Comparative Study of Home Loans of PNB and Sbi Bank

COMPARATIVE STUDY OF HOME LOANS OF PNB AND SBI BANK.
A dissertation submitted to Department of Management in partial fulfillment of t

he requirement for the award of degree of BACHELOR OF BUSINESS ADMINISTRATION (H
ONS.)
Submitted by: KOMAL MARWAHA 7020070003
Supervisor: Miss Monika Kanali (lect,lpu)
LOVELY PROFESSIONAL UNIVERSITY PHAGWARA 2010
1
TO WHOMSOEVER IT MAY CONCERN
This is to certify that the project report titled “Comparative study of home loa
ns of PNB and SBI” carried out by Miss KOMAL MARWAHA, D/o RAJESH
MARWAHA has been accomplished under my guidance & supervision as a duly register
ed BBA(Hons) student of the Department of Management, Lovely
Professional University, Phagwara. This project is being submitted by him/her in
the partial fulfillment of the requirements for the award of the BBA(Hons) from
Lovely Professional University. Her dissertation represents her original work a
nd is worthy of consideration for the award of the degree of BBA(Hons)
___________________________________ (Name & Signature of the Faculty Advisor) Ti
tle: ______________________________ Dare: ______________________________
2
DECLARATION
I KOMAL MARWAHA, hereby declare that the work presented herein is genuine work d
one originally by me and has not been published or submitted elsewhere for the r
equirement of a degree programme. Any literature, data or works done by others a
nd cited within this dissertation has been given due acknowledgement and listed
in the reference section.
_______________________ (Student's name & Signature) _______________________ (Re
gistration No.) Date:__________________
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Acknowledgement
First of all my sincere gratitude goes to my academic supervisor Miss Monika Kan
ali, lecture, lovely professional university,phagwara,who helpd andguided me for
this work. Her conversation and encouragement will always be remembered. In man
y stages of project, her proudful expertise and professional knowledge provided
crucial and key injection to the technical solution. I also would like to thanks
all the staff members of the department, for their cooperation and support duri
ng this work. Finally, I wish to thank my family and friends for their encourage
ment and support that accomplishment me throughout the research work.
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TABLE OF COTENTS
Page no. 6-11
Chapter CHAPTER 1 Section 1.1 Introduction to Subject 1.2 Objective, Need, Scope
& Methodology
12-28
CHAPTER 2 Section 2.1 Introduction to Company 2.2 Overview of the industry (Hist
ory, Growth, Landmarks, major players and their market share) 2.3 Profile of the
organization 2.4 Company’s history 2.5 Recent achievements and milestones 2.6 P
roduct range of the company/industry 2.7 Performance of the company over the las
t few years(Statistical Profile) 2.8 Financial status of the organization 2.9 Fu
ture prospects/ plans
29-35
CHAPTER 3 Survey of Literature
36-65
CHAPTER 4 Interpretation
66
CHAPTER 5 Section 5.1 Conclusion 5.2 Limitations
67-69 70-72
CHAPTER 6 References CHAPTER 7 Questionnaire 5
CHAPTER 1
1.1 Section
INTRODUCTION TO SUBJECT:
Home loans work like any other debt. That is, loans are simply specific money th
at we borrow from a bank, a private lender, or some other type of lender. Afterw
ards, we must repay our debts with interest. However, unlike other types of loan
s, home loans are different in several respects. Owning a piece of land or prope
rty is a lifetime dream for every individual. There are many home loans provider
in the market. There are different type of home loan i.e.
• • • • • • •
Home Purchase Loans Home Improvement Loans Home Construction Loans Home Extensio
n Loans Home Equity Loans Land Purchase Loans Bridge Loans
Home purchase loans: These are the basic forms of home loans used for
purchasing of a new home. With about a million home lenders and mortgage brokers
it s becoming a tough challenge as the days are progressing. But at the same ti
me, when the sites are coming up with all the latest tools and relevant informat
ion for us, and with all such conveniences, obtaining a home purchase loan or mo
rtgage has 6
become really pretty simple. However, at the same time though, we may be flummox
ed to look so many attractive rates and offers in the market, not to forget the
hidden costs associated with each of them.
Home improvement loan: Home improvement loans are used to finance
improvements and add on to the existing set of credentials of beauty on your own
ed house, recently purchased property or rented accommodation. Home improvement
loans are used to maintain or enhance the value of your house. In general it inc
ludes: repairs, remodeling, energy-related items (permanent in nature), repairs,
a new kitchen, a new bathroom, terrace, an extension or general property improv
ements. Luxury items and fireplaces are generally not eligible, though. Many imp
rovements in landscape and even swimming pools are nowadays considered to be a p
art of home improvement.
Home construction loan: Home construction loans are used to finance for the
construction of our newly acquired home or if we are planning to build a home. T
he factors include in calculations for house building costs?
• • • •
Design of the house Construction cost Financing Cost Buildable site
All the above mentioned costs will help us to determine the amount we may need t
o borrow. For example, besides calculating the construction costs, we may also b
e required to consider the total expenditures to develop the site in order to bu
ild. Each site is unique requiring different expenditures so this specific rupee
amount will vary from site location to site location. Payment: Before the house
starts getting build, we will be required to pay a deposit to your builder as w
ell as paying a deposit for the land if we are buying land. As work progresses y
ou will need to make payments to the builder. Certain loans can be structured fo
r progress payments to be made during construction.
Home extinction loan
Home extension loans are used by customers to get loans from the banks to extend
their houses, by adding more rooms, kitchens, wash rooms, terraces, or any othe
r rooms for your growing family. It may also be used to enclose open balcony/ter
race space, or constructing a Puja ghar.
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Maximum Amount of Home Extension Loans:
Banks generally offers about 70-85% of the total amount of home extension as loa
n. The amount of loan sanctioned also depends on a number of factors such as the
age of the applicant at the time of loan, tenure of the loan, repayment capacit
y of the borrower; his/her credit history etc.
Home equity loan:
Home equity loans helps customer to encash the market value of the commodity by
taking a loan by mortgaging the property. So, Home equity loans are availed by c
ustomers, who wish to mortgage his/her property to the bank for taking some loan
for some other purpose. Then, it s up to the bank s discretion to consider the
market value of the property and accordingly decide how much to pay to the custo
mer. Both the residential as well as non residential property can be considered
for the approval of the loan, provided the mortgager is a licensed title holder
and the land is free form any kind of dispute. Home equity loans don t restrict
one to use the loan money in specific investments. It might also be used in marr
iage, higher education, medical expenses, etc. However it should not be used in
any illegal or speculation purposes.
land purchase loan:
Land Purchase loans are used by customers who wish to purchase a plot of land fo
r commercial or residential purpose. Everyone has his/her dream perfectly sketch
ed in his souls and so is his ambition to get his house erected on the exact loc
ation he dreamt that to be. If you have found and shorlisted the piece of land,
and have arrived here for finance, you have come to the best place you could hav
e arrived in the web. Now, that you have decided to purchase a land as an invest
ment or for your own dream home, you will realize that a land purchase loan is o
ne you will cherish. Loans that are strictly for land purchase can be as scarce
as good residential plots. While many lending firms around the nation compete to
provide mortgages for the purchase of a house on a lot, only local institutions
typically will be interested in lending for an empty lot.
Bridge loan:
Bridge loans are designed for people who wish to sell the existing home and purc
hase another one. The bridge loans help finance the new home, until a buyer is f
ound for the home. Bridge loans are used by customers as an effective vehicle to
capitalize on a purchase opportunity. It can be considered as a short term fina
ncing scheme which
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is generally expected to be paid back, within the range of 6-36 months, till the
time the borrower gets more permanent and lower cost financing. So, bridge loan
s, (or swing loans as they are otherwise said) is a short term loan provided by
various banks like Bank of India, Citibank, ICICI etc. often used for commercial
real estate purchases, retrieve real estate from foreclosure. Bridge loans in c
orporate finance are called gap financing, and are used to cover the time betwee
n redemption of issuance of one bond and its replacement by a new issue. They ca
n also be operating loans for periods between LOI and acquisition, or quiet peri
od and IPO. Bridge loan may contain a decent proportion of prepaid interest, som
etimes as much as six months. If the home gets sold before that time, you may re
ceive interest payments back, but if it hasn t sold, you may be required to cont
inue payments.
1.2 Section
OBJECTIVES
To study the cost of home loans provided by the bank. To know that which ban
k provide batter loan schemes. To analyze the home loan scheme by PNB and SBI
banks. To know the consumer perception about the home loan of PNB and SBI. SCO
PE OF THE STUDY: This study is analysis and comparison of home loans provided by
the SBI and PNB banks. It is helpful in analysing the home loan service provide
d to the customer and their comparison.
RESEARCH METHODOLOGY Design of Research:
The research will be exploratory in nature. A population of peoples who take hom
e loan from these banks will be considered for this study. I will try to explore
about the home loans which would make a difference in the behavior of the consu
mer. Effort will be made to throw light on most of the factors which have either
indirect or direct effect on the behavior of the consumer. I will also explore
the impact of home loans on the market share of the banks.
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Sampling plan:
• Population:
The study aimed to include the customers of SBI and PNB in nawanshahr, to make a
comparative analysis of home loan schemes of these two banks..
•
Sample Size:
A Sample size of 100 respondents will be taken for the current study because it
is not possible to cover the whole universe in the available time period. So it
is necessary to take the sample size. In 100 respondents 50 respondents from PNB
and 50 from SBI. The sample will the peoples of age group lying between eightee
n to thirty years. The sample will be taken in the form of strata based on age,
sex, and income group.
• Sampling technique:
The sampling technique will be probabilistic sampling more specifically the rand
om convenient and judgemental sampling will be used. As in probabilistic samplin
g the select unit for observation with known probabilities so that statistically
sound assumptions are supported from the sample to entire population so that we
had positive probability of being selected into the sample. I will go for strat
ified random sampling as we are interested to study the home loan by SBI and PNB
banks, so we will make the strata on the basis of age, occupation, income level
, gender. And from each strata we will go for random sampling.
Sources of Data:
I will use primary source of data that is structured questionnaire. As these ban
ks are established from so many years, so many researchers have done research on
this topic, so we will find secondary data also and also use this data for the
help of this research. So, this research data will collected from the primary so
urce and secondary source.
10
Our method of collecting the data is from the questionnaire that will be filled
by the respondent from the sample, it will be structured questionnaire.
Tools and Techniques:
As no study could be successfully completed without proper tools & techniques, s
ame with my project. For the better presentation and right explanation I used to
ols of statistics and computer very frequently and I am very thankful to all tho
se tools for helping me a lot. Basic tools which I used for project are:
- BAR CHARTS
- PIE CHARTS
- TABLES
Bar charts and pie charts are very useful tools for every research to show the r
esult in a clear, simple way. Because I used bar charts and pie charts in my pro
ject for showing data in a systematic way. So I need not necessary for any obser
ver to read all the theoretical detail, simple on seeing the charts anybody that
what is being said.
Technological Tools:
MS -WORD MS-EXCEL
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CHAPTER 2 2.1 Section
INTRODUCTION TO COMPANY:
PUNJAB NATIONAL BANK : PNB has over 4500 branches and offices bringing the Punja
b National Bank to your doorstep. Around 2400 offices come under the network of
Centralized Banking Solution or CBS. A need for centralized banking system promp
ted PNB to go computerized and what followed was the establishment of CBS in Pun
jab National Bank branches in all the leading cities like Delhi, Pune, Chennai,
Mumbai, Ahmedabad, Chandigarh, Gurgaon, Hyderabad, Jalandhar, Kolkata, Ludhiana,
Nodal and Bangalore. Internet Banking Services are provided to all customers in
the CBS branches. A branch and ATM locator is also available on the official we
bsite of Punjab National Bank. For an overview of the annual report or the bank
profile, the site can be resourceful. The website also provides info on the care
ers and recruitments at PNB and the exam results. The careers at nationalized ba
nks like PNB are the most sought after one and candidates are selected on the ba
sis of their exam result. PNB topped the Best Paying Commercial Bank category wi
th an overall rating of 87.45% as evaluated by the SSS Retirement, Death & Funer
al Benefits Program. STATE BANK OF INDIA: State Bank of India (SBI) is India s l
argest commercial bank. SBI has a vast domestic network of over 9000 branches (a
pproximately 14% of all bank branches) and commands one-fifth of deposits and lo
ans of all scheduled commercial banks in India. The State Bank Group includes a
network of eight banking subsidiaries and several non-banking subsidiaries offer
ing merchant banking services, fund management, factoring services, primary deal
ership in government securities, credit cards and insurance.The eight banking su
bsidiaries are:State Bank of Bikaner and Jaipur (SBBJ),State Bank of Hyderabad (
SBH).State Bank of India (SBI),State Bank of
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Indore (SBIR),State Bank of Mysore (SBM),State Bank of Patiala (SBP),State Bank
of Saurashtra (SBS) and State Bank of Travancore (SBT). Today, State Bank of Ind
ia (SBI) has spread its arms around the world and has a network of branches span
ning all time zones. SBI s International Banking Group delivers the full range o
f cross-border finance solutions through its four wings - the Domestic division,
the Foreign Offices division, the Foreign Department and the International Serv
ices division.
2.2 Section OVERVIEW OF THE INDUSTRY: HISTORY:
Banking in India has a long and elaborate history of more than 200 years. The be
ginning of this industry can be traced back to 1786, when the country’s first ba
nk, Bank of Bengal, was established. But the industry changed rapidly and drasti
cally, after the nationalization of banks in 1969. As a result, the public secto
r banks began experiencing numerous positive changes and enormous growth. Then c
ame the muchtalked-about liberalization and economic reforms that allowed banks
to explore new business opportunities and not just remain constrained to generat
ing revenues from mere borrowing and lending. This provided the Indian banking s
cenario a remarkable facelift that only continues to get better with time. Howev
er, even today, despite the foray of foreign banks in the country, nationalized
banks continue to be biggest lenders in the country. This is primarily due to th
e size of the banks and the penetration of the networks. The Indian banking syst
em can be classified into nationalized banks, private banks and specialized bank
ing institutions. The industry is highly fragmented with 30 banking units contri
buting to almost 50% of deposits and 60% of advances. The Reserve Bank of India
is the foremost monitoring body in the Indian Financial sector. It is a centrali
zed body that monitors discrepancies and shortcomings in the system. Industry es
timates indicate that out of 274 commercial banks operating in the country, 223
banks are in the public sector and 51 are in the private sector. These private s
ector banks include 24 foreign banks that have begub their operations here. The
specialized banking institutions that include cooperatives, rural banks, etc. fo
rm a part of the nationalized banks category. Opportunities The Banking sector i
s considered the most lucrative option in today’s job market. In the industry, a
position in Treasury or Forex is considered right on top and this is followed b
y careers in Private Banking, Investment Banking and Retail Banking. One could w
ork in a variety of areas in banking industry including Recurring Deposit
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account, banking officer, probationary officer, loan officer, assessor, personal
loan officer, home loan officer, home loan agent, loan manager, mortgage loan u
nderwriter, loan processing officer, accountant, product marketing and sales exe
cutive, and customer service executive among others. In the Financial Services,
some of the important jobs include that of a stockbroker who is essentially a pe
rson who buys and sells securities on behalf of individuals and institutions for
some commission. While some brokers like to practice with individual clients ot
hers work for institutions. Brokers who work for institutional investors are oft
en called securities traders. Many prefer to work as dealers, advisors and secur
ities analysts. Security analysts are those who advise companies on floatation’s
of shares as they are expected to have sound knowledge of capital markets. Inve
stment analysts are the backbone of the financial services sector. They study th
e financial reports of companies, assess various statistical information, profit
ability projections, compare financial results, survey the industry as a whole a
nd on the basis of the available information, and finally conclude to a decision
. Equity Analysts do jobs similar to investment analysts and research the equity
markets and make predictions.
Growth:
The limit for foreign direct investment in private banks has been increased from
49% to 74%. In addition, the limit for foreign institutional investment in priv
ate banks is 49%. Liberalization and globalization have created a more challengi
ng environment in the banking sector as well as in the other segments of the fin
ancial sector such as mutual funds, Non Banking Finance Companies, post offices,
capital markets, venture capitalists, etc. Research and Markets has announced t
he addition of Indian Retail Banking, 2006 to their offering. Indian Retail Ba
nking continues to redefine the credit growth in the country. It grew by a whopp
ing 44.4% in 2005-06 to touch Rs 3,538 billion. This leap was despite the increa
se in risk weight by RBI for housing and real estate loans during August, 2005.
Housing, which constitutes more than 52% of all retail loans, grew at a robust r
ate of 44.35% during 2005-06. In order to help banks in India to understand the
market and competition and plan future strategies, we have just come out with an
Industry Insight on Indian Retail banking - 2006 edition. This report analyses
the retail banking market and its segments in India and presents the key trends,
along with issues and challenges. The report also paints a future outlook for t
he market. Besides it profiles 21 major players in the retail banking space and
their strategies. Finally, it seems Reserve Bank of India s (RBI) flurry of meas
ures to restrain the home finance market is paying off. With tightening of inter
est rates by the RBI and a simultaneous increase in real estate prices in a few
markets, the banking sector is witnessing a decline in the growth of its home lo
an portfolio. The home loan industry is experiencing a growth of 25% this year,
as against 30% growth in home loans earlier. Rajiv Sabharwal, senior general man
ager, ICICI Bank,
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which has recorded the highest incremental growth in home finance segment in rec
ent past, said, “The real estate prices have become very high in few markets, wh
ich has resulted in the fall in growth rates for home loans for the banking indu
stry. Home loan growth has reduced to 25% from its earlier growth rate at 30% an
d since we are an integral part of the industry, there will be some impact on us
too.” He added that the bigger impact had come from real estate prices, but obv
iously interest rates hikes will also have an impact. He, however, declined to d
isclose the bank’s current home loan growth rate. Echoing a similar view, a seni
or official of State Bank of India (SBI) said the home loan market is showing so
me signs of slowing down. However, another major player, Housing Development Fin
ance Corporation (HDFC) said the housing finance market for the middle class seg
ment was growing at a healthy pace. PNB Bank is a leading home loan lender of th
e country with about 30% market share. Retail lending comprises 70% of the total
loan portfolio of the bank, of which the home loan lending is about 50%. In the
first half of fiscal 2007, the bank experienced total home loan disbursements o
f Rs 13,400 crore.
MAJOR PLAYERS:
The financial sector in India has become stronger in terms of capital and the nu
mber of customers. It has become globally competitive and diverse aiming, at hig
her productivity and efficiency. Exposure to worldwide competition and deregulat
ion in Indian financial sector has led to the emergence of better quality produc
ts and services. Reforms have changed the face of Indian banking and finance. Th
e banking sector has improved manifolds in terms of capital adequacy, asset clas
sification, profitability, income recognition, provisioning, exposure limits, in
vestment fluctuation reserve, risk management, etc. TOP 10 PLAYERS IN BANKING &
FINANCE State Bank of India HDFC bank Citibank ICICI Bank Punjab National bank U
TI Bank Hongkong & Shanghai Banking Corp. Kotak Mahindra Bank Sundaram Bank Orie
ntal Bank of Commerce TOP 10 PLAYERS IN INSURANCE
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Life Insurance corporation of India Bajaj Allianz General Insurance ICICI Pruden
tial Life Insurance ICICI Lombard General Insurance Birla Sunlife Insurance Tata
AIG General Insurance New India Assurance Co. Iffco Tokio General Insurance Ori
ental Insurance Co. HDFC Standard Life Insurance
2.3 Section PROFILE OF THE ORGANISATION:
PROFILE OF PNB: The profile of the PNB shows superior banking services in corpor
ate, personal and international banking, industrial and agricultural finance and
finance of trade. Punjab National Bank boasts of a varied clientele consisting
of small and medium industrial units, exporters, multi-national companies, India
n
conglomerates and NRI. The Bank is changing outdated front and back end processe
s to modern customer friendly processes to help improve the total customer exper
ience. With about 8500 of its own 10000 branches and another 5100 branches of it
s Associate Banks already networked, today it offers the largest banking network
to the Indian customer. The Bank is also in the process of providing complete p
ayment solution to its clientele with its over 8500 ATMs, and other electronic c
hannels such as Internet banking, debit cards, mobile banking, etc.The objective
s of the Company are in line with objectives laid down by RBI for the Primary De
alers:
Strengthen the infrastructure in the government securities market in order to
make it vibrant, liquid and broad based. Ensure the development of underwritin
g and market making capabilities for Government Securities Improve secondary m
arket trading system, which would contribute to price discovery, enhance liquidi
ty and turnover and encourage voluntary holding of Government securities amongst
a wider investor base Become an effective conduit for conducting open market
operations.
16
PROFILE OF SBI: The SBI’s powerful corporate banking formation deploys multiple
channels to deliver integrated solutions for all financial challenges faced by t
he corporate universe. The Corporate Banking Group and the National Banking Grou
p are the primary delivery channels for corporate banking products. The Corporat
e Banking Group consists of dedicated Strategic Business Units that cater exclus
ively to specific client groups or specialize in particular product clusters. Fo
remost among these a specialized group is the Corporate Accounts Group (CAG), fo
cusing on the prime corporate and institutional clients of the country’s biggest
business centers. The others are the Project Finance unit and the Leasing unit.
The National Banking Group also delivers the entire spectrum of corporate bankin
g products to other corporate clients, on a nationwide platform. The bank is als
o looking at opportunities to grow in size in India as well as Internationally.
It presently has 82 foreign offices in 32 countries across the globe. It has als
o 7 Subsidiaries in India – SBI Capital Markets, SBICAP Securities, SBI DFHI, SB
I Factors, SBI Life and SBI Cards - forming a formidable group in the Indian Ban
king scenario. It is in the process of raising capital for its growth and also c
onsolidating its various holdings. Throughout all this change, the Bank is also
attempting to change old mindsets, attitudes and take all employees together on
this exciting road to Transformation. In a recently concluded mass internal comm
unication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day wo
rkshops across the country and covered over 130,000 employees in a period of 100
days using about 400 Trainers, to drive home the message of Change and inclusiv
eness. The workshops fired the imagination of the employees with some other bank
s in India as well as other Public Sector Organizations seeking to emulate the p
rogramme.
2.4 section
17
COMPANY HISTORY: PNB HISTORY:
Punjab National Bank of India was established by Lala Lajpat Rai in the preindep
endence India in 1895 in Punjab, with Lahore as its head office. Today it is the
second largest public sector bank in India. It was nationalized in 1969 along w
ith 13 other major commercial banks. The privatization started in 1989 when 30 p
er cent of its shares were offered to the public and it was listed on the stock
exchange.In 1992, PNB became the first Philippine bank to reach P100 billion in
assets. Later that year, privatization continued with a second public offering o
f its shares. In August 2005, PNB was fully privatized. The joint sale by the Ph
ilippine government and the Lucio Tan Group of the 67% stake in PNB was complete
d within the third quarter of 2005. The Lucio Tan Group exercised its right to m
atch the P 43.77 per share bid offered by a competitor and purchased the shares
owned by the government. The completion of sale is expected to speed up the deve
lopment of PNB’s franchise and operational competitiveness. SBI HISTORY: The ori
gins of State Bank of India date back to 1806 when the Bank of Calcutta (later c
alled the Bank of Bengal) was established. In 1921, the Bank of Bengal and two o
ther Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to fo
rm the Imperial Bank of India. In 1955, the controlling interest in the Imperial
Bank of India was acquired by the Reserve Bank of India and the State Bank of I
ndia (SBI) came into existence by an act of Parliament as successor to the Imper
ial Bank of India.
Today, State Bank of India (SBI) has spread its arms around the world and has a
network of branches spanning all time zones. SBI s International Banking Group d
elivers the full range of cross-border finance solutions through its four wings
- the Domestic division, the Foreign Offices division, the Foreign Department an
d the International Services division.
18
2.5 Section RECENT ACHIVEMENTS AND MILESTONES:
PNB Recent achievements and milestones Punjab National Bank (PNB), has announced
that it has completed 100% core banking implementation at all its 4604 branches
and extension counters through the Finacle Universal Banking Solution from Info
sys, on Sun infrastructure and the Oracle Database setting a significant milesto
ne for themselves and a new benchmark for the Indian banking industry. Completed
in November 2008, 4 months ahead of schedule, the bank implemented industry-lea
ding Finacle core banking solution from Infosys across its operations running a
flexible, and scalable database platform from Oracle and innovative servers from
Sun Microsystems With an increasingly dynamic business and regulatory environme
nt, PNB sought to not only achieve automation, but also centralize operations, s
tandardize branch processes, achieve high scalability for future business growth
, provide flexibility of creating innovative banking products to its lines of bu
siness, and at the same time, reduce overall costs. The visionary zeal and the f
uturistic view of the Bank’s top management in the year 2007-2008 incubated the
idea of introduction of a Centralised Banking solution. The bold and innovative
thought culminated into the CBS architecture with Finacle application on Oracle
Database and Sun hardware platform with Solaris Operating System. With Finacle’s
agile and future proof technology, the bank today has over 22,500 concurrent us
ers. The solution’s scalability has also enabled the bank’s scalability to be th
e best in the country with the number of peak transactions at 3.5 million. Finac
le core banking platform also provides the bank with exceptional agility for pro
duct innovation and improved flexibility of operations. With seamless integratio
n of delivery channels such as ATM and internet banking solutions, PNB is able t
o provide 24X7 services to customers at a reduced transaction cost. PNB’s choice
of the Oracle Database has provided the bank’s IT infrastructure with robustnes
s, management features, security and scalability as well as performance requirem
ents to service 3.5 million transactions and 22500 concurrent users – a signific
ant achievement in the Indian banking industry. In addition, the Oracle Database
will help PNB take control of its enterprise information, gain better business
insight, and quickly and confidently adapt to an increasingly changing competiti
ve environment.
19
With secure, highly available and scalable grids of low-cost servers and storage
, Oracle customers can tackle the most demanding transaction processing, data wa
rehousing, business intelligence and content management applications. The 100% i
mplementation of Finacle Core Banking Solution shall enable PNB to further reduc
e operational costs and revenue leakage while improving productivity of branches
, introduction of new and innovative products and visibility of business. The an
ywhere anytime banking facility will enable the bank to offer products for every
segment of the customer. PNB long-standing and progressive partnership also hig
hlights Finacle’s leadership in large scale banking transformation, the solution
’s future proof technology and powerful capabilities. India is a strategic marke
t for Finacle and we look forward to closely collaborating with Punjab National
Bank for their future growth plans.”
SBI RECENT ACHIVEMENTS AND MILESTONES:
AWARDS:SBI has been the proud recipient of the ICRA Online Award - 8 times, CNBC
TV – 18, Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005-2006) and mo
st recently with the CNBC TV - 18 Crisil Mutual Fund of the Year Award 2007 and
5 Awards for our schemes. SBI Card reaches three million milestone: SBI Card, a
joint venture between State Bank of
India and GE Money, announced yet another landmark achievement of crossing the t
hree million cardholders-mark. Roopam Asthana, CEO-SBI Card, said, "This milesto
ne is even more remarkable as we have added one million cardholders in just ten
months. Our objective is to accelerate the pace of growth by extending the benef
its to a broader range of consumers in Tier II cities, along with improved value
propositions for the urban affluent customers." SBI Card recently signed up Ind
ian cricketer Yuvraj Singh as its brand ambassador.
SBI joins Chinese bank to touch 10,000 branches: Public sector State Bank of Ind
ia on Sunday became only the second bank in the world to have 10,000 branches wh
en Union Finance Minister P Chidambaram inaugurated its latest branch here. Spea
king on the occasion, Chidambaram said China s ICBC Bank was the other bank to h
ave 10,000 branches. Opening 10,000 branches was a great feat. "It is not an eas
y milestone though the SBI was the bank of the government and Indian people even
before other banks were nationalised," he said. People all over the world, incl
uding the Chinese, would now know about this small village where the 10000th bra
nch of the SBI had been opened, he said adding they would be amazed by the bank
s growth. The bank should be proud of the achievement he said and wished that th
e bank opened one lakh branches. The Minister said out of the over 100 crore peo
ple, seventy 75 per cent did not have any type of insurance. Similarly, 50 per c
ent of the 11 crore farmers did not have bank account. Banks should go to the pe
ople and enroll them as account holders. That is what economists say is financi
al inclusion, he said. 20
2.6 Section PRODUCT RANGE OF COMPANY/INDUSTRY:
The products and services provided by the SBI and PNB are in various fields, suc
h as: • • • • • • Banking services NRI services International banking Corporate
banking Agricultural banking International banking
2.7 Section PERFORMANCE OF COMPANTY IN LAST FIVE YEARS:
PNB performance in last five years: 1st Quarter Net Income UP 48% Year-on-Year T
aking-off from a breakthrough performance in 2007 with a registered net income o
f P1.5 billion, PNB continues to reap the benefits from its efforts to strengthe
n core businesses, reduce non-performing assets and manage costs. Net Income for
the 1st Quarter of 2008 registered P457 million, up 48% from P308 million of th
e same period last year. This performance bucks industry trends for the 1st quar
ter of 2008 based on published income reports. Even as the operating environment
proved volatile where negative trends are expected, PNB still managed to reflec
t a 136% growth in foreign exchange gains year-on-year, from P242 million to P57
1 million. A relentless focus in generating low-cost funds from deposits and oth
er funding sources led to a reduction in total interest expense by as much as 27
%. Total deposits closed firm at P180 billion. Operating expenses were down 23%
despite investments made in systems enhancement and upgrading of facilities. The
Bank has recently implemented a new generation core banking system: Flexcube –
an end-to-end solution designed to automate both corporate and retail banking bu
sinesses; and effectively in-source core overseas operations to its global data
center in the Philippines. PNB’s Japan, Singapore, Hongkong and United States br
anches as well as the London subsidiary have already been converted and the rest
of the Bank is expected to go live soon. As of March 31, 2008, PNB’s consolidat
ed total asset size remained strong at P242 Billion, up P2.7 billion versus end-
2007. With the significant strengthening of its balance sheet over the past few
years, PNB has been able to concentrate on generating new client relationships i
n the corporate segment, both in the large and SME categories. The contribution
from the consumer finance business has likewise continued to register accelerate
d growth. Total consumer loans portfolio stood at P3.3
21
billion, up 25% from end-2007. Combined new bookings for the 1st quarter 2008 al
ready reached the half-billion mark. PNB’s Net Loans and Receivables closed P77
billion. As of March 31, 2008, PNB’s Capital Adequacy Ratio under Basel II remai
ned formidable at 18.51%, still way above the 10% ratio required by the Bangko S
entral ng Pilipinas. Subject to appropriate approvals and clearances, PNB is goi
ng to the capital markets to raise a minimum of P3 billion of Tier 2 Capital in
preparation for its maturing subordinated notes in February 2009. PNB will emerg
e as the 4th largest domestic bank in the country in terms of asset size once it
s planned merger with Allied Banking Corporation (ABC) is completed. The respect
ive Board of Directors of PNB and ABC passed resolutions last April 30, 2008 app
roving the plan to merge the two banks. This transaction is subject to the appro
val of shareholders and regulatory authorities and is expected to be completed b
y the 3rd quarter of 2008. SBI performance in last five years: State Bank of Ind
ia (SBI) is all geared up to increase its business per employee and profit per e
mployee as it thinks that for SBI, these two parameters are among the lowest in
the industry. On one hand, the bank is trying to reduce its staff strength which
would eventually improve the ratios; but on the other, the bank is also going f
lat out to increase its customer base. "Our business per employee and profit per
employee is one of the lowest in the industry," SBI had recently said in a join
t statement issued by the management and unions.SBI s generates Rs 2.99 crore of
business per employee, while its profit per employee is just about Rs 2.17 lakh
. By contrast, majority of the large public sector banks are better in terms of
both these parameters. For instance, Canara Bank has a business per employee (BP
E) of Rs 4.42 crore, while Union Bank of India s BPE is at Rs 4.36 crore and Ban
k of Baroda s (BoB) Rs 3.51 crore. These are according to their respective annua
l reports for 2005-06. On the other hand, Canara Bank s profit per employee (PPE
) is also on the higher side at Rs 3.02 lakh. The PPEs of Union Bank and BoB are
at Rs 2.66 lakh and Rs 2.13 lakh, respectively. "Over the years, we have been s
teadily losing our marketshare from about 35% in 1970s to around 16% in 2006. Ou
r vast network is failing to attract the new and demanding young customers," SBI
said in that statement, which is addressed to all SBI officers and employees an
d aimed at changing their attitude towards customers.
22
The statement was jointly signed by chairman OP Bhatt, managing directors TS Bha
ttacharya and Yogesh Agarwal and top office bearers of its officers and employee
s associations. To address these issues, both the management and unions have agr
eed to work hand in hand. They have appealed to the bank s staffs to go flat out
to increase its customer base."Let us be conscious of the customer s overall ne
eds rather than only the transaction at hand. Let us expand our customer base,"
the statement read. The bank has nearly 37 lakh savings bank accounts in the Ben
gal circle itself.Meanwhile, the country s largest and oldest bank has offered a
n exit option scheme (EOS) to its employees. The bank has some 2.1 lakh staffs,
out of which nearly 1.4 lakh are clerical and subordinate employees.
2.8 Section FINANCIAL STATUS OF THE ORGANISATION:
PNB financial status for last five years: Annual results
Mar 08 Sales Operating profit Interest Gross profit EPS (Rs) Mar 07 Mar 06
Mar 05 Mar 04 14,265.02 11,537.48 9,584.15 8,459.85 7,778.94 10,029.21 8,73
0.86 4,006.24 64.98 7,149.74 5,721.06 4,683.04 4,056.84 6,022.91 4,917.39 4,453.
11 4,154.99 3,230.64 2,874.77 2,707.21 3,120.86 48.84 45.65 44.72 41
Balance sheet
Mar 08 Sources of funds Owner s fund Equity share capital Share application mo
ney Preference share capital Reserves & surplus Loan funds 315.30 10,467.35 315.
30 9,826.31 315.30 8,758.68 315.30 265.30 Mar 07 Mar 06 Mar 05 Mar 04
7,533.50 4,425.47
23
Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less
: revaluation reserve Less : accumulated depreciation Net block Capital work-in-
progress Investments Net current assets Current assets, loans & advances Less :
current liabilities & provisions Total net current assets Miscellaneous expenses
not written Total Notes: Book value of unquoted investments Market value of quo
ted investments Contingent liabilities Number of equity sharesoutstanding (Lacs)
-
-
-
-
-
1,66,457.23 1,39,859.67 1,19,684.92 1,03,166.89 87,916.40 1,77,239.88 1,50,001.2
8 1,28,758.90 1,11,015.69 92,607.16
3,699.64 1,535.70 1,384.12 779.83 53,991.71
2,247.74 293.85 1,237.92 715.98 45,189.84
2,106.92 302.38 1,076.69 727.84 41,055.31
1,875.65 1,645.93 312.49 910.42 652.74 321.04 746.08 578.81 -
50,672.83 42,125.49
4,380.84 14,798.23 -10,417.38 44,354.15
3,980.80 10,178.51 -6,197.71 39,708.10
3,762.79 9,518.93 -5,756.14 36,027.01
3,101.44 3,261.18 12,194.80 8,114.48 -9,093.36 -4,853.30 -
42,232.20 37,850.99
1,04,055.87 3153.03
74,700.48 3153.03
58,739.31 3153.03
-
-
47,047.19 32,229.85 3153.03 2653.03
Profit loss account
Mar 08 Income: Operating income Expenses Material consumed Manufacturing expen
ses Personnel expenses Selling expenses 2,461.54 23.31 2,352.45 18.03 2,114.97 2
0.15 2,121.23 19.16 1,654.06 10.85 15,925.65 12,104.24 9,791.12 9,712.63 9,617.3
4 Mar 07 Mar 06 Mar 05 Mar 04
24
Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other
recurring income Adjusted PBDIT Financial expenses Depreciation Other write off
s Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjus
tments Reported net profit Earnigs before appropriation Equity dividend Preferen
ce dividend Dividend tax Retained earnings
1,247.47 3,732.33 3,462.46 231.62 3,694.08 8,730.86 170.23 3,523.85 1,247.15 2,0
47.63 1.13 2,048.76 2,064.28 409.89 69.66 1,584.73
1,360.77 3,731.25 2,350.09 186.67 2,536.76 6,022.91 194.80 2,341.96 629.05 1,539
.33 0.76 1,540.08 1,723.57 409.89 63.11 1,250.57
941.38 3,076.51 1,797.23 131.54 1,928.77 4,917.39 186.65 1,742.12 412.83 1,436.6
6 2.65 1,439.31 1,439.31 189.18 26.53 1,223.60
933.60 3,073.99 2,185.53 470.69 2,656.22 4,453.11 183.28 2,472.94 495.49 1,409.5
0 0.62 1,410.12 1,410.12 174.18 23.48 1,212.46
1,764.91 3,429.82 2,032.53 59.85 2,092.38 4,154.99 181.45 1,910.93 660.79 1,108.
45 0.24 1,108.69 1,108.69 106.12 13.60 988.97
Cash flow
Mar 08 Profit before tax Net cashflow-operating activity Net cash used in inve
sting activity Netcash used in fin. activity Net inc/dec in cash and equivlnt Ca
sh and equivalnt begin of year Cash and equivalnt end of year 3,295.91 Mar 07
2,169.13 Mar 06 2,033.87 Mar 05 Mar 04 1,904.74 1,768.68 1,073.53 -349.83
1,544.81 2,268.51 529.29 -176.20 390.24 743.33
1,756.13 -10,144.34 14,961.44 -444.46 1,873.54 3,185.21 -159.41 1,157.57 -465.64
-793.13
-9,146.17 13,702.66
15,645.52 24,791.69 11,089.03
8,820.51 8,077.19
18,830.72 15,645.52 24,791.69 11,089.03 8,820.51
SBI financial status for last five years: Annual results
Mar 09 Sales Operating profit Mar 08 Mar 07 0.90 0.35 Mar 06 0.44 -0.06
Mar 05 0.66 -0.03
25
Interest Gross profit EPS (Rs)
24.67 -24.63 -16.42
21.36 -18.24 -12.17
21.29 -4.79 -3.19
21.30 -21.17 -14.13
21.30 -20.35 -13.58
Balance sheet
Mar 08 Sources of funds Owner s fund Equity share capital Share application mo
ney Preference share capital Reserves & surplus Loan funds Secured loans Unsecur
ed loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve
Less : accumulated depreciation Net block Capital work-in-progress Investments
Net current assets Current assets, loans & advances Less : current liabilities &
provisions Total net current assets Miscellaneous expenses not written Total No
tes: Book value of unquoted investments Market value of quoted investments Conti
ngent liabilities Number of equity sharesoutstanding 0.22 150.00 0.21 150.00 0.2
2 150.00 10.40 150.00 10.40 150.00 11.44 306.47 -295.04 -294.56 16.30 293.09 -27
6.79 -276.32 23.98 296.10 -272.12 -271.64 24.38 275.52 -251.14 -250.66 32.15 263
.77 -231.62 -230.35 0.57 0.10 0.48 0.57 0.10 0.48 0.72 0.24 0.48 0.72 0.24 0.48
2.86 1.59 1.27 -294.56 -276.32 -271.64 -250.66 -230.35 15.00 -309.56 15.00 -291.
32 15.00 -286.64 15.00 -265.66 15.00 -245.35 Mar 07 Mar 06 Mar 05 Mar 04
26
(Lacs)
Profit loss account
Mar 08 Income: Operating income Expenses Material consumed Manufacturing expen
ses Personnel expenses Selling expenses Adminstrative expenses Expenses capitali
sed Cost of sales Operating profit Other recurring income Adjusted PBDIT Financi
al expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT
Non recurring items Other non cash adjustments Reported net profit Earnigs befor
e appropriation Equity dividend Preference dividend Dividend tax Retained earnin
gs 0.03 0.12 0.29 0.44 0.58 2.53 3.11 21.36 -18.24 -18.25 -18.25 -312.32 -312.32
0.09 0.41 0.51 0.39 12.16 12.55 21.35 -8.80 0.01 -8.81 4.13 -4.67 -294.08 -294.
08 0.14 0.29 0.44 0.01 0.10 0.11 21.36 0.01 -21.26 0.01 -21.27 0.01 0.27 -20.99
-289.40 -289.40 0.20 0.48 0.68 -0.03 0.79 0.76 21.30 0.02 -20.56 -20.56 0.08 0.1
7 -20.31 -268.42 -268.42 0.72 0.03 12.45 13.20 -2.30 -2.30 28.66 1.02 -31.98 -31
.98 -2.95 9.65 -25.29 -248.11 -248.11 1.02 0.90 0.44 0.66 10.90 Mar 07 Mar 0
6 Mar 05 Mar 04
Cash flow
Mar 08 Profit before tax -18.24 Mar 07 -4.67 Mar 06 -20.98 Mar 05 -21.06
Mar 04 -25.29
27
Net cashflow-operating activity Net cash used in investing activity Netcash used
in fin. activity Net inc/dec in cash and equivlnt Cash and equivalnt begin of y
ear Cash and equivalnt end of year
-4.89 -4.89 16.16 11.27
5.65 5.65 10.51 16.16
0.08 0.01 0.09 10.42 10.51
-7.02 0.85 -0.46 -6.64 17.06 10.42
88.19 29.46 -131.50 -13.85 30.91 17.06
2.9 Section FUTURE PLANS:
PNB future plans: PNB has initiated various steps in a bid to expand its operati
ons in the state of Kerala. These include opening new branches and increasing th
e number of its core banking solutions branches. PNB currently has 71 CBS branch
es in Kerala and has registered good growth from this region. PNB in looking at
increasing its international presence and in line with this, the company is plan
ning to set up offices in UK, Singapore, Hong Kong and Canada. The Canada office
is likely to open very soon, while the other locations are likely to commence o
perations by end of this fiscal year. PNB unvieled its plans to raise additional
capital of Rs. 21,000 million to fund its business expansion plans for this cur
rent fiscal. SBI future plans: SBI has set for itself an ambitious target of cre
dit linking 1 million SHGs up to March 2008.The Bank has started to leverage our
vast SHG network for various services beyond credit delivery. The State Bank of
India (SBI) has formulated a “home-grown strategy” to merge its six associated
banks with it within this fiscal. SBI drawn up a home-grown strategy to carry ou
t the merger programme and we may take up such mergers one by one, or two at a t
ime or in a phased manner. SBI want the future mergers to be as smooth as the me
rger.Post-merger, the size of SBI’s balance sheet will cr-oss Rs 12,00,000 crore
and its profitablity will increased.
28
CHAPTER 3 REVIEW OF LITERATURE:
1) In august 2001 James B. Thomson and Ben R. Craig had studied about the Federa
l Home Loan Bank Lending to Community Banks,are Targeted Subsidies Necessary? Th
e Gramm-Leach-Bliley Act of 1999 amended the lending authority of the Federal Ho
me Loan Banks to include advances secured by small enterprise loans of community
financial institutions. Three possible reasons for the extension of this select
ive credit subsidy to community banks and thrifts are examined, including the ne
ed to: subsidize community depository institutions, stabilize the Federal Home L
oan Banks, and address a market failure in rural markets for small enterprise lo
ans. They empirically investigate whether funding constraints impact the smallbu
siness lending decision by rural community banks. Specifically, they estimate tw
o empirical models of small-business lending by community banks. The data reject
the hypothesis that access to increased funds will increase the amount of small
-business loans made by community banks.
2) In December 2006 Fulbag Singh and Reema Sharma had studied about the housing
Finance in India. Housing, as one of the three basic needs of life, always remai
ns on the top priority of any person, economy, government and society at large.
In India, majority of the population lives in slums and shabby shelters in rural
areas. From the last decade, the Government of India has been continuously tryi
ng to strengthen the housing sector by introducing various housing loan schemes
for rural and urban population. The first attempt in this regard was the Nationa
l Housing Policy (NHP), which was introduced in 1988. The National Housing Bank
(NHB) was set up in 1988 as an apex institution for housing finance and a wholly
-owned subsidiary of Reserve Bank of India (RBI). The main objective of the bank
is to promote and establish the housing financial institutions in the country a
s well as to provide refinance facilities to housing finance corporations and sc
heduled commercial banks. Moreover, for the salaried section, the tax rebates on
housing loans have been introduced. The paper is based on the case study of LIC
Housing Finance Ltd., which analyzes region-wise disbursements of individual ho
use loans, their portfolio amounts and the defaults for the last ten years, i.e.
, from 1995-96 to 2004-05 by working out relevant ratios in terms of percentages
and the compound annual growth rates. A relevant chart has also been prepared t
o highlight the results.
3) In May 18, 2007 Michael LaCour-Little had studied about the Economic Factors
Affecting Home Mortgage Disclosure Act Reporting. The public release of the 2004
2005 Home Mortgage Disclosure Act data raised a number of questions given the in
crease in the number and percentage of higher-priced home mortgage loans and con
tinued differentials across demographic groups. Here we assess three possible ex
planations for the observed increase in 2005 over 2004: (1) changes in lender bu
siness practices; (2) changes in the risk profile of borrowers; and (3) changes
in the yield curve environment. Results suggest that after controlling for the m
ix of loan types, credit risk factors, and the yield curve, there was no statist
ically significant
29
increase in reportable volume for loans originated directly by lenders during 20
05, though indirect, wholesale originations did significantly increase. Finally,
given a model of the factors affecting results for 2004-2005, we predict that 2
006 results will continue to show an increase in the percentage of loans that ar
e higher priced when final numbers are released in September 2007.
4) In may 1991 Stephen F. Borde had studied about the “Is the Savings and Loan I
ndustry Facing Extinction?” This article tells about the Saving and loan crisis.
Proposed solutions are discussed in the context of the industry as it currently
stands. With a somewhat similar liability structure to that of banks (mainly sh
ort-term deposits), the asset structure of S&Ls is quite different. Whereas bank
s assets consist of short-term loans, S&L assets consist largely of long-term lo
ans, such as home ownership mortgages. Therefore, in the absence of adequate hed
ging measures, S&Ls are more vulnerable to interest rate risk, which can lead to
lower profits when interest rates rise.
5) In June 29, 2001 Joshua Rosner had studied about the Housing in the New Mille
nnium: A Home Without Equity is Just a Rental with Debt. They studied about the
prospects of the U.S. housing/mortgage sector over the next several years. Based
on our analysis, we believe there are elements in place for the housing sector
to continue to experience growth well above GDP. However, we believe there are r
isks that can materially distort the growth prospects of the sector. Specificall
y, it appears that a large portion of the housing sector s growth in the 1990 s
came from the easing of the credit underwriting process. Such easing includes: *
The drastic reduction of minimum down payment levels from 20% to 0% * A focused
effort to target the "low income" borrower * The reduction in private mortgage
insurance requirements on high loan to value mortgages * The increasing use of s
oftware to streamline the origination process and modify/recast delinquent loans
in order to keep them classified as "current" * Changes in the appraisal proces
s which has led to widespread overappraisal/overvaluation problems If these tren
ds remain in place, it is likely that the home purchase boom of the past decade
will continue unabated. Despite the increasingly more difficult economic environ
ment, it may be possible for lenders to further ease credit standards and more f
ully exploit less penetrated markets. Recently targeted populations that have hi
storically been denied homeownership opportunities have offered the mortgage ind
ustry novel hurdles to overcome. Industry participants in combination with eased
regulatory standards and the support of the GSEs (Government Sponsored Enterpri
ses) have overcome many of them. If there is an economic disruption that causes
a marked rise in unemployment, the negative impact on the housing market could b
e quite large. These impacts come in several forms. They include a reduction in
the demand for homeownership, a decline in real estate prices and increased fore
closure expenses. These impacts would be exacerbated by the increasing debt burd
en of the U.S. consumer and the reduction of home equity available in the home.
Although we have yet to see any materially negative consequences of the relaxati
on of credit standards, we believe the risk of credit relaxation and leverage ca
n t be ignored. Importantly, a relatively new method of loan forgiveness can tem
porarily alter the perception of credit health in the housing sector. In an effo
rt to keep homeowners in the home and reduce foreclosure expenses, holders of mo
rtgage assets are currently recasting or modifying troubled loans. Such policy i
nitiatives may for a time distort the relevancy of delinquency and foreclosure s
tatistics. However, a protracted housing slowdown could eventually cause modific
ations to become uneconomic and, thus, credit quality
30
statistics would likely become relevant once again. The virtuous circle of incre
asing homeownership due to greater leverage has the potential to become a viciou
s cycle of lower home prices due to an accelerating rate of foreclosures. 6) In
dec 2002 Melissa B. Jacoby had studied about the Home Ownership Risk Beyond a Su
bprime Crisis: The Role of Delinquency Management. They studied that Public inve
stment in and promotion of homeownership and the home mortgage market often reli
es on three justifications to supplement shelter goals: to build household wealt
h and economic self-sufficiency, to generate positive social-psychological state
s, and to develop stable neighborhoods and communities. Homeownership and mortga
ge obligations do not inherently further these objectives, however, and sometime
s undermine them. The most visible triggers of the recent surge in subprime deli
nquency have produced calls for emergency foreclosure avoidance interventions (a
s well as front-end regulatory fixes). Whatever their merit, I contend that a sy
stem of mortgage delinquency management should be an enduring component of housi
ng policy. Furtherance of housing and household policy objectives hinges in part
on the conditions under which homeownership is obtained, maintained, leveraged,
and - in some situations - exited. Given that high leverage or trigger events s
uch as job loss and medical problems play significant roles in mortgage delinque
ncy independent of loan terms, better origination practices cannot eliminate the
need for delinquency management. One function of this brief essay is to identif
y an existing rough framework for managing delinquency. Legal scholarship should
no longer discuss mortgage enforcement primarily in terms of foreclosure law an
d instead should include other debtor-creditor laws such as bankruptcy, industry
loss mitigation efforts, and thirdparty interventions such as delinquency housi
ng counseling. In terms of analyzing this framework, it is tempting to focus on
its impact on mortgage credit cost and access or on the absolute number of homes
temporarily saved, but my proposed analysis is based on whether the system hono
rs and furthers the goals of wealth building, positive social psychological stat
es, and community development. Because those ends are not inexorably linked to o
wnership generally or owning a particular home, a system of delinquency manageme
nt that honors these objectives should strive to provide fair, transparent, huma
ne, and predictable strategies for home exit as well as for home retention. Alth
ough more empirical research is needed, this essay starts the process of analyzi
ng mortgage delinquency management tools in the proposed fashion.
7)
In 1999 Yoko Moriizumi had studied about the Current Wealth, Housing Purchase an
d Private Housing Loan Demand in Japan. Japanese households accumulate wealth fo
r downpayments at a high rate. Therefore, current wealth plays an important role
in home acquisition as public loans whose direct mortgage lending is a strong s
upport for home purchasers. We estimate the wealth effect on private mortgage de
bt as well as housing consumption by applying a model where mortgage debt demand
is derived from house purchase decisions and is determined jointly with housing
consumption. We use a simultaneous equation Tobit estimation method. Wealth eff
ects on private mortgage debt, likelihood of borrowing, and housing consumption
are not elastic. On the other hand, a change in housing consumption affects the
likelihood of borrowing elastically much more than the private mortgage amount o
f borrowers. Housing and private mortgage markets fluctuate very closely with th
e number of participants in the mortgage market. Therefore, the number of housin
g starts is linked strongly to the private mortgage market.
8) Robert B. Avery and Allen N. Berger had studied about the Loan commitments an
d bank risk exposure. They studied about the Loan commitments increase a
bank s risk by obligating it to issue future loans under terms that it might oth
erwise refuse. However, moral hazard and adverse selection problems
31
potentially may result in these contracts being rationed or sorted. Depending on
the relative risks of the borrowers who do and do not receive commitments, comm
itment loans could be safer or riskier on average than other loans. the empirica
l results indicate that commitment loans tend to have slightly better than avera
ge performance, suggesting that commitments generate little risk or that this ri
sk is offset by the selection of safer borrowers.
9) Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studied about
the Loan commitments and private firms. They studied that, Most loans
are in the form of credit lines. Empirical studies of line demand have been comp
licated by their use of data on publicly traded firms, which have a wide menu of
financing options. We avoid this problem by using a unique proprietary data set
from a large financial institution of loan commitments made to 712 privately-he
ld firms. We test Martin and Santomero s (1997) model, in which lines give firms
the speed and flexibility to pursue investment opportunities. Our findings are
consistent with their predictions. Firms facing higher rates and fees have small
er credit lines. Firms with higher growth commit to larger lines of credit and h
ave a higher rate of line utilization. Firms experiencing more uncertainty in th
eir funding needs commit to smaller credit lines. Almost all firms convert unuse
d credit line portions into spot loans and take out new lines.
10) Faik Koray and Eric T. Hillebrand had studied about the Interest Rate Volati
lity and Home Mortgage Loans . they studied that The U.S. economy has experience
d substantial fluctuations in real and nominal interest rates since the 1970s. T
his paper investigates empirically the relationship between home mortgage loans
and volatility in mortgage rates for the period 1971:02 through 2003:03. Contrar
y to common wisdom, we find a positive relationship between mortgage rate volati
lity and home mortgage loans. Further investigation indicates that this is due t
o volatility in the bond market. In times of high interest volatility, household
s disinvest in government securities and invest in real assets, which yield a po
sitive relationship between mortgage rate volatility and home mortgage loans.
11) In nov 2000 Michelle J. White and Emily Y. Lin had studied about the Bankrup
tcy and the Market for Mortgage and Home Improvement Loans. They studied that Th
is paper investigates the relationship between bankruptcy exemptions and the ava
ilability of credit for mortgage and home improvement loans. We develop a combin
ed model of debtors decisions to file for bankruptcy and to default on their mo
rtgages and show that the theory predicts positive relationships between both th
e homestead and personal property exemption levels and the probability of borrow
ers being denied mortgage (secured) and home improvement loans. We test these pr
edictions empirically and find strong and statistically significant support when
evidence from crossstate variation in bankruptcy exemption levels is used. Appl
icants for mortgages are 2 percentage points more likely to be turned down for m
ortgages and 5 percentage points more likely to be turned down for home improvem
ent loans if they live in states with unlimited rather than low homestead exempt
ions. These relationships also hold when we introduce state fixed effects into t
he model. 12) In October 14, 2008 David P. Bernstein had studied about the Home
Equity Loans and Private Mortgage Insurance: Recent Trends & Potential Implicati
ons. They studied about the the impact of increased use of home equity lines and
decreased
32
private mortgage insurance (PMI) on mortgage markets. The data confirms that in
the years leading up to the mortgage crisis home buyers and lenders have aggress
ively used piggyback loans to avoid taking out PMI on first mortgages. Multiple-
mortgage financing packages as a percent of newly originated mortgages (mortgage
s originated within the previous five years) went from 14.8% in survey year 2001
to 21.5% in survey year 2007. The multiple-mortgage percentage for seasoned mor
tgages (mortgages originated more than five years prior to the origination date)
also increased by a modest amount. Further comparisons reveal a large decrease
in the proportion of mortgages with PMI with the largest decreases in PMI covera
ge occurring among newly originated multiple-lien packages. Data from the SCF wa
s used to compare five financial characteristics (credit card debt, installment
loans, consumer credit, home-owners equity, and liquid assets) for multiple-lien
versus single-lien households. The comparisons suggest single-lien households t
end to have slightly stronger financial variables than multiple-lien households.
The data does not support the view that homeowners with multiple liens are less
risky and should therefore be allowed to avoid PMI. The reduced use of PMI and
the increased use of home equity loans increased mortgage holder risk in several
different ways and was a contributing factor to the 2008 mortgage and financial
crisis. This change in lending and borrowing behavior is not a subprime market
problem.
13) In aug 2007 Michael LaCour-Little had studied about the The Home Purchase Mo
rtgage Preferences of Low- and Moderate-Income Households. Housing policy in the
United States has long supported homeownership, yet variation persists across i
ncome groups. This article employs recent mortgage origination data to focus on
the revealed preferences of low- and moderateincome (LMI) households in home pur
chase mortgage choice. I identify the factors associated with conventional confo
rming, FHA, nonprime and specially targeted programs. Empirical results show tha
t individual credit characteristics and financial factors, including pricing, ge
nerally drive product choice, with some variation evident when loans are origina
ted through brokers. Results also indicate that targeted conventional programs e
ffectively compete with government-insured products in the LMI segment.
14) In 24 oct 2008 David C. Wheelock had studied about the Government Response t
o Home Mortgage Distress: Lessons from the Great. They studied about the The Gre
at Depression was the worst macroeconomic collapse in U.S. history. Sharp declin
es in household income and real estate values resulted in soaring mortgage delin
quency rates. According to one estimate, as of January 1, 1934, fully one-half o
f U.S. home mortgages were delinquent and, on average, some 1000 home loans were
foreclosed every business day. This paper documents the increase in residential
mortgage distress during the Depression, and discusses actions taken by state g
overnments and the federal government to reduce mortgage foreclosures and restor
e the functioning of the mortgage market. Many states imposed moratoria on both
farm and nonfarm residential mortgage foreclosures. Although moratoria reduced f
arm foreclosure rates in the short run, they appear to have also reduced the sup
ply of loans and made credit more expensive for subsequent borrowers. The federa
l government took a number of steps to relieve residential mortgage distress and
to promote the recovery and growth of the national mortgage market. The Home Ow
ners Loan Corporation (HOLC) was created in 1933 to purchase and refinance delin
quent home loans as long-term, amortizing mortgages. Between 1933 and 1936, the
HOLC acquired and refinanced one million delinquent loans totaling $3.1 billion.
The HOLC refinanced loans on some 10 percent of all nonfarm, owner-occupied dwe
llings in the United States, and about 20 percent of those with an outstanding m
ortgage. The Great Depression experience suggests how foreclosures might be redu
ced during the present crisis.
33
15) In march 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about th
e Financial Market Imperfections and Home Ownership: A Comparative Study. They e
xplore the determinants of the international pattern of home ownership using the
Luxembourg Income Study (LIS), a collection of microeconomic data on fourteen O
ECD countries. In most, the cross-section is repeated over time and includes sev
eral demographic variables carefully matched between the different surveys. This
allows us to construct a truly unique international dataset, merging data on mo
re than 400,000 households with aggregate panel data on mortgage loans and down
payment ratios. After controlling for demographic characteristics, country effec
ts, cohort effects and calendar time effects, we find strong evidence that the a
vailability of mortgage finance - as measured by outstanding mortgage loans and
down payment ratios - affects the age-profile of home ownership, especially at t
he young end. The results have important implications for the debate on the rela
tionship between saving and growth.
16) In 10 dec 2007 Irina Paley and Chau Do had studied about the Explaining the
Growth of Higher-Priced Loans in HMDA: A Decomposition Approach. The period 2004
-2005 showed a significant increase in Home Mortgage Disclosure Act (HMDA) rate
spread reporting. Following the Oaxaca (1973), Blinder (1973), and Fairlie (2005
) decomposition techniques, this study identifies the fraction of the increase d
ue to the flattening of the yield curve. Even after controlling for changes in b
orrower risk characteristics, the findings reveal that during 20042006, the flat
tening of the yield curve explains a significant amount of the increase in rate
spread reportable loans. This is the case for both prime and subprime originatio
ns.
17) In feb 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael LaCour-Little h
ad studied about the unique paired loan dataset containing information on multip
le conventional conforming mortgage loans of households to examine home equity e
xtraction decisions over the period 2000-2006. The main question addressed is ho
w much households borrow when refinancing their current mortgage debt in a cash-
out transaction. We also provide estimates of the marginal effect of certain bor
rower characteristics. Results contribute both to the literature on refinancing
behavior and the role of house price appreciation in providing funds that may be
used for consumer spending or other purposes.
18) In aug 2004 Mark Carey and Greg Nini had studied about the Is the Corporate
Loan Market Globally Integrated? A Pricing Puzzle. We offer evidence that intere
st rate spreads on syndicated loans to corporate borrowers are economically sign
ificantly smaller in Europe than in the U.S., other things equal. Differences in
borrower, loan and lender characteristics associated with equilibrium mechanism
s suggested in the literature do not appear to explain the phenomenon. Borrowers
overwhelmingly issue in their natural home market and bank portfolios display s
ignificant home "bias." This may explain why pricing discrepancies are not compe
ted away, but the fundamental causes of the discrepancies remain a puzzle. Thus,
important determinants of loan origination market outcomes remain to be identif
ied, home "bias" appears to be material for pricing, and corporate financing cos
ts differ in Europe and the U.S.
19) In july 2005 Gwilym B.J. Pryce and Patric H. Hendershott had studied abot th
e The Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage In
terest.Mortgage interest tax deductibility is needed to treat debt and equity fi
nancing of homes equally. Countries that limit deductibility create a debt tax p
enalty that presumably leads households to shift from debt toward equity financi
ng. The greater the shift, the less is the tax revenue raised by the limitation
and smaller is its
34
negative impact on housing demand. Measuring the financing response to a legisla
tive change is complicated by the fact that lenders restrict mortgage debt to th
e value of the house (or slightly less) being financed. Taking this restriction
into account reduces the estimated financing response by 20 percent (a 32 percen
t decline in debt vs a 40 percent decline). The estimation is based on 86,000 ne
wly originated UK loans from the late 1990s.
20) In 1 nov 2007 Marsha Courchane studied about The Pricing of Home Mortgage Lo
ans to Minority Borrowers: How Much of the APR Differential. The public releases
of the 2004 and 2005 HMDA data have engendered a lively debate over the pricing
of mortgage credit and its implications regarding the treatment of minority mor
tgage borrowers. We provide a unique empirical assessment of this issue by using
aggregated proprietary data provided to us by lenders and an endogenous switchi
ng regression model to estimate the probability of taking out a subprime mortgag
e, and annual percentage rate ("APR") conditional on getting either a subprime o
r prime mortgage. We find that up to 90 percent of the African American APR gap,
and 85 percent of the Hispanic APR gap, is attributable to observable differenc
es in underwriting, costing and market factors that appropriately explain mortga
ge pricing differentials. Although any potential discrimination is problematic a
nd should be addressed, our analysis suggests that little of the aggregate diffe
rences in APRs paid by minority and non-minority borrowers are appropriately att
ributed to differential treatment.
21) In 1991 Susan M. Wachter and Paul S. Calemhad studied about the Community Re
investment and Credit Risk: Evidence from an Affordable Home Loan Program.This s
tudy examines the performance of home purchase loans originated by a major depos
itory institution in Philadelphia under a flexible lending program between 1988
and 1994. We examine long-term delinquency in relation to neighborhood housing m
arket conditions, borrower credit history scores, and other factors. We find tha
t likelihood of delinquency declines with the level of neighborhood housing mark
et activity. Also, likelihood of delinquency is greater for borrowers with low c
redit history scores and those with high ratios of housing expense to income, an
d when the property is unusually expensive for the neighborhood where it is loca
ted.
35
CHAPTER 4 INTERPRETATION: SBI: NO.50
1) What is your occupation?
Business man Student Government Employee Other House wife
15 0 22 0 9
25 20 15 10 5 0 Series1 Series2 Series3
STUDENT
GOVERNMENT EMPLOYEE
BUSINESS MAN
Interpretation:o o o o o o o
Total Number of Respondents was 46. 0 of our Respondents was Students. 22 of the
Respondents were into government employees 15 of our Respondents were Businessm
an. 9 of our Respondents were Housewives. None of our Respondent belonged to the
category of others. 4 respondents did not answer.
HOUSE WIFE
OTHER
36
2) From how many years you are associated with this bank?
Less than 1 year 1-5 years More than 5 10 24 12
30 25 20 Series1 15 10 5 0 Less than year 1-5 year more then 5 Series2
Interpretation:o o o o o
Total Number of Respondents was 46 10 persons are associated less than 1 year 24
persons are associated from 1-5 years. 12 persons are associated from more than
5 years.
3) How do you come to know about the home loan schemes of that bank?
News paper Television
18 14
37
Internet other resources
10 4
20 18 16 14 12 10 8 6 4 2 0 News paper Television Internet Other resources
Series1 Series2
Total Number of Respondents was 46 18 persons came to know from newspaper 14 per
sons came to know from television 10 persons came to know from internet 4 person
s came to know from other resources
4) Are you aware of these type of home loans?
Home purchase loan Home construction loan Home improvement loan Home equity loan
Land purchase loan
9 18 6 4 9
38
20 18 16 14 12 10 8 6 4 2 0
Series1
5) Are you aware all terms and conditions of home loans?
Yes No
lo an co ns tr u ct Ho io n m lo e an im pr ov em en tl oa Ho n m e eq ui ty lo
La an nd pu rc ha se lo an
Ho m e
Ho m e
pu rc ha se
Total Number of Respondents was 46 Only 4 persons know home equity loan. Many of
peoples know home construction loan. 9 peoples know home purchase loan. 6 peopl
es knowhome improvement loans.
40 6
39
45 40 35 30 25 20 15 10 5 0 Yes No Series1
Interpretation:o o o
Total Number of Respondents was 46. Many of persons know all terms and condition
s of home loan i.e. 40. 6 persons had not know properly about all terms and cond
itions.
6) Are you satisfy with the interest rate charges by your bank?
Strongly agree Agree Disagree strongly disagree
12 30 4 0
40
16 14 12 10 8 6 4 2 0 Strongly agree Agree Disagree strongly disagree Series1
Total Number of Respondents was 46 12 among all consumers are strongly agreed by
interest rate of the bank. 30 among all consumers are agreed by interest rate o
f the bank 4 among all consumers are disagreed by interest rate of the bank 0 am
ong all consumers are strongly disagreed by interest rate of the bank
7) Your bank offer which type of services?
Mobile banking Net banking Forex banking
24 15 7
41
30 25 20 15 10 5 0 Mobile banking Net banking Forex banking Series1
Interpretation:o o o o
Total Number of Respondents was 46. 24 persons said that bank offer mobile banki
ng services. 15 said that bank offer net banking services. Only 7 persons said t
hat bank offer forex banking services.
8) Do you agree that your bank loan processing is fast?
8 26 9 3
42
30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1
Total Number of Respondents was 46. 8 persons strongly agree that bank home loan
processing is fast. 26 persons agree that bank home loan processing is fast. 9
persons disagree that bank processing is fast. 3 persons strongly disagree that
bank processing is fast.
9) Do you satisfy with the after home loan services provided by your bank are be
st as compare to other bank?
12 30 4 0
43
35 30 25 20 Series1 15 10 5 0 Strongly agree Agree Disagree strongly disagree
Interpretation:o o
Total Number of Respondents was 46 12 among all consumers are strongly agreed by
after sale services of the bank.
o o o
30 among all consumers are agreed by after sale services of the bank 4 among all
consumers are disagreed by after sale services of the bank 0 among all consumer
s are strongly disagreed by after sale services of the bank
10) Does the cost of home loan is appropriate, according to your demand?
Yes No
33 13
44
35 30 25 20 Series1 15 10 5 0 Yes No
Interpretation:o o
Total Number of Respondents was 46. 33 persons said that home loan is appropriat
e according to their demand.
o
13 persons said that home loan is not appropriate according to their demand.
11) Are you satisfy with the employees behaviour of the bank?
19 23 4 0
45
25 20 15 Series1 10 5 0 Strongly agree Agree Disagree strongly disagree
Interpretation:o o o o o o
Total Number of Respondents was 46. 19 persons very satisfied with the employee
behaviour of the bank. 23 persons satisfied with the employee behaviour of the b
ank. 4 persons disagree with the employee behaviour of the bank. No one is disag
ree with the employee behaviour of the bank.
12) Does the bank give any discount upon loan services?
Yes No
40 6
46
45 40 35 30 25 20 15 10 5 0 Yes No Series1
Total Number of Respondents was 46. 40 persons said that bank give discount upon
loan services. Only 6 persons said that bank does not give any discount upon lo
an services.
13) Are you satisfy by the time taken in sanctioning the loan?
Yes No
34 12
47
40 35 30 25 20 15 10 5 0 Yes No Series1
Total Number of Respondents was 46. 34 persons are satisfied by the time taken 1
2 persons are not satisfied by the time taken
14) Have you face any difficulty during taking the loan?
Yes No
39 7
48
45 40 35 30 25 20 15 10 5 0 Yes No Series1
Total Number of Respondents was 46. 39 persons face difficulty during taking the
loan. Only 7 persons does not face any difficulty during taking the loan.
15) Which grade you want to give of home loan schemes of the bank?
Excellent Good Average below average
24 18 4 0
49
30 25 20 15 10 5 0 Excellent Good Average below average Series1
Total Number of Respondents was 46. 24 persons give excellent grade of the bank.
18 persons gove good grade to the bank. Only 4 persons give average grade to th
e bank. No none give below average grade to the bank.
PNB: NO.50
1) What is your occupation?
Business man Student Government Employee Other House wife
17 0 23 0 7
50
25 20 15 10 5 0 Series1
St ud en en t tE m pl oy ee
O th er
an
m
Bu sin
Interpretation:o o o o o o o
G ov er nm
Total Number of Respondents was 47. 0 of our Respondents was Students. 23 of the
Respondents were into government employees 17 of our Respondents were Businessm
an. 7 of our Respondents were Housewives. None of our Respondent belonged to the
category of others. 3 respondents did not answer.
2) From how many years you are associated with this bank? 3)
Less than 1 year 1-5 years More than 5 17 19 11
Ho us e
es s
w
ife
51
20 18 16 14 12 10 8 6 4 2 0 Less than 1 1-5 years year More than 5
Series1
Total Number of Respondents was 47 17 persons are associated less than 1 year 19
persons are associated from 1-5 years. 11 persons are associated from more than
5 years.
3) How do you come to know about the home loan schemes of that bank?
News paper Television Internet other resources
12 22 9 4
52
25 20 15 Series1 10 5 0 News paper Television Internet other resources
Total Number of Respondents was 47 12 persons came to know from newspaper 22 per
sons came to know from television 9 persons came to know from internet. 4 person
s came to know from other resources.
4) Are you aware of these type of home loans?
Home purchase loan Home construction loan Home improvement loan Home equity loan
Land purchase loan
9 19 9 2 8
53
20 18 16 14 12 10 8 6 4 2 0
Series1
5)Are you aware all terms and conditions of home loans?
Yes No
pu rc ha se co ns lo Ho an tr u m ct e io im n pr lo an ov em en Ho tl m oa e eq
n La ui nd ty lo pu an rc ha se lo an Ho m e
Ho m e
Total Number of Respondents was 47. Only 2 persons know home equity loan. Many o
f peoples know home construction loan. 9 peoples know home purchase loan. 9 peop
les knowhome improvement loans.
34 13
54
40 35 30 25 20 15 10 5 0 Yes No Series1
Total Number of Respondents was 47. Many of persons know all terms and condition
s of home loan i.e. 34. 13 persons had not know properly about all terms and con
ditions.
6)Are you satisfy with the interest rate charges by your bank?
11 34 2 0
55
40 35 30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1
Total Number of Respondents was 47. 11 among all consumers are strongly agreed b
y interest rate of the bank. 34 among all consumers are agreed by interest rate
of the bank 2 among all consumers are disagreed by interest rate of the bank 0 a
mong all consumers are strongly disagreed by interest rate of the bank
7) Your bank offer which type of services?
Mobile banking Net banking Forex banking
26 13 8
56
30 25 20 15 10 5 0 Mobile banking Net banking Forex banking Series1
Total Number of Respondents was 47. 26 persons said that bank offer mobile banki
ng services. 13 said that bank offer net banking services. Only 8 persons said t
hat bank offer forex banking services.
8)Do you agree that your bank loan processing is fast?
4 21 13 9
57
25 20 15 Series1 10 5 0 Strongly agree Agree Disagree strongly disagree
Total Number of Respondents was 47. 4 persons strongly agree that bank home loan
processing is fast. 21 persons agree that bank home loan processing is fast. 13
persons disagree that bank processing is fast. 9 persons strongly disagree that
bank processing is fast.
st as compare to other bank?
14 29 4 0
58
35 30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1
Interpretation:o o
Total Number of Respondents was 47. 14 among all consumers are strongly agreed b
y after sale services of the bank.
o o o
29 among all consumers are agreed by after sale services of the bank 4 among all
consumers are disagreed by after sale services of the bank 0 among all consumer
s are strongly disagreed by after sale services of the bank
10) Does the cost of home loan is appropriate, according to your demand?
Yes No
29 18
59
35 30 25 20 Series1 15 10 5 0 Yes No
Interpretation:o o
Total Number of Respondents was 47. 29 persons said that home loan is appropriat
e according to their demand.
o
18 persons said that home loan is not appropriate according to their demand.
11)Are you satisfy with the employees behaviour of the bank?
16 25 6 0
60
30 25 20 15 10 5 0 Strongly agree Agree Disagree strongly disagree Series1
Total Number of Respondents was 47. 16 persons very satisfied with the employee
behaviour of the bank. 25 persons satisfied with the employee behaviour of the b
ank. 6 persons disagree with the employee behaviour of the bank. No one is disag
ree with the employee behaviour of the bank.
12)Does the bank give any discount upon loan services?
Yes No
35 12
61
40 35 30 25 20 15 10 5 0 Yes No Series1
Total Number of Respondents was 47. 35 persons said that bank give discount upon
loan services. Only 12 persons said that bank does not give any discount upon l
oan services.
13)Are you satisfy by the time taken in sanctioning the loan?
Yes No
30 17
62
35 30 25 20 Series1 15 10 5 0 Yes No
Total Number of Respondents was 47. 30 persons are satisfied by the time taken 1
7 persons are not satisfied by the time taken
14)Have you face any difficulty during taking the loan?
Yes No
43 4
63
50 45 40 35 30 25 20 15 10 5 0 Yes No Series1
Total Number of Respondents was 47. 43 persons face difficulty during taking the
loan. Only 4 persons does not face any difficulty during taking the loan.
15)Which grade you want to give of home loan schemes of the bank?
Excellent Good Average below average
18 20 8 1
25 20 15 Series1 10 5 0 Excellent Good Average below average
64
Total Number of Respondents was 47. 18 persons give excellent grade of the bank.
20 persons gove good grade to the bank. Only 8 persons give average grade to th
e bank. 1 person give below average grade to the bank.
65
CHAPTER 5 5.1 Section CONCLUSION:
All the people are availing loan facility from both the banks. No. of respondent
s of SBI were 46 and 47 of SBI Bank. Peoples are relating with PNB more satisfy
with the interest rate as compare to SBI. SBI peoples much know about home loans
then PNB. Both PNB and SBI mostly offer mobile banking services. Processing of
SBI is fast then PNB. After home loan services of PNB is good as compare to SBI.
Peoples related with SBI is more satisfy with the employee behaviour as compare
to PNB.People are more satisfied by SBI for time taken for sanctioning the loan
. From all this I conclude that SBI bank provide good home loan services as comp
are to PNB and many peoples are very satisfied from SBI.
5.2 Section LIMITATIONS
Although best of the efforts were made to conduct a prefect survey but still it
faces certain limitation. Following were certain limitation of this project. 1.T
he survey was conducted only on 100 respondents. 2.Some of the respondents did n
ot answer all the questions, which could hamper the final results to a certain e
xtent. 3.The study confines itself to the respondents of “NAWANSHAHAR” region on
ly. Hence findings would not be relevant to other cities.
66
CHAPTER 6
REFERENCES:
•
Craig, Ben R. and Thomson, James B.,Federal (August 2001). Home Loan Bank Lendin
g to Community Banks: Are Targeted Subsidies Necessary? FRB of Cleveland Working
Paper No. 01-12. Available at SSRN: http://ssrn.com/abstract=282410 or DOI: 10.
2139/ssrn.282410
•
Singh, Fulbag and Sharma, Reema,(December 2006) Housing Finance in India: A Case
Study of LIC Housing Finance Limited. ICFAI Journal of Financial Economics, Vol
. 4, No. 4, pp. 63-74, December 2006. Available at SSRN: http://ssrn.com/abstrac
t=959359
•
LaCour-Little, (May 18, 2007) Michael,Economic Factors Affecting Home Mortgage D
isclosure Act. SSRN: http://ssrn.com/abstract=992815
•
Borde, Stephen F. May/June 1991 ,Is the Savings and Loan Industry Facing Extinct
ion?The Secured Lender,Vol.47. SSRN:http://ssrn.com/abstract=151018
•
Rosner, Joshua (June 29, 2001).,Housing in the New Millennium: A Home Without Eq
uity is Just a Rental with Debt,Available at SSRN: http://ssrn.com/abstract=1162
456
•
Jacoby, Melissa B.( dec 2006) Home Ownership Risk Beyond a Subprime Crisis: The
Role of Delinquency Management. Fordham Law Review, Vol. 76, 2008; UNC Legal Stu
dies Research Paper No. 1074442. Available at SSRN: http://ssrn.com/abstract=107
4442
•
Moriizumi, Yoko,Current Wealth, (dec 1999) Housing Purchase and Private Housing
Loan Demand in Japan. Journal of Real Estate Finance and
67
Economics, Vol. 21, Issue SSRN: http://ssrn.com/abstract=237815
1.
Available
at
•
http://ideas.repec.org/p/fip/fedcwp/9015.html
•
http://ideas.repec.org/p/fip/fedgfe/2004-27.html
• •
• •
•
• • • • •
Hillebrand, Eric T. and Koray, Faik,Interest Rate Volatility and Home Mortgage L
oans. Applied Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstrac
t=923358 Lin, Emily Y. and White, Michelle J. (November 2000),Bankruptcy and the
Market for Mortgage and Home Improvement Loans. Michigan Law and Economics Rese
arch Paper No. 00-013. Available at SSRN: http://ssrn.com/abstract=252699 or DOI
: 10.2139/ssrn.252699 Bernstein, David P. (October 14, 2008) ,Home Equity Loans
and Private Mortgage Insurance: Recent Trends & Potential Implications. Availabl
e at SSRN: http://ssrn.com/abstract=1277353 LaCour-Little, Michael,The Home Purc
hase Mortgage Preferences of Lowand Moderate-Income Households. Real Estate Econ
omics, Vol. 35, No. 3, pp. 265-290, Fall 2007. Available at SSRN: http://ssrn.co
m/abstract=1007862 or DOI: 10.1111/j.1540-6229.2007.00190.x Wheelock, David C(Oc
tober 24, 2008)..,Government Response to Home Mortgage Distress: Lessons from th
e Great Depression.Federal Reserve Bank of St. Louis Working Paper No. 2008-038A
. Available at SSRN: http://ssrn.com/abstract=1289440 Chiuri, Maria Concetta and
Jappelli, Tullio, (March 2001) Financial Market Imperfections and Home Ownershi
p: A Comparative Study. CEPR Discussion Paper No. 2717. Available at SSRN: http:
//ssrn.com/abstract=264399 Do, Chau and Paley, Irina,Explaining the Growth of Hi
gher-Priced Loans in HMDA: A Decomposition Approach. Journal of Real Estate Rese
arch, Vol. 29, No. 4, 2007. Available at SSRN: http://ssrn.com/abstract=1030058
LaCour-Little, Michael, Rosenblatt, Eric and Yao, Vincent W.(February 1, 2009).,
Home Equity Extraction by Homeowners: 2000-2006. Journal of Real Estate Research
, 2009. Available at SSRN: http://ssrn.com/abstract=1336049 Nini, Greg and Carey
, Mark, (August 2004) Is the Corporate Loan Market Globally Integrated? A Pricin
g Puzzle. FRB International Finance Discussion Paper No. 813. Available at SSRN:
http://ssrn.com/abstract=585742 Hendershott, Patric H. and Pryce, Gwilym B.J. (
July 2005).,The Sensitivity of Homeowner Leverage to the Deductibility of Home M
ortgage Interest.NBER Working Paper No. W11489. Available at SSRN: http://ssrn.c
om/abstract=762768
68
• •
Courchane, Marsha, (November 1, 2007). The Pricing of Home Mortgage Loans to Min
ority Borrowers: How Much of the APR Differential Can We Explain? Available at S
SRN: http://ssrn.com/abstract=1374872 Calem, Paul S. and Wachter, Susan M. (Nov
1, 1999),Community Reinvestment and Credit Risk: Evidence from an Affordable Hom
e Loan Program. Real Estate Economics, Vol. 27. Available at SSRN: http://ssrn.c
om/abstract=145360
69
CHAPTER 7
QUESTIONNAIRE:
Name____________ Qualification_________ Age 18-25 25-35 35-40 Above Gender
_________ 16) What is your occupation? Business man House wife Other Gover
nment employee Student
17)
From how many years you are associated with this bank?
1-5
Less than 1 year More than 5 year
3) How do you come to know about the home loan schemes of this bank? News paper
Internet Television Other resources
4) Are you aware of these type of home loans? Home purchase laon Home improvem
ent loan Home equity loan Home construction loan Home extention loan Lan
d purchase loan
5) Are you aware all terms and conditions of home loans? Yes No
6) Are you satisfy with the interest rate charges by your bank? Strongly agree
Agree
70
Strongly disagree
Disagree
7) Your bank offer which type of services ? Mobile banking Forex banking 8)
Do you agree that your bank loan processing is fast? Strongly agree Strongly d
isagree Agree Disagree Net banking
st as compare to other bank? Strongly agree Strongly disagree Agree Disagr
ee
10) Does the cost of home loan is appropriate, according to your demand? Yes N
o
11) Are you satisfy with the employees behaviour of the bank? Strongly agree S
trongly disagree Agree Disagree
12) Does the bank give any discount upon loan services? Yes No
13) Are you satisfy by the time taken in sanctioning the loan? Yes No
14) Have you face any difficulty during taking the loan? Yes No
If yes then specify___________________________ 15) Which grade you want to give
of home loan schemes of your bank? Excellent Good
71
Average
Below average
16) Any suggestions that you want to give___________________________________
_____________________________________________________________________
72

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