Data Analysis and Interpretation

Transcription

1 Chapter 4 Data Analysis and Interpretation 4.1 Brief Profile of Surat 4.2 Data Analysis and Interpretations Section- (A) Simple Tables Section- (B) Two Way Tables Section- (C) Association Between Various Characteristics 139

2 Chapter 4 Data Analysis and Interpretation ============================================================== As mentioned earlier, in this study respondents, who have taken home loan during the period of from BOB and SPB in Surat City, have been selected. Before analysing the collected data, it is important to know something about Surat City. 4.1 Brief Profile of Surat Surat is a city located on the Western part of India in the State of Gujarat. It is one of the most dynamic cities of India with one of the fastest population growth rate due to immigration from various parts of Gujarat and other states of India. History The city of Surat has a glorious history that dates back to 300 BC. The origin of the city can be traced back to the old Hindu town of Suryapur during A.D., which was later colonised by the Brigus or the King from Sauvira on the banks of the river Tapti. In 1759, the British rulers took its control from the Mughals till the beginning of the 20 th century. The city is located on the river Tapi and has about 6 km long coastal belt along the Arabian Sea. Due to these reasons, the city emerged as an important trade centre and enjoyed prosperity through sea trade in the 16 th, 17 th and 18 th centuries. Surat became the most important trade link between India and many other countries and was at the height of prosperity till the rise of Bombay port in the 17 th and 18 th centuries. Surat was also a flourishing centre for ship building activities. The whole coast of Tapi from Athwalines to Dumas was specially meant for ship builders who were usually Parsis. After the rise of the port at Bombay, Surat faced a severe blow and its ship building industry also declined. During the post-independence period, Surat has experienced considerable growth in industrial activities (especially textiles) alongwith trading 140

3 activities. Concentration of these activities, combined with residential developments, has resulted in considerable expansion of the city limits. 1 The city is a pivotal centre on the Ahmedabad-Mumbai regional corridor as well as on the 225 km long industrial belt, having direct linkages with the industrial urban centres of cities like Vadodara, Ankleshwar and Vapi. National Highway No. 8 passes within a few kilometres of the SMC boundary and is one of the busiest inter-state trunk routes in the country. The summers are quite hot with temperatures ranging from 37 o C to 44 o C. The climate is pleasant during the monsoon, while the autumn is temperate. The average annual rainfall of the city is 1143 mm. Shree Premchand Raichand started first bank in Surat in 1864 namely Bank of Surat. In the next year the Bank of Gujarat Commenced operations in this historic city. Surat is known by several other names like THE SILK CITY, THE DIAMOND CITY, THE GREEN CITY, THE CLEANLIEST CITY, etc. Surat has practically zero percent unemployment rate and jobs are easier to get here due to very fast development of various industries in and around Surat City. Today, apart from the traditional industries of textile manufacturing, trade, diamond cutting and polishing industries, intricate zari works, the base has expanded to gas based industries at Hazira. The events since the 1960 s, seen in the city and the region, have resulted in a spurt in urban population in the city. Surat continues to present a 6% plus annual population growth since 60 s, placing Surat 9 th in terms of size countrywide (2001). Table 4.1 Population Size for the Year 2011 City Population Ahmedabad 72,08,200 Surat 60,79,231 Vadodara 41,57,568 Rajkot 37,99,770 Source:

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5 During , the city experienced an exceptionally high decadal population growth rate of percent. Rapid inflow of population is continuing. Population of Surat city is 60,79,231 lakhs, approximately. Parallel to the industrial expansion, Surat emerged as a major centre for trade and commerce in the region and a silent evolution has been that of the informal sector. Surat also has many industrial Giants such as KRIBHCO, Mammoth Fertilizer Plant, Reliance Petrochemical Plant, Essar 10 Million Tone Steel Plant, Shell LNG Terminal. All this at Hazira and ABG shipyard and Ambuja Cement at Magdalla port. Whereas Torrent power plant and GIPCL have got a huge lignite power plant in Kamarej area. While the city had a vibrant economy, the focus was on growth with limited response to housing and services and the local administration did not translate benefits of growth in terms of a financially robust local administration. The region is one of the leading city-regions in the country that has attracted massive investments of which substantial proportion is under implementation. According to CMIE 2002, the Surat City region has a proposed investment of about Rs. 11,817 Crores. In addition projects worth Rs. 2,022 Crores are under implementation. Hazira and SEZ are major focal points for growth. Given these, the prospects of rapid growth continuing is bright. Much of the industrial development is located within the limits of Surat city. In fact, Surat is truly an industrial city with over 50% of workforce engaged in manufacturing activity. The detailed account of sub-sectors of the economy is presented below approximately: - 42% of the world s total rough diamond cutting and polishing - 70% of the nation s total rough diamond cutting and polishing - 40% of the nation s total diamond exports - 40% of the nation s total man made fabric production - 28% of the nation s total man made fibre production - 18% of the nation s total man made fibre export - 12% of the nation s total fabric production 2 2 CEPT Report 143

6 Income Distribution The average Annual Household Income (AHI) in the city is ` 4.57 lakhs, the highest in the country. Surat s AHI is almost equal to China s per capita income of 2007 and double the national per capita income. Even its GDP growth of 11.5% for the many consecutive year is the fastest in the country. 3 Growth Prospects According to CMIE, as on August 31, 2006, there are 1819 projects under implementation with investment of ` 1,34,206 Crores with an estimated employment generation of 2,77,947. Surat district accounts for 26% of units, 21% of investment and 11% of employment being generated through this investment in the state. In addition, recently, the Government of Gujarat organised an Urban Summit. Large number of entrepreneurs signed MOUs (Memorandum of Understanding) to invest in the state in various sectors. In the Surat region, total worth of MOUs signed is about ` 61,450 crores. The majority of MOUs signed belong to urban infrastructure, industrial and real estate sector. The location of these projects is in the areas like Abhava, Kosad, Rundh, Dumas, Vesu, Pal, Magdalla, Kadodara, Amroli and Sachin, which are in the peripheral areas to the municipal boundary. Real Estate Housing sector is the most preferred segment in Surat too, like in other parts of the country. Leading property developers are coming up with all kinds of affordable and luxury home to woo buyers from all classes, i.e., that is to cater to the needs of both nationals and NRIs. Though the industrial sector of the city is quite well established, expansion of work is going on in full swing. Even the retail property sector is developing manifold to meet the recreation need of its growing population with number of malls, multiplexes and retail outlets opening up across the city. Builders are taking keen interest in developing property in the Surat city. Surat has a very high growth rate and there is a huge influx of population at 0 people daily entering the city hunting for jobs. The city offers a tremendous potential for

7 trade and commerce activity. These people need all the urban amenities. In Surat, people living in rented tenaments are as high as 37%. People mostly live in tenament duplex type of dwelling units on an average area of 576 sq ft built-up area with three rooms, whereas in slums the average area is 250 sq ft built-up area with 1.6 rooms. Due to the rapid industrial growth, urbanization, migration, etc. in Surat, the demand for home loan is increasing day by day. housing loan accounts and sanctioned limit in Surat is as shown from this table. Table 4.2 Housing Loan Accounts and Sanctioned Limits in Surat Growth Particulars Rates A/C 16,922 22,717 27,434 32,040 33, (in Nos.) Surat S/Limit 54,46,223 88,93,143 1,25,969 1,84,93,128 18,977, (in Lakhs) Source: Trend and Progress Report, RBI, A/C: Number of Accounts S/Limit: Sanctioned Limit Figure 4.1 Housing Loan Accounts and Sanctioned Limits in Surat 40,000 35,000 A/C S/Limit 30, A/C Numbers 25,000 20,000 15,000 10,000 5,000 A/C C/Limit

8 At Surat city level, the relevant data are not available for various types of banks. Instead, only aggregate data are available for this year. In Surat city number of housing loan accounts were 16,922 in 2005 which increased to 33,451 in 2009 which shows the increase of 97.68%. In comparison, the amount of Sanctioned Limits registered 248% growth i.e. 54,46,223 loan in 2005 to 1,89,77,333 in In this study, I have selected two banks, namely BOB and SPB. So I have tried to know the amount of sanctioned home loan by BOB and SPB. Table 4.3 and 4.4 given below shows the Sanctioned home loan amount by BOB and SPB. Home Loan Given by BOB Table 4.3 Home Loan Given by BOB (in Lakhs) Time Period A/C Sanctioned A/C Disbursed Amount Amount 01/04/06 to 31/03/07 1,225 6, NA NA 01/04/07 to 31/03/08 1,517 16, ,352 13, /04/08 to 31/03/09 1,382 17, ,152 14, /04/09 to 31/03/10 1,456 20, ,283 17, Source: Bank of Baroda, Surat. In the case of BOB, from the information provided by the bank, it can be seen that the total amount of home loan disbursed during the year was about ` 139 crores which increased to about ` 144 crores in and to ` crores in Thus, unlike SPB in the case of BOB, the disbursed amount continued to rise but the number of customers taking the loan had declined to 1382 in from 1517 in Table 4.4 Home Loan Given by SPB (in `) Time Period A/C Sanctioned A/C Disbursed Amount Amount 01/04/05 to 31/03/ ,78,45, ,26,24,651 01/04/06 to 31/03/ ,25,66, ,72,93,268 01/04/07 to 31/03/ ,47,84, ,31,85,241 01/04/08 to 31/03/ ,41,83, ,87,76,363 01/04/09 to 31/03/ ,05,82, ,97,83,471 Source: SPB, Surat. 146

9 The number of customers who were given home loans during the financial year by SPB was 347, which increased to 363 in the next financial year and to 417 in the financial year However, in the next financial year, i.e , the corresponding number was less than half (226) of the previous year. This may be due to the effect of global melt down on the real estate sector in the fast growing city of Surat. It is to be noted that the number of customers who took home loan from SPB increased marginally to 242 in the financial year As far as, the disbursed amount of home loan by SPB is concerned, from about ` 15 crores in year , it increased to ` crores in next year and to ` crores in year However, the amount decreased to ` crores in but increased to ` crores in year Data Analysis and Interpretations The data analysis and interpretation have been divided into three sections. Section-A is simple tables, Section-B is Two-way tables and Section-C is Association between various characteristics. Section- (A) Simple Tables This section focuses on the personal information of the respondents. (1) Age of the Respondents The first characteristic of the respondents that is taken into account is the age of the respondent. Table 4.5 given below shows the age distribution of the respondents. It can be seem from the table that almost half (48%) respondents belong to the age group of 31 to 40 years, whereas the next age group in terms of the number was 41 to 50 years to which (22%) of the respondents belonged. 14% of the respondents were above 50 years of age of which 3 were above 60. Thus, 70% of the respondents belonged to the middle age group, i.e. 31 to 50 years. 147

10 Table 4.5 Age of the Respondents Age of the Respondents (years) Number of Respondents (%) Below to to Above Figure 4.2 Age of the Respondents (%) Below to to 50 Above 50 Age (In Years) (2) Sex of the Respondents Out of the respondents surveyed, 78% were males and the remaining 22% were females. Thus, the sample was male dominated. (3) Educational Qualification of the Respondents Education is one of the most important characteristics of the customers because the perception, awareness and behavior of the customers depend largely on his/her educational qualifications. Among the selected respondents, a majority (55%) were graduates, while 10 had studied upto S.S.C. level and 6 were educated upto H.S.C. and 148

11 under graduate levels. Apart from this, 23 respondents had other qualifications like Diploma, etc. The relevant data are provided in table 4.6 below. Table 4.6 Educational Qualifications of the Respondents Educational Level Number of Respondents (%) S.S.C H.S.C Under Graduate Graduate Post Graduate/Diploma Figure 4.3 Educational Level of the Respondents (%) S.S.C H.S.C Under Graduate Educational Level Graduate Post Graduate (4) Occupation of the Respondents Table 4.7 given below shows the profession of respondents which may also be an important factor affecting the decision making of customers. It was found that half of the respondents (50%), were from the business class, 39% were doing some sort of service, while only 11% were professionals like doctors, C.A., Engineers, etc. 149

12 Table 4.7 Occupation of the Respondents Types of Occupation Number of Respondents (%) Business Service Profession Figure 4.4 Type of Occupation of the Respondents Business Service Profession (5) Income of the Respondents Annual Income of the respondents is the most important factor determining their demand for home loan. Table 4.8 gives information on the annual income of the respondents in which the respondents are divided into four income groups. It is found that the maximum number of respondents (32) were in the income group of ` 2.4 lakhs to 3.6 lakhs and the next important income group was less than ` 1.8 lakhs. There were 19 respondents earning more than ` 3.60 lakhs. The minimum and maximum annual income were ` 72, 000 and ` 30,00,000 respectively. 150

13 Table 4.8 Annual Income of the Respondents Income Group ( ` in lakhs) Number of Respondents (%) < to to > Figure 4.5 Income Level of Respondents Income Level (in `) >` 3.6 `2.4 to `3.6 ` 1.8 to `2.4 < ` (%) (6) Type of Family of the Respondents The demand for housing is affected by an important social factor, viz. type of family. Normally, persons living in a joint family are likely to have a higher propensity to acquire an independent house of their own. Among the selected respondents 77% lived in a nuclear family and the remaining 23% lived in a joint family. (7) Loan Taken in the Past In order to analyze the behavior of customers who have taken home loans from the banks, it was necessary to examine whether they had previous experience of taking a loan. The response of the respondents in this regard indicated that only 32% of them had taken a loan in the past and for the remaining 68%, this was the first experience of taking a loan. 151

14 (8) From which Bank, Loan is Taken in the Past Table 4.9 From which Bank, Loan is Taken in the Past Banks Number of Respondents (%) BOB Canara Bank Dena Bank HDFC Bank HDFC Bank and BOB Andhra Bank ICICI SDCB SPB SBI Figure 4.6 From which Bank, Loan is Taken in the Past (%) BOB Canara Bank Dena Bank HDFC Bank HDFC Bank and BOB Andra Bank ICICI SDCB SPB SBI Banks It is found that the largest number of respondents (09) had taken loan from the HDFC bank and SBI earlier. The other important banks were BOB and ICICI. 152

15 (9) Types of Loan taken in the Past It would be interesting to know which types of loans were taken by the respondents earlier. The information on the type of loan taken earlier by the respondents are shown in table 4.10 given below. Table 4.10 Types of Loan taken in the Past Types of Loan Number of Respondents (%) Home Loan Personal Loan Vehicle Loan Home Loan & Vehicle Loan Personal Loan & Others Others Figure 4.7 Types of loan taken in the past (%) Home Loan Personal Loan Vehicle Loan Home Loan & Vehicle Loan Personal Loan & Others Others Types of Loan The above table reveals that most of the respondents viz. 62.0% (21 out of 34) had taken loan for buying vehicles. The next important type of loan was the personal loan. Only 8.82% (3) respondents had taken home loan earlier. This indicates that most of the respondents selected in the sample were taking home loans for the first time. 153

16 (10) Sources of Information An attempt was made to examine the source of information regarding the home loans. Table 4.11 given below, which is based on the information provided by the respondents, gives the relevant figures. Table 4.11 Sources of Information Sources of Information Number of Respondents Advertisement 32 a. Newspaper 06 b. T.V. 09 c. Internet 04 d. Others 13 (a+b+c+d) 32 By Bank 37 a. Staff/Agent 23 b. SMS/ Phone Call 08 c. Others 06 (a+b+c) 37 Others 83 a. C.A./ Loan Consultant 56 b. Friends 19 c. Relatives 04 d. Neighbour 02 e. Others 02 (a+b+c+d+e) 83 It is evident from this table that as many as 83 respondents availed the information about home loans from Others, which included 56 respondents who get the information from C.A./ loan consultant, 19 from friends and the remaining 8 from the relatives, neighbours, others, etc. The second most important source of information was 154

17 Banks (37 respondents) consisting of 23, 08, and 06 respondents who received information from bank staff/agents, SMS/Phone calls and others respectively. The last important source of information is Advertisement from which 32 respondents received the information. In this category others (hoardings, banners, etc.) provided information to 13 respondents while the sources like newspaper, T.V. and Internet were stated as sources of information by only 06, 09 and 04 respondents respectively. However, in the study undertaken by M.K. Chaubey (2009), it was found that 72%, 18% and 10% respondents came to know about home loan through print and electronic media, friends and relatives and builders/developers respectively. But in my study, the results had shown that only 27% and 25% respondents came to know about home loan through print and electronic media and friends and relatives respectively. However, in my study more respondents (56%) came to know about home loan through CA / loan consultant. (11) Year in which the Loan was Taken Table 4.12 given below gives information regarding the year in which loan was taken by the respondents. It is clear from this table that a large majority of them (76) had taken home loan in the year 2010, 24 had taken the loan in the year Table 4.12 Year in which the Loan was Taken Loan taken Number of Respondents (%) During During (12) Term of Loan The respondents were asked to provide information on the term of loan taken by them. On the basis of the replies given by them, table 4.13 given below was constructed. 155

18 Table 4.13 Term of Loan Years Number of Respondents (%) 5 to to > Figure 4.8 Term of Loan > 15 6 Years 11 to to (%) It can be seen from the table that slightly more than half (54%) of the respondents had taken home loans with terms ranging from 5 to 10 years. For 40 respondents the term was between 11 to 15 years and for the remaining 06 the term was more than 15 years. In the study of M.K. Chaubay (2009) in Varanasi, it was found that 28%, 14% and 58% respondents opted for, 5 years and 10 years, more than 15 years as a term of loan respectively. In the study of D. Rajasekhar (2008) in Chennai city, it was found that 54%, 36% and 10% of the respondents preferred the repayable period of more than 10 years, more than 15 years and more than 5 years, respectively. But in this study only 6% respondents opted for loan for more than 15 years. It may be assumed that in Surat city the level of income is so high that the customers are able to repay home loan in a short period of time. 156

19 (13) Amount of Loan Applied For It will be instructive to know about the amounts of loan the customers had applied for. Table 4.14 given below provides information on the amounts of loan applied for. As shown in the table, out of respondents almost 1/3 each had applied for the loan amount between ` 1 to 5 lakhs and ` 5 to 10 lakhs. Thus, about 2/3 of the sample customers had asked for home loans below ` 10 lakhs. On the other hand, only 8 respondents had applied for a loan amount of ` 20 lakhs or more. Table 4.14 Amount of Loan Applied For Amount (` in lakhs) Number of Respondents (%) 1 to to to > Figure 4.9 Amount of Loan Applied For (%) to 5 5 to to 20 >20 Amount (` in lakhs) (14) Amount of Loan Sanctioned As against the amount of the loan applied for, one would like to know the amount of loan sanctioned by the respective banks. Table 4.15 gives the necessary information. 157

20 According to this table, in case of 33, 36, 23 and 08 customers, the amounts of loan sanctioned were in the range of ` 1 to 5 lakhs, ` 5 to 10 lakhs, ` 10 to 20 lakhs and more than ` 20 lakhs respectively. Table 4.15 Amount of Loan Sanctioned Amount (` in lakhs) Number of Respondents (%) 1 to to to > Figure 4.10 Amount of Loan Sanctioned (%) to 5 5 to to 20 >20 Amount (` in lakhs) Comparing with the earlier table (table 4.15), only in the case of range ` 10 lakhs to 20 lakhs, 4 customers were denied amounts of loan in this range. All the customers who applied for home loans amounting to more than ` 20 lakhs were sanctioned the loan of similar amounts. 158

21 The findings of analysis of simple frequency tables may be summarized as follows: (1) About 70% of the respondents were middle aged, i.e. 31 to 50 years of age (2) The sample was dominated by males. (78%) (3) A majority of (55%) respondents were graduates. (4) Exactly 50% of the respondents were from business class. While 39% were from service class. (5) The maximum number of respondents (32%) had annual income of ` 2.4 to 3.6 lakhs and 19% had income more than ` 3.6 lakhs. (6) 77% respondents lived in nuclear family. (7) 32% of the respondents had taken some kind of loan from the bank earlier and 59% of them had taken vehicle loan earlier. (8) Most of the respondents availed the information about the home loan from other sources like C.A. / loan consultant / friends, etc. (9) In case of only 6% of the respondents the term of loan was more than 15 years and for the remaining 94% the term of loan was less than 15 years. (10) About 2/3 of the sample customers had applied for loans below ` 10 lakhs and 69% respondents were sanctioned loan below ` 10 lakhs. Section (B) Two Way Tables In this section, I have done comparative study of BOB and SPB in respect of different aspects of home loan. (15) Time Taken for Sanctioning Home Loan The time taken by the bank for sanctioning the loan is an important factor for the consideration of customers. It also reflects the efficiency of the bank and the staff and stability of the procedure for sanctioning the loan. The relevant data for BOB and SPB also at the aggregate level are given in table no It may be seen from this table that in as many as 37 cases the loan was sanctioned within 8 to 15 days and in 30 cases the time lag was 21 to 30 days. Only in 9 cases, sanction took more than a month. 159

22 Table 4.16 Time Taken for Sanctioning Home Loan Days BOB SPB Upto 7 07 (77.78%) 02 (22.22%) 09 8 to (74.36%) 10 (25.64%) to (33.33%) 08 (66.67%) to (21.88%) 25 (78.13%) 32 >30 03 (37.50%) 05 (62.50%) (%) Figure 4.11 Time taken for Sanctioning Home Loan Upto 7 8 to to to 30 >30 Days BOB SPB Comparing the relevant figures for BOB and SPB it is found that in general BOB had sanctioned the loan within a shorter period. For example, out of 9 cases in which the loan was sanctioned within 7 days, 8 were BOB customers and only 1 was SPB customer. Similarly, for 8 to 15 days duration, 27 were BOB customers and only 10 were SPB customers. On the other hand, for 24 customers of SPB the loan was sanctioned within 21 to 30 days, but the corresponding number was only 6 in case of BOB. 160

23 (16) Documents Demanded for Home Loan The respondents were also asked during the survey to reveal the documents which were demanded by the banks alongwith the application form. This was done just to assess the knowledge and awareness of the respondents. Table 4.17 Documents Demanded for Home Loan Documents Number of Respondents PAN Card 94 I.T. Returns 94 Residence Proof 93 Latest Salary Pay Slip 42 Six Months Bank Statement 92 It was found that between 6 and 8 respondents responded negatively when they were asked whether PAN card, income tax returns, residence proof and 6 months bank statements were demanded by the bank. Moreover, 42 respondents said that the Latest Salary Pay Slips were demanded by the bank at the time of processing the loan application. (17) Property Insurance Only 4 of the respondents claim that they had not taken property insurance at the time of disbursement of loan. It means that out of the respondents covered in the study, 96 respondents had taken property insurance. (18) Reasons for Taking the Home Loan It is important to know the purpose of taking home loan by the respondents. During the survey the customers were asked to reveal the reasons for availing the home loans. On the basis of their responses, Table 4.18 given below was constructed. 161

24 Table 4.18 Reasons for Taking Home Loan Reasons BOB SPB In place of rented property 06 (50.0%) 06 (50.0%) 12 For investment 23 (62.16%) 14 (37.84%) 37 (.%) Desire for big house 14 (40.0%) 21 (60.0%0 35 To get relief in income tax 23 (69.70%) 10 (30.30%) 33 To receive rent income by purchase of new house 12 (57.14%) 09 (42.86%) 21 Others 02 (50.0%) 02 (50.0%) 04 Figure 4.12 Reasons for Taking Home Loan (%) In Place of Rented Property For Investment Desire for Big House To Get Relief in Income Tax To receive rent income by purchase of new house Others Reasons BOB SPB This table reveals that the reasons for taking a home loan in order of preferences were for investment (37), desire for a big house (35) and for getting income tax relief (33). There were 21 respondents who wanted to earn rent income by availing home loan. 12 of the respondents wanted to buy a house in place of the rented house in which they had been living. 162

25 Examining the bank-wise break-up, it is found that the proportion of customers who took the home loan for investment purpose was much more (23) in the case of BOB as compared to similar number (14) in the case of SPB. Applying for the home loan for IT relief also had a similar pattern with the number of customers declaring this as a reason was 23 in case of BOB as compared to 10 in case of SPB. However, the number of customers who had taken the home loan to buy a big house was only 14 in the case of BOB with the comparable figure of 21 in the case of SPB. The customers of BOB and SPB who gave the reason such as in place of rented property and others were equal, (6 in each case). (19) Types of Property It will be useful to know the types of property the respondents wanted to buy through the home loans. Various types of property and the corresponding number of respondents who wanted to buy those properties are provided in the following Table Table 4.19 Types of Property Properties BOB SPB New flat New bungalow New row house Old flat Old bungalow Renovation of old flat Extension of old bungalow Renovation of old bungalow Others

26 (%) Figure 4.13 Types of Property NF NB NRH OF OB ROF EOB ROB Others Properties BOB SPB It was found that half (50) respondents wanted to buy new flats while the number of respondents who wanted to buy a new row house and a new bungalow were 21 and 12 respectively. Comparatively, very few customers wanted to buy old flat (6) or old bungalow (5). Moreover, there were only 1 or 2 respondents who wished to renovate/extend their existing flat or bungalow. There were also 2 respondents who wanted to use loan amounts to buy other type of property, viz. plot. In the study undertaken by M.K. Chaubey (2009), it was found that 26%, 34%, 38% and 2% respondents have borrowed loan for purchase of flats, purchase of house, construction of house and other reasons respectively. However, D. Rajasekhar (2008) had found in his study, that 45% of the respondents have bought loan for purchase of house, 37% have bought the loan for purchase of flat, 16% for construction of house and remaining 2% for other reasons. But in my study, more respondents had taken home loan for purchasing flat (56%) followed by row house (21%). Only 4% respondents opted loan for construction or renovation of flat/bungalow. It implies that in Surat city most of the respondents had taken home loan for purchase of flat because city of Surat is one of the fastest growing city, therefore, the population growth is also high due to migration. Due to scarcity of land, builders prefer to construct high-rise buildings than the row house or bungalow. 164

27 (20) Area (sq. ft.) of the New Flat Table 4.20 Areas (sq. ft.) of the New Flat Area (in Sq. ft.) Number of Respondents (%) 500 to to to > It can be seen from the above table that most (more than 60%) respondents have preferred to buy new flats measuring 0 to 1500 sq. feet. Only 08 respondents were ready to buy bigger flats measuring 1500 or more sq. feet. (21) Area (sq. ft.) of the New Bungalow Table 4.21 Areas (sq. ft.) of the New Bungalow Area (in Sq. ft.) Number of Respondents (%) 350 to to > It can be seen from the above table that 4 and 6 respondents had planned to buy a small size bungalow (350 to 1200 sq. ft.) and medium size new bungalow (1200 to 1700 sq. ft.) respectively. There were also 2 respondents who wanted to buy a bigger size bungalow (more than 3500 sq. ft.). 165

28 (22) Area (sq. ft.) of the New Row House Table 4.22 Areas (sq. ft.) of the New Row House Area (in sq. ft.) Number of Respondents (%) 201 to to to > The areas of new row houses that 21 respondents wanted to buy are given in Table 4.22 given above. It is found from this table that 8 and 7 respondents wished to buy a new row house measuring 200 to 500 sq. ft. and 501 to 750 sq. ft. respectively. As against this, only 3 respondents wished to buy new row house measuring 751 to 0 sq.ft. and 2 were willing to buy the new row houses of about 1500 sq. ft. (23) Area (sq. ft.) of the Old Flat Out of the 6 respondents who desired to buy old flats through the home loan, 4 of them wanted to buy a small flat measuring between 400 and 617 sq. ft., 1 wanted to buy a medium size of flat of 1170 sq. ft. and the remaining respondent desired to buy a large old flat measuring 2650 sq. ft. (24) Area (sq. ft.) of the Old Bungalow One of the respondents wanted to buy a small size old bungalow of 1266 sq. ft. and the remaining 4 wanted to buy old bungalows of 2000 to 2500 sq. ft. (25) Number of Respondents who were Account Holder of the Bank Table 4.23 given below provides the necessary information on this aspect. 52 respondents were account holders of the bank when they applied for home loan. Out of them, 22 were relatively new account holders (9 years) and 27 were holding account for 10 to 20 years and 3 had accounts for more than 20 years. 166

29 Table 4.23 Number of Respondent who were Account Holder of the Bank No. of Years Number of Respondents (%) 2 to 9 years to 20 years >20 years (26) Reasons for Rejection of Application Table 4.24 gives the reasons for the rejection of applications. It indicates that the application of 12 respondents were rejected, in case of 07 respondents (58.33%) the reason for rejection was negative CIBIL (Credit Investigation Bureau of India Ltd.) report. The other reasons were less income (16.67%), plan of the property not sanctioned (16.67%) and other reasons (8.33%). Table 4.24 Reasons for Rejection of Application Reasons Number of Respondents (%) Due to Less Income Plan not Sanctioned CIBIL Report Other Reason Figure 4.14 Reasons for Rejection of Application (%) Less Income Plan not Sanctioned CIBIL Report 8.33 Other Reason Reasons 167

30 (27) Other Services of the Bank Utilized by the Respondents Table 4.25 provides the responses of the respondents regarding other services of the bank utilized by them. As can be seen from the table two important reasons are savings account facility (63) and current account facility (61). The third and the fourth service in terms of importance are the locker facility (35) and overdraft (14). Less than 5 customers utilized other services such as cash credit, insurance, mortgage loan, etc. Table 4.25 Other Services of the Bank Utilized by the Respondents Other Services Utilized BOB SPB Current A/C 21 (33.87%) Saving A/C 39 (61.90%) Overdraft 10 (66.67%) Cash Credit 03 Mortgage Loan 0 (00.0%) Insurance 03 (75.0%) Locker 19 (54.29%) Others 01 (33.33%) 41 (66.13%) 24 (38.10%) 05 (33.37%) 0 (00.0%) (25.0%) 16 (45.71%) 02 (66.67%) (.%) 15 (.%) 03 (.%) (.%) 03 Among the three important facilities that were utilized by the respondents, in the case of current account 41 and 21 respondents were using the facility from SPB and BOB respectively and in the case of savings account the dominance of these two banks was reversed as 3 and 24 respondents used this facility from the banks. However, in the case of locker facility the numbers of respondents obtaining this facility were almost equal (19 and 16) respectively. (28) Reasons for Selecting the Bank One can see that the most important reason for selection of the bank is Less fee (86) followed by the Co-operative staff (76). The other reasons were Speedy process and Nearer to residence (67 each) and Low interest rate (62). 168

31 Table 4.26 Reasons for Selecting the Bank Reasons for Selecting the Bank BOB SPB Less Interest Rate 47 (75.81%) 15 (24.19%) 62 Speedy Process of Loan 43 (64.18%) 24 (35.82%) 67 Less Processing Fee and Other Charges 46 (53.49%) 40 (46.41%) 86 Co-operative Staff 33 (43.42%) 43 (56.58%) 76 Nearer to residence 36 (53.73%) 31 (46.27%) 67 Others 0 (00.0%) Figure 4.15 Reasons for Selecting the Bank (%) Less Interest Speedy Less Co-operative Nearer to Others Rate Process of Processing Staff residence Loan Fee and Other Charges BOB SPB Among the reasons for selecting the bank Less processing fees and Other charges, Co-operative staff and Nearer to residence were almost equally popular among the respondents. On the other hand, among 62 respondents who claimed that less interest was the reason for selecting the bank 47 (75.81%) were the customers of BOB and only 15 (24.19%) were from SPB. In the study undertaken by D. Rajasekhar (2008), it was found that 34% of the respondents have reported that, the institution provide loan at low rate of interest, 33% have reported easy installment, 31% reported that they approached for simple procedure 169

32 and formalities and only 2% of the respondents represent location near to their house. Thus there was wide disparity between the reasons given by the respondents in this study as compared to my study, e.g. nearer to residence was given as a reason by 46% to 53% respondents in our study whereas the same reason was given by only 2% of the respondents in Rajasekhar s study. So were the case with reasons like co-operative staff and less interest rate, etc. (29) Mode of Repayment of Loan Data regarding the number of customers making payment through various modes are shown in the following table. Table 4.27 Mode of Repayment of Loan Mode of Payment BOB SPB By Cash 03 (75.0%) 01 (25.0%) 04 By Cheque 20 (64.52%) 11 (35.48%) 31 Online Banking 06 (66.67%) 03 (33.33%) 09 Mobile Banking 1 0 (00.0%) 01 Standing Instruction 12 (92.31%) 01 (7.69%) 13 ECS 08 (19.05%) 34 (80.95%) 42 Figure 4.16 Mode of Repayment of Loan (%) BOB SPB By Cash By Cheque Online Banking Mobile Banking Standing Instruction ECS Mode of Repayment 170

33 42 out of customers had opted for ECS mode of repayment and 31 chose to make repayment by cheque, 12 customers chose repayment through Standing Instructions. Only 10 customers preferred to use modern methods like on line banking and mobile banking for repayment. However, in the study undertaken by M.K. Chaubey (2009) it was found that 40%, 38% and 18% respondents repaid their loan amount through post dated cheques, through ECS and through Salary deduction and 4% were paid directly to the bank. In other study by D. Rajasekhar (2008) shows that 53%, 27% and 14% of the respondents were paying their loan amount through ECS, through post dated cheques and through the collecting bank respectively. So I have come to almost similar conclusion in the case of mode of repayment of home loan by ECS and cheque. Another point I had noticed in my study was that the repayment of home loan was done by using the internet and mobile services. (30) When the respondents were asked whether any intimation had been given to them before due date of installment, only 17 replied in affirmative. This means that majority of them were not informed about the due date of installment. Only 10 respondents said that a penalty imposed on them by the bank for a delay in repayment. (31) Out of respondents only 13 said that relief has been given by the bank if more than 1 installment is paid at a time. (32) Fulfillment of Services Promised by the Banks During the survey the respondents were asked whether the services promised by the banks while taking a loan were fulfilled later on. 171

34 Table 4.28 Fulfillments of Services Promised by the Banks Services BOB SPB Proper Bank Services No Hidden Charges Always Helpful and Co-operative Give Full Details and Information regarding Bank Complaints entertained and solved Lower Interest Rate Others Figure 4.17 Fulfillment of Services Promised by the Banks (%) BOB SPB 0.00 Proper Bank Services No Hidden Charges Always Helpful and Co-operative Give Full Details and Information regarding Bank Complaint Entertained and Solved Lower Interest Rate Others Services As many as 93 out of respondents said that proper bank services were provided. Next in important were services like no hidden charges (89), given full details (88) and helpful and co-operative staff (81). However, it is important to note here that services like Complaints entertained and solved and Lower Interest rate were fulfilled only in 66 and 70 cases respectively. 172

35 In the study undertaken by Ashok Kumar (2009), it was found that 51% of the customers are satisfied with the behaviour towards customers by the bank employees. (33) Satisfaction with the Bank Table 4.29 Satisfactions with the Bank Are you Satisfied? BOB SPB Yes No Table 4.29 provides information on whether the customers were satisfied with the bank. It is found that a very large majority (92%) were satisfied with the service of the bank, i.e. only a tiny proportion (8%) were not satisfied. Thus it is true of each bank i.e. SPB and BOB. So, it seems that the extent of satisfaction among the bank customers in Surat is much higher as compared to the one in Chennai as reported by Ashok Kumar (2009). (34) Switch-Over of the Bank Table 4.30 Switch-Over of the Bank Switch Over to BOB SPB Nationalised Bank Private Bank Co-operative Bank Others

36 Figure 4.18 Switch-Over of the Bank Nationalised Bank Private Bank Co-operative Bank Others 0.00 Banks BOB SPB The relevant data given in table 4.30, according to the information provided in this table, only 12% of the respondents who took home loan from BOB were not ready to switch over to any other nationalized bank, if they given a choice. Since, similar percentage was almost five times (66%) in the case of SPB customers. It is clear that the customers of SPB were much more interested in switching over to the other type of banks (a nationalised Bank). (35) Whether Form is Read Before Signing Table 4.31 Whether Form is Read before Signing Whether Form is Read Before Signing BOB SPB Yes 15 (25.0%) 45 (75.0%) 60 No 35 (87.5%) 05 (12.5%) (50.0%) 50 (50.0%) (.%) 174

37 Figure 4.19 Whether Form is read Before Signing (%) BOB SPB 12.5 Bank Yes No At the aggregate level, slightly more than half (60.0%) of the customers claimed that they had thoroughly read the loan application form before signing it that means a significant proportion of the respondents do not read loan application before signing. However, 75% of the SPB customers had replied in affirmative as against only 25% of the BOB customers doing so. This is probably due to the fact that the application form provided by BOB is in English, while that provided by the SPB is in Gujarati. (36) Reasons for not Reading Home Loan Application The reasons for not reading the loan application form before signing are listed below in table Table 4.32 Reasons for not Reading Home Loan Application Reasons BOB SPB More detailed information 08 (80.0%) Language 06 (75.0%) Completed by Agent 19 (95.0%) Others (20.0%) 02 (25.0%) 01 (05.0%) 0 (0.0%) 10 (.%)

38 Figure 4.20 Reasons for not Reading Home Loan Application Form (%) More detailed Information Language By Agent Others Reasons BOB SPB Out of 40 respondents, who did not read the loan application form, about 3/4 th of them did so because the entire procedure of application was completed by the agent. 15 respondents did not read it because of the language problem. While, 10 respondents felt that the application form contained too much of information to read. (37) Suggestions Given by the Respondents Table 4.33 Suggestions Given by the Respondents Suggestions BOB SPB Insurance policy taken by customers Timely and Transparent sanctioned and disbursement process Application form in local language/detailed information Complete information about home loan and required documents Force to buy gold coin/shares Loan prepayment and delay charges Others

39 As far as suggestions given by respondents regarding home loans are concerned, the numbers of suggestions given by BOB and SPB customers were 27 and 15 respectively. In the case of BOB customers, the most important suggestion (08 cases) given was that to impose to take life insurance policy themselves (The bank should not impose to take insurance policy to the customers). Next in terms of importance was timely and transparent sanction and disbursement process. (06 cases) and availability of application forms in local language and information to be provided in short form (05 cases). There were also minor suggestions like provision of complete information about home loans and required documents. Informing the customer about approximate time to be taken, black part of the payment to be included to determine the loan amount etc. In the case of SPB out of 15 customers, 09 suggested that there should be timely and transparent procedure for sanctioning the loan, 03 customers suggested that the customers should not be forced to buy the shares of the bank. There were also other suggestions (one each) like, co-operation from the bank staff, bank should check CIBIL report and the bank should charge lower interest rate. However, in the study undertaken by M.K. Chaubey (2009), it was found that 70% respondents agree that there is a delay of loan approval and disbursement also. Most of the customers suggested that the loan processing / sanctioning time should be reduced. In this study it is revealed that various problems faced by customers. It was found that more than half of respondents agree with statement about delay in approval and disbursement, in adequate guidelines, tedious procedure, lack of interest on part of officials, difficulty in getting security, inconvenience in paying EMI, irrelevant securization, illogical approach and insufficient amount sanctioned. In the study undertaken by D. Rajasekhar (2008), 75% of respondents reported that there is a delay in sanctioning and disbursement of loan amount. The conclusions arrived at after analyzing the two-way tables are summarized below:- 1) It was found that in general BOB had sanctioned loan within shorter period than SPB. 2) The important reasons for availing the home loan were to get relief in income tax, for investment and to receive rent income, in case of BOB customers, 177

40 while for SPB customers there were desire for big house, for investment, and to get relief in income tax in the order of importance. 3) About half of the respondents had applied for home loan to buy a new flat or a new row-house. 4) It was found that 52% respondents were accont holders of the bank concerned and most of them were holding their account for many years. 5) Applications of only 12 respondents were rejected and more than half of them were rejected due to negative CIBIL report. 6) Two important facilities utilized by the respondents are savings account and locker in the case of BOB and Current account and Saving account in the case of SPB. 7) Less processing fee, less interest rate and speedy loan process were important reasons for selecting BOB while co-operative staff and less processing fee were important reasons for selecting SPB. 8) The more frequently used modes of repayment are cheque, standing instructions and ECS for BOB customers. There were ECS and by Cheque for SPB costumers. 9) 93% respondents reported that proper bank services were provided and 90% and 88% respondents claim that there were no hidden charges and the bank gave full details and information, respectively. 10) 92% of the customers were satisfied with the services provided by the bank, in case of both BOB and SPB. 11) It was found that the loan customers of SPB were much more interested in switching their loan over to other nationalized bank as compared to BOB loan customers, if they are asked to do so because interest rate is higher as compared to nationalized bank. 12) 75% of SPB customers, but only 25% of the BOB customers, had read loan application form before signing it. The most important reason for not reading the application form being the filling up of form by the agents. 13) It was found that application form of BOB being not in local language (Gujarati) so the respondents did not read the application form thoroughly. 178

41 Section (C) Association Between Various Characteristics In this section, an attempt has been made to determine whether there exists any association between various characteristics on which data were collected during the survey. Such association may be found to be helpful to the policy makers for formulating policies regarding home loans. Relation between Age of the Respondents and Various Reasons for Home Loans Table 4.34 Age of Respondents and Reason for Home Loan For Investment Age of Respondents Yes No < 30 yrs % (31.3%) % (68.8%) % 31 to 40 yrs % (39.6%) 41 to 50 yrs % (31.8%) > 50 yrs % (42.9%) 37 (37.0%) % (60.4%) % (68.2%) % (57.1%) 63 (63.0%) % % % The table given above shows a two way classification of the customers selected in the sample according to two attributes-their age and whether the home loan was taken for investment. It is found that the percentage of the respondents, who took the home loan for investment purpose, varied between 32% and 42% without much variation within the four age groups. Thus, it seems that age of the respondents does not have any effect on their decisions regarding taking home loan as investment. 179