Ilkogretim Online - Elementary Education Online, 2020; Vol 19 (Issue 2): pp.

1950-1959
http://ilkogretim-online.org
doi: 10.17051/ilkonline.2020.02.696778

A Study On Customer Satisfaction Towards Home

Loan With Reference To Vellore District

Dr. P. Venkatesh* , Magesh. M** , Dinesh S.Patel *** , Dr. Maran Mari Muthu****

*Assistant Professor, Sri Sairam Engineering College, Chennai, India.

**Student, Sri Sairam Engineering College, Chennai.
*** Managing Director SFP & Sons Ltd, Chennai.
****Associate Professor, Universiti Teknologi PETRONAS, Malaysia.

ABSTRACT
The research is carried out to understand the customer satisfaction and banking rating
provided by the customers in terms of Housing finance company and to find the factors
influencing the customer’s satisfaction towards the home loans provided by the company. The
objective of conducting this study to find the factors influencing the customers towards
satisfaction on home loans and to examine the relationship among significant factors
influencing customer satisfaction and banking rating. For this purpose, 76 respondents were
taken as sample for the study in order to get the needed information. The study is a
descriptive type. The data are collected from survey using questionnaire method. The
collected data were consolidated and interpreted by using statistical tools like percentage
analysis and statistical analysis are used for representation purpose. The research is useful for
employees and researchers to understand the customer requirements during purchase of
home loan and difficulties faced by the customer during the processing of loans and
repayment.

KEY WORDS: Banking, Customer Satisfaction, Customer Requirements, Repayment, etc.

INTRODUCTION TO THE STUDY

The concept of housing finance and the housing finance systems has been evolving over
time. According to Loic Chiquier and Michael Lea, “Housing finance brings together complex
and multi-sector issues that are driven by constantly changing local features, such as a
country’s legal environment or culture, economic makeup, regulatory environment, or
political system”. The demand for housing has increased day by day. Housing finance plays
an important role as an engine of equitable economic growth though the reduction of
poverty and prevents slum proliferation in economy. To meet the growing housing demand
the government needs to provide the finance for housing to the people. The housing finance
1950 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan
With Reference To Vellore District
sector in India has experiences unprecedented change in its structure since its formulation
stage of being a solely a government undertaking to a very competitive sector with a large
number of financing entities all over India. House is center and domestic device for
mankind's moral and substance development ever since the dawn of civilization. Housing is
one of the most important that we human beings need. Adequate housing is essential for
human survival with dignity. There are many things that we would find difficult, if not
impossible to do without good-quality housing. Housing shortage is a universal
phenomenon. It is more acute in developing countries. The housing scenario has become
more critical in India in recent years. India has initiated so many housing reforms that has
taken many forms and manifestations characterized by the reduction in social allocation,
cutbacks in public funding and promotion of a real estate culture in close partnership
between the state and private actors. Mortgage financing markets can play an important role
in stimulating affordable housing markets and improving housing quality in many countries.
Unfortunately, these are still in infancy in India. This lack of development often translates
into lower homeownership rates or poor housing quality. Most of these problems stem from
the central dilemma that the resources are always too limited and housing development
heavily depend on the financial institutions such as banks, credit corporations and
development banks for the supply of finance to meet their daily financial needs.

A home loan is a long-term commitment which is critical. The demand for home loans has
increased manifold in the last decade. The reason for this growth is not hard to see, changing
mindset with globalization and integration with the developed economies, where mortgages
rule the roost, income tax sops in the Union Budgets and substantial rise in the income-
generating capacity of Indian youth. So, the present scenario of home loans shows good
amount of growth and is heading for a bright future. There are number of banks and housing
finance companies offering cheap home loans at a low interest rate. The home loan schemes
offered by both public and private sector banks are very competitive. Mostly people prefer
public sector banks for home loans, especially because they believe that it is more secure
bank and interest rate is lower. On the other hand, the private sector banks are coming daily
in our country and the preference of younger population is changing because of services &
facilities provided by them. And the most important thing is that the customer should know
about each and every term related with Home Loans before applying for a Loan. There are
different types of home loans tailored to meet customer needs like

● Home Purchase Loans,

● Home Improvement Loans,
● Home Construction Loans,
● Home Extension Loans,
● Home Conversion Loans,
● Land Purchase Loans; Bridge

1951 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan

With Reference To Vellore District
 ● Loans &Mortgage Loans offered by public and private sector banks.

STATEMENT OF PROBLEM
This study has been conducted to understand the difficulties faced by the customer during
the loan agreement. Even though people are availing loan and have their dreams fulfilled of
having a Home, there are many problems faced by them even after availing the loan. So, this
study is undertaken to understand the level of satisfaction or dissatisfaction from the loan
availed. Finally, the detail information about the benefits they had received are also
considered. Home Loan Agreement is a contract entered between the lender and the
borrower that regulates the terms of a loan, during that process of sanctioning the loan
customer will face huge difficulties especially in HFC’s this is because many of the HFC
provide house loans to self-employed peoples were the monthly revenue varies due to their
working and other factors too hence proper field study has to be carried out before giving
the loan to the customers and the processing cause burden to the customers hence proper
study has to made in order to reduce the difficulties and loan approval procedure has to be
studied The social status of the customer for the need of home loans and customer
preference towards interest option has to be studied Since not much research work has
been done in the area of housing finance provided by various types of Financial Institutions
from the customers’ point of view, it was decided to undertake one such study in Chennai
city The main purpose of the study is to attain the knowledge of the processing system of
home loans. To understand the home loan market with its current practices in context of
Indian scenario. To know the ideas of customers about home loan products and services.

OBJECTIVE OF THE STUDY

1. To study the satisfaction level of customers regarding the home loans provided by
Housing Finance company.
2. To study the problems faced by customers in obtaining the home loans.
3. To evaluate Home Loan schemes of Housing Finance company.
4. To study the difficulties faced during the repayment of loans.
5. To know about customers response regarding the home loans.

REVIEW OF LITERATURE
B. CHANDRA MOHAN PATNAIK et al (2017), The title of the journal is “Development of
Indian Home Loan Industry” This paper studies about various phases of growth and
development of home loan industry and empirical study on Indian home loan Industry. The
growth and development has been examined by analyzing the contribution towards GDP
and current scenarios are studied such as GST impact on Housing sector and challenges
1952 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan
With Reference To Vellore District
 followed by Future of Home loan Industry in India has been analyzed.

PATNAIK B.C.M et al (2017) The title of the journal is “Home loan portfolio- A Review of
Literature” this paper contains only Review of Literature were 18 journal paper has been
analyzed in this journal with regard to Home loan industry. And it concludes has the various
variables identified are financial basics are behind drop in home cost, interest rate plays an
important role, paper work, decrease in profitability, awareness among the prospective
customers, poor are not getting the budgetary help, re-arrangement of housing policy of
government, service quality, speed of providing services and implementations of schemes
should match the economic profile of the borrowers.

MANJULA BAI H (2018) The title of the journal is “Customer Perception towards home
loan with special reference to SBI- A Study” This paper provides a platform to understand
the prospects and problems of Housing Finance faced by an individual while dealing with a
Home loan. So in order to collect this information a researcher has selected 50 respondents
who have availed Home
loan of SBI bank in various branches in Shimoga. It particularly focused on the problems or
the benefits availed from the housing loan provided by SBI bank. All levels of customers
were surveyed by using questionnaire and the level of satisfaction or dissatisfaction from
the loan availed was studied. Finally, the detail information about the benefits they had
received were also considered. A small attempt has been made to understand the benefits
of the home loan and also the level of stress the individual faced while clearing the loan was
studied with reference to SBI Bank. Finally, it makes an attempt to offer suggestions to
Banks to improvise the procedure of the loan proceedings.

S.V. SATYANARAYANA et al (2019), The title of the journal is “A Comparative Study

between Public and Private Housing Finance Companies (HFCs) in India”. the housing
sector have led to an increase in the number of banking and non-banking financial
institutions providing different types of housing finance services. In this regard, the public
(HFCs) and private HFCs are operating at different levels to provide housing finances to all
the sections of society. The present study is an attempt to comparatively analyze the
financial performance of five public HFCs and five private HFCs in India for the period of
2009-2018. The collected data were analyzed using descriptive statistics in the form of
means and a student t-test was conducted to compare the performance of public and
private HFCs with regard to various financial ratios. The result showed that profitability,
and operating ratios significantly influenced the financial performance of public and
private HFCs. The present study calls for regulatory measures and policy reforms to
improve the profitability and operating efficiency of both public and private HFCs. This
study has an implication in improving the housing finance sector from the perspective of
Indian HFCs.

P. VANITHA MALARVIZHI (2019), The title of the journal is “A Comparative Study on Gold
1953 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan
With Reference To Vellore District
 Loan Offered by Public Sector Banks and Non-Banking Financing Companies, Madurai” This
research study is related to a comparative survey of the gold loan offered by Public sector
Banks and Non-Banking Financing Companies in Madurai. This study is focused on the
preference of the borrowers in availing the gold loan, the awareness level of borrowers
about lending norms, factors influencing borrowers to avail the gold loan, problems faced
by the borrowers while availing gold loan and satisfaction level of borrowers towards
Public sector Banks and Non- Banking Financing Companies in availing gold loan. An
attempt has been made to collect information from 107 respondents from the borrowers of
gold loan from Public sector Banks and Non-Banking Financing Companies in Madurai city.
The data collected using an appropriate questionnaire were analyzed and interpreted using
statistical techniques, and also the testing of the hypothesis was done, and conclusions
arrived at whether the theories were accepted or rejected.

RESEARCH METHODOLOGY
RESEARCH DESIGN

Research design is the decision regarding what, where, when, how much, by what means
concerning an inquiry or a research study constitute a research design. It can be defined as
the arrangement of conditions for collection and analysis of data in a manner that aims to
combine the relevance to the research purpose to the economy procedure. Research design
is needed because it facilitates the smooth sailing of the various research operations,
thereby making research as efficient as possible yielding maximal information with
minimal expenditure of effort, time and money. In fact, research design has a great bearing
on the reliability of the results arrived at end as such constitutes the firm foundation of the
entire edifice of the research work.

DESCRIPTIVE STUDY:

Descriptive research is defined as a research method that describes the characteristics of

the population or phenomenon that is being studied. This methodology focuses more on
the “what” of the research subject rather than the “why” of the research subject.
Descriptive research aims to accurately and systematically describe a population, situation
or phenomenon. Descriptive research is used to describe characteristics and behavior of
sample population. The variable of this study are practical problems during home loan
process in Customer’s perception.

DATA COLLECTION

FOR THIS STUDY:

1954 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan

With Reference To Vellore District
 In this study, primary data has been collected directly from the respondents
using a questionnaire.

SOURCES OF DATA

• Primary Data: Primary data will be collected using structured questionnaire. Data is
collected from 76 respondents from Chennai city. A personal interview method will be
adopted with the help of a questionnaire.

SAMPLE DESIGN

SAMPLE SIZE:
The numerical value of the representation is the sample size. Sample Size = 76

SAMPLING TECHNIQUE:

Stratified sampling techniques are used in this study. When elements in the population have
a known chance of being chosen as subjects in the sample, we resort to probability sampling
technique.

DATA ANALYSIS AND INTERPRETATION

STATISTICAL ANALYSIS

ANOVA

Hypothesis

H01: There is no influence of EMI amount and bank rating

H02: There is influence of EMI amount and bank rating

Table No.2.2.2.1 the influence of EMI amount and bank rating

ANOVA

BANK RATING

Sum of d Mean F Sig

Squares f Square .

Between Groups 16.454 3 5.485 .886 .453

1955 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan
With Reference To Vellore District
 Within Groups
445.652 72 6.190

Total 462.105 75

Findings

H01 is accepted.

Interpretation

Since p value is more than 0.05, we accepted H01. Therefore, null hypothesis is accepted.
There is no influence of EMI amount and bank rating.

2.2.1 CORRELATION

H01: There is no relationship between bank rating and customer satisfaction of the bank.

H02: There is relationship between bank rating and customer satisfaction of the bank.

Table No.2.2.2.2 Relationship between bank rating and customer satisfaction

Correlations

Bank Customer Satisfaction

Rating

Bank Rating Pearson 1 .299**

Correlation

Sig. (2-tailed) .009

N 76 76

Customer Pearson .299** 1

Satisfaction Correlation

Sig. (2-tailed) .009

N 76 76

**. Correlation is significant at the 0.01 level (2-tailed).

1956 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan
With Reference To Vellore District
Findings

H01 is rejected.

Interpretation

Since p value is less than 0.01, we rejected H01. Therefore, alternative hypothesis is
accepted. There is relationship between bank rating and customer satisfaction of the bank.

CONCLUSION
The housing finance companies face huge competition on basis of exchanging of loans with
commercial banks or other housing finance companies. The waiver of pre-payment penalty
charges has increased rivalry among banks and housing finance companies, which the
regulator fears will lead to a dilution in underwriting and appraisal standards. Thus, in
order to improve the banking function, they have to maintain good customer relationship
and the repayment of loan has to be carried out with customer itself. The Interchange of
loans will cause loss to the company because of loss of customer and also in interest
fluctuation at future. This study helps me to understand the procedure of acquiring loans
through housing finance company and I learnt that most of the customers are not salaried
professionals they concentrate on non-salaried customers to improve their social status.
During covid 19 crisis this company has allowed some provisions on payment of interest
because RBI has suggested banking institutions to get interest payment in Interest on
Interest basis this bank allows customer to take their time for first 4 months with reduced
penalty. Thus, I conclude by valuing the employees of the company and my college staffs for
completion of my study.

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1959 | Dr. P. Venkatesh A Study On Customer Satisfaction Towards Home Loan

With Reference To Vellore District