PROJECT ON

“A DESCRIPTIVE STUDY ON HOME LOAN PROCESS AT

HOUSING DEVELOPMENT FINANCE CORPORATION LTD,
QUETA COLONY, LAKADGANJ,
NAGPUR
FOR THE
FY. 2018-19”

SUBMITTED TO RASHTRASANT TUKADOJI MAHARAJ

NAGPUR UNIVERSITY, NAGPUR

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF
BACHELOR OF BUSINESS ADMINISTRATION
(FINANCIAL MANAGEMENT)

SUBMITTED BY

BBA PART III

UNDER THE VALUABLE GUIDANCE OF

DEPARTMENT OF COMMERCE, MANAGEMENT AND COMPUTERS

HISLOP COLLEGE, NAGPUR.

ACADEMIC SESSION 2019 – 2020
 CERTIFICATE

I hereby declare that, the project report entitled on a descriptive study of home loan process at
housing development finance corporation limited, submitted by Mas to Rashtrasant
Tukdoji Maharaj Nagpur University, Nagpur for the award of Bachelor Of Business
Administration Degree in the faculty of commerce is a bonafide and original research work
carried out under my guidance and supervision. The research is sufficiently high standard to
warrant its submission to the university of the said degree.

No part of this project has been submitted for any degree or diploma, or published in any
other form. The assistance and the help to the researchers during the course of the
investigation in the form of basic source material and information have been duly
acknowledged.

Place: - Nagpur

Date: -

Dr (Mrs.) Jigisha Naidu (Rajshri Channe)

Director Guide
 DECLARATION

I hereby declare that study on a descriptive study of home loan process at housing
development finance corporation limited submitted by is a result of my own research work
under the guidance of for the partial fulfilment of Rajshri Channe Bachelor Of Business
Administration and that the same has not been previously submitted to any degree/diploma.

Place: - Nagpur Signature of the

student

Date: -
 ACKNOWLEDGEMENT

The project work has been undertaken as a part of curriculum of final year degree in Bachelor
of Business Administration. The purpose of doing this is to impart integrated approach to our
education. It gives us an opportunity to apply our concepts vis-à-vis the subject we undertake
to study.

It is said that success is the symbol of diligence, inspiration and innovation. Success
only smiles on those who strive hard for it. So I would like to ascribe my success to the hard
work of my guide Rajshri Channe whose endeavor for perfection, personal attention,
enthusiasm and foresight has contributed in a big way in completing this project with
considerable ease within the stipulated time.

At last my sincere thanks to the members of Department Of Commerce, Management &

Computers, friends and all those who helped me directly or indirectly in the completion of
this project work for all my inspiration and strength in completing this work

(Yash Jejani)
 INDEX

SR. NO. PARTICULARS PAGE NO.

1 INTRODUCTION

2 COMPANY PROFILE

3 OBJECTIVES OF THE STUDY

4 RESEARCH METHODOLOGY

DATA ANALYSIS AND

5
INERPRETATION
CONCLUSIONS AND
6
SUGGESTIONS

7 LIMITATIONS

8 BIBLOGRAPHY

9 ANNEXURE
INTRODUCTION
The sun at home warms better than sun elsewhere.

True isn’t it, where else do you find that comfort that makes you feel so special everyday.
Undoubtedly owning a house is the most important phase in ones life. Not long ago, turning
this dream into a reality was a daunting task for the common man with property rates going
north all the time. But now, thanks to the proliferation of home loans and housing finance
companies, one can aspire to own a roof over one's head. Many think it is an expensive affair
and beyond reach. Well, that’s not always true. It takes a little planning and awareness to get
to that home you want to call your own.

Buying a home for the first time can be daunting to any person but in today’s time various
banks are lending a helping hand to the people to purchase their dream house. Thus people
look forward towards choosing a home loan. The primary concern of a housing finance
company is to determine the loan amount that the borrower is comfortably able to repay. The
most popular method of financing a home purchase is with a mortgage. This is a loan that is
secured over the home. There are a number of different mortgage suppliers and people will
have to shop around in order to get the best deal.

Home Loan is one of the fastest growing retail and mass banking area. It forms an important
part of the country’s priority in 5 year plans. Almost all public and private sector banks are
offering home loans at attractive rates for purchasing their dream home. Home loan usually
cover a variety of types. All Banks have come out with home loan products studded with
features and value additions that make the schemes not only attractive but also serve as a
substantial source to the borrowers for owning their dream home.

Banks as financial service providers aims at providing financial support from the banking
system to the needy for purchasing a home to the resident Indians as well as non-resident
Indians. The main emphasis is that every needy person is provided with an opportunity to
pursue home loan with the financial support from the banking system with affordable terms
and conditions.
HDFC-(Housing Development And Finance Corporation) Home Loan, India have been
serving the people for around three decades and providing various housing loan according to
their varied needs at attractive & reasonable interest rates. Owing to their wide network of
financing, HDFC Housing Loans provides services at your doorstep and helps you find a
home as per your requirements. 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.
With the RBI reducing bank rate. The HDFC Bank and has become the first player in this
sector to announce a housing loan for a 20 years period. No doubt it will enhance the end cost
people to plan their house over longer duration now; it has been made easy for a person to
buy that dream house which he dreamt of long ago. HDFC also provides with Home
Improvement Loan for internal and external repairs and other structural improvements like
painting, waterproofing, plumbing and electric works, tiling and flooring, grills and
aluminium windows. HDFC finances up to 85% of the cost of renovation (100% for existing
customers). Ministry of Housing and Urban Poverty Alleviation (MoHUPA) has introduced
in June 2015, an interest subsidy scheme called Credit Linked Subsidy Scheme (CLSS) under
Pradhan Mantri Awas Yojana (URBAN)-Housing for All, for purchase/ construction/
extension/ improvement of house to cater Economical Weaker Section(EWS)/Lower Income
Group(LIG)/Middle Income Group (MIG), given the projected growth of urbanization & the
consequent housing demands in India. The Corporation remained steadfast in its commitment
towards supporting the government’s flagship scheme, ‘Housing for All’ and continued to
pursue efforts towards lending to the Economically Weaker Section (EWS), Low Income
Group (LIG) and Middle Income Group (MIG) segments. The Corporation has the largest
number of home loan customers – of approximately 1 lac who have availed benefits under the
Credit Linked Subsidy Scheme (CLSS). As at March 31, 2019, cumulative loans disbursed by
the Corporation under CLSS stood at ` 16,253 crore. The Corporation continued its focus on
lending to credit worthy home loan customers across all income segments as given below: On
an average, the Corporation has been approving approximately 8,600 loans on a monthly
basis to the EWS and LIG segment, with monthly such average approvals at ` 1,406 crore.
The average home loan to the EWS and LIG segment during the year stood at ` 10.1 lac and `
17.5 lac respectively.
The Corporation’s niche products such as ‘HDFC Reach’ which addresses the housing needs
of the informal sector and micro entrepreneurs and ‘HDFC Rural Loans’ which focuses on
customers with rural incomes or acquiring homes in rural and peripheral rural areas continued
to gain traction during the year. As at March 31, 2019, cumulatively, the Corporation had
financed 7 million housing units.

CHARACTERISTICS OF HOME LOAN

 Home loans are the consumer loans.

 Home loans are long term loans provided by various banks.
 These are large amount loans which provide financial support to the people who want
to purchase their dream home.
 Home loans are secured loans.
 The borrowers get to own their dream home and pay for it in easy and affordable
instalments.
 Banks and Financial Institutions offers home loans at cost-effective rates.
 Tax concessions make home loans more attractive than other loan products.
 The borrowers can get tax deduction on repayment of the principal amount of a loan
taken to buy or construct a house.
 The interest paid on a loan is deductible from 'income from house property', even if it
has not been paid during the year.
 Interest paid on a new loan taken to repay the original housing loan is also allowed as
deduction.
COMPANY PROFILE
 COMPANY PROFILE

Housing development and finance company HDFC Bank limited as the name suggest
Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC Bank limited has since
emerged as the largest residential mortgage finance institution in the country. The corporation
has had a net worth of US$ 48 Billions , it’s wholly owned subsidiaries are HDFC Credila
which is India first education loan company with loan book of US$ 817 millions. HDFC
Property fund and HDFC Capital Advisors which have property fund AUM OF US$ 2.2
Billions of which 50% of it is allocated to construct affordable housing. HDFC Sales which
is a Financial services distribution company. Home loans are also sourced through HDFC
Sales.

HDFC BANK LTD , founded 1977 by Ravi Maurya and Hasmukhbhai Parekh, is an Indian
NBFC, focusing on home mortgages. HDFC Bank ltd distribution network spans 546
interconnected offices that include 188 offices of HDFC BANK LTD Sales Private Limited
with outreach programs to several towns and cities all over India. In addition 3 representative
offices in Dubai, London and Singapore offering Home loan products to Non-Resident
Indians and Persons of Indian Origin. Enhanced distribution through HDFC Sales, HDFC
Bank and third party Direct Selling Associates.

The business summary: Gross loan outstanding worth Rupees 4900 crore, Individual loans
has frown by CAGR of 17% in previous 5 years. Cumulative units of housing financed is 7.3
millions units. The cost to income ratio is 8.5% . The unaccounted gains and listed
investment in subsidiary and associated companies is 2,288 crores with consolidated profit
after tax CAGR is 16% in previous 5 years.

The branch on which the study has been taken is lead my Jatin Choudhari as a branch
manager followed by Avi Choudhari as a operation manager, Shama Dhoble as a core
support, Palash meshram as a resource person. The branch was established on 26th December
2017, having an approx annual turnover of 150 crore rupees. The NPA level is low. Rate of
interest provided on home loan is 8.3-8.75 percent and have a concession of 0.05% for
woman. HDFC SALES and HDFC BANK forms a main source of customer base. SBI bank
is the main competitor offering low rate of interest, HDFC defeat such competition with
number one services as the home development finance cooperation (HDFC) bank itself was
initially established for home loan purposes.

ABOUT THE PROMOTER

HDFC, the promoter, is India’s premier housing finance company and enjoy an impeccable
track record in India as well as in international markets.

Since its inception in 1977, HDFC has maintained a consistent growth in its operation and
profitability. Its outstanding loan portfolio covers over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segment and also
has a large corporate client base in relation to its housing related credit facilities and its
investment in portfolio.
 TYPES OF HOME LOAN SCHEME AND ITS EXTENSIONS
A home loan scheme is generally offered to the person to accommodate finance for
purchasing the house or for renovation or extension of the existing house.
The various extensive schemes, which are included in the home loan portfolio, are:

Home Purchase Loan:

This is the basic home loan for the purchase of a new home.

Top up loan:

Sometimes, you need another helping hand to fulfil your dreams. How wonderful would it be
if someone understands your aspirations and is always there to help you? One such product
that fulfils the criteria is a top-up loan. The top-up loan is a financial help provided by banks
or housing finance companies so that you can easily fulfil your dreams with little more
financial aid.
Let us take an example to understand what actually a top-up loan is?
Suppose your bank has approved a home loan of Rs.60 lakhs for a period of 10 years. After 5
years, the outstanding principal balance on your loan is Rs. 36 lakhs. Now, if you are
considering a major renovation in the house, you can consider a top-up loan (a loan that tops-
up your home loan), to finance the renovation instead of opting for a costly personal loan.
A top-up loan is a loan given by the bank over and above your home loan. Just like you top-
up your mobile balance if you are running low on balance, similarly banks give top-up loans
over your current balance

Home equity loan:

A home equity loan is a type of loan in which the borrower uses the equity of his or
her home as collateral. The loan amount is determined by the value of the property, and the
value of the property is determined by an appraiser from the lending institution.
Home equity loans are often used to finance major expenses such as home repairs, medical
bills, or college education. A home equity loan creates a lien against the borrower's house and
reduces actual home equity.
Composite loan (Land+ Construction)

Composite loan are loans which are given to an individual who plans to buy a plot on loan or
to construct the home on the same within the stipulated time mentioned by the bank.
Therefore a composite home loan means a loan that can offer you loan to buy a land, and also
provide you money for construction of a house.

Balance transfer:

It is also known as subrogation of the property known as novation of contract. Subsequent

mortgagee steps into the shoes of prior mortgagee. Subsequent mortgagee gets all the rights
of prior mortgagee. Now mortgagor is liable to subsequent mortgagee. Subrogation means
substitution. Generally done when the credibility of mortgagor increases in the mean time and
subsequent bank provide lower rate of interest than the prior bank.

Home Improvement Loans:

These loans are given for implementing repair works and renovations in a home that has
already been purchased by you.

Home Construction Loan:

This loan is available for the construction of a new home.

Home Extension Loan:

This is given for expanding or extending an existing home.
For example: Addition of an extra room or an extra floor in the bunglow.

Home conversion loan:

This is available for those who have financed the present home with a home loan and wish to
purchase and move to another home for with some extra funds are required. Through home
conversion loan, the existing loan is transferred to the new home including the extra amount
required, eliminating the need of pre-payment of the previous loan.
Non residential Loan:

This loan can be taken to buy an existing or new office/clinic. It can also be taken to

renovate, extend construct an office space or clinic. Self-employed professionals or non-
professionals can apply for this loan. The maximum loan tenure of this loan is 15 years.
 ELIGIBILITY CRITERIA FOR HOME LOANS

How much an applicant can borrow?

Most lenders require 10-20% of the home's purchase price as a down payment from you. It is
also called 'one's own contribution' by some lenders. The rest, which is 80-90% of the
property value, is financed by the lender. The total financed amount also includes
registration, transfer and stamp duty charges.

Even though the lender calculates a higher eligible amount, it is not necessary to borrow that
amount. Even a lesser amount can be borrowed. One should try to arrange the maximum of
down payment and less of home loan so that interest cost is kept at minimal. Also, should
have a positive CIBIL score.

Eligibility:-

Individuals:
You should have completed a minimum of 2 years of service (with a minimum of 1 year in
the current job) or 3 years of continuance of business. Also, should have income tax return of
at least 3 financial years fulfilling the eligibility criteria.
Salaried applicants need to satisfy the following home loan eligibility criteria.

Home Loan Eligibility Criteria Salaried Employees

Eligible Age (Min-Max) The applicant's age should be minimum 24
years and maximum 60 years at the time of
applying for a home loan if the applicant is a
salaried employee.
Eligible Income Salaried applicants should have a minimum
monthly income of ₹25,000 per month in a
metro city, and a minimum monthly income
of ₹20,000 in other cities.
Minimum Loan Amount The salaried applicants can avail a home loan
starting from ₹100,000, based on their
eligibility.
Maximum Loan Amount The salaried applicants can avail a home loan
up to ₹35 Crores, based on their eligibility.
Eligible City 180 Cities across India.
Co-applicant Not mandatory, but only immediate family
members can apply as a co-applicant.
Employment The salaried employees should have a
minimum of 2 years of total work-experience,
and at least 6 months in the current company.
CIBIL Required (750-900)

Self-employed applicants need to satisfy the following home loan eligibility criteria.

Home Loan Eligibility Criteria Self-Employed Professionals

Eligible Age (Min-Max) The applicant’s age should be minimum 24
 years and maximum 65 years at the time of
applying for a home loan if the applicant is
a self-employed professional.
Eligible Income Self-employed applicants should have a
minimum monthly income of ₹36,000 per
month in a metro city, and a minimum
monthly income of ₹30,000 in other cities.
Minimum Loan Amount The self-employed applicants can avail a
home loan starting from ₹100,000, based
on their eligibility.
Maximum Loan Amount The self-employed applicants can avail a
home loan up to ₹35 Crores, based on their
eligibility.
Eligible City 180 Cities across India.
Co-applicant Not mandatory, but only immediate family
members can apply as a co-applicant.
Employment The self-employed applicants should have a
minimum of 5 years of turnover, before
they can apply for a home loan.
CIBIL Required (750-900)

Some of the acceptable relationships where loan clubbing is possible:-

Income clubbing of co-applicants

Combinations Income clubbing
Husband-Wife YES
Parent-Son YES (if only son)
Parent-Daughter YES (if only daughter)
Brother-Brother YES (if currently staying together and
 intend staying together in the new property)
Brother-Sister NO
Sister-Sister NO
Parent-Minor child NOT ELIGIBLE FOR LOAN.

 The minimum age for the applicant and the co applicant to become eligible for the
commencement of home loan is 24 years, and co applicant can be of 18 years of age
if their income is not clubbed to calculate the loan eligibility

The maximum age at the time of loan maturity for applicant or co-applicant is 60 years or the
retirement age whichever is earlier.

DOCUMENTS INVOLVED IN EVALUATION OF HOME

LOAN:

Home Loans help to fulfill all housing finance related needs. But to do so, they need certain
documents to be sure of the borrower. Also, home loans are secured loans.
As such, the lenders need to have the property documents before they approve the loan.
Different lenders have their own specific requirements, criteria and documents required.

Here is a complete list of the documents required for a home loan.

List of common documents required for a home loan

 Complete Home Loan Application Form with one passport size photograph.

 Photo Identity Proof: Passport / Driving License / Voter ID / PAN
 Residence Address Proof: License / Registered Rent Agreement / Utility Bill
 Residence Ownership Proof: Sale deed or rental agreement
 Income Proof: salary slip, bank statement and Form 16
 Job Continuity Proof: Appointment letter at employment and validation letter from
HR
 Bank Statement: Past 6 months’ document
 Property Documents: Sale deed, transfer of ownership.
 Advance Processing Cheque: A cancelled cheque for validation of bank account.
 Financial documents:

A. For Salaried Individual: 3 month salary slip, Form 16 and bank statement

B. For Self-Employed Individual: IT returns for last 2 years along with computation of
income tax for past 2 years certified by a Chartered accountant

C. For Self-Employed Non- Professionals: IT returns for last 3 years along with
computation of income tax for past 2 years certified by a Chartered accountant.

Documents required for Salaried Individual

 Loan Form: Bank loan application form to be filled with passport size photographs
affixed
 Address Proof: Leave and License / Registered Rent Agreement / Utility Bill (up to 3
months old), Passport
 Identity Proof: Passport / Driving License / Voter ID / PAN
 Income Proof: 3 month payslips, 2 years Form 16, Copy of Income Tax PAN
  Bank Statement: 6 months bank statement that shows salary from the employer and
any EMI paid for outstanding debit.

Documents required for Self employed- Professionals

 Identity Proof: Passport / Driving License / Voter ID / PAN.

 Address Proof: License / Registered Rent Agreement / Utility Bill.
 Office Address Proof: Property Documents, Utility Bill.
 Office Ownership Proof: Property Documents, Utility Bill, Maintenance Bill.

Business Existence Proof: 3 years old SARAL Copy ( The SARAL-II is a two page form which
will enable individuals to enter the relevant details in a simple format. Income Tax Return (ITR I)
which was the old form has been renamed as SARAL), the Company Registration license, Shop
Establishment Act.

 Income Proof: Latest 3 years Income Tax Returns including Computation of Income, Profit
& Loss Account, Audit Report, Balance Sheet, etc.
 Bank Statement: Past 1 year bank statement.
 1 passport size colour photograph.

Documents required for home balance transfer

There are many reasons why people transfer their home loan from one financial institute to
another. Most prominent reason is lower interest rate which saves cost of borrowing. You
must identify the objective of transferring the loan before actually doing it. The process of
home loan balance transfer is not much different than applying for the home loan. That is the
reason why documentation part is very important for transferring the home loan from one
financial institute to another. The process not just includes the documentation but also the
validation of documents. The documents are validated by the bank or NBFC that you apply
to. One has to accept that the reliability of a person for repayment is decided from the
documents that the person has to offer. The documents of the applicant will describe if he /
she will able to repay the loan amount or not. The prerequisite key documents for home loan
transfers are the following:

 Passport-size photographs
 Filled application form for loan transfer (of the bank / NBFC)
 Latest three months' Salary Slips indicating break up of Gross salary that is the Basic
Pay, House rent and Net Salary after deductions, if any.
 Six months' bank statement, reflecting salary credits updated within 15 days before
the loan application.
 Identity Proof (Any One): Pan Card, Passport / Driving License / Voter's ID card /
employee identity card (as identity proof and signature proof in case of government
employees).
 Proof of address: utility bill / voters ID / Aadhar card.
 Proof of Age (Any One): 10th or 12th Marksheet / birth certificate / PAN Card /
Voters ID Card.
 If you are a self-employed professional or businessperson, then instead of Points (3.)
and (4.), you need to provide documents proving the existence of your business (for
businesspersons) and academic qualifications (for professionals) ; and financial
statements for both.
 Bank statements from wherein the home loan EMIs were deducted amounting to last
12 months of the account.
 The Loan statement copy and complete set of documents relating to the property that
is currently in possession of the present home loan lender.

Purpose Documents
Proof of both identity and residence (any 1) 1. Valid Passport
  2. Voter ID Card
  3. Aadhaar Card
  4. Valid Driving Licence
Proof of income 1. Last 3 months' Salary Slips
  2. Last 6 months' Bank Statements, showing
salary credits
  3. Latest Form-16 and IT returns
Other documents 1. Employment Contract / Appointment Letter
in case current employment is less than 1 year
old
  2. Last 6 months' Bank Statements showing
repayment of any ongoing loans
  3. Passport size photograph of all the
applicants / co-applicants to be affixed on the
Application Form and signed across
  4. Cheque for processing fee favouring ‘The
New bank’
Documents for a Balance Transfer Loan 1. A letter on the letter head of the existing
lender stating the list of property documents
held by them
  2. Latest outstanding balance letter from your
existing financial institution on their letter
head
  3. Photocopy of the property documents
(including Own Contribution Proof)

Ability to reimburse the credit takes factors, for example, age, capabilities, pay, and life
partner's salary, number of dependents, resources, reserve funds history, liabilities,
dependability and persistence in occupation in thought. The candidate is called as the
individual and the co-candidates can be candidate's mate, guardians, or even real youngsters.
The co-candidate requires not be co-proprietor of house, but rather co-proprietor of property
should be the co-candidate
Additional Documents for Salaried Self Employed
Loan Takeover / Transfer
Loan statement (loan track) and Yes Yes
list of property documents (LOD)
in possession of existing lender
Last 12 months' statement of Yes Yes
bank account from which loan
EMI is paid
Application Form and KYC Salaried Self Employed
Application Form with photo and Yes Yes
signed by Primary Borrower and
Co-borrower(s)
Identity Proof of Primary Yes Yes
Borrower and Co-borrower(s)
Residential Address proof of Yes Yes
Primary Borrower and Co-
borrower(s)
Age Proof of Primary Borrower Yes Yes
and Co-borrower(s)
Office address – ownership /   Yes
lease / rent agreement / utility bill
Income Proof Salaried Self Employed
Last 3 years’ Form 16, last 6 Yes  
months salary slip, last 6 months’
bank account statement showing
salary credit
Last 3 years ITR (self and   Yes
business), profit and loss
account, balance sheets certified /
audited by a CA. Last 12 months
bank account statement (self and
business)
Certificate and Proof of Business   Yes
Existence
Business Profile   Yes

Documents required for senior citizens/ Pensioners.

 1 passport size colour photograph

 Photo Identity Proof: Passport / Driving License / Voter ID / PAN
 Residence Address Proof: License / Registered Rent Agreement / Utility Bill
 Age Proof: Pan Card or Passport
 Income Proof: Pension Returns Or Bank Statement
What is sale deed?

A sale deed is a legal document which has all the information regarding the sale, purchase
and transfer of a property. A sale deed holds lots of importance as it proves your ownership
on a particular property which you purchased.

A sale deed when talking basically is the main document which has all the details related to
the deal of the property. A sale deed denotes proof that you have paid a particular amount
against your house and hence it belongs to you now. This deed also contains some other
information such as details of the of previous owner, previous to previous owner, value paid
against the property, location and dimensions of the property.

Sale deed is also a declaration that you are selling your property with your own will.

Who prepares a Sale Deed?

A sale deed is prepared by an authorised lawyer on behalf of an individual. The sale deed
declaration should include all details of the property, ownership and the financial deal and it
has no fixed format.

Information a Sale Deed contains:

 Property Seller’s name & address.

 Property  Buyer’s name & address.
 Details of the property – location, dimension, jurisdiction.
 Details of previous owners of the property.
 Cost paid against the property.
Documents to collect from lender after closing a home loan?

Basically there are just 5 documents to be received once you close your existing home loan and the
list of these documents are below:

1. No Objection Certificate (NOC): This is an authorization certificate confirming there is no

outstanding due and it is issued by the lending bank assuring that all payments have been
settled. It is considered as the important documents to acquire during closure of home loan.
2. Retrieve original property documents: Take back all documents from the bank that was
submitted while applying for home loan. Check for misplaced or missing pages and documents.
If possible, go the bank and personally retrieve your loan documents thus courier delays and
problems can be avoided.
3. Retrieve Security Cheques: Everyone would have submitted 3-4 security cheques at the time
of applying loan to the lending bank. Make sure to take these back after filing necessary
documents for the same. This was just shared with the bank for security reasons in case if you
default the payments.
4. Encumbrance Certificate (EC): An EC is a certificate listing all monetary transactions on
your house. Once the home loan is closed, it must reflect in the EC. This is necessary to
complete the home-loan closure procedure.
5. Get Legal Clearance: Though this is optional, it is advisable to get a legal clearance certificate
from a lawyer. In this way, you can be sure that all necessary formalities are completed from a
legal stand-point. Also in case of any issues, a lawyer is the best person to make any decision
on the same.
THE PARAMETERS INVOLVED IN EVALUATION OF COST
OF HOME LOAN
There are a number of parameters on which the housing loans are built:
They are:
1. TENURE
The tenure of the home loan refers to the time limit for a customer to repay the loan Generally, the
maximum tenure of home loans is 20 years, with a few lenders offering tenure of 20 years or more
(HDFC has recently launched a 30 years loan). The longer the tenure, more a customer pays in total
interest, but monthly payments will be less. So depending on the earning potential and bank balance
of the customer, an appropriate can be chose. An important requirement of most banks/ HFIs is that
they pay up the entire loan before you retire. The customer can always prepay the entire loan amount
before it is due.

As long as the tenure goes up a customer pays more interest which is up to 0.25 – 0.5%, generally
above the home loan rates.

2. AMOUNT PAID BY THE FINANCER/ MARGIN REQUIREMENTS

The financer does not pay the entire amount of the loan, they request the customer to maintain margin,
most banks go in for a 85% funding of the property value including the stamp duty and charges, it
however varies among various banks.
This is also treated as the margin money or own contribution required to be put by the prospective
loan seeker as the contribution towards the purchase of the house. Most HFIs believe the amount paid
is upfront before they release any disbursement.

As a rule of thumb, depending upon the HFC, the prospective loan seeker has to cough up 15% - 20%
of the loan amount as a down payment. For smaller amounts, this may not be much. But for figures
running into lacks, this could make loads of difference.
For example: An apartment costing Rs. 10lacss may get 85 per cent financing. So, customer has to
arrange for the remaining Rs 1.5lacs.
Some banks however make way for the payment for 90% of financing and about 100% financing for
some new projects, however they are subjected to a large number of factors and constrains.

3. INTEREST RATES

Without doubt the most important parameter to factor into home loan calculations. The interest rates
may vary from institutions to institutions and generally range from about 08 - 11% per Anum to
around 09.5% Repayment is in the form of EMIs (Equated Monthly Instalments). The longer the
tenure, the more you pay in interest, but your monthly payment will be less.

The two kinds of interest rates available to a customer are:

 Fixed interest rates

 Floating interest rates

There are two types of home loan interest rates at which lenders sanction a home loan, fixed
and floating.

Fixed Interest Rate – Fixed interest rates remain the same throughout the loan tenure. For
instance, if you get a home loan at 10% p.a. for a period of 15 years, the interest rate will not
change till the end of your loan period. However, lenders allow their customers to switch over
to the variable/floating housing loan interest rates after completing a specific period of time.

Floating Interest Rate – Floating interest rate, also known as the variable rate of interest, is
subject to the latest lending rates of the bank. Unlike the fixed rate of interest, floating interest
rates may change during the loan tenure. The rate is dependent on various factors such as
RBI’s monetary policies and revised MCLR (Marginal cost of funds based on ratings) or
other external benchmark rates.

4. MISCELLANEOUS CHARGES:
 All banks charge certain amount of processing fee which cannot be ignored, it should be
understood that along with monthly payments, the customer should also ensure that he has to
pay these charges, so he should careful in choosing his HFC. Miscellaneous charges generally
range around 2.5% to 3%.

A 1% administration fee and 0.8% processing fee on, say RS. 5, 00,000 loan, would amount
to RS 10.000. Other times, it could be just one fee (either administration or processing) but
could yet work out to be much more if it is considerably higher at, say, 2.5 per cent or 3 per
cent. The various other fees, which you are required to be paid along with the margin amount,
are:

A) Processing fee:

It’s a fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan
or may also be a percentage of the loan amount. The loan amount received by customer can be less
than the processing fee. It is charged at the submission of the application form and covers expenses
incurred for processing the application form.

B) Prepayment Penalties:

No prepayment charges are levied on floating interest rates.

C) Administrative Fees:

An administrative fee is charged by the HFI on the loan amount sanctioned to customer. This fee is
normally payable at a time of accepting the offer letter. It is charged mainly to meet the operating
expenses of the loan amount of the entire tenure.

D) Others:

It is quite possible that some lenders may levy a documentation or consultant charge. In case of
HDFC Bank the processing fee is 0.25% of the loan amount and the administrative fee is
approximately 0.50% of the loan amount.

5. AMORTISATION

It means the method or the calculation by way of which the entire Principal amount/loan amount is
paid through the tenure of the loan.
This helps the customer to know what his outstanding principal is at any point of time. There are two
methods generally followed:

 Annual rests
 Monthly rests

Annual rests:

This is more commonly known as annual reducing balance of the principal/loan amount lent
to you. In an annual rest the EMIs (fixed monthly payment for the dispersal of the loan
amount) are calculated on an annual basis.
The component of interest is higher in the initial years and later on the component of principal
increases and the interest keeps reducing year after years. In other words, the interests in the
EMI will keep reducing year after year and the principal component keeps increasing.

Monthly rests:

This is called monthly reducing balance or principal. The calculation in the above method
remains the same as of the above except that the balance is calculated on a monthly basis and
the EMI is broken up every month to arrive at the opening balance of the principal for the
next month. It is always better for a customer to seek an HFI, which generally has monthly
rests, based system; this will reduce the amount of interest paid by the customer. Many banks
have adopted to the monthly rests system.

6. REPAYMENT FACILITY

The bank has given two options for repayment of the loan to suit the convenience of
Borrower.

1.Equated Monthly Instalments (EMI) uniform monthly instalment, inclusive of interest, for
the entire repayment of only interest for the first five years, and thereafter in EMI for the next
10 years.

2.Repayment of only interest in the first five years, 30% principal plus interest in the next five
years, and balance 70% plus interest in the remaining period.
Repayment to start on completion of construction, but not later than 18 months from first
disbursement and in case built up houses after one month from disbursement. Interest during
gestation shall be paid as & when due. The repayment not to extend beyond the age of
retirement of the borrower or 70 years whichever is earlier, however where co-borrower is
 taken, a maximum repayment period of 20 years may be considered provided the loan is
liquidated within the age of 65 years of the borrower/ co-borrower having capacity to service
the loan.

PROCEDURE OF HOME LOAN

Home loan procedure caters to processes right from the time the customer walks into the bank with a
request for home loan till the time the loan is finally repaid by the customer. The three major phases
in the home loan procedure are the information acquisition, credit appraisal and sanction, and
disbursement. Tracking the performance of the process is an underlying phase that runs across the
application processing cycle and is critical for monitoring and profitability for the Bank/ Financial
Institution.

The procedure for availing a home loan can be explained with the help of the following flow chart:
 Submission of application form

Personal discussion with customer

Field investigation by bank

Credit appriasal and loan sanction

Issue of offer letter to the customer

Submission of property/ legal documents

Legal check on the property by the bank

Technical check on the property by the bank

Disbursement

Repayment

Intrest tax certificate

Prepayment by the customerr

A. Submission of application form: The application is submitted along with photographs,

credit documents and a cheque for processing, documentation and administration fees by the
customer. The credit documents comprise documents to establish income, age, residence,
employment, investments, etc. During this stage, the bank/financial institution checks the
repayment capacity of the customer. The repayment capacity is determined by taking into
consideration factors such as income, age, qualifications, number of dependants, spouse's
income, assets, liabilities, stability and continuity of occupation and savings history.

B. Personal Discussion with customer: Some banks/FIs require the customer be present at
the time of the credit appraisal. Some banks/FIs may insist on a personal interview with the
customer and perform a reference check on the references provided by the customer on the
application form. For the personal discussion the customer needs to take with him all
documents pertaining to the information provided by him on the application form.

C. Field Investigation by the bank/FI: The bank/FI validates information provided by the
customer on the application form. This stage revolves around two key aspects. Critically
appraising the credit worthiness of the customer and analyzing the risk in lending. It is
necessary to capture all the information required to cater to these aspects. It is important to
verify that the information supplied by the customer is correct and authentic. Banks achieve
this mostly through external agencies. Also the validity and authenticity of information can
be done through conducting checks on the residential address of the customer, the place of
employment of the customer, and credentials of the employer, verification of documentary
proofs of income, age and other information. To minimize the risk, it is necessary to check
that the customer is not a fraud or black listed within the bank or other institutions.

D. Credit Appraisal and loan sanction: The next phase in the home loan process is the
credit appraisal and loan sanction. After checking the customer's repayment capacity, the
bank/FI sets norms that define the customer's eligibility for a loan amount. The loan then gets
sanctioned along with certain terms and conditions. When evaluating the measurable aspects
of home loan requests, an analyst addresses the following issues: the character of the
borrower, the use of loan proceeds, the amount needed, and the primary and secondary
sources of repayment. Therefore, the bank has to base its decisions more on qualitative
parameters rather than quantitative aspects. Credit analysis therefore is distinct for each type
of home loan scheme. Credit analysis is the most popular methods of evaluating home loans.

E. Issue of offer letter to the customer: The bank/FI sends an offer letter to the customer
with the loan sanction details which mention:

 Loan amount
 Rate of interest and whether it is fixed / variable rate of interest. If variable, period
after which the rate of interest would be reset - annual / monthly reducing balance
 Loan duration
 Mode of loan repayment
 Scheme of the loan, if a special scheme has been offered to the customer
 General terms and conditions of the loan
 Special conditions, if any, which the customer needs to adhere to prior to
disbursement
 Submission of the acceptance copy of the offer letter and a cheque for administrative
fees by the customer

F. Submission of property / legal documents by the customer to the bank/FI:

After the selection of the property, the customer is required to submit the original
documents pertaining to the property being purchased or mortgaged (if the property
purchased is different from the property mortgaged). The bank/FI keeps the property
documents as security for the loan amount given to the customer till the time the loan is
fully repaid.

G. Legal check on the property by the bank: The bank/FI sends all the documents
to their empanelled lawyer for a thorough scrutiny. On receiving the lawyer's report that
the documents are clear, the bank/FI decides to disburse the loan to the customer. If the
documents sent to the lawyer are not enough to arrive at a judgment, the bank/FI
requests the customer to furnish additional documents.

H. Technical check on the property by the bank/financial institution: Prior to

disbursement, the bank/FI conduct a site visit to the customer's property to verify the
following:

In case of under construction property:

 Quality of construction
 Stage of construction: Whether it is the same as mentioned in the payment
notice given to the customer by the builder

 Progress of work
 Layout of flats and area of property is within permission granted by the governing
authority
 Requisite certificates have been received by the builder to start construction at the site

In case of ready construction/ resale:

 Age of the structure
 Quality of construction
 Whether the structure will last the tenure of the loan
 External maintenance of the property
 Internal maintenance of the property
 Surrounding area (development)
 Required certificates from the governing authority have been received by the builder
for handing over possession of the flat
 There is no existing lien or mortgage on the property

I. Disbursement: After verifying that the property is legally and technically clear, the
bank/FI disburses the loan amount on the basis of the stage of construction of the
property. The customer needs to pay the margin money from his own contribution
prior to the disbursement.

J. Repayment: The repayment of the loan by the customer starts only after the full
disbursement of the loan amount has been made by the bank/FI. The loan is always
repaid by way of EMIs. The mode of repayment, however, differs from case to case.
In case of a loan repayment done through Deduction Against Salary (DAS), Post
Dated Cheques (PDCs), Standing Instructions (SI) and cash / Demand Draft (accepted
only by some banks/FIs). The customer can deposit the amount of his EMI every
month at the bank/FI’s office.

K. Interest tax certificate: This certificate is given by the bank/FI to the customer to
avail of tax benefits that accrue through a home loan. The customer can submit this to
his employer or Chartered Accountant to account it while calculating the customer's tax
liability.

L. Prepayment by the customer: The customer can either partly or fully prepay his
loan at any given point of time. The loan could be partly or fully disbursed when the
customer wishes to prepay his loan. Most banks/FIs, however, have a limit on the
number of times that a person can prepay his loan. There is, normally, also a
minimum amount that a customer has to prepay each time he wishes to do so.
Whenever a customer makes a prepayment, the customer has an option of reducing
 his EMI by keeping his tenure constant or to reduce his tenure by keeping the EMI
constant.

STUDY OF GROWTH IN RECENT YEARS IN HOUSING

FINANCE

Housing finance growth is set to slow down to 13-15 per cent this fiscal, lower than the
average of the past three years, due to the lingering liquidity issues faced by non-banking
lenders, warns a report.

There can also be an adverse impact on the outstanding housing credit, which stood at Rs
19.1 trillion as of March 2019, ratings agency ICRA (Investment information and credit
rating agency) said in a weekend report.

It can be noted that the government is betting on housing sector as one of the major vehicles
to push the sagging economic growth.
Given the tough operating environment, we expect housing credit growth in FY20 to be in the
range of 13-15 per cent which is lower than the last three years when it clipped past 17 per
cent.

The overall industry loan growth for housing finance companies had slowed down to 15 per
cent for FY18.

Banks grew faster at 19 per cent as against 13 per cent, taking their overall market share to 64
per cent from 62 in the year-ago period, it said, adding banks will lead the growth curve in
FY20 as well.
However, given the under-penetration of mortgages, the agency expects growth to recover
soon.

The gross non-performing assets ratio from the overall housing finance exposures increased
to 1.5 in March 2019, from 1.1 a year ago.
There could be some pressure on the asset quality owing to the challenging operating
environment and the emerging risk factors, it warned.
The overall NPAs of HFCs will grow to up to 1.8 per cent due to troubles faced by some
developers, it said, unlike most previous financial years, when NPAs decline in the last
quarter through enhanced recovery efforts, gross NPAs increased to 1.5 per cent as on March
2019 (against 1.4 per cent in December 2018) from 1.1 per cent as of March 2018.
Some reduction in NPAs was seen in the affordable new housing segment, to 4.6 percent as
of March 2019 from 5 per cent as of December 2018, it said, attributing the same to write-
offs and sale of NPAs by some of the players.

Housing finance companies would require Rs 4-4.5 trillion in FY20 to meet the growth
requirement of 10-14 per cent, it said, adding companies will have to resort to securitisation.

Directions issued by the RBI:

The home loan sector has been drastically affected by the hike in the property rates. The
property prices have been rising and touching unprecedented heights. In fact so much so, that
property are again becoming out of reach of common man. Whether the price rise is justified
or is it just a manipulated bubble remains to be seen. Reserve Bank of India, in its policy
statements has time and again cautioned the banks to be extra cautious before taking
exposure. In fact RBI went to the extent of increasing the risk weight age of the housing
loans. Reserve Bank of India increased the risk weight on real estate exposure and hiked the
risk weight for lending to the real estate sector. The RBI has cautioned the banks to be extra
careful while going all out to fund and finance the real estate sector. According to reports, the
property prices have come to their saturation and there is little scope for further increases.
The price hike has been quite fast and unrealistic. The growth in infrastructure has not been
able to keep pace with the increase in property prices. Hence property rates hike have led to
an increasing importance to home loans but bankers have to be extra cautious on their part.
 OBJECTIVES OF THE PROJECT

The whole study is taken in a procedural way. What are all the housing finance scheme
provided by the HDFC Bank, secondly the customers who are applying for the home loan are
eligible or not, what are all the criterial addressed by the bank to check whether the person
applying is eligible or not. Third, what are the documents of the customers needed by the
bank. Why are these documents needed and what is the purpose of those documents. Fourth
point, that comes into picture is what are the parameters which influence the cost of Home
loan. Fifth point, what is the internal process which took place before the home loan
disbursement, what are the checkpoints. Lastly, comes the point at what rate the housing
finance sector is growing. What is the growth in housing finance in recent years. How slow
down or lack of liquidity in the economy has pull down the sector.

Following are the points which formed basis of the research:-

• To study and understand the concept of home loan scheme and the eligibility criteria of the
customers.

• To study and understand the documents involved in the home loan scheme and the
repayment methodology adopted by HDFC BANK .

• To study the cost of home loan.

• To understand the internal disbursement process under home loan at HDFC BANK.

• To study the growth in the sector of home loan in last few years.
 HYPOTHESIS

A hypothesis consists either of a suggested explanation for an observable phenomenon or of

a reasoned proposal predicting a possible causal correlation among multiple phenomena. The
term derives from the Greek, hypotithenai meaning "to put under" or "to suppose." The
scientific method requires that one can test a scientific hypothesis. Scientists generally base
such hypotheses on previous observations or on extensions of scientific theories. Even though
the words "hypothesis" and "theory" are often used synonymously in common and informal
usage, a scientific hypothesis is not the same as a scientific theory.

Hypothesis may be defined as a proposition or a set of proposition set forth as an explanation

for the occurrence of some specified group of phenomenon either asserted merely as a
provisional conjecture to guide some investigation or accepted as highly probable in the light
of established facts. Quite often a research hypothesis is a predictive statement, capable of
being tested by scientific methods, that relates an independent variable to some dependent
variable.

NULL HYPOTHESIS

A null hypothesis is a hypothesis (within the context of statistical hypothesis testing) that
might be falsified on the basis of observed data. The null hypothesis typically proposes a
general or default position, such as that there is no relationship between two quantities, or
that there is no difference between a treatment and the control. The term was originally
coined by English geneticist and statistician Ronald Fisher.

The null hypothesis (often denoted by H0) formally describes some aspect of the statistical
"behaviour" of a set of data.

ALTERNATE HYPOTHESIS
Alternative hypothesis is the "hypothesis that the restriction or set of restrictions to be tested
does NOT hold." Often denoted H1. Synonym for 'maintained hypothesis.'

The Alternate Hypothesis of this project report is that customers are not satisfied.

RESEARCH METHADOLOGY
The basic objectives of this project being bank capital structure analysis, it is necessary to
know the study the process for home loan disbursement for which the whole research was
conduct.
 Research methodology is a systematic way to solve a problem. It is a science to study
how research is to carried out essentially the procedure by which researcher goes about their
work of describing, explaining and predicting phenomena are called “Research
Methodology”

RESEARCH

Generally research is considered as an endeavor to arrive at the answer to intellectual

and practical through the applicant and scientific method to knowledge universe. It is from
know to unknown.

Definition :

“Research is a careful critical inquiry or examination in seeking or principles diligent

investigation in order to ascertain something.”

-WEBSTER’S DICTIONARY

“Research is a structural inquiry that utilize acceptable scientific methodology to solve

problems & creates new knowledge that is generally applicable.”

- GRINELL

RESEARCH DESIGN :-

A research design is a framework or blueprint for conducting the market research

project. It details the procedures necessary for obtaining information needed to structure &
save marketing problems. Although a broad approach to the problem has already developed.
The research design specifies details the nuts & bolts of implementing that approach. A
research design lays the foundation for conducting project.

According to Clifford woody research comprises defining and redefining problems

formulating hypothesis or suggested solution organizing and evaluating data, making
deduction and reaching conclusion and at last carefully testing the conclusion to determine
whether they fit formulating hypothesis.

1.Research design

 The study done is exploratory in nature.

  The branch of the bank was selected by convenience and for the sake of access to the
quantitative information.

 For the latest information and focus , study is confined to the system and procedures
followed by the bank in the financial year 2018-2019

2. Sources of data

The data and information present here have been collected mainly from two
kind of resources :

I. Primary sources

 Direct and oral interaction with bank officials, particularly the branch manager via
Questionnaire, a copy of which is made available in Appendix.

 With the permission the records maintained in the branch.

II. Secondary sources

Several secondary information have been referred for collecting first hand
information and literature on the subject that includes:-

 The training and guidance material supplied to the staff of the

branch

 Online annual reports by consultancy and research companies.

 Online content of bank website

 Guidance of the faculty guide

 Several websites on home loans

  Daily newspapers like economic times of India and Business
standard.

The details of which have been presented in Biblography.

3. Tools and techniques used

i. Statistical techniques:

 Percentages

 Averages

 Tools like

 Tables

 Bar charts

ii. Software and technologies used

 Macintosh laptop

 Microsoft word

 Microsoft Excel

 World wide web

SCOPE OF THE STUDY
 The present study is confined to study the process of home loan products offered by
the domestic operations at HDFC BANK, QUETA COLONY, LAKADGANJ,
NAGPUR

 The study is also confined to the internal functional and operational aspect of the
lending process.

 The data collection here, is specific to

1. The selected branch as said before

2. The time period covering is the financial year 2018-2019

 The data collection here has been taken from the records maintained at branch and
oral communication with branch manager.
DATA ANALYSIS
 1. Types of home loan provided by the HDFC bank to its prospect
customers.
PERCENTAGE OF CUSTOMER IN EACH SCHEME

TYPES OF HOME LOAN SCHEME

35

30

25

20

15

10

0
HPL HCL HIML HEL CL BTL

TYPES OF HOME LOAN SCHEME

Following terms stands for:

HPL- HOME PURCHASE LOANS

HCL- HOME CONSTRUCTION LOANS
HIML- HOME IMPROVEMENT LOANS
HEL- HOME EQUITY LOANS
CL- CONSTRUCTION LOANS
BTL- BALANCE TRANSFER LOANS (SUBROGATION)

Interpretations:-

1. House purchase loan contribute 30% in housing finance this is the basic home loan for
purchase of a new home.
2. Home construction loan and balance transfer loan contribute equally that is 20%.
Where home construction loan is taken when a home is constructed on a piece of land
3. Balance transfer of loan is also known as subrogation of the property known as
novation of contract. Subsequent mortgagee steps into the shoes of prior mortgagee.
Subsequent mortgagee gets all the rights of prior mortgagee. Now mortgagor is liable
to subsequent mortgagee. Subrogation means substitution. Generally done when the
credibility of mortgagor increases in the mean time and subsequent bank provide
lower rate of interest than the prior bank.
4. Composite loan contributes 15% which is taken both on land and building where the
loanee availing loan having enough credibility take finance both land and house
construction loan.
5. House improvement loan contributes 10% which is taken where there are repair works
and renovation or civil changes that has already been purchased by the loanee.
6. Lastly, home equity loan which contributes 5% which is a type of loan in which the
borrower uses the equity of his or her home as collateral. The loan amount is
determined by the value of the property, and the value of the property is determined
by an appraiser from the lending institution. Home equity loans are often used to
finance major expenses such as home repairs, medical bills, or college education. A
home equity loan creates a lien against the borrower's house and reduces actual home
equity.
 2. What are the checks done in HDFC BANK to measure the risk
involved in housing finance?

RISK CAPTURING MECHNISM

60

50

40
SCORES

30

20

10

0
DEMOGRAPHIC RELATIONSHIP INCOME MODEL STABILITY AND ASSET MODEL
PROFILE WITH BANK CONTINUITY

PARAMETERS

Interpretation:-

 Income model is given the most weightage while providing the home loan which
gives idea of the home loan repayment capacity of the loanee.
 Demographic profile and Stability & Continuity are the factors which are given equal
weightage which includes Age, Educational and Qualifications, Dependents which
determines the risk in the home loan. The capacity to work in the future, how certain
the particular field or sector in which the loanee earn his income.

 The Stability and Continuity includes Organization Profile : Government / Public

sector companies / Public limited or Private limited companies or Partnership or
others. Length of service in Present job / Organization which is a indicator of how
stable the income of a loanee is and whether the term for which the loan is availed
by him or her involves low or moderate risks.

 Relationship with bank and asset model are again the factors which are given equal
weightage. Relationship with bank include if the loanee has availed any loan from the
bank in the past, whether his profile with bank already exists, his repayment history
with the bank.

 Asset model includes the margin money given by the loanee, what is the net worth of
the loanee, how much amount of loan can be sanctioned based on his repayment
capacity.
 3. PREFERENCE FOR FIXED OR FLOATING INTEREST
RATES

TYPE OF INTEREST RATE

80

70

60

50
Respondent

40

30

20

10

0
FIXED RATE FLOATING RATE OTHER
types of interest rate

 Going by the trend, it should surprise no one if interest rates on home loans rise as a
consequence of the rising interest rate scenario.
 This being the case, home loan seekers considers opting for a fixed rate loan (i.e.
fixed for 3-5 years). This protects them from a potential interest rate hike in the near
term. At the end of the said 3-5 year term, they have the option of considering either
to continue with the 'fixed' rate (if interest rates continue to rise) or migrate to a
floating rate loan.
  However, in case an individual does not have the risk appetite to take the interest
rate fluctuations in his stride, he may consider selecting the 'truly' fixed rate loans.
Such loans have a fixed rate throughout the tenure of the loan.
 However, if interest rates were to decline going forward, the truly fixed rate loan will
not reflect the fall in interest rates and the consumer will forfeit any chance of
benefiting from a decline in interest rates.

4. AMOUNT OF HOME LOAN TAKEN.

AMOUNT OF HOME LOAN TAKEN

PERCENTAGE OF CONSUMER IN EACH BRACKET

60

50

40

30

20

10

0
LESS THAN 25 LAKHS LESS THAN 50 LAKHS LESS THAN 1 CRORE
AMOUNT OF LOAN

 The demand for home loans remained strong given the shortage of housing in the
country. During the year, sales of high end luxury apartments continued to remain
tepid, however, there was increased demand for ready-to-move-in properties. New
launches of residential projects focusing on affordable housing saw strong demand
from homebuyers.
 The government’s impetus to encourage the supply of affordable housing units has
yielded salutary results. Across all major cities in India, there has been a distinct shift
towards smaller apartments, thereby also helping affordability.
  Much of the new supply of affordable homes has come up in peripheral areas of the
cities.
 The home loan sector has been drastically affected by the hike in the property rates.
The property prices have been rising and touching unprecedented heights. In fact so
much so, that property are again becoming out of reach of common man.
 Owing to the increase in property rate and tepid growth in income which is not in par
with increase prices of property, 75% of the people availing home loans lies less than
50 lakhs bracket.
 Only 25% of the people avails for the loan which is more than 50 lakh rupees,

5. Housing loan approvals to customers based on Income Slabs in

FY19.

Housing Loan Approvals to Customers based on Income Slabs in

FY19
PERCENTAGE OF EACH CONSUMER IN EACH SEGMENT

50
45
40
35
30
25
20
15
10
5
0
Economically Weaker Section Low Income Group Middle Income Group High Income Group
ANUAL HOUSEHOLD INCOME

Home Loan Approvals in FY19 Home Loan Approvals in FY19

Interpretations:

 The middle income group has the highest demand with 47% for Home loans followed
by high income group with 36%.
 As we seen where most of the home loans lie around 50 lakhs in Graph 4, the home
loan sectors consist more customers who belongs to the middle income group whose
annual income lies between 6 to 18 lakhs rupees.
  High income group consist of annual income of 18 lakhs and above.
 The low income group segment consist of whose annual income is around 3 to 6
lakhs, with 16% this segment is expected to grow in the future with government
emphasis on various scheme like CLSS and Pradhan mantri awas yojna.
 The economical weaker section consist of whose annual income is 3 lakhs with only 2
%. Government is expected to build housing and affordable quarters of poor people
who aren’t yet afford to buy their own homes.

6. Views of the people on the process of home loan followed at

HDFC BANK?

LEVEL OF SATISFACTION
45
40
35
NUMBER OF CUSTOMERS

30
25
20
15
10
5
0
HIGHLY SATISFIED SATISFACTORY AVERAGELY DISSATISFACTORY
SATISFACTORY

SATISFACTION LEVEL

Interpretation:-

 From the above graph interpret the satisfaction level of the services In this only 16%
people are highly satisfied with the home loan services.
 While 40% people are average satisfactory.
 38% people are satisfied with the services.
Remain are dissatisfied with the services

Conclusions and Suggestions

HDFC bank deals in various product of home loans the highest demand is for a home
purchase loan products followed by construction loan and balance transfer of loan balance
transfer of loan which is also known as subrogation this is because the growth in competition
between banks offering low rate of interest in home lone products to customers.

Also, Due diligence is done before disbursing or granting a home loan to somebody which
included important factors like capacity of an individual to repay home loan his or her
stability of income and his demographic profile which include factors like age educational
and qualifications to calculate the risk of home loans which determines the interest rates.

Further the research on the project discloses that customer gives more preference to fixed rate
of interest rather than floating rate of interest to eliminate the risk of the interest rates rising
in future however if the interest rates fall in future the it will not reflect the fall in interest rate
and the customer will forfeit any chance of benefiting from a decline in interest rates.

Further home loan sectors majorly consist of a middle income group that has the highest
demand of home loans followed by the high income groups. As we have seen in above that
the demand for the high end luxury apartments remain tepid in the following financial year,
the amount of home loans usually lie around 50 lakhs rupees. Also, the government has come
with various schemes like CLSS and Pradhan Mantri awas yojna to support low income
groups whose annual income is around 3 to 6 lack rupees to build affordable housing
schemes. The government is expected to build affordable quarters of poor people who aren’t
yet afford to buy their own homes.

During the year, the demand for home loans continued to be strong. Besides the continued
fiscal incentives for housing, the Goods and Services Tax council has reduced GST for under
construction housing projects from 12% to 5% and for affordable housing projects from 5%
to 1% which bodes well for the sector. These revised GST rates are without input tax credit.

Lastly, the annual report of HDFC bank tells that demand for home loans remains strong
given the shortage of housing in country. During the year the sale of high end luxury
apartments remain tepid. However there is an increase in demand of move in apartments.
New launches of residential product focusing on affordable housing saw strong demand from
homebuyers. The government impetus to encourage the supply of affordable housing units
has yielded salutary result across all major cities in India. There has been a distinct shift
toward smaller apartment thereby also helping affordability.

Most states have now put in place a real estate regulator, which acts as a strong confidence
booster for homebuyers. The Real Estate (Regulation & Development) Act, 2016 has helped
bring in greater discipline and transparency amongst developers in terms of usage of funds
for the project as well as adherence to stated timelines for the delivery of homes.
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ANNEXURE
 APPENDIX

QUESTIONNAIRE

Dear Sir/Madam,
As a part of Bachelors of Business Administration (BBA), I, Yash Sushil Jejani, am
undertaking a study project on “A DESCRIPTIVE STUDY ON HOME LOAN PROCESS
AT HOUSING DEVELOPMENT FINANCE CORPORATION” for which I need your
views regarding banking products and services in housing finance in shape of questionnaire
designed by me. The data collected are solely for academic purpose. I request you to kindly
extend my co-operation.

1. How many home loan products that your bank is offering to the prospect customers.
Serial Product/Schem Customer Interes Quantum of Tenure
no. e segment t rate Amount
1,
 2.
3.
4.
5.
..

2. What are the checks done in HDFC BANK to measure the risk involved in housing
finance?
3. What do consumer prefer the most, fixed rates or floating rates?
4. Due to hike in property rates, what is the amount of home loan a consumer apply for?
5. Which income slabs consist
6. Is there any feedback conducted on your behalf and if yes what is the satisfaction rate on
the. Home loan process conducted by your bank?