CHAPTER – 1

INTRODUCTION AND DESIGN OF STUDY

Page 1
1.1 INTRODUCTION

Home is an integral part of an individual, who since his/her birth and

childhood. Dreams to have living home to accomplish that, is how the
home loan comes in to earn of things. Buying a home is a dream for
everyone. Owing to the rising properties, it has almost become impossible
to an average earning person to buy a home on a lump-sum payment.
Therefore, the concept of home loan has come in to existence. Therefore
plethora of housing finance companies and equal number of banks offer
home loans.

Housing is one of the basic needs of an individual in terms of safety,

security, self-esteem, social status, satisfaction and achievement. As a
human being, an individual needs his own space and privacy, which can be
provided by the ownership of a house. The home is the basic unit of
society. Home provides a platform to the family and the family is the most
important social institution, which leaves its imprint on an individual for
whole life. The life of a human being cannot be imagined without safe,
secure and comfortable shelter. The need for shelter is one of the
fundamental requirements, which needs to be attended at priority.

An average person cannot afford to pay cash for something has

expensive as a home, lenders began offer loan for the difference between
purchase price of a home and the cash down payment supplied by the
buyer. These loans were interest only loans of between 5 and 10 years that
were due in full at the end of the each term or save up enough money to
pay off the loan in the mean time.

A loan simply means an advanced financial assistance to a

person in buying or constructing a house or a flat. It is the amount used for
purchase a primary or investment residence, the owner of the property

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transfers the title to the lenders on the condition that the title will be
transfer back once the payment has been made. Interest rate will be paid
along with the principal amount of loan.

Page 3
1.2 STATEMENT OF THE PROBLEM

A study about the topic "A BENEFICIARY CENTRIC STUDY ON

HOME LOAN AND ITS IMPLICATIONS IN SREEKARIYAM". Is a
concept of studying about the home loans and its impact in our society
with special reference to Sreekariyam. Building a home is a big dream of
every person in their life. Everyone wants to construct a house which is the
basic need of every human. People build their dreams with the maximum
use of their effort.

Man is unsatisfied in these world, once the basic needs achieved

we go for bigger dreams, it is not different in these case also, starting from
a small shelter but it ends to big palaces. Everyone needs to keep their
status, so they spend lakhs for homes. But to build high social status
homes, many of them depends banks or same type of financial institutions
to get home loans. One of the important problems faced by our society is
the repayment of such big amount of borrowed funds and sometimes it
creates some kind of social issues.

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1.3 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE;

To study about the "Beneficiary centric study on home loan and its
implications in Sreekariyam".

SECONDARY OBJECTIVES;

● To find out good and bad effects of home loans.

●To find out whether home is becoming a life burden or not.
● To find out borrower's satisfaction in home loans and its terms.

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1.4 SCOPE OF THE STUDY

Home loan is the finance borrowed from a bank or financial institution

to Buy or modify a residential real estate property. The scope of the present
study is limited to home loan borrowers in Sreekariyam. The study aims to
understand borrower's satisfaction in home loans and study the good and bad
effects of home loan.

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1.5 RESEARCH METHODOLOGY

Research methodology, in related with this project is...

RESEARCH DESIGN;

This study is large and descriptive one. It involves collection, measurement

and analysis of data.

POPULATION;

Population for this study is those people from the Sreekariyam, who
borrowed money from the lenders for home construction. A study about all
the loan receivers in area is not possible. So for convenience from this high
population we consider some respondents based on some sampling
techniques.

SAMPLE METHOD;

For completing this study "convenience sampling" method is used for data
collection.

SAMPLE SIZE;

A sample of "150" loan takers from the entire Sreekariyam is the sample
size of the study. It is not possible to study all the loan takers from the area.

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1.6 SOURCE OF DATA

A researcher can collect his required information from two sources namely
primary and secondary. The data collected for this study can be classified
as follows

> Primary data

> Secondary data.

PRIMARY DATA;

The primary data are useful for knowing opinion, qualities and attitudes of
respondents.

Primary data are collected through the following method...

> Questionnaire

SECONDARY DATA;

Secondary data are those which have been collected by some other person
for this purpose and published. Here the secondary data are collected from
the newspapers, books, and internet.

TOOLS FOR ANALYSIS;

* SIMPLE PERCENTAGE ANALYSIS

In this method it make numerator as respondents and denominator as total

sample size and will multiply with 100.

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*CHI- SQUARE TEST

Is the statistical test based on the test statistic follows chi square distribution.

=SUM (0-E)2 /E

* CHARTS, DIAGRAMS AND TABLES

For the purpose of making analysis researcher used the various charts and
diagrams...

1. Column chart.
2. Pie diagram.
3. Bar diagrams.

HYPOTHESIS OF THE STUDY

The entire experiment and research revolves around the research hypothesis
(H1) and the null Hypothesis (H0). So making a mistake here could ruin the
whole. This is one of the most difficult stages in research study. In fact it is
not as difficult as it looks. It is just about making sure that you are asking
the right questions and wording your hypothesis statement correctly.

For this research study the hypotheses are...

(A)H0 = There is no association between the interest rates of home
loans and satisfaction of borrowers.
H1 = There is an association between the interest rates of home loan
and borrower satisfaction level.
(B)H0 =There is no association between the monthly income of the
borrower and sources of home loan.
H1=There is an association between the monthly income of the
borrower and sources of home loan.

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1.7 LIMITATIONS OF THE STUDY

1. People are always not ready to open their minds, especially this study is
something which is related to their status, and this is a major difficulty in
study.
2. Respondent's response behavior is a major limitation of the study.
3. Lack of accurate information affects reliability of the report.
4. Attitudes of respondents towards the researchers especially to students, it is
an important limitation.
5. The illiteracy of the respondents is an important limitation.
6. The secondary data collected for the study may be affected by the
accuracy of such sources.
7. The result of the study depends upon information given by the borrowers
of home loan.

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 CHAPTER - 2

REVIEW OF LITERATURE

Page 11
 REVIEW OF LITERATURE
Review of literature helps a researcher to get acquainted with his/her
selected research problem and also may provide some guidelines in
selecting a proper research methodology. In the following paragraph several
similar studies undertaken earlier are reviewed.

Housing finance all over the world are undergoing tremendous

changes and have acquired great significance in the present day context of
liberalization, globalization and modernization of the society. A good
number of research works have been undertaken by individual researchers
and institutions invariably dealing with different aspects of housing finance.
A brief review of the major studies which are particularly pertinent for the
present study is attempted here. By analyzing the question of housing in the
country,

1. Nair,K.N.S and S.G. Jayachandra Raj (1994) observed that Kerala

stands unique in the realm of growth and development. But, even in the
wake of state’s rapid expansion in the social sector, it is to be observed
that Kerala projects a dichotomy picture of development comprising of
feeble economic structure along with developed social culture.
2. Narayan and MohanKumar (1994) presented a paper analyzing the
housing problem from the resource base point of view and attempts to
highlight the need for evolving contextual technologies that use locally
available materials that can act as alternative to the presently popular
building materials.
3. Ananda Bose, C.V (1996) emphasized the need for propagating cost-
effective and environment friendly building technology. He also
underlined the need for bringing out a new design and construction
culture, avoiding costs and eliminating wrong notions.

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4. Sharma,A.K.(1996) highlights the fact that the challenges of
homelessness and urban slums are largely the spill over problems of
inadequate rural habitat. He stated that the housing is closely connected
with growth of population, modernisation, poverty, development and
information and the poor people of India, lack all basic facilities as they
are incapable of meeting the rising cost of building materials. He also
opined that Indians cannot solve the housing problem without a strong
political will and properly designed strategies.
5. Krishna, R.R and V.V.Ganesh Murthy (1998) observed the views that
there is a vast scope for housing promotion in India and the banks and
housing finance companies can play a vital role in the promotion of
housing. They suggested that reduction in the housing loan interest and
simplified procedure for sanctioning housing loan will boost the
construction of houses.
6. Paul Diamond, T (1998) observed the housing shortage in the country
and highlighted the role of the HFIs in national housing. His observations
include introducing flexibility in designing products and systems,
development of mortgage market and development of suitable products to
satisfy wide range needs of borrowers.
7. Madhusudhanan V (1998) studied the part played by governmental and
nongovernmental agencies in mitigating the housing problem especially
the weaker sections of society in Kerala. He assessed the different
housing schemes and policies of the government and also evaluated its
impact on the socially marginalized people in state.
8. Muthuram,P (1999) opined that housing finance, particularly retail
housing finance is acquiring great importance because of government’s
incentives and stability in prices. Housing finance offers safe, secured,
profitable and diversified asset portfolio.

Page 13
9. Parimal.H.Vyas and Sandip.K.Bhat (1999) who analyse the major
housing finance institutions, critical issues of housing finance, interest
rates and the repayment techniques observed that the restructuring of
housing finance institutions by developing appropriate marketing
orientation programmes are necessary to face the challenges in the present
day world of liberalisation and globalization .
10. Krishnamurthy, K.V (2002) in his article titled “Housing Finance: A
Safer Avenue” raise a question- why banks are keen on housing finance
sector today? He highlighted the reasons for this changed phenomenon as
the present market condition which forces the banks to park this surplus
resources profitably; housing finance is relatively safe and secure gives
better average yield; to tap the potential as a result of change in life style
wide publicity by banks and financial institutions, demand from wider
reach (smaller towns) all have resulted in attracting banks to enter into this
sector. He feels that there is small hope for business for the banks in
housing segment. Further, the mortgage-backed nature of housing finance
helps the bank to look for securitisation, which generate cash flow and
thereby improve capital adequacy.
11.Mistry,K.M (2002) Managing Director, HDFC, in his article, “Future
Perfect”, emphasizes the importance of housing sector in the economy by
stating that it has backward and forward linkages with as many as 269
industries and is the second largest employment generator in the country.
He affirmed that HDFC is superior to Banks in terms of its ability to
render expert counseling and legal advisory services. He also stated that
HDFC has an effective risk management technique so that its spread
remains protected. Though banks have access to low cost funds, it is
totally unstable and over a period of time it will face an issue of mismatch
by borrowing short and lending long.

Page 14
12.M. Mahadeva (2004) A research article entitled "Housing Problem and
Public Action: Continued Incompatibility Experience from a South Indian
State"In this article, the author has analyzed the nature and distribution of
the housing problem in Karnataka and examined how the state has
addressed this issue. From the analysis it is found that Karnataka is not an
exception to the general rule that housing strategies, which were evolved
over decades, have not taken the direction expected. By and large, the
sector policies pursued were only ad hoc without a clear locus. Lack of
comprehensive policy to guide housing development on equity principle
together with ad- hoc approaches, have failed to deliver housing benefits
and develop critical housing inputs on a sound footing with equal
opportunities for all need based policy interventions, hassle free input
delivery mechanism existing housing shortage and rural-urban disparities
substantially.
13.K. Netal. Rao (2005) A Paper entitled "Retail Banking - Emerging Issue
in Home Loan" In this paper the author revealed that during 2002-03
housing loans by banks grew at a hefty growth rate of more than 100%.
The factors that contributed to this aggressive growth in the portfolio of
housing loans of banks and HFC are: Tax intensives on repayment of
principal and interest, rising income level of middle class, falling interest
rate, stable real estate prices, easy availability of housing loans, low
returns on the investment opportunities available in the market. They also
concluded that although there is strong growth in housing loans by
financial situations in India, we are still behind the developed countries in
terms of housing loans to GDP ratio.

Page 15
 CHAPTER – 3
THEORETICAL FRAME WORK

Page 16
 THEORETICAL FRAME WORK
HOME LOAN

INTRODUCTION;

Home is an integral part of an individual, who since his/her birth and

childhood, dreams to have living loan to accomplish that, is how the home
loan comes in to scheme of things. Buying a home is a dream for everyone.
Owing to the rising properties, it has almost become impossible to an
average earning person to buy a home on a lump sum payment. Therefore,
the concept of home loan has come into existence. Therefore plethora of
housing finance companies and equal number of banks offer home loans.
The task of selecting one company and one offer for home loan amidst
thousand available option have become a very complex task owing to the
burgeoning housing finance market in the country. Apart from these
intricate business jargons and technicalities that make this task more
difficult. In this study, I also propose to give the basic information of home
loan technicalities, so that when a person applies for the home loan, he/ she
can understand the basic and help themselves remain away from the duping
elements in the market.

Definition and Meaning of Home Loan

Home Loan;

The section 5(b) of the banking regulation act 1949 defines banking as
"accepting for the purpose of lending investment of deposit of money from
the public. Repayable on demand or otherwise and withdrawal by cheque,
draft or otherwise. A “home loan" is a credit to a consumer for the purchase
or transformation of the private immovable property he owns or aims to

Page 17
 acquire secured either by a mortgage on immovable property or by surety
commonly used in a Member state for that purpose".

A home loan requires you to pledge your home as the lender's security for
repayment of your loan. The lender agrees to hold the title or deed to your
property until you have paid back your loan plus interest. In simple words a
home loan is a fund or the loan which buyer has taken from any financial
institution or bank to purchase a new home at an agreed rate of interest
specified during the contract.

Home loan is the finance borrowed from a bank or financial institution to

Buy or modify a residential real estate property. Any resident or non-
resident individual who is planning to buy a house in India can apply for
home loan. If you have decided to buy a property in the near future you can
even apply for a loan before you selected property.

IMPORTANCE OF HOME LOAN;

• The need for home loan arises not because of property prices are
heading upwards all the time but because home loans make great sense
from a long-term saving perspective. Not only are home loans a handy
tool for all the common man to own a roof over his head but they also
help save money in the long run.
• With skyrocketing real estate prices, people are increasingly opting for
housing loans to acquire their dream home. Interest rates are coming
down all the time and the banks and the housing finance companies are
literally falling over each other to lure the prospective home -seekers.
• Notwithstanding the tax breaks and generous lending rates, allot of
people still cannot arrange resources for the down payment. Which
comes out to be at least 15 of the property value? Taking concise of the
Page 18
 situation, banks are coming with home loan products called "zero down
payment loans" wherein 100 per cent funding is provided for select
properties. These lucrative offers are other major other reasons for why
people are opting for loans. Best way to avail.
• Even if one can afford to buy a home with one's own money, home loans
should be availed because they act as good saving instrument. According
to industry estimates, the long term average return in investing in a home is
about 20% P.A. While the average cost of borrowing funds in the market
today is about 7% P.A (considering all tax breaks).

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 residency only.
After gaining experience and more important to be competitive, lenders now
approves loan now even 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 purpose.

2. Home extension loan;

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

Page 19
 • 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/tilling,
additions like built-in cup boards/ shelves, internal repairs including
doors/windows, etc. a loan for purchase of house hold furniture including
space saving furniture (kitchen racks, cup boards, etc) may also sanctioned
as a home improvement loan.

4. Home loan purchase for housing site;

Here again initially many banks did not approve such loans. However,
market forced now made this a universal feature of home loan market.
However, care has been taken in structuring the schemes for avoiding
finance for purchase of land for speculative ration 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.

6.Bridge loan;

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

Page 20
 7. Balance transfer;

Balance transfer loans help customer to pay off an existing home loan and
avail the option of a loan with a lower rate of interest. Customer can transfer
the balance of the existing home loan to either the same banks or any another
banks.

8. Stamp duty loan;

These loans are sanctioned to pay the stamp duty amount that needs to be
paid on the purchase property.

9. NRI home loan;

This is a special home loan scheme for the Non - Resident Indians (NRI)
who wishes to build or buy a home or land property in India. They are
offered attractive housing finance plans with suitable reimbursement
options by many banks in the country.

Page 21
 CHAPTER – 4

DATA ANALYSIS
AND
INTERPRETATIONS

Page 22
 TABLE 4.1

AGE WISE CLASSIFICATION OF RESPONDENTS

SL.NO AGE NO. OFPERSONS PERCENTAG

E
1 Up to 20 0 0
2 20-30 13 9
3 30-40 26 17
4 40-50 63 42
5 Above 50 48 32
Total 150 100%
Source: Primary Data

FIGURE 4.1
AGE WISE CLASSIFICATION OF RESPONDENT

INTERPRETATION;
The above table and diagram shows that 9% peoples are belonging to age 20-
30, 17%respondents are belonging to age 30-40, 74% respondents are
belonging to age 40-50 and above 50, and 1% respondents are belonging to up
to 20.

Page 23
 TABLE 4.2

GENDER WISE CLASSIFICATION OF RESPONDENTS

SL.NO GENDER NO. OF PERCENTAGE

PERSONS
1 Male 127 85
2 Female 23 15
Total 150 100%
Source: Primary Data

FIGURE 4.2
GENDER WISE CLASSIFICATION OF RESPONDENTS

INTERPRETATION;

The above table and diagram shows that 85% of respondents are belonging to
Male category and 15% of respondents are belonging to Female category.

Page 24
 TABLE 4.3
MARITAL STATUS OF RESPONDENTS

SL.NO STATUS NO.OF PERSONS PERCENTAGE

1 Single 21 14
2 Married 129 86
Total 150 100%
Source: Primary Data

FIGURE 4.3
MARITAL STATUS OF RESPONDENTS

160
140
120
100 Married
80 Single
60
40
20
0
NO.OF PERSONS PERCENTAGE

INTERPRETATION;

The above table and diagram shows that 86% respondents are married (129)
and 14% respondents are belonging to the category of living single (21).

Page 25
 TABLE 4.4
EDUCATIONAL QUALIFICATION OF RESPODENTS

SL.NO QUALIFICATIONS NO. OF PERCENTAGE

PERSONS
1 BELOW SSLC 24 16
2 SSLC 47 31
3 HIGHER SECONDARY 43 29

4 GRADUATE&ABOVE 36 24
TOTAL 150 100%
Source: Primary Data

FIGURE 4.4

EDUCATIONAL QUALIFICATIONS OF RESPONDENTS

50
45
40
35
30
25
20
15 NO. OF
10
5 PERCENTAGE
0

INTERPRETATION;

The above table and figure shows that, 31% respondents are completed
secondary school leaving certificate and 29% respondents are passed higher
secondary and 24% are graduate and above category.

Page 26
 TABLE 4.5
OCCUPATION OF RESPONDENTS

SL.NO OCCUPATION NO. OF PERSONS PERCENTAGE

1 BUSINESS 27 18
2 PROFESSION 38 25
3 EMPLOYEE 52 35
4 SELF 33 22
EMPLOYEE
TOTAL 150 100%
Source: Primary Data

FIGURE 4.5
OCCUPATION OF RESPONDENTS

INTERPRETATION;

The above table and diagram shows that 57% respondents are belonging
to employees (Employee &Self employee) and 25% respondents are doing
some professional works, only 18% respondents are carrying any business.

Page 27
 TABLE 4.6
INCOME LEVEL CLASSIFICATION OF RESPONDENTS

SL.NO INCOME NO.OF PERSONS PERCENTAGE

1 Below 5000 2 1
2 5000-10000 30 20
3 10000-15000 77 52
4 Above 15000 41 27
Total 150 100
Source: Primary Data

FIGURE 4.6

INCOME LEVEL CLASSIFICATION OF RESPONDENTS

INTERPRETATION;

The above table and diagram are related with income level of respondents, most
of the respondents, 52% belonging to the income group of 10000-15000 and
27% of respondents are earning above 15000 and 1% of respondents
belonging to the category of earnings below 5000.

Page 28
 TABLE 4.7

MONTHLY EXPENSE WISE CLASSIFICATION OF RESPONDENTS

SL.NO EXPENSE NO. OF PERCENTAG

1 Below 5000 PERSONS
10 E 7
2 5000-7500 44 29
3 7500-10000 63 42
4 Above 10000 33 22
Total 150 100%
Source: Primary Data

FIGURE 4.7
MONTHLY EXPENSE WISE CLASSIFICATION OF RESPONDENTS

INTERPRETATION;

The above table and diagram are related with expense level of respondents
most of the respondents, 42% belonging to the expense group of between
7500-10000 and 29% of respondents belonging to 5000-7500 and 22% of
respondents are spending more than Rs. 10000/month only 7% peoples are
spending below 5000.

Page 29
 TABLE 4.8

TABLE SHOWING HOW LONG RESPONDENTS ARE LIVING IN

CURRENT HOME

SL.NO NO.OF YEARS NO. OF PERSONS PERCENTAGE

1 Below 1 YR 45 30

2 1-3 YR 63 42
3 3-6 YR 22 15
4 More than 6 20 13
Total 150 100%
Source: Primary Data

FIGURE 4.8

FIGURE SHOWING HOW LONG RESPONDENTS ARE LIVING IN

CURRENT HOME

INTERPRETATION;

The above table and diagram shows 28% of respondents are living more than
3 years in the current home and 72% of the people are using their current house
hold below 3 years.

Page 30
 TABLE 4.9
TABLE SHOWING CONSTRUCTION COSTS OF HOME

SL.NO COST OF NO:OF PERCENTAGE

CONSTRUCTION(IN PERSONS
LAKHS)
1 BELOW 5 27 18
2 5-10 74 49
3 10-15 32 21
4 ABOVE 15 17 12
TOTAL 150 100%
Source: Primary Data

FIGURE 4.9

FIGURE SHOWING CONSTRUCTION COST OF HOME

BELOW 5
5-10
10-15
ABOVE 15

INTERPRETATION:

The above table and related with the construction costs of households
Majority (49%) of respondents spend an amount of 5-10 lakhs for
construction and 12% respondents are amounted above 15 lakhs to complete
their dream homes work. Only 18% respondents made small homes with an
amount of below 5 lakhs.

Page 31
 TABLE 4.10
TABLE SHOWING THE SOURCE OF HOME LOAN

SL.NO TYPE OF BANK NO.OF PERSONS PERCENTAGE

1 PRIVATE BANK 31 21

2 PUBLIC BANK 77 51

3 CO-OPERATIVE BANK 33 22

4 HDFC 7 5

5 OTHER SOURCE 2 1

TOTAL 150 100%

Source: Primary Data

FIGURE 4.10
FIGURE SHOWING THE SOURCE OF HOME LOAN

INTERPRETATION;

Table and figure shows that 44% respondents are depending private banks for
home loans and 33% respondents are depending public banks for home loan
purpose.

Page 32
 TABLE 4.11

TABLE SHOWING REACTION OF LENDERS TOWARDS

CUSTOMERS REQUEST FOR LOAN

SL.NO OPINION PERCENTAGE

NO .OF
PERSON
I OPTIMISTIC 58 39
2 PESIMISTIC S
55 37
3 NUTRAL 37 24
TOTAL 150 100%
Source: Primary Data

FIGURE 4.11

FIGURE SHOWING REACTION OF LENDERS TOWARDS CUSTOMERS

REQUEST FOR LOAN

INTERPRETATION;
From the above table and figure it is found that 39% of respondents have got an
optimistic behavior from the lender and 37% of them felt pessimistic behavior
from the bank when they approach the bank at the first time.

Page 33
 TABLE 4.12

TABLE SHOWING OPINION ABOUT OTHER SOURCES OF

HOME LOAN AMONG RESPONDENTS

SL.NO CHOICES NO OF PERCENTAGE

1 NON BANKING 62
PERSONS 42
2 MONEY 57 38
3 CHIT FUND
LENDERS 23 15
4 OTHERS 8 5
TOTAL 150 100%
Source: Primary Data I

FIGURE 4.12

FIGURE SHOWING OPINION ABOUT OTHER SOURCES OF HOME

LOAN AMONG RESPONDENTS

INTERPRETATION;

The above figure and table shows that 42% of respondents will depend non
banking financial intuitions as other choice to raise their home loan. About 38% of
them have an opinion of depend money lenders for finance home loan. People are
also interested to raise funds through chit funds.

Page 34
 TABLE 4.13

TABLE SHOWING OPINION ABOUT PROCEDURES OF HOME

LOAN

SL.NO OPINION NO.OF PERCENTAGE

PERSONS
1 VERY SIMPLE 12 8
2 SIMPLE 17 12
3 NEUTRAL 24 16
4 DIFFICULT 62 41
5 VERY DIFFICULT 35 23
TOTAL 150 100%
Source: Primary Data

FIGURE 4.13

FIGURE SHOWING OPINION ABOUT PROCEDURES OF HOME

LOAN

INTERPRETATION;

Table and above showing figure describes customer’s opinion about procedures
of home loan. About 62 respondents felt, it was very difficult to raise a home
loan. But 29 respondents felt simple about the stages of home loan procedures.

Page 35
 TABLE 4.14
TABLE SHOWING AVAILABILITY OF FULL AMOUNT OF LOAN

SL.NO OPINION NO. OF PERSONS PERCENTAGE

1 YES 82 55
2 NO 46 30
3 SOMEWHAT 22 15
TOTAL 150 100%
Source: Primary Data

FIGURE 4.14
FIGURE SHOWING AVAILABILITY OF FULL AMOUNT OF LOAN

INTERPRETATION;

The above table and figure shows the availability of full amount of loan as they
requested. 55% of respondents have got full amount of loan and 30% of
respondents did not get full amount as they requested.

Page 36
 TABLE 4.15
TABLE SHOWING TYPE OF SECURITY FOR HOME LOAN

SL.NO SECURITY NO. OF PERSONS PERCENTAGE

1 LAND PROPERTY 58 39
2 BUILDING 7 5
3 BANK A/C 19 12
4 BANK LICENSE 12 8
5 OTHER VALUABLE 54 36

Total 150 100%

Source: Primary Data

FIGURE 4.15

FIGURE SHOWING TYPE OF SECURITY FOR HOME LOAN

INTERPRETATION;
From the above table and figure it is clear that respondents are given their land
property, Gold and other kind of valuables as major types of security.75% of
people used to give these as a security to grant loan.

Page 37
 TABLE 4.16
TABLE SHOWING INTEREST RATE OF HOME LOAN

SL.NO INTEREST RATE NO. OF PERCENTAGE

PERSONS
1 5-8 7 5
2 8-11 77 51
3 11-14 53 35
4 ABOVE 14 13 9
TOTAL 150 100%
Source: Primary Data

FIGURE 4.16
FIGURE SHOWING INTEREST RATE OF HOME LOAN

INTERPRETATION;
From the table and figure shows that 51 % of the respondents have taken their
home loans at an interest rate of between 8 to 11 but a number of 53 respondents
are borrowed loan from bank under 11-14% interest rate.

Page 38
 TABLE 4.17

TABLE SHOWING SATISFACTION IN INTEREST RATE OF HOME

LOAN

SL.NO OPINION NO.OF PERCENTAGE

PERSONS
1 HIGLY SATISFIED 0 0
2 SATISFIED 57 38
3 NEUTRAL 55 37
4 DISSATISFIED 20 13
5 HIGHLIY DISSATISFIED 18 12
TOTAL 150 100%
Source: Primary Data

FIGURE 4.17

FIGURE SHOWING SATISFACTION IN INTEREST RATE OF HOME

LOAN

INTERPRETATION;
Table and figure 3.17 gives a clear idea about respondent's satisfaction in interest
rates of loan. Only 38% of respondents are satisfied in interest rates. About 62% of
respondents are not or fully dissatisfied in interest rates of loan.

Page 39
 TABLE 4.18
TABLE SHOWING TYPE OF INSTALLMENT SYSTEM

SL.NO TYPE NO. OF PERSONS PERCENTAGE

1 WEEKLY 13 9
2 MONTHLY 93 62
3 HALF YEARLY 9 6
4 YEARLY 23 15
5 OTHERS 12 8
TOTAL 150 100%
Source: Primary Data

FIGURE 4.18
FIGIURE SHOWING TYPE OF INSTALLMENT SYSTEM

INTERPRETATION;
From the above table and figure it is found that 62% of respondents are following
monthly installment system and only 15% of them are following annual payment
system but there are some respondents they are following a daily payment system.

Page 40
 TABLE 4.19
TABLE SHOWING SATISFACTION IN INSTALLMENT SYSTEM

SL.NO LEVEL NO.OF PERSONS PERCENTAGE

1 HIGHLY 17 11
SATISFIED
2 SATISFIED 27 18
3 NEUTRAL 42 28
4 DISSATISFIED 47 32
5 HIGHLY 17 11

DISSATISFIED
TOTAL 150 100%
Source: Primary Data

FIGURE 4.19
FIGURE SHOWING SATISFACTION IN INSTALLMENT SYSTEM

INTERPRETATION;

Analysis of table and figure 3.19 depicts 29% of them satisfied in installments and
about 43% of the respondents are not satisfied.

Page 41
 TABLE 4.20
TABLE SHOWING DELAY IN INSTALLMENTS OF HOME LOAN

SL.NO OPINION NO .OF PERSONS PERCENTAGE

1 YES 38 25
2 NO 112 75
TOTAL 150 100

Source: Primary Data

FIGURE 4.20
FIGURE SHOWING DELAY IN INSTALLMENTS OF HOME LOAN

INTERPRETATION;

It is very clear from the above figure and table that is about 75% of respondents
are very clear in repayment of loan amount but rest of the respondents had delays
in repayment of installments.

Page 42
 TABLE 4.21

TABLE SHOWING REASONS FOR LATE PAYMENT IN

INSTALLMENTS OF HOME LOAN

SL.NO OPTIONS NO OF PERSONS PERCENTAGE

1 FAMILY PROBLEMS 82 54

2 BUSINESSPROBLEMS 16 11

3 JOB PROBLEMS 47 32
4 OTHER REASONS 5 3
Total 150 100%
Source: Primary Data

FIGURE 4.21

FIGURE SHOWING REASONS FOR LATE PAYMENT IN

INSTALLMENTS OF HOME LOAN

INTERPRETATION;
It is clear from the above analysis, Family problems were the most important
problem behind the late in payments; 32% of respondents have Job problems; it is
also an important factor causing into delay of payments.
Page 43
 TABLE 4.22

TABLE SHOWING SATISFACTION IN REPAYMENT OF HOME LOAN

IN MATURITY

SL.NO OPINION NO. OF PERCENTAGE

PERSONS
1 HIGHLY SATISFIED 17 11
2 SATISFIED 26 17
3 NEUTRAL 22 15
4 DISSATISFIED 66 44
5 HIGHLY 19 13
DISSATISFIED
TOTAL 150 100%
Source: Primary Data

FIGURE 4.22

FIGURE SHOWING SATISFACTION IN REPAYMENT OF HOME LOAN

IN MATURITY

INTERPRETATION;
From the table and figure 3.22 it is clear that majority of respondents (57%)
are not satisfied in maturity period given by the lender.

Page 44
 TABLE 4.23

TABLE SHOWING OPINION ABOUT ACTION TAKEN BY LENDER

AGAINST LATE PAYMENT OF INSTALLMENT

SL.NO OPINION NO OF PERSONS PERCENTAGE

1 YES 124 83
2 NO 26 17
TOTAL 150 100%

Source: Primary Data

FIGURE 4.23

FIGURE SHOWING OPINION ABOUT ACTION TAKEN BY

BANK AGAINST LATE PAYMENT OF INSTALLMENTS

INTERPRETATION;

Table and figure 3.23 made analysis about opinion of respondents about the
actions taken by the lender when they fails to meet installments, respondents
have the same opinion of "yes" and "no" for this question. 83% of respondents
said "yes" and rest of them said "no".

Page 45
 TABLE 4.24

TABLE SHOWING OPINION ABOUT SERVICES PROVIDED BY THE LENDER

SL.NO OPINION NO OF PERSONS PERCENTAGE

1 GOOD 23 15
2 VERY GOOD 42 28
3 AVERAGE 15 10
4 BAD 52 35
5 VERY BAD 18 12
TOTAL 150 100%
Source: Primary Data

FIGURE 4.24

FIGURE SHOWING OPINION ABOUT SERVICES PROVIDED BY THE LENDER

INTERPRETATION;
Respondents have somewhat same opinion for this question about half of
the respondents are satisfied in bank's services and 31% of them are not
satisfied in services of banker.

Page 46
 TABLE 4.25
TABLE SHOWING SATISFACTION IN LENDER'S RULES& POLICIES

SL.NO SATISFACTION LEVEL NO OF PERSONS PERCENTAGE

1 HIGLY SATISFIED 8 5

2 SATISFIED 17 11

3 NEUTRAL 22 15

4 DISSATISFIED 47 31

5 HIGHLIY DISSATISFIED 56 38

TOTAL 150 100%

Source: Primary Data

FIGURE 4.25

FIGURE SHOWING SATISFACTION IN LENDER'S RULES &

POLICIES

INTERPRETATION;
From the above table and figure it is clear that majority of respondents (69%) are
not satisfied in lender's rates only few peoples are satisfied in lender's rates.
Page 47
 TABLE 4.26

TABLE SHOWING OPINION ABOUT DEPENDING AGAIN THE SAME

LENDER

SL.NO OPINION NO OF PERSONS PERCENTAGE

1 YES 24 16
2 NO 29 19
3 DEPENDS UPON 97 65

SITUATION
TOTAL 150 100%
Source: Primary Data

FIGURE 4.26

FIGURE SHOWING OPINION ABOUT DEPENDING AGAIN THE SAME

LENDER

INTERPRETATION;
From the above table and figure it is found that respondents (65%) would meet
the same lender based upon the situation of the respondents.

Page 48
 .TABLE 4.27

TABLE SHOWING OPINION ABOUT DEPENDING BANKS FOR HOME

LOAN

SL.NO OPINION NO OF PERSONS PERCENTAGE

1 GOOD 15 10
2 VERY GOOD 9 D

3 AVERAGE 49 33
4 BAD 42 28
5 VERY BAD 35 23
TOTAL 150 100%
Source: Primary Data

FIGURE 4.27

FIGURE SHOWING OPINION ABOUT DEPENDING BANKS FOR HOME

LOAN

INTERPRETATION;
From the above table and figure it is clear that people are not interested in
depending banks for raising home loan finance, It is clear from the analysis about
51% of respondents are not feeling good to depend banks for home loan finance.

Page 49
 TABLE 4.28

TABLE SHOWING OPINION ABOUT IMPACT OF HOME LOAN IN

SOCIETY

SL.NO OPINION NO OF PERSONS PERCENTAGE

1 YES 64 43
2 NO 53 35
3 SOMETIMES 33 22
TOTAL 150 100%
Source: Primary Data

FIGURE 4.28

FIGURE SHOWING OPINION ABOUT IMPACT OF HOME LOAN IN

SOCIETY

INTERPRETATION;
Table and figure 3.28 shows that, about half of the respondents (35+22) are
thinking that situations leads social issues and 43% of believes home loans leads to
some kind of social issues.

Page 50
 Calculation of chi square test
(A) Interest rates of loan and satisfaction level in interest rates of loan

TABLE 4.29

Observed Frequency
Interest Highly frSatisfied Neutral Dissatisfied Highly Total
satisfied dissatisfied

5-8 0 6 1 0 0 7
8-11 0 46 26 5 0 77
11-14 0 5 28 11 9 53
Above 14 0 0 0 4 9 13

Total 0 57 55 20 18 150
Chi square = (0-E2/E)
O = Observed frequency

Page 51
 TABLE 4.30

Chi-square Table

Degree of Level of Table Value Computed Result

freedom significance Value

12 5% 21.026 95.228 Null

hypothesis is
rejected

H0 =rejected

So there is an association between interest rates of home loan and customer's

satisfaction in interest rates of loan (H1).

Page 52
 Calculation of chi square test

(B) Monthly income of the borrower and the sources of home loan

TABLE 4.31

OBSERVED FREQUENCY

MONTHLIY PRIVATE PUBLIC CORPORATE HDFC OTHER TOTAL

INCOME BANK

BELOW 5000 0 0 0 1 1 2

5000-10000 9 14 2 4 1 30

10000-15000 17 36 22 2 0 77

ABOVE 5 27 9 0 0 41
15000

TOTAL 31 77 33 7 2 150

Page 53
 TABLE 4.32

Chi-square Table

Degree of Level of Table Value Computed Result

freedom significance Value

12 5% 21.026 59.82 Null

hypothesis is
rejected

H0 =Rejected

So there is an association between the monthly income of the borrower and the

sources of home loan (H1).

Page 54
 CHAPTER - 5

FINDINGS, SUGGESTIONS

AND CONCLUSION

Page 55
 FINDINGS

 127 out of 150 respondents are Males.

 It is found from the analysis is that, majority of peoples are using home loan
facility, when they passed the age of 40.
 49% of respondents have raised more than 5 lakhs as home loan.
 People depends more on co-operative and public banks for home loan.
 Most of the Peoples felt that, it was not a good behavior from the lender
when they approach them for the first time for home loan.
 Procedures of granting home loans are very difficult to complete.
 It is clear that more than 50% of lenders are ready to provide full amount of
loan as per the request of borrower.
 It is found that land property and valuables are the common types of security
used for grant home loan.
 86 % of lenders levying a range of 8-14 as home loan interests.
 Majority of the respondents are not satisfied in interest rates.
 62% of the respondents are following monthly installment scheme.
 Most of the respondents are not satisfied in current installment system.
 112 respondents out of 150 are clear in following their installments.
 Family problems are the major reason behind the delay in payments of 54%
respondents.
 It is found that borrowers are not satisfied in maturity period given by the
lender.
 47% of the respondents are not satisfied in services provided by the lender.

Page 56
 It is clear from the analysis is that; at a certain level borrowers cannot accept
the terms and policies of the lender in related to home loan.
 It is clear from the study that respondents would depend the same lender on
the basis of situation only.
 77% of the respondents feel that, it is not good to depending banks for home
loans.
 It is found from the chi square analysis that there is an association between
interest rates of loan and satisfaction of respondents in interest rates.
 It is found that, 53% of people feel that home loans leads to some kinds of
social issues.
 It is found from the chi square analysis that there is an association between
monthly income of the borrower and sources of home loan.

Page 57
 SUGGESTIONS

 Lenders should simplify procedures of home loan.

 Lenders’ services related to home loan should be improved.
 Government should bring uniformity in interest rates of home loan.
 Authorities must conduct awareness programs about home loans and its
consequences.
 Borrowers should be aware about their repayment capacity before raising
home loan.
 Authorities should take strict actions against exploitation of customers by
lenders.
 Government should promote housing development through different
beneficial schemes.
 Borrowers should be aware about the terms and conditions of home loan.
 Government should provide adequate financial assistance to rural back
warded peoples for housing development.

Page 58
 CONCLUSION

This research made an attempt to the beneficiary centric study on home loan
and its implications in Sreekariyam. Borrowers of home loans are facing lot of
problems in today's competitive world.

The finding of the study indicates that the respondents are not satisfied
with the current home loan facility. They are not well satisfied in interest rates
of loan, maturity period of repayment, and they felt very difficult in completing
procedures of home loan. From the study we can understand that home loan
creates social issues.

The aggregate findings of the study and the suggestions are presented in
these reports which will be an eye-opener to the concerned lenders for
improving the performance and ensure providing of better service to their
customers. The study confined only to Sreekariyam, the same study can be
conducted in other areas for new findings and suggestions which will be an eye-
opener to the concerned authorities.

The present study measured, only contains customer's feelings and

attitudes towards home loans. Still many areas such as services of lenders,
actions of lenders towards delays, difference between private and public sector
banks in home loan facility, emerging trends in home loan mortgages, etc left
out from the preview of my study. These areas can be exposed as scope for
further research.

Page 59
BIBLIOGRAPHY

Page 60
 BIBLIOGRAPHY

BOOKS;

> Kothari. C.R (2005) "Research Methodology Methods and

Techniques". 4th edition, new age international publishers, New Delhi.
> DR. Mahasweri. S N and Dr. Mahasweri. S K, Banking law and
practice. Published at Delhi, Kalyani publishers, 2010, 13 l revised
edition.
> Gomes Clifford, Banking and Finance, Theory and Practice, New
Delhi, PHI learning Pvt Ltd, 2011.
> Misra Shukavinder, Banking Law and practice, Published at Ram
Nagar New Delhi, Publisher S. Chand & company Ltd, 2012.
> Gordon E & Natarajan k, Banking theory Law and Practice, Himalya
Publishing House, 2008, 21st revised edition.

WEBSITES;

> www.bankbazar.com/home-loan.html

> www.icicibank.com/personal-banking/loans/home-loan/index.page
> https://www.sbi.co.in/portal/web/personal-banking/home-loans

> https://en.rn.wikipedia.org/wiki/home equity loan

Page 61
APPENDIX

Page 62
 QUESTIONNAIRE

Dear Sir,

As part of M.B.A program under K..T.U University, I SARATH S

NAIRis undergoing a project work on "A BENEFICIARY CENTRIC
STUDY ON HOME LOAN AND ITS IMPLICATIONS IN
SREEKARIYAM ". I would much oblige if you kindly share your view and
opinion through this questionnaire, I also assure you that information provided by
you will be kept as highly confidential. Opinion through this questionnaire,

1. Name :
2. Age :
Gender :
Marital status :
Educational qualification:
Occupation :
3. Monthly income
Below 5000 5000-10000

10000-15000 Above 15000

4. Monthly expense

Below 5000 5000-7500

7500-10000 Above 10000

5. How long are you living in this house?

Page 63
 Below 1 yr 1-3 yr
3-6 yr More than 6

6. How much would it cost to construct your home? (Rupees in Lakhs).

Below 5 5-10

10-15 Above 15

7. From which source you brought home loan?

Private bank Public bank

Co-Operative Banks

HDFC Other sources

8. How was lender's reaction towards your first attempt for grant home loan?
Optimistic Pessimistic Neutral
9. If banks were not ready? What would be your next choices to meet your
finance needs?
Financial institutions (non banks) Money lenders

Chit funds other sources

10. How did you felt the procedures of granting a home loan?

Very simple Simple Neutral

Difficult Very difficult

11. Did you get the full amount of loan as you requested?

Page 64
 Yes No Somewhat

12. What kind of securities is provided to grant home loan?

Land property Building

Bank account Business license

Other valuables

13. At what rate of interest lender granted home loan? (In percentage)

5-8 8-11 11-14 above 14

14. Express your level of satisfaction towards interest rate?

Highly satisfied Satisfied Neutral

Dissatisfied Highly dissatisfied

15. Type of installment system?

Weekly Monthly

Half yearly Yearly

16. Express your level of satisfaction towards installments system?

Highly satisfied Satisfied Neutral

Dissatisfied Highly dissatisfied

17. Did you made any delay in installments?

Yes No

18. What was the most important reason behind the delay of installments?

Page 65
 Family plans Business problems

Job problems Other reasons

19. Express your level of satisfaction towards the maturity period of repayment?

Highly satisfied Satisfied

Neutral Dissatisfied

Highly dissatisfied

20. Do you think, the lender will take any kind of strict actions, when you fail to
meet lender's requirements?

Yes No

21.What is your over all opinion about the services provided by your lender?
Very good Good Average
Bad very bad
22. Are you satisfied with the policies and rules of lender towards home loan?
Highly satisfied Satisfied Neutral
Dissatisfied Highly dissatisfied
23. If you want to raise further amount of loan, will you meet the same lender?

Yes No Depends upon situation

24. Express your opinion about depending banks to grant home loan?

Very good Good Average

Bad Very bad

25. Do you think home loans leading in to some kind of social issues in our society?

Yes No Some times

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Page 67