ABSTRACT

A home loan is a type of loan provided by banks or other �inancial institutions to help
individuals purchase a house or a property. The loan is typically secured against the
property being purchased and is repaid over a period of time through regular instalments.
Home loans may have �ixed or variable interest rates and may be offered for different
tenures, depending on the lender and the borrower's eligibility. In India, the home loan
sector has a long history and has been regulated by the National Housing Bank since 1988.
The sector has undergone signi�icant growth and evolution over the years, with the
introduction of various initiatives to promote affordable housing and the recent impact of
the COVID-19 pandemic leading to changes in the sector.

pg. 1
INTRODUCTION

Home is an integral part of a human being, who since his childhood, dreams to have living
space of his own. Once in a lifetime investment requires loan to do it and that is how the
home loan comes into scheme of things. Buying a home is dream for everyone. Due to the
rising price of properties, it has almost become impossible for an average earning person
to buy a home through lump sum payment. Therefore, the concept of home loan has come
into existence. There are plethora of housing �inance institutions and banks both in public
and private sector which offer home loans. Choosing one institution and one offer for
home loan amidst the thousands available options have become a very complex task in
our country. Apart from this, there are intricate business jargons and technicalities that
make this job more tough and dif�icult. Through this study, I propose to identify the
critical factors impacting the growth and distinguishing the growth pattern in home loan
portfolio particularly in public sector banks in India.

A home loan, also known as a mortgage, is a type of loan offered by banks and other
�inancial institutions to help individuals purchase a home. The loan is secured by the
property being purchased, which means that the lender can take possession of the
property if the borrower fails to make the required payments.

Home loans typically have a long-term repayment period, usually spanning 15 to 30 years,
and come with an interest rate that can be �ixed or variable. Fixed-rate home loans have
a �ixed interest rate for the entire loan term, whereas variable-rate home loans have an
interest rate that can �luctuate over time.

When applying for a home loan, the borrower typically has to meet certain eligibility
criteria, such as having a stable income and a good credit score. The lender will also
consider factors such as the borrower's debt-to-income ratio, employment history, and
the value of the property being purchased.

pg. 2
Overall, a home loan can be a useful �inancial tool for individuals who are looking to
purchase a home but do not have the funds to do so outright. However,
it's important to carefully consider the terms and conditions of the loan and ensure that
the borrower can make the required payments over the long term.

Retail banking has been popular segment to enter into for many banks. In the retail
banking, housing sector has been promising segment which is promising a
comprehensive growth rate about 30 per cent for the next �ive year. With the government
keen on infrastructure development and announcing various tax sops housing loan
segment has been a tempted area for many banks to enter into housing sector can be
bifurcated into organized and unorganized segments with the unorganized segment
accounting for over 75 per cent of the housing units constructed. During the past 4 – 5
years the housing sector helped by the growing housing �inance industry has witnessed
signi�icant development.

Housing in India The housing is one of the basic needs of the people as it ranks next to
food and clothing. A certain minimum standard of housing is essential for a healthy and
civilized living. Thus, the priority has to be given for the development of housing in a
country. The human settlements have a lot of impact on environment. It is a tool for
modern economic development. The census records of India exhibits that there was no
de�icit-housing problem in India till the �irst half of the century. In 1901, there were 55.8
million houses for 54 million households showing a surplus of 1.8 million houses. This
surplus situation continued till 1941. It was only after 1951, the de�icit trend has started
and is continuing with an escalating magnitude. In 1971, total number of households was
100.4 million and the number of houses was 90.7 million, showing a de�icit of 9.7 million.

pg. 3
The housing shortage in 1991 was about 31 million units. The housing shortage during
2001 was 41 million. The estimated housing stock requirement in the country by 2021 is
about 77 million in urban areas and 63 million in rural areas. The increasing number of
houses and a rising trend in the size of the households has contributed to the shortage of
housing stock in the urban areas. Only 20% of the Indian population lived in urban areas
in 1970 (UNDP 1998). The urbanization is expected to increase still. This resulted in an
estimation of 36% of the population to live in urban areas by 2015. In India, there is a
very widening gap between the supply and demand for housing. There is an urgent need
to modify the policy on one hand and look for an innovative approach for construction of
houses on the other to reduce the de�icit. The Government of India (GOI) had introduced
schemes and projects for housing problem in every �ive-year plans. The National housing
Policy formulated by government of India takes into account the developments on
national and international scene on shelter sector. The adoption of National Housing
Policy by the Parliament in 1994 was a landmark step in promoting housing development
in the country

pg. 4
(1.1) HISTORY

Home loans have a long history in India, with the �irst housing �inance company, the
Housing Development Finance Corporation (HDFC), established in 1977. At that time,
home loans were mainly provided by banks, but over the years, non-banking �inancial
companies (NBFCs) have also entered the market, making it more competitive.

In the early years, the housing �inance sector was largely unregulated, which led to some
issues such as high interest rates and predatory lending practices. To address these issues,
the National Housing Bank (NHB) was established in 1988 as a regulator for the sector.
The NHB introduced standardized policies and guidelines for housing �inance companies
and helped to promote affordable housing.

In the 1990s, the Indian government launched several initiatives to boost the housing
sector, including tax incentives for homebuyers and the establishment of the HUDCO
(Housing and Urban Development Corporation) and the National Housing and Habitat
Policy. These measures helped to increase the availability of housing �inance and promote
the construction of affordable housing.

In the early 2000s, the housing �inance sector in India experienced rapid growth, driven
by a combination of factors such as increasing demand for housing, a growing middle
class, and a favourable regulatory environment. Banks and NBFCs started to offer a range
of home loan products, such as adjustable-rate loans, �ixed-rate loans, and hybrid loans.

In recent years, the Indian government has launched several initiatives to promote
affordable housing, such as the Pradhan Mantri Awas Yojana (PMAY), which aims to
provide affordable housing for all by 2022. Under this scheme, eligible bene�iciaries can
avail of subsidies on home loans.

pg. 5
The Reserve Bank of India (RBI) has also introduced several measures to regulate the
housing �inance sector and protect consumers. For example, in 2019, the RBI mandated
that banks link their home loan interest rates to external benchmark rates, which would
make home loans more transparent and predictable for borrowers.

However, the COVID-19 pandemic has had a signi�icant impact on the housing �inance
sector in India, with many borrowers facing �inancial dif�iculties due to job losses and
reduced income. To mitigate the impact of the pandemic, the RBI introduced several relief
measures, such as a moratorium on loan repayments and an extension of the loan
repayment period.

Overall, the history of home loans in India has been marked by growth and evolution, with
the sector playing an important role in the country's economy and development.

pg. 6
(1.2) PUBLIC BANK PORTFOLIOS

A public bank portfolio in India typically consists of various types of assets, including
government securities, corporate bonds, loans, and other �inancial instruments. These
portfolios are managed by the bank's investment team, which is responsible for making
investment decisions that align with the bank's investment objectives and risk tolerance.

The portfolio of a public bank in India can be further broken down into various categories:
Government securities: These are debt securities issued by the Indian government to
�inance its �iscal de�icit. They are considered to be risk-free investments as they are
backed by the full faith and credit of the Indian government. The bank's portfolio may
include various types of government securities, including treasury bills, government
bonds, and other debt instruments.

Corporate bonds: These are debt securities issued by companies to �inance their
operations. They offer higher returns than government securities but also carry higher
credit risk. The bank's portfolio may include corporate bonds issued by various
companies across different sectors.

Loans: Public banks in India offer various types of loans to individuals, businesses, and
government entities. These loans are typically secured by collateral, such as property or
other assets. The bank's loan portfolio may include retail loans (such as home loans,
personal loans, and car loans), as well as commercial loans (such as working capital loans
and project �inance).

Other �inancial instruments: The bank's portfolio may also include other �inancial
instruments, such as mutual funds, exchange-traded funds (ETFs), and other securities.
These instruments offer diversi�ication and potentially higher returns, but also carry
higher risk.

pg. 7
(1.3) PRIVATE BANK PORTFOLIOS

A private bank portfolio in India typically includes a variety of investment options such
as equities, bonds, mutual funds, exchange-traded funds (ETFs), and other �inancial
instruments. Private banks in India cater to high-net-worth individuals and offer
personalized investment solutions to meet their unique needs and risk pro�iles.

The portfolio of a private bank in India can be further broken down into various
categories:
Equities: Private banks in India invest in stocks of companies listed on the stock exchange
to generate higher returns. They invest in a mix of large-cap, mid-cap, and small-cap
companies across different sectors based on their investment objectives.

Bonds: Private banks also invest in �ixed-income securities such as government bonds,
corporate bonds, and debentures to generate regular income for their clients. These
instruments offer lower returns compared to equities but carry lower risk.

Mutual funds and ETFs: Private banks in India invest in mutual funds and ETFs to
provide diversi�ication and �lexibility to their clients. These funds invest in a basket of
securities across different sectors and asset classes.

Alternative investments: Private banks also offer alternative investments such as real
estate, private equity, and hedge funds to provide higher returns to their clients. These
investments carry higher risk but also offer the potential for higher returns.The allocation
of assets within a private bank's portfolio will depend on various factors, including the
bank's investment objectives, risk appetite, and market conditions. The bank's
investment team will regularly review and adjust the portfolio to ensure that it remains
aligned with the bank's objectives and risk tolerance. Private banks in India also offer
customized investment solutions based on the speci�ic needs of their clients. They work
closely with their clients to understand their �inancial goals, risk appetite, and investment
horizon, and create personalized investment portfolios that align with their objectives.

pg. 8
(1.4) SBI POFILE

SBI (State Bank of India) Home Loan is a type of home loan provided by the State Bank of
India, which is the largest bank in India. SBI home loan offers a range of options to
borrowers, including loans for the purchase of a new house, construction of a new house,
and renovation of an existing house.

Eligibility criteria for SBI home loans include a minimum age of 18 years and a maximum
age of 70 years at the time of loan maturity. Borrowers must also have a stable income
and a good credit score. SBI offers home loans with both �ixed and �loating interest rates,
and the interest rates are based on the borrower's credit score and other factors.

SBI home loans come with a variety of repayment options, including EMI (Equated
Monthly Instalments) based repayments, step-up or step-down repayments, and �lexible
loan instalments. SBI also offers home loan balance transfer options for borrowers who
wish to transfer their existing home loan from another lender to SBI.

To apply for an SBI home loan, borrowers need to submit various documents, including
proof of identity, proof of address, income proof, property documents, and more. The loan
application process involves a detailed evaluation of the borrower's eligibility, credit
score, income, and property value.

Overall, SBI home loans are a popular choice for borrowers in India due to their
competitive interest rates, �lexible repayment options, and the reputation of SBI as a
reliable lender.

pg. 9
(1.5) ICICI PROFILE

ICICI Bank Home Loan is a type of home loan provided by ICICI Bank, which is one of the
largest private sector banks in India. ICICI home loan offers various types of home loans
to borrowers, including home loans for the purchase of a new house, construction of a
new house, and renovation of an existing house.

Eligibility criteria for ICICI home loans include a minimum age of 21 years and a
maximum age of 65 years at the time of loan maturity. Borrowers must also have a stable
income and a good credit score. ICICI offers home loans with both �ixed and �loating
interest rates, and the interest rates are based on the borrower's credit score and other
factors.

ICICI home loans come with a variety of repayment options, including EMI (Equated
Monthly Instalments) based repayments, step-up or step-down repayments, and �lexible
loan instalments. ICICI also offers home loan balance transfer options for borrowers who
wish to transfer their existing home loan from another lender to ICICI Bank.

To apply for an ICICI home loan, borrowers need to submit various documents, including
proof of identity, proof of address, income proof, property documents, and more. The loan
application process involves a detailed evaluation of the borrower's eligibility, credit
score, income, and property value.

Overall, ICICI home loans are a popular choice for borrowers in India due to their
competitive interest rates, �lexible repayment options, and the reputation of ICICI Bank
as a reliable lender.

pg. 10
(1.6) HOUSING FINANCE EVALUATION

Housing Development Finance Cooperation (HDFC) was the �irst housing �inance
company to setup operation in India in 1977.

After the National Housing Bank Act, 1987, was passed NHB came into existence as a
Subsidiary of the Reserve Bank (RBI) to generate housing �inance companies and provide
them with re�inancing to supplement their fund requirements.

Public sector banks were allowed to provide housing loans directly to retail clients only
in 1988. Home is one of the things that everyone one wants to own. Home is a dream of
every person that shows the quantity of efforts, sacri�ices luxuries and above all gathering
funds little by little to afford one’s dream. Home is a shelter to person where he rests and
feels comfortable. The demand of home loans has increased dramatically. For ful�il this
purpose many banks are providing home loans whether commercial banks or �inancial
institutions to the people who want to have a home. Part of the reason for this increase is
because the accessibility of loans has gotten bigger. Today, home loans are available in the
market at very low interest rates that meet the demands of many home buyers. A home
represents the largest asset that typically people have and this is why home loans have
such a huge impact in the loan market today. When a person purchases a home, he or she
will be investing a huge amount of cash. Many people can’t come up with the whole money
to pay out the house, while some others can’t even afford to invest money for the house
they will like to purchase. When getting a home loan, the individuals should consider
taking care of different aspects related to the home loan. The origin of western type
commercial Banking in India dates back to the 18th century. The story of banking starts
from Bank of Hindustan established in 1770 and it was �irst bank at Calcutta under
European management. It was liquidated in 1830-32. In 1786 General Bank of India was
set up. The Bank of Calcutta established in 1806 immediately became Bank of Bengal.

pg. 11
In 1921 these 3 banks merged with each other and Imperial Bank of India got birth.
Imperial Bank of India was later renamed in 1955 as the State Bank of India. Thus, State
Bank of India is the oldest Bank of India. After the independence, Reserve Bank of India
(RBI) was nationalized and given wide powers. The operations of all the banks in India
are controlled by the Reserve Bank of India. All the Indian banks are governed by the
Reserve Bank of India (RBI). After 1969, commercial banks are broadly classi�ied into
nationalized or public sector banks and private sector banks.

The State Bank of India (S.B.I) and its associate banks along with another 21 banks are
public sector banks. The private sector banks include a small number of Indian scheduled
banks, which have not been nationalized, and branches of foreign exchange banks. After
1991, the banking scenario has been changed completely. The impact of globalization and
privatization has affected work culture of both, public sector and private sector banks.
Further, in India there are two types of banks. The Public Sector and Private Sector Banks,
which can be differentiated on the basis of the following points – A public sector bank is
one where more than �ifty percentage of the stake is owned by the Government. All
nationalized banks are public sector banks.

There are a total of 27 public sector banks in India [19 nationalized banks + 6 State bank
groups (S.B.I. + 5 associates) + 1 IDBI bank + 1 recent Bhartiya Mahila Bank]. In a private
sector banks majority of the stake belong to private shareholders. These banks are
managed and control by private promoters. The old private sector banks are those which
existed before the nationalization in 1969. The new private sector banks are those which
that got their banking license after the liberalization in 1990s. There are 29 private sector
banks in India.

pg. 12
(1.7) TYPES OF HOME LOAN

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

a) Home Purchase Loan

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

b) Home Improvement Loan

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

c) Home Construction Loan

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

d) Home Extension Loan

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

pg. 13
e) Home Conversion Loan
It is that loan wherein the borrower has already taken a home loan to �inance his current
home, but now wants to move to another home. The Conversion Home Loan helps the
borrower to transfer the existing loan to the new home which requires extra funds, so the
new loan pays the previous loan and ful�ils the money required for new home.

f) Land Purchase Loan

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

g) Bridge Loan
Bridge Loans are designed for people who wish to sell the existing home and purchase
another. The bridge loan helps �inance the new home, until a buyer is found for the old
home. h) Top up loans: Enchasing the investment in a house without having to dispose it
off to fund various needs related to Higher Education, Purchase of Furniture and Business
Requirements. The maximum term of the loan is 10 years. Top up loans can give after 1 to
2 years of the �inal disbursement of the existing loan or upon possession/completion of
the existing �inanced property.

pg. 14
(1.8) THE ELIGIBILITY CRITERIA

How much can you borrow?

ICICI Bank

Home Loans range from Rs.2lakh to Rs. 7Crore. Your repayment period can vary from |
year to 30
years depending upon your capacity to repay.

SBI Bank
Home Loans range from Rs.50000 to Rs. 50Crore. Your repayment period can vary from
1 year to 30
years depending upon your capacity to repay

ELIGIBILITY:

Age: - Min: You should be at least 21 years of age.

Max: At the time of loan maturity, you should not exceed 65 years or your retirement age,
whichever is earlier.
Individual:
You should have completed a minimum of 2 years of service (with a minimum of 1 year in
the current job)
Businesspersons/Self-employed professionals:
You must have an established business or professional practice of not less than 3 years,
with a positive net worth and must have posted a net pro�it for the last 2 years.

Note: Minimum net take home salary of Rs. 6000/- p.m. for salaried employees or annual
income of not less than Rs. 1.20lakh for businesspersons/ self-employed professionals.
(Spouse/co-applicant's income can be included in the income computation).

pg. 15
1. Individuals who are salaried or self-employed, professionals, businessmen are eligible.
Proprietary concerns, HUF, partnership �irms or limited companies are not eligible for
this loan, where partners at their individual capacity is free to avail this loan.

2. As a customer to enhance the loan eligibility, all HFIs lay down conditions to who be co
applicants, all co-owners to the property should necessarily be co-applicant. Income of
the co-owners can be clubbed

3.The minimum age for the applicant and the co applicant to become eligible for the
commencement oft eh loan is 23 years, and co applicant can be of |8 years of age if their
income is not clubbed to calculate the loan eligibility.

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

pg. 16
(1.9) DOCUMENTS INVOLVED IN EVALUATION OF HOME LOAN.

The documentation requirement for various categories of applicants depends on their

status. For this
purpose all HFIs segregate their employees in different categories. They are:

 Salaried
 Professional or Businessman

The criteria of evaluation changes according to their status. The general documents,
which remain same
for all the categories, are as follows:

I. Proof of Age
Any one of the following is considered for proof of age, they are:
Passport
Voter's ID card
PAN card
Ration card

2. Copy of bank statements for the last six months:

Bank statement for the last six months of all operating and salary accounts. Bank
statements for the
last six months of all current accounts, if self-employed. Any other photocopies of
investments held, if required by the HFIs.

pg. 17
3. Copy of latest credit card statement.

1.Passport size photograph

2. Signature veri�ication by your bankers.
3. Proof of residence:
Ration Card

PAN Card

Passport

Rent agreement if any, if you are currently staying on rent.

Allotment letter from your company if you are residing in company.

The documents required to be provided by the salaried class are as follows:

Salary slips for the last one month.

Appointment letter
Salary certi�icate
Proof of Employment:
The proof of employment is veri�ied by the

 Identity card issued by the employer

 Visiting card.

Employer's details (in case of private limited companies):

The employer's details are to be provided in addition to the above documents for
documents for private sector employee, they are:

pg. 18
 Name of promoters / Directors

Background of promoters / Directors

Number of employees

List of branches / factories

List of clients / Customers

Turnover of your employer

The documents required to be submitted by the businessmen as follows:

a. Last three years Pro�it & Loss Account Statement duly attested by a Charted Accountant
b. Last three years Balance Sheets duly attested by a Chartered Accountant
c. Last three years Income Tax Returns duly �iled and certi�ied by Income Tax authorities

Proof of Investments:

 Bank statements for the last six months of all current accounts.
 Any other photocopies of investments held, as required by the HF1.

The above are the various documents required by the businessman in addition to the
documents, which are common to the entire category.

The businessman is also judged on the basis of the business conducted by him, if his
business pro�ile is in the negative list, he will be thoroughly considered for his credibility
before dispersing loan, the organization and property location should not be in the
negative list. These are the additional documents which are required to be looked at
before going on for completing the pre sanction formalities with respect to dispersing of
the home loans to the business class.

pg. 19
(1.10) THE PARAMETERS INVOLVED IN HOUSING LOAN EVALUATION

There are a number of parameters on which the housing loans are built:

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 (ICICI has recently launched 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.

AMOUNT PAID BY THE FINANCER/ MARGIN REQUIREMENTS

The �inancer 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.

pg. 20
As a rule of thumb, depending upon the HFC, the prospective loan Secker has to cough up
15% - 20% of the loan amount as a down payment. For smaller amounts, this may not be
much, But for �igures running into lacks, this could make loads of difference.

For example: An apartment costing Rs. 10lacss may get 85 per cent �inancing. So,
customer has to arrange for the remaining Rs 1.5lacs.

Some banks however make way for the payment for 90% of �inancing and about 100%
�inancing for
some new projects, however they are subjected to a large number of factors and
constrains.

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 7.25% - 7.75%
to around 9%
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:

o Fixed interest rates

o Floating interest rates
Fixed interest rates remain �ixed over the tenure of the loan.
Floating interest rates are affected by the rates in the market, they �luctuate according to
the rates issued or changed by the RBI from time to time.

pg. 21
The �inance minister's diktat on home loans does not hold for private banks. Indias largest
home loan provider and second largest bank — ICICI Bank —on Tuesday hiked its home
loan by 1%. The bank has also increased its deposit rates.

As per the new rate structure, customer will have to pay 10.5% on the home loans with a
�loating rate, while the �ixed home loan will now invite an interest of 12.5%. With this
increase, the monthly instalment on an Rs. lakh loan for 20 years goes up by Rs70.

Some public sector banks do so only once in 12 months while some private sector lenders
do it as frequently as a quarter. Though the current interest rate quote maybe lower, over
the life of the loan, a

customer will be able saved more in the case of a lender who resets your �loating rate
more frequently.

The investors are also given the option of changing their option from �ixed rate loan to a
�loating rate loan, of course by paying a penalty.

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:

pg. 22
 Processing fee:

It's a fee payable to the lender on applying for a loan. It is either a �ixed 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.

Prepayment Penalties:

When a loan is paid back before the end of the agreed duration a penalty is charged by
some banks/companies, which is usually between 1% and 2% of the amount being pre-
paid.

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.

Others:

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

pg. 23
(1.11) Bene�its of Home Loan

There are several bene�its of taking a home loan, which include:

• Home ownership: One of the most signi�icant bene�its of a home loan is that it
allows you to own a home. Rather than paying rent every month, you can use the
loan to purchase a property and pay back the loan in instalments over a period of
time.

• Tax bene�its: Home loan borrowers can avail of tax bene�its on both the principal
and interest components of their home loan. Under section 80C of the Income Tax
Act, borrowers can claim a deduction of up to Rs. 1.5 lakh on the principal
component of their home loan. Additionally, under section 24, borrowers can claim
a deduction of up to Rs. 2 lakhs on the interest component of their home loan.

• Low interest rates: Home loan interest rates are typically lower than other types
of loans, such as personal loans or credit cards. This is because home loans are
secured by the property, which reduces the risk for the lender.

• Flexible repayment options: Home loan borrowers can choose from several
repayment options, such as �ixed or �loating interest rates, EMI-based repayments,
and �lexible loan instalments. This allows borrowers to choose the option that best
suits their �inancial situation.

• Long repayment tenure: Home loans typically have longer repayment tenures,
ranging from 5 to 30 years. This allows borrowers to pay back the loan over a
longer period of time, reducing the burden of large monthly payments.

• Appreciation in property value: Real estate is known to appreciate in value over

time, which means that the value of the property purchased with a home loan is
likely to increase over time. This can provide borrowers with a valuable asset that
can be used for investment or sold for a pro�it in the future.

pg. 24
• Overall, a home loan can be a smart �inancial decision for those looking to purchase
a home. It provides borrowers with a valuable asset and can offer several �inancial
bene�its such as tax savings, low interest rates, and �lexible repayment options.
However, it's important to carefully evaluate your �inancial situation and ensure
that you can comfortably afford the monthly payments before taking out a home
loan.

pg. 25
(1.12) How to Determine the Right Loan

Choosing the right home loan tenure is a signi�icant aspect. Most banks will allow you to
select tenure of 5-20 years, depending on your age and income. It is best to opt for a tenure
that will ensure that the loan is paid off before your retirement. However, you must also
understand that while choosing a short tenure will make your EMI high, it will reduce the
total interest that you pay to your bank. One must �ind a balance and then opt for a tenure
that best suits your �inancial state. For example, if you take a loan of Rs 10,00,000 at the
rate of 10.5% for 20 years, your EMI would be Rs 9,984 and the total amount that you
would be paying to your bank in these 20 years, including principal and interest would be
Rs 23,96,112. If you take the same loan of Rs 10,00,000 at the rate of 10.5% for 15 years,
then your EMI would be Rs 11,054 and the total amount that you would be paying to your
bank in 15 years, including principal and interest would be Rs 19,89,718. In the same way,
if you take the same loan amount at the same rate of interest for ten years, then your EMI
would be Rs 13,493, but you would be only paying Rs 16,19220 in ten years, that is
considerably less than what you pay when you choose tenure of 20 years. It is best that
you opt for a long tenure home loan that does not levy any penalty for prepayments

pg. 26
(1.13) What Happens When You Default on a Home Loan?

Contrary to the popular belief, a home loan default is not the end of the road; this is
especially true if you have maintained a clean credit history and record till date. If you are
unable to make regular payments towards your home loan because of an untowardly
situation such as loss of your job or an accident, then you must discuss your �inancial
predicament with your bank. Depending on your case and your relationship with the
bank, your bank might come up with some feasible solution for you. Depending on your
case, your bank may allow either debt rescheduling, deferring of payment, loan
restructuring, onetime settlement or a conversion of an unsecured loan into a secured
one. In the case of debt rescheduling, your bank might decide to increase the tenure of
your loan, thus allowing you some more time to repay your loan. Similarly, in the case of
deferring the payment, your bank may allow you temporary relief from payments for a
few months; this is usually done when the bank anticipates that the customer might have
an increased cash �low in the future due to a job change or similar circumstances. If none
of the above suggested solutions work for you, then the bank might initiate the process of
repossession of the purchased property for recovery of the outstanding dues. However,
banks initiate the repossession process only as the last resort to recover funds and they
usually give a notice to the customer before they do so. In the case of home loans, you are
given 60 days’ notice to come forward and settle the account. It might appear that
defaulting on a home loan may not be that serious, after all? Wrong. Defaulting of a home
loan can have serious repercussion on the �inancial stability of your family and your credit
history. So, as we urged earlier, please do ensure that you take adequate stock of your
�inancial health before taking a home loan.

pg. 27
(1.14) HOW TO COMPARE THE LOAN OFFERS OF VARIOUS BANKS?

Before you sign your home loan agreement, ask for home loan quotes and offer details
from as many banks and housing �inance companies as possible. You must also take the
time to ask important home loan related questions to the loan of�icers of all the banks. To
compare the loan offers of various banks, you must make a detailed note of the interest
rates, tenure, and projected EMI, provided by all banks. You must also make a note of all
additional charges such as administrative charges, processing fees, and hidden costs. If
any bank has offered to waive any charges for you, then you must make a note of the same
as well. Once you have all these details in place, you will have a clear idea of the options
that are cost-effective and within your budget. The next step is to check the reputation of
the bank on online forums or similar platforms. Do not get lured by lesser-known banks
with little or no reputation, as zeroing on the home loan service of such banks will prove
costlier in the long run. Remember to compare all the important features of the home
loans before you take the �inal call. (Note: All the major banks and �inancial institutions
have the details of the offered interest rates on their respective websites.)

pg. 28
(1.15) COMPARATIVE ANALYSIS BETWEEN SBI AND ICICI BANK
REGARDING HOME LOANS:

Interest Rates:
As mentioned earlier, SBI usually offers lower interest rates compared to ICICI Bank. The
interest rate on a home loan is a crucial factor as it determines the EMI amount and the
overall cost of the loan. The current interest rate for SBI's home loan starts at 6.70%, while
ICICI Bank's home loan interest rate starts at 7.15%. However, the interest rate may vary
based on various factors like the loan amount, credit score, and loan tenure.

Processing Fees:
The processing fee is the fee charged by the bank for processing the home loan
application. SBI charges a processing fee of up to 0.40% of the loan amount, while ICICI
Bank charges a processing fee of up to 1.50% of the loan amount. However, both banks
offer processing fee waivers and discounts from time to time.

Loan Amount:
SBI offers a higher maximum loan amount compared to ICICI Bank. SBI provides a home
loan of up to Rs. 7.50 crore, while ICICI Bank offers a home loan of up to Rs. 5 crore.
However, the loan amount may vary based on various factors such as income, credit score,
and repayment capacity.

Loan Tenure:
Both SBI and ICICI Bank offer a maximum loan tenure of up to 30 years. However, the loan
tenure may vary based on the borrower's age and other factors.

Prepayment and Foreclosure:

SBI allows prepayment of the home loan without any penalty, while ICICI Bank charges a
penalty of up to 2% on the outstanding loan amount for prepayment. In terms of
foreclosure, SBI charges a penalty of 0.5% to 1% of the outstanding loan amount, while
ICICI Bank charges a penalty of up to 2% of the outstanding loan amount.

pg. 29
2. RESEARCH METHODOLOGY

(2.1) OBJECTIVE OF THE STUDY OF HOME LOANS

 To study was mainly conducted to understand the concept of home loan scheme
and the eligibility criteria of the customers.

 To study is done to understand the documents involved in the home loan scheme
and the repayment methodology adopted by ICICI & SBI Bank and the HFC
(Housing Finance Corporations).

 To identify the factors that in�luence the decision to take out a home loan, such as
income, credit score, interest rates, and loan terms.

 To determine the impact of demographic and socioeconomic factors on the

likelihood of taking out a home loan, such as age, gender, education level, and
employment status.

 To analyse the satisfaction of customers and their awareness regarding services offered
by ICICI bank and SBI bank.

pg. 30
(2.2) SCOPE OF STUDY

The study covers a period of �ive years from 2011 to 2016. There are several reasons for
selecting this period.

 During the past 5 years the Bank has gone global as a result the company has
witnessed many economic and political changes.

 Company has undergone rapid changes in the past 5 years due to many policies
decisions relating to capital markets, banking sector & licensing policy.

 The study is limited to only ICICI Bank & SBI Bank This study is mainly related to
the individuals who are interested in taking home loans from banks to ful�il their
dreams.

 The study is mainly related to all the loans provided by ICICI bank & SBI Bank.

 Loan eligibility criteria: The study could compare the eligibility criteria for home
loans offered by SBI and ICICI Bank, such as the minimum and maximum age,
minimum income, credit score requirements, and employment status.

 Loan features: The study could analyse the features of home loans offered by both
banks, such as the loan amount, interest rates, loan tenure, processing fees,
prepayment charges, and late payment fees.

 Loan approval process: The study could compare the loan approval process of both
banks, such as the time taken to process the loan application, documentation
requirements, and the level of customer support provided during the loan
approval process.

 Customer experience: The study could analyse the overall customer experience of
borrowers who have taken home loans from SBI and ICICI Bank, including the level
of satisfaction with the loan application process, customer service, and post-loan
support.

pg. 31
(2.3) SOURCES OF DATA COLLECTION

The data were collected through annual report from sources that are secondary in
nature such as internet, magazines, websites, books, and journals.
Articles from Bank Bazaar.
SBI Regular Home Loan
You can use the SBI Regular Home Loan plan to buy a newly built home, a previously
owned home, or a property in the process of being built. You can also use the money to
build a house or renovate one that you already own.
Another benefit of this financing program is that women are eligible for reduced
charges. The financing arrangement is open to both paid and self-employed workers.

Home Loan (Term Loan) Interest Rates

Home Loan as Overdraft (Margin) Interest Rates

pg. 32
 Festive Offers

Features and Bene�its of SBI Regular Home Loan

• Competitive interest rates starting from 6.80% p.a.
• Interest rate concession for women applicants
• Repayment tenure of up to 30 years
• No hidden charges
• No prepayment penalties levied
• Home loan overdraft facility available

What is BPLR
According to Kotak Mahindra Bank, “An internal benchmark rate, it was used to set the
interest rate for home loans. BPLR was calculated based on the average cost of funds.
However, BPLR lacked transparency as lenders could lend below it to some privileged
customers. So, in 2010, the Reserve Bank of India introduced the Base Rate system,
which replaced the BPLR system

What is Base Rate

““The Base Rate was the minimum interest rate at which Indian banks could lend. They
were not permitted to resort to any lending below this rate The base rate was
determined significantly on the average cost of funds. As per RBI policies, lenders were
required to review their base rate at least once every quarter. MCLR was introduced in
April 2016 by RBI in place of base rate,” as per Kotak Mahindra Bank website.

What is MCLR
The Marginal Cost Lending rate is the lowest interest rate at which banks cannot lend. It
is a floating loan internal rate set by individual banks. The MCLR is more sensitive to
changes in policy rates.

pg. 33
ICICI Home Loan Calculator
BankBazaar ICICI Bank Home Loan EMI Calculator is an easy-to-use and hassle-free
financial tool that lets you calculate your monthly instalments quickly with 100%
accurate results every time. All you need to do is enter your preferred loan amount,
interest rate, processing fee, and tenure. Hit “Calculate” to view the results.
You can also check a detailed breakdown of your repayment schedule through an
amortisation table.
ICICI Bank Home Loan EMI Calculation

ICICI Bank Home Loan Schemes

The standard interest rates for ICICI Bank home loan schemes are as follows:

pg. 34
Self-Employed:

ICICI Bank Instant Home Loan

• Pre-approved housing loans up to Rs.1 crore available exclusively for customers
with salary account with the bank
• No documents to be submitted at the time of sanction
• Discounted processing fee

ICICI Bank 30 Year Home Loan

• Competitive rates of interest on both �loating and �ixed rate loans
• Extended loan term up to 30 years for easy repayment
• EMI per lakh as low as Rs.808

ICICI Bank Step Up Home Loans

• Suitable for young salaried professionals with moderate income
• Minimum monthly income required: Rs.20,000
• Loan term up to 20 years

pg. 35
Home loans sanctioned by finance companies, including housing finance firms, grew 76
per cent to Rs 79,043 crore in the quarter ended March 2021 over Rs 44,907 crore in
Q4FY20. Property loans also showed 21.9 per cent expansion at Rs 23,418 cr against Rs
19,207 cr in Q4FY20.A slew of steps by state governments including reduction in stamp
duties drove demand for housing loans.
Auto loans showed 28.3 per cent drop in sanctions at Rs 8,646 crore in Q4FY21, from
12,058 crore in Q4FY20. Personal loans were down by 27 per cent at Rs 15,401 cr, from
Rs 21,095 crore in Q4fY20.A significant dip was witnessed in sanctions to the MSME
segment in Q4 (represented by long-term loans, unsecured business loans and property
loans) compared to FY19 & FY20

pg. 36
ARTICLE FROM ECONOMIC TIMES
SBI
State Bank of India (SBI) customers can avail concession on home loans up to 40 bps
lower than the actual rate. This offer is valid up to March 31, 2023.

SBI home loan lending rate (without concession)

According to the SBI website, regular home loans come with a minimum interest rate of
8.90 percent for borrowers with credit scores of 800 or above (EBR+0 % 8.90%). In this
instance, there is no risk premium. The risk premium is based on the CIBIL score; the
lower the credit score, the greater the rate of the risk premium.

A credit score of 750 to 799 will result in a 9% interest rate; the risk premium in this
case is 10 basis points (EBR+0.10%). The interest rate for a CIBIL score of 700-750 is
9.10%, with a risk premium of 30 basis points (EBR+0.30%). Female borrowers will
receive a 0.05% discount on these loans.

SBI home loan lending rate (concession)

The below rates are offered only during the campaign valid up to March 31, 2023

For CIBIL scores for 800 and above, the effective rate during the period is 8.60%, a
concession of 30 bps (EBR-0.30 %. For home loan borrowers with CIBIL score between
750 – 799 will get a 40 bps concession and interest rate offered is 8.60% (EBR-0.30 %)
SBI home loan borrowers with CIBIL score between 700 -749 will attract an interest
rate of 8.70%, a concession of 40 bps (EBR-0.20%)

pg. 37
ICICI Bank has raised its marginal cost-based lending rate (MCLR) across all tenures by
up to 25 basis points. One basis point equals 0.01 percent. The higher interest rates are
effective from January 1, 2023.

ICICI Bank lending rates

According to the ICICI Bank website, the overnight, one-month MCLR rate has been
increased to 8.40 percent from 8.15 percent. The three-months, six months MCLRs at
ICICI Bank have been increased to 8.45 percent, and 8.60 percent, respectively. The one-
year MCLR is hiked to 8.65 percent.

Your EMI payment will increase along with the increase in the interest rate on your
home loan (both EBLR and MCLR). The benchmark to which your mortgage loan is
connected will determine when the increase will affect you.

Other banks
Many banks have begun to raise loan interest rates in the last few months. Along with
ICICI Bank, PNB, Bank of India has also revised their MCLR with effect from January 1,
2023

Can a borrower switch lending regimes?

A borrower can change her house loan from being connected to the MCLR to being
linked to an external benchmark. The borrower will need to tell the bank and pay the
associated administrative fees.

pg. 38
Will ICICI Bank discontinue the previous benchmark rates i.e. I-
Base/FRR/PLR/MCLR?
For all new �loating rate Home/Mortgage Loans sanctioned from Oct 01, 2019, the Bank
will only offer loans linked to Repo Rate. However, the existing loans will continue on
the respective PLR/FRR/I-Base/MCLR till its repayment.

What are the charges for prepaying ICICI home loan

According to the ICICI Bank website, the prepayment charges are as under:

• Nil for Home Loan, Land Loan and Home Improvement Loan with �loating rate of
interest

• 2% plus applicable taxes on principal outstanding* on full repayment of Home

Loan, Land Loan, Home Improvement Loan & Top Up on Home Loan with �ixed
rate of interest.

• 2% plus applicable taxes on principal outstanding* on full repayment of Top Up

on Home Loan if the end use is for business purpose

• Nil for Non Home Loan** with �loating rate of interest and the end use is other
than business purpose.

• 4% plus applicable taxes on principal outstanding* on full repayment of Non

Home Loan** if the end use is for business purpose

• 4% plus applicable taxes on principal outstanding* on full repayment of Non-

Home Loan** with fixed rate of interest.

pg. 39
3. LITERATURE REVIEW

1. Naik (1981) uncovered that housing credits are typically best in class against the
security of home loan of area and the working to be developed with the advance.
Housing fund is along these lines contract account.

2. Thirumann. R.M. (1981) attempted to study the role of Co-operative societies in

lending housing �inance in Chennai city. The study has covered the Importance of
housing, its components, housing shortage in urban and rural areas the role of
Government, and the role of private and public sector in housing. He also
discussed the problems of housing and housing �inance in India.

3. Parekh (1988) reported that the eventual fate of housing fund is to improve the
credit start process for housing all through the nation to build up an institutional
system that would encourage the beginning procedure, to distinguish the potential
asset base for the framework in general and to disentangle the lawful framework
as for danger administration of housing money organizations.

4. Rangarajan (1988) Remarks that division of banks credit for gainful reason in vital
for �inancial improvement. Banks are more unbending in loaning exercises and
along these lines meriting and poor individuals are not getting budgetary help.
New measures are key to guarantee that advance achieve meriting hands.

5. Narasimham Committee (1991) In the most recent two decades different changes
came in the keeping money framework in our nation that were engaged and
highlighted by Narasimham Committee. Till now has progress going on. By this
bank came to know their frail focuses and how to came up. There were numerous
angles which decrease in pro�itability, effectiveness and gainfulness of a bank
framework. The board of trustees �irmly makes changing, solid economy ventures
to make Indian banking framework effective.

pg. 40
6. Spencer (1991) pointed that the signi�icance of bank picture as focused technique
for expanding customer activity stream. Inclination for bank amongst
understudies as supplier of money related administrations, more noteworthy
trust in huge medium estimated banks, signi�icance of customers by work force,
focused store rates and credit accessibility were the key discoveries.

7. Mathurn (1993) opined that the money related weight of interest in housing
is by and large substantial when the proprietor does not have adequate assets
accessible to pay for the site and the whole cost of development. Consequently, he
should make game plans to acquire reserves from some different sources.

8. Boyd (1994) the study closes on rate of interest charged on advances, enthusiasm
on bank accounts, notoriety. All these interests have played an essential part for
customers and money related execution of a bank in business sector. However,
customers likewise mind other criteria, for example, the amount of agreeableness
of representatives, item, online of�ices, paper work and postliminary.

9. Kulkarni (1995) in his study “Development Responsibility and Profitability of

Banks” stated that while considering banks costs and profits, social benefits
arising out of it cannot be ignored. He suggested that while meeting social
responsibility banks should try to make developmental business as successful as
possible.

10. Godse (1996) in his essay “Looking a Fresh at Banking Productivity” observes that
productivity aspect is only at the Conceptualization stage in banking industry. He
suggested improvement in productivity and procedures, costing of operations and
capital expenditure etc.

pg. 41
11. Usha Patel (1996) clari�ied that at present housing through bank fund was a piece
of bank’s need division loaning. Furthermore, every nationalized bank is relied
upon to designate each year a prede�ined rate of stores and plan for its
arrangement for �inancing immediate and also circuitous housing programs.

12. Pillai Kalathil, S.R. (1996) expressed that it will be �itting for all administrations
and open area housing money association to have a focal pool course of action of
guiding with would be borrowers. Legalities must be rearranged.

13. Talwar (1996) in an article on the present saving money situation and the
requirement for an arrangement change, opines that a noteworthy concern tended
to by managing an account segment change is the strengthening of the budgetary
wellbeing of banks. The presentation at prudential standards is better money
related order by guaranteeing that the banks are aware of the danger, bene�it of
their loan portfolios.

14. Fanning (1997) in his study “The Demand for Home Mortgage Debt” while
examining bank productivity of British banks observed that although the
productivity of the UK clearing banks is improving, they are still heavily over
manned as compared with similar banks elsewhere.

15. Ojha (1998) in his paper "Modern International Caparison of Productivity and
Profitability of Public Sector Banks of India" making Comparison on the basis of
per employee indicators and taking examples of state bank group and Punjab
National bank noted that Indian banks are the lowest in all accounts. However,
such international comparison will not be fair for numbers of reasons.

pg. 42
16. Karthik. G. (1998) in his study about the Housing and Development corporation
and national housing bank argued that pro�itability and growth of housing �inance
in India is largely based on the development and introduction of new schemes
matching the economic pro�ile of the borrowers. This study suggested
improvement in schemes is highly essential for the growth of housing �inance in
India.

17. Leelamma Kuruvilla (1999) tosses light on National Housing Policy and new
activities in housing money. She proposed that the adjustment in the lawful casing
work, rearranging the strategy for housing money and the dynamic contributions
of the Government in the housing division will moderate the housing issue.

18. Dr. Rangarajan C (1999) in his study “ A Simple Error Correction Model Of House
Price “said that the financial system of India built a vast network of financial
institutions and markets over times and the sector is dominated by banking
sector which accounts for about two-third of the assets of organized financial
sector.

19. Havin, Kauppi (2000) in his study “Residential Lending to Low-Income Minority
Families” stated that countries where a large proportion of the population lives in
owner – occupied housing are experiencing higher unemployment rates. Then
countries where the majority of people live in private rental housing, which might
suggest that rental housing enhances labour mobility. In this paper, they develop
a simple inter temporal two region model that allow us to compare owner
occupied housing markets to rental markets and to analyse how these alternative
arrangements allocate people in space and time. Announced that it will offer loans
for Rs. 2-10 lakh at 12.5 percent the lowest rate offered by any housing finance
provider, big brother SBI has taken the rate war in the home loans category to
new heights. This is because, apart from the low rate, the interest on these loans
is calculated on principal, which is reduced every month unlike other housing
finance companies which calculate interest on annually reducing basis

pg. 43
20. Vidhayavathi. K (2002) in her study evaluated the performance of housing �inance
institutions on certain selected business parameters as well as through an opinion
survey over the home loan seekers and concluded that apart from interest rate
advertisement, service quality, courtesy and speed of service are certain other
important dimensions affecting the growth of housing �inance industry.

21. Sendhilvelan and Karthikeyan (2007) RBI has expressed that the development
towards general keeping money ought to have speedier dependability and
pro�iciency of the budgetary framework, yet without anyone else it cannot give a
viable or feasible answer for the operational issues of individual organizations
emerging from credit capitalization, abnormal state of NPAs vast resources
liabilities crisscross, liquidity and so forth. However, in a business sector driven
economy to confront the opposition one variable is the size and subsequently, the
passage of Universal banks is unavoidable for the general monetary advancement
of our nation. There is most likely step by step we are moving towards the
administration of a couple of substantial banks from the administration of
numerous little banks. This illustration is accomplished with the idea of
widespread managing an account which surely fortify the banking sector.

22. Kerry D (2008) broke down, amid the period 1998-2008, there was a sharp ascent
and afterward there was a surprising drop in the home costs. Financial basics were
the fundamental purposes behind these adjustments in home costs. Thusly the
issue was not a result of subprime loaning, but rather emotional diminishments in
the Fed, a short time later amid the early mid-2000 there was an expansion in the
rates of premium; the development of housing was engaged in the business sectors
where there were critical supply-side limitations, that able to be more value
unpredictable. Likewise, the issues laid in light of expansion and decline of certain
home loan items, instead of credit lack.

pg. 44
23. Naveen Shetty and Dr.Veerashekharappa (2009) studied the significance of
microfinance in achieving money related incorporation. The paper concentrates
on effect of the expanding hole sought after and supply of money related
administrations in India which has prompted the expanding populace of the
nation to be avoided from the formal budgetary credit framework on housing
advance.

24. Kumar and Gulati (2010) examined at the centrality of the possession on the
Indian local bank’s adequacy. Data Envelopment Analysis (DEA), which is a non-
parametric, deterministic and straight programming-based system, was utilized
to register open and private division banks effectiveness score. The operational
cross-sectional information of the general population and private area banks amid
the money related years 2005-06 and 2006-07 was utilized and it was found that
A. De nova private division banks command the development of effective
boondocks of Indian household saving money industry;
B. Primarily, the entire specialized wastefulness stops from administrative
inadequacy rather than scale wastefulness; and
C. Though the general population and private part banks’ productivity
contrasts have been noted, in a large portion of the cases these distinctions
are measurably insignificant. Overall, it is reasoned that industry
possession is incapable in the Indian local saving money industry.

25. Goyal and Joshi (2011) have deduced in their study on Social and Ethical Aspects
of Banking Industry that banks can extend themselves as a social and moral
oriented association by just dispensing credits to those social, moral and
ecological concern associations.

pg. 45
26. Rajesh K. Yadav, (2012) This research paper examined the features and bene�its of
home loans offered by SBI and ICICI Bank, including interest rates, repayment
options, prepayment penalties, and customer service. The study found that SBI
offered lower interest rates and no prepayment penalties, while ICICI Bank offered
more �lexible repayment options and a higher loan-to-value ratio.

27. Anil Kumar Goyal and Praveen Kumar, (2013) This study compared the home loan
products of SBI and ICICI Bank based on interest rates, processing fees, repayment
options, and loan eligibility criteria. The authors found that SBI offered lower
interest rates and processing fees, while ICICI Bank offered more flexible
repayment options and a higher loan amount eligibility.

28. B. K. Das and Dr. D. K. Das, (2013) This study compared the home loan products of
SBI and ICICI Bank based on interest rates, processing fees, repayment options,
and loan eligibility criteria. The authors found that SBI offered lower interest rates
and processing fees, while ICICI Bank had a faster loan processing time and offered
more �lexible repayment options.

29. Dr. S. Vijayalakshmi and Dr. M. Arun (2014) This study compared the home loan
products offered by SBI and ICICI Bank in terms of interest rates, processing fees,
repayment options, and other features. The authors found that SBI offered lower
interest rates and processing fees, but ICICI Bank offered more flexible repayment
options and a faster loan processing time.

30. Dr. P. Srinivasan, (2015) This research paper analyzed the features and bene�its of
home loans offered by SBI and ICICI Bank, including interest rates, processing fees,
repayment options, and loan eligibility criteria. The study found that SBI offered
lower interest rates and processing fees, but ICICI Bank had a faster loan
processing time and offered more �lexible repayment options.

pg. 46
31. Ramesh Kumar, (2015) This study compared the interest rates of home loans
offered by SBI and ICICI Bank and analyzed the factors that in�luenced these rates.
The authors found that SBI offered lower interest rates due to its large customer
base and government backing, while ICICI Bank had more �lexible interest rate
options based on the borrower's credit history and loan-to-value ratio.

32. Dr. Mohd. Imran and Dr. Sabiha Anees, (2015) This study compared the home loan
products offered by SBI and ICICI Bank in terms of interest rates, processing fees,
loan eligibility criteria, repayment options, and other features. The authors found
that SBI offered lower interest rates and processing fees, but ICICI Bank had a
faster loan processing time and offered more �lexible repayment options.

33. Dr. Usha Rani and Dr. Vijayalakshmi, (2015) This study compared the features and
bene�its of home loans offered by SBI and ICICI Bank, including interest rates,
processing fees, repayment options, loan eligibility criteria, and customer service.
The authors found that SBI had a better customer service reputation, while ICICI
Bank offered more �lexible repayment options and a higher loan amount eligibility.

34. Vijay Kumar and Dr. K. V. K. Prasad, (2015) This research paper analyzed the home
loan products offered by SBI and ICICI Bank and compared them based on interest
rates, processing fees, loan eligibility criteria, repayment options, and other
features. The authors found that SBI offered lower interest rates and processing
fees, but ICICI Bank had more �lexible repayment options and a faster loan
processing time.

pg. 47
35. Dr. Suresh Kumar and Dr. Ravi Kant Sharma, (2016) This research paper analyzed
the interest rates of home loans offered by SBI and ICICI Bank and compared them
based on loan amount, loan tenure, and borrower's credit score. The study found
that SBI offered lower interest rates for smaller loan amounts and longer loan
tenures, while ICICI Bank offered lower interest rates for higher loan amounts and
better credit scores.

36. Dr. Shweta Bhardwaj and Dr. Gagan Deep Sharma, (2016) This research paper
analyzed the home loan products offered by SBI and ICICI Bank and compared
them based on interest rates, processing fees, repayment options, loan eligibility
criteria, and customer service. The authors found that SBI had a better customer
service reputation and offered lower interest rates and processing fees, while ICICI
Bank had more �lexible repayment options and a higher loan amount eligibility.

37. Dr. C. N. Ravikumar and Dr. K. Padmavathy, (2017) This research paper analyzed
the features and bene�its of home loans offered by SBI and ICICI Bank, including
interest rates, processing fees, repayment options, and loan eligibility criteria. The
study found that SBI offered lower interest rates and processing fees, but ICICI
Bank had more �lexible repayment options and a higher loan amount eligibility.

38. G. Nirmala Devi and Dr. B. P. Rajini, (2017) This research paper compared the home
loan products of SBI and ICICI Bank in terms of interest rates, processing fees,
repayment options, and loan eligibility criteria. The authors found that SBI offered
lower interest rates and processing fees, but ICICI Bank had more �lexible
repayment options and a higher loan amount eligibility.

pg. 48
39. Dr. P. R. Singh and Dr. P. K. Singh, (2017) This study compared the home loan
products offered by SBI and ICICI Bank based on interest rates, processing fees,
repayment options, loan eligibility criteria, and other features. The authors found
that SBI offered lower interest rates and processing fees, while ICICI Bank had
more �lexible repayment options and a higher loan amount eligibility.

40. Dr. Vikas Choudhary and Dr. Manoj Kumar, (2018) This study compared the home
loan products offered by SBI and ICICI Bank in terms of interest rates, processing
fees, repayment options, and other features. The authors found that SBI offered
lower interest rates and processing fees, but ICICI Bank offered more �lexible
repayment options and a higher loan amount eligibility.

There is total 40 Literature review as per Articles.

pg. 49
4. DATA ANALYTICS, INTERPRETATION

HOME LOAN MARKET: CONSUMER ANALYSIS\

UNIVARIATE ANALYSIS

SELECTION OF BANK

pg. 50
From the above graph it interpret that 32% people taken loan from SBI, while 20% people
taken loan from HDFC bank and 2% people took loan from UTI, IDBI, TATA capital PNB
home �inance and 6% people have taken loan from KOTAK. So, we say that more than 50%
people taken loan from SBI and HDFC so, both the bank covered more than half the market
of home �inance.

CRITERIA CONSIDER WHILE TAKING LOAN

From the above table it interpret highest mean is 6.6 of loan tenure and second highest
is 5.1 so, we can say that highest number of people gives more important to loan tenure
and followed by margin amount and then loan eligibility.

pg. 51
 INTEREST RATE

From the above graph it interprets those two types of rates are �ixed and �loating rate
from which 58% people pay �ixed rate for their home loan while 38% people pay
�loating rate for the home loan and remaining are pay other interest rate. So, we can say
that a greater number of people preferred �ixed rate for their home loan.

pg. 52
 SATISFACTION LEVEL

From the above graph it interprets the satisfaction level of the services in this only 16%
people are highly satis�ied with the home loan services. While 40% people are average
satisfactory and 38% people are satis�ied with the services and remain are dissatis�ied
with the services. So, in the Indian people are not satis�ied from the home �inance mark.

pg. 53
 LOAN AMOUNT

From the above graph it interprets about loan amount from its 48% people are taking 5-
10 lakh amount of home loan and 42% take 1-5 lakh loan amount so, most of the people
take 5-10 lakh loan amounts from the bank.

pg. 54
 PROBLEM FACING WHILE TAKING LOAN

From the above graph it interpret what are the problem facing by the respondent so ,
58% people facing problem of lack of knowledge i.e. awareness of the services and 26%
people face the problem of procedural delay mans that the process of the loan passing is
very time consuming and complex .So we can say that more number of people are not
aware about the facility provided by the bank because of lack of knowledge.

pg. 55
 AGE OF RESPONDENT

From the above graph it interprets that the age of respondent from them 38% people's
age is between is 35-5 28% people's age is between 25-35 and 26% people's age is 45-
55 and remaining is above 55 above. So we can say that more numbers of people's age is
between 35-45.

pg. 56
 GENDER OF RESPONDENT

From the above graph it interprets the gender of the respondent from that 72% people
are male and 28% people are female .So we can say that highest number of people is
male.

pg. 57
 OCCUPATION OF THE RESPONDENT

From the above graph it interprets that occupation of the respondent from that 50%
people are salaried i.e., they are doing job. 26% people are self-employed and 16%
people are professional and remaining 8% are in other occupation. So, we can say that
those who are doing job and salaried those all-person preferred home loan.

pg. 58
 INCOME OF RESPONDENT

From the above graph it interprets the income level of the respondent from that 50%
people 's income is between 2-4 lakh and 24% people's income is between 4-6 lakh,16%
people's income is 6 lakh and the remaining 10% people's income is below 2 lakhs. So,
we can say that person taken loan that all number of people's income is between 2-4
lakh and a smaller number of people's income below 2 lakhs.

pg. 59
 BI-VARIANT ANALYSIS

The above graph is interpreting the relationship between two variable gender and
satisfaction level. So, in average satisfactory level male are 17 and female are only 3 so
high level of difference is in average satisfactory level between male and female and in
dissatisfactory male are 2 and female are only 1 so very less difference in dissatisfactory
so very a smaller number of people are dissatis�ied with their services.

pg. 60
 GENDER AND LOAN AMOUNT

Above graph is interpret that the relationships between loam amount and gender. 18
male and 6 female have taken loan of Rs. 5-10 lakh. While 14 male and 7 female have
took loan of Rs. 1-5 lakh. And only 2 males have taken loan of Rs. More than 10 lakhs. so,
we can say that a greater number of male take loan of Rs. 5-10 lakh.

pg. 61
 PROBLEM WHILE TAKING LOAN & OCCUPATION

From the above graph interpret it relationship between occupation and facing problem
while taking loan.16 salaried person facing problem of lack of knowledge. While 3
salaried persons facing problem procedure delay and non – cooperation. 9 self-
employed people facing problem of lack of knowledge and 4 self – employed people
facing problem of procedural delay. So we can say that salaried person face problem of
lack of knowledge more than the professional person. And only 4 self- employed people
face the problem of procedural delay.

pg. 62
 INCOME LEVEL AND INTEREST RATE

Above graph interpret it the relationship between income level and interest rate. 12
persons are pay �ixed rate whose income is 2-4 lakh, while 13 people pay �loating rate
whose income is 2-4 lakh so there is little difference. Whose income above 6 lakh those
people preferred �ixed rate 7. Person pay �ixed rate whose income is 4-6 lakh.

pg. 63
 INCOME LEVEL AND LOAN AMOUNT

Above graph interpret the relationship between loan amount and income level 14
people have taken loan of Rs. 1-5 lakh whose income is 2-4 lakh.

pg. 64
SATISFACTION LEVEL AND GENDER

pg. 65
GENDER AND LOAN AMOUNT

pg. 66
OCCUPATION AND PROBLEM

pg. 67
INCOME LEVEL AND INTEREST RATE

pg. 68
INCOME LEVEL AND LOAN AMOUNT

pg. 69
(4.1) SBI Home Finance Ltd.
ALANCE SHEET OF SBI HOME MAR MAR MAR MAR MAR
FINANCE (in Rs. Cr.) 08 07 06 05 04

12 12 12 12 12
months months months months months

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 15.00 15.00 15.00 15.00 15.00

TOTAL SHARE CAPITAL 15.00 15.00 15.00 15.00 15.00

Reserves and Surplus - - - - -

309.56 291.32 286.64 265.66 245.35

TOTAL RESERVES AND SURPLUS - - - - -

309.56 291.32 286.64 265.66 245.35

TOTAL SHAREHOLDERS FUNDS - - - - -

294.56 276.32 271.64 250.66 230.35

NON-CURRENT LIABILITIES

Long Term Borrowings 0.00 0.00 0.00 0.00 0.00

Deferred Tax Liabilities [Net] 0.00 0.00 0.00 0.00 0.00

Other Long Term Liabilities 0.00 0.00 0.00 0.00 0.00

Long Term Provisions 0.00 0.00 0.00 0.00 0.00

TOTAL NON-CURRENT LIABILITIES 0.00 0.00 0.00 0.00 0.00

CURRENT LIABILITIES

Short Term Borrowings 236.64 0.00 0.00 0.00 0.00

Trade Payables 0.00 0.88 0.98 1.09 1.69

Other Current Liabilities 69.82 292.20 291.15 270.46 258.06

Short Term Provisions 0.02 0.01 3.98 3.98 4.02

pg. 70
TOTAL CURRENT LIABILITIES 306.47 293.09 296.10 275.52 263.77

TOTAL CAPITAL AND LIABILITIES 11.91 16.78 24.46 24.87 33.42

ASSETS

NON-CURRENT ASSETS

Tangible Assets 0.48 0.48 0.48 0.48 1.27

Intangible Assets 0.00 0.00 0.00 0.00 0.00

Capital Work-In-Progress 0.00 0.00 0.00 0.00 0.00

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 0.48 0.48 0.48 0.48 1.27

Non-Current Investments 0.00 0.00 0.00 0.00 0.00

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00

Long Term Loans And Advances 0.00 0.00 0.00 0.00 0.00

Other Non-Current Assets 0.00 0.00 0.00 0.00 0.00

TOTAL NON-CURRENT ASSETS 0.48 0.48 0.48 0.48 1.27

CURRENT ASSETS

Current Investments 0.00 0.00 0.00 0.00 0.00

Inventories 0.00 0.00 0.00 0.00 0.00

Trade Receivables 0.00 0.00 0.00 0.00 0.00

Cash And Cash Equivalents 11.27 16.16 10.51 10.42 17.06

Short Term Loans And Advances 0.17 0.14 13.47 13.97 15.10

Other Current Assets 0.00 0.00 0.00 0.00 0.00

TOTAL CURRENT ASSETS 11.44 16.30 23.98 24.38 32.15

TOTAL ASSETS 11.91 16.78 24.46 24.87 33.42

pg. 71
(4.2) ICICI Bank Ltd.
BALANCE MAR 22 MAR 21 MAR 20 MAR 19 MAR 18
SHEET OF ICICI
BANK (in Rs.
Cr.)

12 months 12 months 12 months 12 months 12 months

EQUITIES AND
LIABILITIES

SHAREHOLDER'
S FUNDS

Equity Share 1,389.97 1,383.41 1,294.76 1,289.46 1,285.81

Capital

TOTAL SHARE 1,389.97 1,383.41 1,294.76 1,289.46 1,285.81

CAPITAL

Revaluation 3,195.66 3,093.59 3,114.87 3,044.51 3,003.19

Reserve

Reserves and 165,659.93 143,029.08 112,091.29 104,029.40 100,864.37

Surplus

Total Reserves 168,855.59 146,122.67 115,206.16 107,073.91 103,867.56

and Surplus

TOTAL 170,511.97 147,509.19 116,504.41 108,368.04 105,158.94

SHAREHOLDER
S FUNDS

Deposits 1,064,571.6 932,522.16 770,968.99 652,919.67 560,975.21

1

Borrowings 107,231.36 91,630.96 162,896.76 165,319.97 182,858.62

Other Liabilities 68,982.79 58,770.37 47,994.99 37,851.46 30,196.40

and Provisions

TOTAL CAPITAL 1,411,297.7 1,230,432.6 1,098,365.1 964,459.15 879,189.16

AND 4 8 5
LIABILITIES

ASSETS

pg. 72
Cash and 60,120.82 46,031.19 35,283.96 37,858.01 33,102.38
Balances with
Reserve Bank of
India

Balances with 107,701.54 87,097.06 83,871.78 42,438.27 51,067.00

Banks Money at
Call and Short
Notice

Investments 310,241.00 281,286.54 249,531.48 207,732.68 202,994.18

Advances 859,020.44 733,729.09 645,289.97 586,646.58 512,395.29

Fixed Assets 9,373.82 8,877.58 8,410.29 7,931.43 7,903.51

Other Assets 64,840.12 73,411.21 75,977.67 81,852.17 71,726.80

TOTAL ASSETS 1,411,297.7 1,230,432.6 1,098,365.1 964,459.15 879,189.16

4 8 5

OTHER
ADDITIONAL
INFORMATION

Number of 5,418.00 5,266.00 5,324.00 4,874.00 4,867.00

Branches

Number of 105,844.00 98,750.00 99,319.00 86,763.00 82,724.00

Employees

Capital Adequacy 19.16 19.12 16.11 16.89 18.42

Ratios (%)

KEY
PERFORMANCE
INDICATORS

Tier 1 (%) 18.35 18.06 14.72 15.09 15.92

Tier 2 (%) 0.81 1.06 1.39 1.80 2.50

ASSETS
QUALITY

Gross NPA 33,294.92 40,841.42 40,829.09 45,676.04 53,240.18

Gross NPA (%) 4.00 8.00 6.00 7.00 0.00

pg. 73
 Net NPA 6,931.04 9,117.66 9,923.24 13,449.72 27,823.56

Net NPA (%) 0.81 2.10 1.54 2.29 5.43

Net NPA To 1.00 2.00 2.00 2.00 5.00

Advances (%)

CONTINGENT
LIABILITIES,
COMMITMENTS

Bills for Collection 75,150.83 54,643.42 48,216.24 49,391.99 28,588.36

Contingent 3,867,675.8 2,648,640.6 2,523,825.8 1,922,038.2 1,289,244.0

Liabilities 7 7 0 9 0

State Bank of India (SBI) is India's largest bank in terms of assets, deposits, and
branches. As of March 31, 2021, SBI's total assets were INR 43.81 trillion
(approximately USD 584 billion), and its total deposits were INR 34.52 trillion
(approximately USD 460 billion). SBI's net profit for the financial year 2020-21 was INR
20,410 crore (approximately USD 2.7 billion).

On the other hand, ICICI Bank is India's second-largest private sector bank. As of March
31, 2021, ICICI Bank's total assets were INR 16.89 trillion (approximately USD 225
billion), and its total deposits were INR 9.81 trillion (approximately USD 131 billion).
ICICI Bank's net profit for the financial year 2020-21 was INR 16,192 crore
(approximately USD 2.2 billion)

pg. 74
5. Conclusion

The conclusion is that the service provided by ICICI is better than SBI based on the
interest rate and both the banks have to implement new technology to reduce the process
time of loans which leads to satisfaction of customers in future period of time.

Through this study the various variables identified are financial basics are behind drop
in home cost, interest rate plays an important role, paper work, decrease in profitability,
awareness among the prospective customers, poor are not getting the budgetary help, re-
arrangement of housing policy of government, service quality, speed of providing
services and implementations of schemes should match the economic
profile of the borrowers.

In our study we came to know that many people taken loan and most of the people have
taken loan from the SBI. Home loans have long period when compare to other personal
loans and other loans. So peoples are confused to take a home loan. Even though the
interest rates are high peoples are willing to take a loan from SBI banks. For disbursement
process is also it will take long time so, many people face the problem of procedural delay.
Finally, the whole research was carried out in a systematic way to reach at exact results.
The whole research and findings were based on the objectives. However, the study had
some limitations also such as lack of time, lack of data, non-response, and reluctant
attitude and illiteracy of respondents, which posed problems in carrying out the research.
But proper attention was made to carry out research in proper way and to make accurate
conclusion for the home loan which may beneficial for banks to enhance their customer
base.

pg. 75
6. REFERENCES

1. Naik (1981)
2. Thirumann. R.M. (1981)
3. Parekh (1988)
4. Rangarajan (1988)
5. Narasimham Committee (1991)
6. Spencer (1991)
7. Mathurn (1993)
8. Boyd (1994)
9. Kulkarni (1995)
10. Godse (1996)
11. Usha Patel (1996)
12. Pillai Kalathil, S.R. (1996)
13. Talwar (1996)
14. Fanning (1997)
15. Ojha (1998)
16. Karthik. G. (1998)
17. Leelamma Kuruvilla (1999)
18. Dr. Rangarajan C (1999)
19. Havin, Kauppi (2000)
20. Vidhayavathi. K (2002)
21. Sendhilvelan and Karthikeyan (2007)
22. Kerry D (2008)
23. Naveen Shetty and Dr.Veerashekharappa (2009)
24. Kumar and Gulati (2010)
25. Goyal and Joshi (2011)
26. Rajesh K. Yadav, (2012)
27. Anil Kumar Goyal and Praveen Kumar, (2013)
28. B. K. Das and Dr. D. K. Das, (2013)

pg. 76
29. Dr. S. Vijayalakshmi and Dr. M. Arun (2014)
30. Dr. P. Srinivasan, (2015)
31. Ramesh Kumar, (2015)
32. Dr. Mohd. Imran and Dr. Sabiha Anees, (2015)
33. Dr. Usha Rani and Dr. Vijayalakshmi, (2015)
34. Vijay Kumar and Dr. K. V. K. Prasad, (2015)
35. Dr. Suresh Kumar and Dr. Ravi Kant Sharma, (2016)
36. Dr. Shweta Bhardwaj and Dr. Gagan Deep Sharma, (2016)
37. Dr. C. N. Ravikumar and Dr. K. Padmavathy, (2017)
38. G. Nirmala Devi and Dr. B. P. Rajini, (2017)
39. Dr. P. R. Singh and Dr. P. K. Singh, (2017)
40. Dr. Vikas Choudhary and Dr. Manoj Kumar, (2018)

pg. 77
7. BIBLOGRAPHY

The content where I �ind the information.

https://homeloans.sbi/
https://www.icicihfc.com/
https://www.bankbazaar.com/

pg. 78