate the activities of housing finance companies based on regulatory and

supervisory authority derived under the Act.

f. To encourage augmentation of supply of buildable land and also building

materials for housing and to upgrade the housing stock in the country.

g. To encourage public agencies to emerge as facilitators and suppliers of serviced

land, for housing.

6

NHB is a lean, officer oriented, professionally managed institution with its headquarters

in Delhi and offices in Mumbai, Hyderabad, Bangalore, Chennai, Kolkata, Lucknow and

Ahmedabad. It has 84 professionals at different levels. NHB is committed to pursuit of

excellence through innovation, doer work culture and contemporary work practices with

technology intervention. It has the following Departments, apart from NHB RESIDEX

Cell for handling residential index activities –

1. Department of Regulation and Supervision

2. Refinance Operations Department

3. Project Finance and Technology Promotion Department

4. Resource Mobilization and Management Department

5. Risk Management Department

6. Business Planning and Promotion Department

7. Market Research, Consultancy and Policy Department

8. Credit Guarantee Fund Trust Cell

9. Information Technology Department

10. Legal Department

11. Administration, HR and Premises Department

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12. Accounts Department

13. All Audits Department

14. Board and CMD Secretariat

NHB was established under the Act of Parliament viz, NHB Act in 1988 to operate as a

principal agency to promote housing finance institutions and to provide financial and

other support to such institutions. NHB is wholly owned by the Reserve Bank of India.

One of the prime objectives of the bank is to establish and promote a sound and stable

housing finance system in the country.

NHB is pursuing its charter and vision to shape and develop the housing finance market

in India along sustainable lines and promoting financial and institutional depth in the

housing finance sector. The bank is engaged in a range of activities that are key to the

development of market based solutions for low and moderate income housing segments.

The activities include building of institutional and market infrastructure critical for

expansion and stabilization of the housing finance system. Apart from its various

promotional activities, NHB also seeks to undertake measures that promote confidence

amongst all stake holders. Under provision of the Act, NHB is the key national regulator

for the Housing Finance Institutions (HFIs)

NHB as the apex Development Finance Institution (DFI) in the housing sector is working

with multiple objectives. Besides, a key role in the mortgage finance industry, the Bank

has important seminal role in promotional and supervisory field. To promote the cause of

affordable housing, NHB works closely with the Government of India (GoI) and the

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banking sector in formulation and implementation of various policies, programmes and

schemes. The bank seeks to play a key pivotal role in catalyzing and channelizing the

flow of credit in the housing sector. In accordance with its mandate, NHB has encouraged

and incentivized the lending institutions to improve/ strengthen the credit delivery

network for housing finance in the country, particularly for the people in the low and

moderate income segments.

The bank will continue to play an important catalytic role in the growth and development

of the housing finance system in the country. NHB is well positioned to oversee and

guide the development of the housing finance market. Building on the present state of the

industry and existing institutional infrastructure, NHB will seek to introduce international

best practices across the industry in terms of products, lending qualities, origination

standards coupled with new research initiatives for the efficient functioning of the

housing finance system including new innovative instruments such as covered bonds, title

insurance, RMBS etc.

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OBJECTIVES

There is no strongest foundation for your dream home, than a cheap loan. Home loans

have become that stronger foundations for people who want to own a home. The main

objectives of the study are as follows:-

1. The main objective of this study is to know the customers perceptions about home

loans.

2. To know the ideas of customers about home loan products and services.

3. To study the satisfaction level of customers about home loans.

4. To study the problems faced by customers in obtaining the home loans.

5. To analyze Indian home loan market and its growing trends.

6. To analyze various methods of operating a home loan.

7. To gain knowledge about various home loan products.

8. To know various rates available while providing home loan.

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CHAPTER 2 -RESEARCH METHODOLOGY

.

Research Methodology is an important part of every project. Because it help in knowing

how to select representative sample from the world or the general population, the right

research tools and techniques to complete the research. To satisfy the customer the study

of consumer behavior is important because he is the king. The Research Process is based

on survey method, so in order to implement the survey we go to Service Provider and the

Services user which is the customers. The research involves the following steps;

Define the problem & research objective

The problem and objective is to assess the services offered by various service providers

and what the consumer wants.

Developing the research Plan

The second stage of research methodology is to develop a research plan. The research

plan designed to take decision on the data sources, research approaches, research,

instruments, sampling plan and contact methods.

Survey Research

It was a descriptive research.

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Research Instrument

The use of an effective research instrument is very important. Because through this

instrument we collect data. In this project through observations & personal interviews

were conducted.

Personal Interview

As we were doing direct selling. We interacted with my customers are asked about their

views in selecting a service and what are their wants and expectations from a service

provider

Sampling Plan

After finalizing the research approach and instruments a sampling must be designed.

Sampling Unit

Data have been collected from banks

Sample size-20

It has been collected from four banks.

Sampling Procedure

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What process should be used to collect the sample. So, representation samples

convenience sampling is used.

Collect the Information

After completing all the steps, the data are collected from different sources.

Analyze the Information

After the data is collected they are analyzed to Know the findings. The data is then

tabulated to develop frequency distribution.

Present the findings

As the last step, the findings are presented that are relevant to the major marketing

decisions

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CHAPTER 3 – DATA PRESENTATION & ANALYSIS

ABOUT NHB

The Sub-Group on Housing Finance for the Seventh Five Year Plan (1985-90) identified

the non-availability of long-term finance to individual households on any significant

scale as a major lacuna impeding progress of the housing sector and recommended the

setting up of a national level institution.

The Committee of Secretaries considered' the recommendation and set up the High Level

Group under the Chairmanship of Dr. C. Rangarajan, the then Deputy Governor, RBI to

examine the proposal and recommended the setting up of National Housing Bank as an

autonomous housing finance institution. The recommendations of the High Level Group

were accepted by the Government of India.

The Hon'ble Prime Minister of India, while presenting the Union Budget for 1987-88 on

February 28, 1987 announced the decision to establish the National Housing Bank (NHB)

as an apex level institution for housing finance. Following that, the National Housing

Bank Bill (91 of 1987) providing the legislative framework for the establishment of NHB

was passed by Parliament in the winter session of 1987 and with the assent of the Hon'ble

President of India on December 23, 1987, became an Act of Parliament.

14

The National Housing Policy, 1988 envisaged the setting up of NHB as the Apex level

institution for housing.In pursuance of the above, NHB was set up on July 9, 1988 under

the National Housing Bank Act, 1987.NHB is wholly owned by Reserve Bank of India,

which contributed the entire paid-up capital.

The general superintendence, direction and management of the affairs and business of

NHB vest, under the Act, in a Board of Directors.The Head Office of NHB is at New

Delhi.

NHB has been established to achieve, inter alia, the following objectives –

a) To promote a sound, healthy, viable and cost effective housing finance system to

cater to all segments of the population and to integrate the housing finance system

with the overall financial system.

b) To promote a network of dedicated housing finance institutions to adequately serve

various regions and different income groups.

c) To augment resources for the sector and channelise them for housing.

d) To make housing credit more affordable.

e) To regulate the activities of housing finance companies based on regulatory and

supervisory authority derived under the Act.

f) To encourage augmentation of supply of buildable land and also building materials

for housing and to upgrade the housing stock in the country.

g) To encourage public agencies to emerge as facilitators and suppliers of serviced land,

for housing.

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3.1 FUNCTIONS

REGULATION

In terms of the National Housing Bank Act, 1987, National Housing Bank is expected, in

the public interest, to regulate the housing finance system of the country to its advantage

or to prevent the affairs of any housing finance institution being conducted in a manner

detrimental to the interest of the depositors or in a manner prejudicial to the interest of the

housing finance institutions. For this, National Housing Bank has been empowered to

determine the policy and give directions to the housing finance institutions and their

auditors.

Besides the regulatory provisions of the National Housing Bank Act, 1987, National

Housing Bank has issued the Housing Finance Companies (NHB) Directions, 2001 as

also Guidelines for Asset Liability Management System in Housing Finance Companies.

These are periodically updated through issue of circulars and notifications.

As part of the supervisory process, an entry level regulation is sought to be achieved

through a system of registration of housing finance companies. National Housing Bank

supervises the sector through a system of on-site and off-site surveillance.

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FINANCING

NHB supports housing finance sector by:

Extending refinance to different primary lenders in respect of

Eligible housing loans extended by them to individual beneficiaries,

for project loans extended by them to various implementing agencies.

Lending directly in respect of projects undertaken by public housing agencies for housing

construction and development of housing related infrastructure.

Guaranteeing the repayment of principal and payment of interest on bonds issued by

Housing Finance Companies.Acting as Special Purpose Vehicle for securitizing the

housing loan receivables.

Refinance Operations

Project Finance

Guarantee

Securitization

PROMOTION

The principal mandate of the Bank is to promote housing finance institutions to

improve/strengthen the credit delivery network for housing finance in the country. The

Bank has played a facilitator role in this regard instead of itself opening such dedicated

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housing finance institutions. For this purpose, NHB has issued the Model Memorandum

and Articles of Association. NHB has also issued guidelines for participating in the

equity of housing finance companies.

All housing finance companies registered with NHB u/s 29A of the National Housing

Bank Act, 1987 and scheduled commercial/co-operative banks are eligible for refinance

support subject to terms and conditions as laid down under the respective refinance

schemes.

As a part of its promotional role NHB has also formulated a scheme for guaranteeing

the bonds to be issued by the housing finance companies.

Considering the need for trained personnel for the sector NHB has designed and

conducted various training programmes.

3.2 NHB HOUSING INFO INDIA

National Housing Bank (NHB) is a statutory organization that was established on July 9,

1988 under the National Housing Bank Act, 1987. It is the apex level financial institution

for the housing sector in the country and a wholly owned subsidiary of the Reserve Bank

of India. The head office of NHB is located in New Delhi. It has a regional office at

Mumbai and a Representative office at Hyderabad, Bangaluru, Chennai, Kolkata,

Lucknow and Ahemdabad.

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NHB aims to facilitate the promotion of Housing Finance Institutions and provides

financial and other support to such institutions. NHB also raises resources for the housing

sector towards increasing new housing stock and provides refinance to a large set of retail

lending institutions such as Banks, HFCs, Co-operative Sector Institutions, Housing

Agencies or to any authority established by or under any Central or State Act in order to

benefit the masses both in urban and rural areas.

The regulatory and supervisory authority of NHB over the activities of housing finance

companies is derived from the NHB Act. As per the provisions of the Act, NHB is

empowered to grant Certificate of Registration to companies for commencing/carrying on

the business of a housing finance institution.Housing Information Portal -

Expectations

NHB's Housing Information Portal (HIP) will provide one stop window for reliable

information on housing and housing finance in India. The housing portal will offer

insight into the trends in the housing and related activities nationally and internationally.

The NHB HIP would be the platform for hosting comprehensive information on housing

and for interaction between various groups of users. It would provide the channel for

propagating consumer awareness related to housing.

GOVERNMENT GUIDELINES AND POLICIES:

This section equips you with the knowledge of updated Central as well as State

Government rules, regulations, policies and procedures which in turn assist in deciding

19

housing-related issues. Acts, regulations, taxation aspects and directives are covered in

this section.

Government missions and programmes, such as JNNURM and IAY, that intervene with

local governments and municipal authorities to encourage minimum standards for

housing and related infrastructure are discussed. Information on bye-laws and regulations

essential for building constructions and related issues are also covered. The coverage in

this section will facilitate citizens and professionals to evaluate and enhance housing

decisions.

This Section Covers:

PROPERTY PURCHASE

Property purchase is governed by several laws and legislation. This section will help you

to develop an understanding of the regulations necessary for purchase of properties. The

structure of stamp duty in different states, effective utilization of transfer of development

rights, the Registration Act, and guidelines applicable for the transfer of property and

mortgages, will help you take judicious property purchase decisions.

TAXATION

India has a well-developed tax structure, and this section emphasizes on taxation aspects

of property. It provides information pertaining to permissions, formalities and

implications for property transactions. This section focuses on capital gains exemptions,

20

gift tax, and service tax implications on buying property from developers, tax benefits of

home loans, and the effect of fiscal measures on real estate development.

PROPERTY CONSTRUCTION

This section imparts information on the role of the Central and State Governments,

Municipal and Development Authorities and other agencies involved in housing and

infrastructure planning. New constructions or renovations of old buildings require strict

adherence to several bye-laws and standards.

For construction activities, the bio-diversity of India does not enable adherence to a

national code or standard. This section gives information on model codes, standards and

bye-laws that act as guidelines for States and Union Territories.

Information is provided on construction bye-laws, Town and Country Planning Act,

Urban Mapping Schemes, and Constitutional Amendment Acts that enable proactive

participation of local authorities. Various housing and urban development schemes, and

general permits and procedures applicable for construction of buildings and their

protection from natural hazards are also given. This section also provides information on

the Central, State and local-level organizations/institutions involved in formulating bye-

laws with regard to immovable properties.

3.3 UNDER PROPERTY PURCHASE:

Property purchase is governed by several laws and legislation. This section will help you

to develop an understanding of the regulations necessary for purchase of properties. The

21

structure of stamp duty in different states, effective utilization of transfer of development

rights, the Registration Act, and guidelines applicable for the transfer of property and

mortgages, will help you take judicious property purchase decisions.

Here We Cover :

REGISTRATION ACT

The Registration Act, 1908, and relevant sections dealing with immovable property are

given in a concise yet cohesive form. The section deals with the procedures to register a

document; and answers common queries on how and where to register a document;

documents required for registration; and circumstances in which a Registrar can refuse to

register a document.

LEGAL PROVISIONS FOR TRANSFER OF PROPERTIES

The article apprises on various acts and policies governing various types of transfer of

properties in India. Coverage of the Transfer of Property Act, with emphasis on transfer

by sale, by lease, by mortgage, by gift, and by exchange is given. Types of properties and

the provisions for fraudulent transfers are explained.

TRANSFER OF DEVELOPMENT RIGHTS

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Effective utilization of Transfer of Development Rights (TDR) by builders, developers,

and others involved in the Real Estate Sector is an essential means of optimizing space in

crowded metropolises. This section will enable you to understand TDR and Floor Space

Index along with the rules and conditions applicable for granting Development Rights

Certificates.

STAMP DUTY STRUCTURE IN INDIAN STATES

Stamp duty is a duty that is levied by both the Central and State Governments in India, on

a range of paper and electronic transactions. These vary across states and territories, and

can be called stamp duty, transfer duty or general duty. Relevant sections of the Stamp

Duty Act, 1899, are given. E-stamping and steps to rationalize stamp duty are given for

reference.

RULES AND REGULATIONS RELATED TO MORTGAGES

The section acquaints you with rules and regulations applicable on mortgages as per the

Transfer of Property Act, 1882. The increasing trend to mortgage properties makes it

indispensable to have the knowledge and understanding of different types of mortgages,

the rights and responsibilities of both mortgagor and mortgagee, and Mortgage Guarantee

and its applicable RBI.

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3.4 UNDER TAXATION:

India has a well-developed tax structure, and this section emphasizes on taxation aspects

of property. It provides information pertaining to permissions, formalities and

implications for property transactions. This section focuses on capital gains exemptions,

gift tax, and service tax implications on buying property from developers, tax benefits of

home loans, and the effect of fiscal measures on real estate development.

Here We Cover:

PROPERTY TAX

Property tax is designated as tax on land and buildings, payable by property owners. The

difference between tax payable on Income from House Property and taxes levied by local

Municipal Bodies is given in the article. The article also emphasizes upon different ways

to calculate property tax, and the property tax reforms undertaken by Municipalities for

incentives under schemes such as JNNURM.

INCOME TAX FORMALITIES BEFORE AND AFTER PROPERTY SALE

The article deals with income tax formalities required to be complied with before as well

as after the sale of immovable properties in India, and Cost of Acquisition of property.

TAX IMPLICATIONS OF PROPERTY TRANSFER

The article deals with tax implications on various types of property transactions, for e.g.,

sale, gift, mortgage, lease, exchange, inheritance and relinquishment of property.

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TAX IMPLICATIONS OF PROPERTY SALE

The article deals with tax implications on Property Sale.

TAX EXEMPTIONS ON CAPITAL GAINS

Relevant sections of the Income Tax Act that deal with capital gains exemptions in

relation to property are given. This article mainly emphasizes on capital gains account

scheme, exemptions on short-term and long-term capital gains, cost inflation index and

computation of capital gains.

SERVICE TAX IMPLICATIONS ON BUYING PROPERTY FROM DEVELOPERS

This article clarifies the applicability and exemptions of service tax on property related

transactions with developers.

TAX BENEFITS ON HOME LOANS

This article apprises on the taxation benefits and the deductions which could be claimed

on payment of Income Tax, if there is a home loan for acquisition of a property.

GIFT TAX

The article emphasizes on implications of tax on transfer of any property by way of gift,

persons liable to pay tax and exemptions therein, and the applicable rates of taxes.

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FISCAL POLICIES AND TAX IMPLICATIONS

This article gives a broad outlook on the fiscal measures adopted with regards to Real

Estate Sector and their respective tax implications.

3.5 UNDER PROPERTY CONSTRUCTION:

This section imparts information on the role of the Central and State Governments,

Municipal and Development Authorities and other agencies involved in housing and

infrastructure planning. New constructions or renovations of old buildings require strict

adherence to several bye-laws and standards. For construction activities, the bio-diversity

of India does not enable adherence to a national code or standard. This section gives

information on model codes, standards and bye-laws that act as guidelines for States and

Union Territories.

Information is provided on construction bye-laws, Town and Country Planning Act,

Urban Mapping Schemes, and Constitutional Amendment Acts that enable proactive

participation of local authorities. Various housing and urban development schemes, and

general permits and procedures applicable for construction of buildings and their

protection from natural hazards are also given. This section also provides information on

the Central, State and local-level organizations/institutions involved in formulating bye-

laws with regard to immovable properties.

26

Here We Cover:

CONSTRUCTION BYE-LAWS

Bye-laws are promulgated to regulate and control usage of land and property in cities and

towns, and render control in the hands of local authorities for implementing building

standards. The usage of land is governed by Zoning regulations, development control

rules, building regulations and bye-laws. This section gives information on the Central,

State and local-level organizations/institutions involved in formulating construction bye-

laws.

This section provides information on the rationale behind, and the agencies responsible

for the formulation of the Construction Bye-Laws. The introduction of the Model Town

and Country Planning Act 1960, role and schemes of the Town and Country Planning

Organisations, salient features of the Constitution (74th) Amendment Act and

information on master plans and development control rules are discussed. The section

also gives information on housing and urban development schemes including Urban

Development Plans Formulation and Implementation, Urban Mapping Scheme and

JNNURM. A list of general permits and procedures applicable for construction activities

in India is also presented.

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BUILDING STANDARDS

Building standards/codes protect public health, safety and general welfare as they relate

to development of townships, construction and occupancy of buildings and structures.

This section deals with the role of the Bureau of Indian Standards (BIS), the importance

of National Building Codes and the various parameters required to be adhered to for

constructing any building in India. This section provides information on building

standards for quality construction, fire safety, water, electricity, energy conservation,

sewage, water harvesting and other amenities. Also listed are zoning laws applicable for

cities and natural hazard prone areas.

The section deals with the requisite procedures for obtaining ISO certification. Indian

Standardization codes, norms and regulations that propel a focus on sustainable and green

energy-efficient buildings are given. Energy Conservation Act, standards for buildings,

environment impact assessment requirements and regulations of Central Ministry of

Environment and Forests for Coastal Zones.

SCHEMES OF HOME LOANS:

1) Home loans for construction of new house / flat, purchase of old house/ flat, etc:

Initially, lenders approved a home loan for family/own residence only. After gaining

experience and more importantly to be competitive, lenders now approve loans even

28

when the applicant has more than one house or flat/apartment. Today there is no general

restriction on the number of houses owned by an individual. The only stipulation is that

the home loan funds should not be used for commercial purposes.

2) Home extension loan:

These loans are given for expanding or extending an existing home. These are some of

the instances for which you could take an Extension Loan.

* To construct an additional room or floor by getting additional FSI granted.

* Using grills or sliding windows to enclose the balcony.

* Construction of a garden or garage in the building vicinity.

3) Home improvement loan:

Home improvement loans for repairs /renovation including waterproof, plumbing,

compound wall, digging of well/tube-well, flooring/tiling, additions like built-in

cupboards /shelves, internal repairs including replacing doors/windows, etc. A loan for

purchase of household furniture including space-saving furniture (kitchen racks,

cupboards, etc) may also be sanctioned as a home improvement loan.

4) Home loan for purchase of housing site:

Here again, initially many banks did not approve such loans. However, market forces

have now made this a universal feature of the home loan market. However, care has been

29

taken in structuring the schemes for avoiding financing for purchase of land for

speculative lotion purposes.

5) Home equity loans:

A home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower

uses the equity in their home as collateral. These loans are sometimes useful to help

finance major home repairs, medical bills or college education. A home equity loan

creates a lien against the borrower's house, and reduces actual home equity.

30

Q1 Age:

TABLE 1: AGE GROUP

RESPONSE NO. OF RESPONDENTS PERCENTAGE

BELOW 30 4 20

BETWEEN 30-40 8 40

BETWEEN 40-50 6 30

ABOVE 50 2 10

TOTAL 20 100

FIGURE 1: AGE GROUP

BELOW 30BETWEEN 30-40BETWEEN 40-50ABOVE 50

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THE MAJOR GROUP OF PEOPLE WHO TAKE LOAN FROM BANKS AS

HOUSING LOANS ARE IN THE AGE GROUP OF BETWEEN 40 –50 AND THE

LEAST IS OF AGE GROUP ABOVE 50.

Q2 Occupation:

TABLE 2: RESPONDENTS OCCUPATION


PROFESSIONAL 5 25

SELF-EMPLOYED 10 50

SALARIED 4 20

OTHERS 1 5

TOTAL 20 100

FIGURE 2: RESPONDENTS OCCUPATION

32

PROFESSIONALSELF-EMPLOYEDSALARIEDOTHERS


HOUSING LOANS HAVE OCCUPATION AS SELF-EMPLOYED AND THE LEAST

IS OF OTHERS

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Q3 Which income group do you belong? (Per annum)

TABLE 3: INCOME GROUP OF RESPONDENTS


BELOW 2 LAKHS 3 15

2-4 LAKHS 2 10

4-6 LAKHS 8 40

6 LAKHS AND ABOVE 7 35

TOTAL 20 100

FIGURE 3: INCOME GROUP OF RESPONDENTS

BELOW 2 LAKHS2-4 LAKHS4-6 LAKHS6 LAKHS AND ABOVE

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HOUSING LOANS ARE IN THE INCOME GROUP OF 4-6 LAKHS AND THE

LEAST IS FROM 2-4 LAKHS.

Q4 Do you own a home?

TABLE 4: HOME ACCOMODATION


YES 12 60

NO 8 40

TOTAL 20 100

FIGURE 4: HOME ACCOMODATION

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YESNO


HOUSING LOANS HAVE HOME ACCOMODATION WITH THEM

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Q5 Are you aware of the home loan product of any of the following banks?

TABLE 5: AWARENESS ABOUT THE HOME LOAN PRODUCTS OF BANKS


ICICI 7 35

HDFC 3 15

PNB 4 20

SBBJ 2 10

OTHERS 4 20

TOTAL 20 100

FIGURE 5: AWARENESS ABOUT THE HOME LOAN PRODUCTS OF BANKS

ICICIHDFCPNBSBBJOTHERS

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HOUSING LOANS HAVE AWARENESS ABOUT THE HOME LOAN PRODUCTS

OF ICICI BANK AND THE LEAST IS OF SBBJ BANK

Q6 Which bank’s home loan product do you find most reliable?

TABLE 6: MOST RELIABLE HOME LOAN BY BANKS


ICICI 4 20

HDFC 5 25

PNB 1 5

SBBJ 3 15

OTHERS 7 35

TOTAL 20 100

FIGURE 6: MOST RELIABLE HOME LOAN BY BANKS

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HOUSING LOANS SAY THAT THE MOST RELIABLE BANK SO FAR

ACCORDING TO THEM IS IN THE OTHER CATEGORY AND LEAST IS PNB

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Q7 If yes why?

TABLE 7: RELIABILITY REASON


ATTRACTIVE

INTEREST RATES

10 50

SERVICE PROVIDED 2 10

SCHEMES 5 25

PAYBACK PERIOD 0 0

OTHERS 3 15

TOTAL 20 100

FIGURE 7: RELIABILITY REASON

40

ATTRACTIVE INTEREST SCHEMESSERVICE PROVIDED SCHEMESPAYBACK PERIODOTHERS


HOUSING LOANS HAVE THE RELIABILITY REASON AS ATTRACTIVE

INTEREST RATES AND THE LEAST IS PAYBACK PERIOD AND SERVICES.

Q8 Have you ever taken home loan?

TABLE 8: ISSUE OF HOME LOAN


YES 15 75

NO 5 25

TOTAL 20 100

FIGURE 8: ISSUE OF HOME LOAN

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YESNO


HOUSING LOANS HAVE ISSUED A HOME LOAN BEFORE.

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Q9 If yes, from which bank?

TABLE 9: NAME OF BANK HOME LOAN TAKEN FROM


ICICI 2 10

HDFC 1 5

PNB 7 35

SBBJ 4 20

OTHERS 6 30

TOTAL 20 100

FIGURE 9: NAME OF BANK HOME LOAN TAKEN FROM


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HOUSING LOANS HAVE TAKEN HOME LOAN FROM PNB AND LEAST HAVE

TAKEN FROM HDFC

Q10 While taking home loan, which things attract you the most?

TABLE 10: ATTRACTIVE SCHEMES FOR HOME LOAN


INTEREST RATE 10 50

SERVICE PROVIDED 8 40

PAYBACK PERIOD 2 10

SCHEME 0 0

OTHERS 0 0

TOTAL 20 100

TABLE 10: ATTRACTIVE SCHEMES FOR HOME LOAN

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INTEREST RATE SERVICE PROVIDED PAYBACK PERIOD SCHEMEOTHERS


HOUSING LOANS FINDS INTEREST RATE AS THE MOST STTRACTIVE

SCHEME AND LEAST ATTRACTIVE IS OF PAYBACK PERIOD

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Q11 In near future would you be interested to take home loan?

TABLE 11: FUTURISTIC INTEREST OF TAKING HOME LOAN


YES 4 20

NO 11 55

CAN’T 5 25

TOTAL 20 100

TABLE 11: FUTURISTIC INTEREST OF TAKING HOME LOAN

YESNO CAN'T

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HOUSING LOANS WILL NOT BE INTERESTED IN TAKING HOME

LOANS IN THE NEAR OR COMING FUTURE

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CHAPTER 4 – SUMMARY AND CONCLUSIONS

4.1 FINDINGS

The following are findings that have been found by the survey conducted:

According to the study conducted majority of Home Loan Clients lie in 30-40(40%)

and 40-50(30%) age group.

Mostly the people who are self-employed do require home loans, professional people

and salaried individuals require Home Loan less then self-employed.

People from majorly 4-6 lakhs and 6 lakhs per year above income group require

(75%) home Loans.

From our 20 respondents 12(60%) respondents own a home loan and all the home

Loan clients compare all the available alternatives well in advance and are aware of

all the major player banks providing these services.

ICICI, HDFC, PNB are more reliable for Home Loans then other banks.

While taking a Home loan Clients are at most concerned with INTREST RATES

(50%) and services provided(40%).

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4.2 LIMITATIONS

The following are the limitations that have been found out by the survey and the study

conducted:

1. The Survey is based on limited number of respondents.

2. The time frame was bit short to conduct the study.

3. Most of the respondents felt that the information we (study) required was confidential

or personal.

4.3 RECOMMENDATIONS

The following are the recommendations that may bring a change in the working of the

banks related to the housing loans of banks, i.e. bring a boost:

1. The Private Banks are fully putting in all possible efforts to attract the HOME LOAN

CLIENTS and government banks are becoming less reliable.

2. While taking a HOME LOAN an individual is most concerned with the INTREST

RATE so banks should provide cheaper interest rate to attract more and more customers.

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The banks should try to formulate HOME LOAN POLICY as simple as possible, so that

the client can understand it well.

3. The awareness of private banks regarding HOAN LOANS are higher than the public

banks so public banks should take aggressive corrective actions to reach CLIENTS.

4.4 CONCLUSIONS

The home loan market in India has grown at a rapid and alarming rate of over 40% over

the period of the last four years. And from the reports from some of the industry experts,

it is evident that there is very little chance that there will be any significant decline in

growth rates in the future. Therefore it becomes important at this point in time to examine

the key factors that have been instrumental in triggering this high growth period. There

are several reasons that can be considered as having attributed to the growth of the home

loan market. On the demand side, the first and the most important factor for the growth

has been faster rise in incomes as compared to property prices, thus making housing more

affordable.

Most of the housing finance companies in India have introduced several new home loan

products in order to meet the needs of a wide variety of customers. The various home

loan schemes have their different interest rates in the market. The customer can choose

those schemes which he feels is good for him and have the capacity to repay it on that

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specified time period. If unwavering liability is what suits your profile, then fixed interest

rate home loan should be the natural choice. On the other hand, If you can handle risks

and are willing to go the extra mile to benefit from any further fall in interest rates,

floating rate home loans will be best suited for you.

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BIBLIOGRAPHY

WEBSITES:

www.nhb.org.in

www.wikipedia.com

www.google.com

MAGAZINES:

Business Today

Economic Times

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APPENDICES

QUESTIONNAIRE

Dear Respondent,

I (ROHIT JAIN) pursuing BBA doing a survey on “major project on housing loans by

banks”. I will be grateful if you could spare your precious time to respond to the

following questions. Your valuable response would be treated as confidential and would

be used only for the purpose of the study.

NAME (OPTIONAL) :

Q1 Age:

a) Below 30

b) 30-40

c) 40-50

d) Above 50

Q2 Occupation:

a) Professional

b) Self-employed

c) Salaried

d) Others

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Q3 Which income group do you belong? (Per annum)

a) Below 2 lakhs

b) 2-4 lakhs

c) 4-6 lakhs

d) 6 lakhs and above

Q4 Do you own a home?

a) Yes

b) No

Q5 Are you aware of the home loan product of any of the following banks?

a) ICICI

b) HDFC

c) PNB

d) SBBJ

e) Others

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Q6 Which bank’s home loan product do you find most reliable?

a) ICICI

b) HDFC

c) PNB

d) SBBJ

e) Any Others, please specify

Q7 If yes why?

a) Attractive interest rates

b) Service provided

c) Schemes

d) Payback period

e) Any Other, Please specify

Q8 Have you ever taken home loan?

a) Yes

b) No

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Q9 If yes, from which bank?

a) ICICI

b) HDFC

c) PNB

d) SBBJ

e) Any Other, Please Specify

Q10 While taking home loan, which things attract you the most?

a) Interest rates

b) Service Provided

c) Payback period

d) Scheme

Q11 Are you overall satisfied from the performance of house loan provided by your

bank?

a) Yes

b) No

Q12 Had you faced any problem in obtaining the home loan?

a) Yes

b) No

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Q13 If yes, then what problems had been faced by you in obtaining the home loan?

a) Policies

b) Terms & Conditions

c) Schemes

d) Service not liked

e) Any Other, Please specify

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House Loan

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