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MATUSHRI AHILYADEVI INSTITUTE OF MANAGEMENT & RESEARCH

INDORE

SYNOPSIS OF MAJOR RESEARCH PROJECT

ON

A COMPARATIVE STUDY ON PROSPECT COUSTMER

OF SBI AND PNB BANK FOR HOME LOANS

GUIDED BY SUBMITTED BY

MS. SAMKITA JAIN SATISH KUMAR SLKARI

MBA II YEAR

BATCH 2008-10

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TABLE OF COTENTS

CHAPTER 1 (Section)1.1 Introduction to Subject

1.2 Objective, Need, Scope & MethodologyCHAPTER 2 (Section)2.1 Introduction to Company2.2 Overview of the industry (History, Growth, Landmarks, major players and theirmarket share)2.3 Profile of the organization2.4 Companys history2.5 Recent achievements and milestones2.6 Product range of the company/industry2.7 Performance of the company over the last few years(Statistical Profile)

2.8 Financial status of the organization2.9 Future prospects/ plansCHAPTER 3Survey of LiteratureCHAPTER 4InterpretationCHAPTER 5 (Section )5.1 Conclusion5.2 LimitationsCHAPTER 6

ReferencesCHAPTER 7Questionnaire

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1.1 Section

INTRODUCTION

Home loans work like any other debt. That is, loans are simply specific money that We borrow

from a bank, a private lender, or some other type of lender. Afterwards, we must repay our debtswith interest. However, unlike other types of loans, home loans are different in several respects.Owning a piece of land or property is a lifetime dream for every individual. There are manyhome loans provider in the market.

There are different types of home loan:-

y Home Purchase Loansy Home Improvement Loansy Home Construction Loansy Home Extension Loansy Home Equity Loansy 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 amillion home lenders and mortgage brokers it's becoming a tough challenge as the days are progressing. But at the same time, when the sites are coming up with all the latest tools and

relevant information for us, and with all such conveniences, obtaining a home purchase loan ormortgage has become really pretty simple. However, at the same time though, we may beflummoxed to look so many attractive rates and offers in the market, not to forget the hiddencosts associated with each of them.

Home improvement loan: -

Home improvement loans are used to finance Improvements and add on to the existing set ofcredentials of beauty on your owned house, recently purchased property or rentedaccommodation. Home improvement loans are used to maintain or enhance the value of yourhouse. In general it includes: repairs, remodeling, energy-related items (permanent in nature),repairs, a new kitchen, a new bathroom, terrace, an extension or general property improvements.Luxury items and fireplaces are generally not eligible, though. Many improvements in landscapeand even swimming pools are nowadays considered to be a part of home improvement.

]

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Home construction loan: -

Home construction loans are used to finance for the Construction of our newly acquired home orif we are planning to build a home.

The factors include in calculations for house building costs?

y Design of the housey Construction costy Financing Costy Buildable site

All the above mentioned costs will help us to determine the amount we may need to borrow. Forexample, besides calculating the construction costs, we may also be required to consider the totalexpenditures to develop the site in order to build. Each site is unique requiring differentexpenditures 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 wellas paying a deposit for the land if we are buying land. As work progresses you will need to makepayments to the builder. Certain loans can be structured for progress payments to be made duringconstruction.

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 other rooms for your growingfamily. It may also be used to enclose open balcony/terrace space, or constructing a Puja ghar.

Maximum Amount of Home Extension Loans:

Banks generally offers about 70-85% of the total amount of home extension as loan. The amountof loan sanctioned also depends on a number of factors such as the age of the applicant at thetime of loan, tenure of the loan, repayment capacity 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 customers, who wish tomortgage his/her property to the bank for taking some loan for some other purpose. Then, it's upto the bank's discretion to consider the market value of the property and accordingly decide howmuch to pay to the customer. Both the residential as well as non residential property can beconsidered for the approval of the loan, provided the mortgager is a licensed title holder and theland is free form any kind of dispute.Home equity loans don't restrict one to use the loan money

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in specific investments. It might also be used in marriage, higher education, medical expenses,etc. However it should not be used in any illegal or speculation purposes.

Bridge loan:

land purchase loan:

Land Purchase loans are used by customers who wish to purchase a plot of land for commercialor residential purpose. Everyone has his/her dream perfectly sketched in his souls and so is hisambition to get his house erected on the exact location he dreamt that to be. If you have foundand shorlisted the piece of land, and have arrived here for finance, you have come to the bestplace you could have arrived in the web. Now, that you have decided to purchase a land as aninvestment or for your own dream home, you will realize that a land purchase loan is one youwill cherish. Loans that are strictly for land purchase can be as scarce as good residential plots.

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1.2 Section

Primary objective: - To analyze the home loan scheme by PNB and SBI banks.y To know the consumer perception about the home loan of PNB and SBI. Secondary objective:-y . To study the cost of home loans provided by the bank.y . To know that which bank provide batter loan schemes. of PNB and SBI.

SCOPE OF THE STUDY:This study is analysis and comparison of home loans provided bythe SBI and PNB banks. It is helpful in analysing the home loan service provided to the customerand their comparison.

RESEARCH METHODOLOGY

Design of Research: The research will be exploratory in nature. A population of peopleswho take home loan from these banks will be considered for this study. I will try to exploreabout the home loans which would make a difference in the behavior of the consumer. Effortwill be made to throw light on most of the factors which have either indirect or direct effect onthe behavior of the consumer. I will also explore the impact of home loans on the market share ofthe banks.

SAMPLING PLAN

Sample Size: A Sample size of 100 respondents will be taken for the current study because itis not possible to cover the whole universe. So it is necessary to take the sample size. In 100respondents 50 respondents from PNB and 50 from SBI. The sample will the peoples of agegroup lying between eighteen to thirty years. The sample will be taken in the form of strata basedon age, sex, and income group.

Sampe place : Indore

Sampling Method:-The sampling method will be probabilistic sampling more specificallythe random convenient and judgemental sampling will be use. As in probabilistic sampling theselect unit for observation with known probabilities so that statistically sound assumptions aresupported from the sample to entire population so that we had positive probability of beingselected into the sample. I will go for stratified random sampling as we are interested to study thehome 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.

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CHAPTER2

2.1 Section

INTRODUCTION TO COMPANY:

PUNJAB NATIONAL BANK:

PNB has over 4500 branches and offices bringing the Punjab National Bank to yourdoorstep. Around 2400 offices come under the network of Centralized Banking Solutionor CBS. A need for centralized banking system prompted PNB to go computerized andwhat followed was the establishment of CBS in Punjab National Bank branches in all theleading cities like Delhi, Pune, Chennai, Mumbai, Ahmedabad, Chandigarh, Gurgaon,Hyderabad, Jalandhar, Kolkata, Ludhiana, Nodal and Bangalore. Internet BankingServices are provided to all customers in the CBS branches. A branch and ATM locator isalso available on the official website of Punjab National Bank. For an overview of theannual report or the bank profile, the site can be resourceful. The website also providesinfo on the careers and recruitments at PNB and the exam results. The careers atnationalized banks like PNB are the most sought after one and candidates are selected onthe basis of their exam result. PNB topped the Best Paying Commercial Bank categorywith an overall rating of 87.45% as evaluated by the SSS Retirement, Death & FuneralBenefits Program.

STATE BANK OF INDIA:

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of

over 9000 branches (approximately 14% of all bank branches) and commands one-fifth ofdeposits and loans of all scheduled commercial banks in India. The State Bank Group includes anetwork of eight banking subsidiaries and several non-banking subsidiaries offering merchant banking services, fund management, factoring services, primary dealership in governmentsecurities, credit cards and insurance.The eight banking subsidiaries are:State Bank of Bikanerand Jaipur (SBBJ),State Bank of Hyderabad (SBH).State Bank of India (SBI),State Bank ofIndore (SBIR),State Bank of Mysore (SBM),State Bank of Patiala (SBP),State Bank ofSaurashtra (SBS) and State Bank of Travancore (SBT). Today, State Bank of India (SBI) hasspread its arms around the world and has a network of branches spanning all time zones. SBI'sInternational Banking Group delivers the full range of cross-border finance solutions through itsfour wings - the Domestic division, the Foreign Offices division, the Foreign Department and the

Internationl Services division.

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2.2 Section

OVERVIEW OF THE INDUSTRY:

HISTORY:

Banking in India has a long and elaborate history of more than 200 years. The beginning of thisindustry can be traced back to 1786, when the countrys first bank, Bank of Bengal, wasestablished. But the industry changed rapidly and drastically, after the nationalization of banks in1969. As a result, the public sector banks began experiencing numerous positive changes andenormous growth. Then came the much-talked-about liberalization and economic reforms thatallowed banks to explore new business opportunities and not just remain constrained togenerating revenues from mere borrowing and lending. This provided the Indian bankingscenario a remarkable facelift that only continues to get better with time. However, even today,despite the foray of foreign banks in the country, nationalized banks continue to be biggestlenders in the country. This is primarily due to the size of the banks and the penetration of thenetworks. The Indian banking system can be classified into nationalized banks, private banksand specialized banking institutions. The industry is highly fragmented with 30 banking unitscontributing to almost 50% of deposits and 60% of advances. The Reserve Bank of India is theforemost monitoring body in the Indian Financial sector. It is a centralized body that monitorsdiscrepancies and shortcomings in the system. Industry estimates indicate that out of 274commercial banks operating in the country, 223 banks are in the public sector and 51 are in the private sector. These private sector banks include 24 foreign banks that have begub theiroperations here. The specialized banking institutions that include cooperatives, rural banks, etc.form a part of the nationalized banks category.

Opportunities

The Banking sector is considered the most lucrative option in todays job market. In the industry,a position in Treasury or Forex is considered right on top and this is followed by careers inPrivate Banking, Investment Banking and Retail Banking. One could work in a variety of areasin banking industry including Recurring Deposit account, banking officer, probationary officer,loan officer, assessor, personal loan officer, home loan officer, home loan agent, loan manager,mortgage loan underwriter, loan processing officer, accountant, product marketing and salesexecutive, and customer service executive among others. In the Financial Services, some of theimportant jobs include that of a stockbroker who is essentially a person who buys and sellssecurities on behalf of individuals and institutions for some commission. While some brokerslike to practice with individual clients others work for institutions. Brokers who work forinstitutional investors are often called securities traders. Many prefer to work as dealers, advisorsand securities analysts. Security analysts are those who advise companies on floatations ofshares as they are expected to have sound knowledge of capital markets. Investment analysts arethe backbone of the financial services sector. They study the financial reports of companies,assess various statistical information, profitability projections, compare financial results, surveythe industry as a whole and on the basis of the available information, and finally conclude to adecision. Equity Analysts do jobs similar to investment analysts and research the equity markets

and make predictions.

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Growth:

The limit for foreign direct investment in private banks has been increased from 49% to 74%. Inaddition, the limit for foreign institutional investment in private banks is 49%. Liberalization andglobalization have created a more challenging environment in the banking sector as well as in the

other segments of the financial sector such as mutual funds, Non Banking Finance Companies,post offices, capital markets, venture capitalists, etc.Research and Markets has announced the addition of 'Indian Retail Banking, 2006' to theiroffering. Indian Retail Banking continues to redefine the credit growth in the country. It grew bya whopping 44.4% in 2005-06 to touch Rs 3,538 billion. This leap was despite the increase inrisk weight by RBI for housing and real estate loans during August, 2005. Housing, whichconstitutes more than 52% of all retail loans, grew at a robust rate of 44.35% during 2005-06. Inorder 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 keytrends, along with issues and challenges. The report also paints a future outlook for the market.

Besides it profiles 21 major players in the retail banking space and their strategies. Finally, itseems Reserve Bank of India's (RBI) flurry of measures to restrain the home finance market ispaying off. With tightening of interest rates by the RBI and a simultaneous increase in real estateprices in a few markets, the banking sector is witnessing a decline in the growth of its home loanportfolio.

The home loan industry is experiencing a growth of 25% this year, as against 30%growth in home loans earlier. Rajiv Sabharwal, senior general manager, ICICI Bank, which hasrecorded the highest incremental growth in home finance segment in recent past, said, The realestate prices have become very high in few markets, which has resulted in the fall in growth ratesfor home loans for the banking industry. Home loan growth has reduced to 25% from its earlier

growth rate at 30% and since we are an integral part of the industry, there will be some impact onus too. He added that the bigger impact had come from real estate prices, but obviously interestrates hikes will also have an impact. He, however, declined to disclose the banks current homeloan growth rate. Echoing a similar view, a senior official of State Bank of India (SBI) said thehome loan market is showing some signs of slowing down. However, another major player,Housing Development Finance Corporation (HDFC) said the housing finance market for themiddle class segment was growing at a healthy pace. PNB Bank is a leading home loan lender ofthe country with about 30% market share. Retail lending comprises 70% of the total loanportfolio of the bank, of which the home loan lending is about 50%. In the first half of fiscal2007, the bank experienced total home loan disbursements of Rs 13,400 crore.

MAJOR PLAYERS:

The financial sector in India has become stronger in terms of capital and the number ofcustomers. It has become globally competitive and diverse aiming, at higher productivity andefficiency. Exposure to worldwide competition and deregulation in Indian financial sector hasled to the emergence of better quality products and services. Reforms have changed the face ofIndian banking and finance. The banking sector has improved manifolds in terms of capital

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adequacy, asset classification, profitability, income recognition, provisioning, exposure limits,investment fluctuation reserve, risk management, etc.

TOP 10 PLAYERS IN BANKING & FINANCE

State Bank of India HDFC bank Citibank ICICI Bank Punjab National bank UTI Bank Hongkong & Shanghai Banking Corp. Kotak Mahindra Bank Sundaram Bank Oriental Bank of Commerce

TOP 10 PLAYERS IN INSURANCE

Life Insurance corporation of India Bajaj Allianz General Insurance ICICI Prudential Life Insurance ICICI Lombard General Insurance Birla Sunlife Insurance Tata AIG General Insurance New India Assurance Co. Iffco Tokio General Insurance Oriental Insurance Co. HDFC Standard Life Insurance

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2.3 Section

PROFILE OF THE ORGANISATION:

PROFILE OF PNB:

The profile of the PNB shows superior banking services in corporate, personal and internationalbanking, industrial and agricultural finance and finance of trade. Punjab National Bank boasts ofa varied clientele consisting of small and medium industrial units, exporters, multi-nationalcompanies, Indian conglomerates and NRI. The Bank is changing outdated front and back endprocesses to modern customer friendly processes to help improve the total customer experience.With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banksalready networked, today it offers the largest banking network to the Indian customer. The Bankis also in the process of providing complete payment solution to its clientele with its over 8500ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking,etc.The objectives of the Company are in line with objectives laid down by RBI for the PrimaryDealers: Strengthen the infrastructure in the government securities market in order to make itvibrant, liquid and broad based. Ensure the development of underwriting and market makingcapabilities for Government Securities . Improve secondary market trading system, which wouldcontribute to price discovery, enhance liquidity and turnover and encourage voluntary holding ofGovernment securities amongst a wider investor base . Become an effective conduit for

conducting open market operations.

PROFILE OF SBI:

The SBIs powerful corporate banking formation deploys multiple channels to deliver integratedsolutions for all financial challenges faced by the corporate universe. The Corporate Banking

Group and the National Banking Group are the primary delivery channels for corporate bankingproducts. The Corporate Banking Group consists of dedicated Strategic Business Units that caterexclusively to specific client groups or specialize in particular product clusters. Foremost amongthese a specialized group is the Corporate Accounts Group (CAG), focusing on the primecorporate and institutional clients of the countrys biggest business centers. The others are theProject Finance unit and the Leasing unit.The National Banking Group also delivers the entirespectrum of corporate banking products to other corporate clients, on a nationwide platform.The bank is also looking at opportunities to grow in size in India as well as Internationally. Itpresently has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries inIndia SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBICards - forming a formidable group in the Indian Banking scenario. It is in the process of raising

capital for its growth and also consolidating its various holdings. Throughout all this change, theBank is also attempting to change old mindsets, attitudes and take all employees together on thisexciting road to Transformation. In a recently concluded mass internal communication programme termed Parivartan the Bank rolled out over 3300 two day workshops across thecountry and covered over 130,000 employees in a period of 100 days using about 400 Trainers,to drive home the message of Change and inclusiveness. The workshops fired the imagination ofthe employees with some other banks in India as well as other Public Sector Organizationsseeking to emulate the programme.

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2.4section

COMPANY HISTORY:

PNB HISTORY:

Punjab National Bank of India was established by Lala Lajpat Rai in the pre-independence Indiain 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 with 13 other major commercial banks. Theprivatization started in 1989 when 30 per cent of its shares were offered to the public and it waslisted on the stock exchange.In 1992, PNB became the first Philippine bank to reach P100 billionn assets. Later that year, privatization continued with a second public offering of its shares. InAugust 2005, PNB was fully privatized. The joint sale by the Philippine government and theLucio Tan Group of the 67% stake in PNB was completed within the third quarter of 2005. The

Lucio Tan Group exercised its right to match the P 43.77 per share bid offered by a competitorand purchased the shares owned by the government. The completion of sale is expected to speedup the development of PNBs franchise and operational competitiveness.

SBI HISTORY:

The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank ofBengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madrasand Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controllinginterest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of

India (SBI) came into existence by an act of Parliament as successor to the Imperial Bank of India.Today, State Bank of India (SBI) has spread its arms around the world and has a network of branchesspanning all time zones. SBI's International Banking Group delivers the full range of cross-border financesolutions through its four wings - the Domestic division, the Foreign Offices division, the ForeignDepartment and the International Services division.

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2.5 Section

RECENT ACHIVEMENTS AND MILESTONES:

PNB Recent achievements and milestones

Punjab National Bank (PNB), has announced that it has completed 100% core bankingimplementation at all its 4604 branches and extension counters through the Finacle UniversalBanking Solution from Infosys, on Sun infrastructure and the Oracle Database setting asignificant milestone for themselves and a new benchmark for the Indian banking industry.Completed in November 2008, 4 months ahead of schedule, the bank implemented industry-leading Finacle core banking solution from Infosys across its operations running a flexible, andscalable database platform from Oracle and innovative servers from Sun Microsystems With anincreasingly dynamic business and regulatory environment, PNB sought to not only achieveautomation, but also centralize operations, standardize branch processes, achieve high scalability

for future business growth, provide flexibility of creating innovative banking products to its linesof business, and at the same time, reduce overall costs. The visionary zeal and the futuristic viewof the Banks top management in the year 2007-2008 incubated the idea of introduction of aCentralised Banking solution. The bold and innovative thought culminated into the CBSarchitecture with Finacle application on Oracle Database and Sun hardware platform with SolarisOperating System. With Finacles agile and future proof technology, the bank today has over22,500 concurrent users.

The solutions scalability has also enabled the banks scalability to be the best in the countrywith the number of peak transactions at 3.5 million. Finacle core banking platform also providesthe bank with exceptional agility for product innovation and improved flexibility of operations.

With seamless integrationof delivery channels such as ATM and internet banking solutions, PNBis able to provide 24X7 services to customers at a reduced transaction cost.

PNBs choice of the Oracle Database has provided the banks IT infrastructure with robustness,management features, security and scalability as well as performance requirements to service 3.5million transactions and 22500 concurrent users a significant achievement in the Indianbanking industry. In addition, the Oracle Database will help PNB take control of its enterpriseinformation, gain better business insight, and quickly and confidently adapt to an increasinglychanging competitive environment. With secure, highly available and scalable grids of low-costservers and storage, Oracle customers can tackle the most demanding transaction processing,data warehousing, business intelligence and content management applications.

The 100% implementation of Finacle Core Banking Solution shall enable PNB tofurther reduceoperational costs and revenue leakage while improving productivity of branches, introduction ofnew and innovative products and visibility of business.The anywhere anytime banking facility will enable the bank to offer products for every segmentof the customer.PNB long-standing and progressive partnership also highlights Finacles leadership in large scalebanking transformation, the solutions future proof technology and

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powerful capabilities. India is a strategic market for Finacle and we look forward to closelycollaborating 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, CrisilAward 2006 - 4 Awards, The Lipper Award (Year 2005-2006) and most recently with the CNBCTV - 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes. SBI Cardreaches three million milestone: SBI Card, a joint venture between State Bank of India and GEMoney, announced yet another landmark achievement of crossing the three million cardholders-mark. Roopam Asthana, CEO-SBI Card, said, "This milestone is even more remarkable as wehave added one million cardholders in just ten months. Our objective is to accelerate the pace ofgrowth by extending the benefits to a broader range of consumers in Tier II cities, along withimproved value propositions for the urban affluent customers." SBI Card recently signed upIndian cricketer Yuvraj Singh as its brand ambassador. SBI joins Chinese bank to touch 10,000branches: Public sector State Bank of India on Sunday became only the second bank in the worldto have 10,000 branches when Union Finance Minister P Chidambaram inaugurated its latest branch here. Speaking on the occasion, Chidambaram said China's ICBC Bank was the other bank to have 10,000 branches. Opening 10,000 branches was a great feat. "It is not an easymilestone though the SBI was the bank of the government and Indian people even before otherbanks were nationalised," he said. People all over the world, including the Chinese, would nowknow about this small village where the 10000th branch of the SBI had been opened, he saidadding they would be amazed by the bank's growth. The bank should be proud of theachievement he said and wished that the bank opened one lakh branches. The Minister said outof the over 100 crore people, seventy 75 per cent did not have any type of insurance. Similarly,

50 per cent of the 11 crore farmers did not have bank account. Banks should go to the people andenroll them as account holders. 'That is what economists say is financial inclusion,' he said. ]

2.6 Section

PRODUCT RANGE OF COMPANY/INDUSTRY:

The products and services provided by the SBI and PNB are in various fields,

such as:

Banking services NRI services International banking Corporate banking Agricultural banking International banking

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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 Taking-off from a breakthrough performance in2007 with a registered net income of P1.5 billion, PNB continues to reap the benefits from itsefforts to strengthen core businesses, reduce non-performing assets and manage costs. NetIncome for the 1st Quarter of 2008 registered P457 million, up 48% from P308 million of thesame period last year. This performance bucks industry trends for the 1st quarter of 2008 basedon published income reports.

Even as the operating environment proved volatile where negative trends are expected, PNB stillmanaged to reflect a 136% growth in foreign exchange gains year-on-year, from P242 million to

P571 million. A relentless focus in generating low-cost funds from deposits and other fundingsources led to a reduction in total interest expense by as much as 27%. Total deposits closed firmat P180 billion.Operating expenses were down 23% despite investments made in systems enhancement andupgrading of facilities. The Bank has recently implemented a new generation core bankingsystem: Flexcube an end-to-end solution designed to automate both corporate and retailbanking businesses; and effectively in-source core overseas operations to its global data center inthe Philippines. PNBs Japan, Singapore, Hongkong and United States branches as well as theLondon subsidiary have already been converted and the rest of the Bank is expected to go livesoon.

As of March 31, 2008, PNBs consolidated total asset size remained strong at P242 Billion, upP2.7 billion versus end-2007. With the significant strengthening of its balance sheet over the pastfew years, PNB has been able to concentrate on generating new client relationships in thecorporate segment, both in the large and SME categories. The contribution from the consumerfinance business has likewise continued to register accelerated growth. Total consumer loans portfolio stood at P3.3 billion, up 25% from end-2007. Combined new bookings for the 1stquarter 2008 already reached the half-billion mark. PNBs Net Loans and Receivables closedP77 billion.

As of March 31, 2008, PNBs Capital Adequacy Ratio under Basel II remained formidable at18.51%, still way above the 10% ratio required by the Bangko Sentral ng Pilipinas. Subject to

appropriate approvals and clearances, PNB is going to the capital markets to raise a minimum ofP3 billion of Tier 2 Capital in preparation for its maturing subordinated notes in February 2009.

PNB will emerge as the 4th largest domestic bank in the country in terms of asset size once itsplanned merger with Allied Banking Corporation (ABC) is completed. The respective Board ofDirectors of PNB and ABC passed resolutions last April 30, 2008 approving the plan to mergethe two banks. This transaction is subject to the approval of shareholders and regulatoryauthorities and is expected to be completed by the 3rd quarter of 2008.

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SBI performance in last five years:

State Bank of India (SBI) is all geared up to increase its business per employee and profit per

employee as it thinks that for SBI, these two parameters are among the lowest in the industry. Onone hand, the bank is trying to reduce its staff strength which would eventually improve theratios; but on the other, the bank is also going flat out to increase its customer base.

"Our business per employee and profit per employee is one of the lowest in the industry," SBIhad recently said in a joint statement issued by the management and unions.SBI's generates Rs2.99 crore of business per employee, while its profit per employee is just about Rs 2.17 lakh. Bycontrast, majority of the large public sector banks are better in terms of both these parameters.

For instance, Canara Bank has a business per employee (BPE) of Rs 4.42 crore, while UnionBank of India's BPE is at Rs 4.36 crore and Bank of Baroda's (BoB) Rs 3.51 crore. These are

according to their respective annual reports for 2005-06. On the other hand, Canara Bank's profitper employee (PPE) is also on the higher side at Rs 3.02 lakh. The PPEs of Union Bank and BoBare at Rs 2.66 lakh and Rs 2.13 lakh, respectively.

"Over the years, we have been steadily losing our marketshare from about 35% in 1970s toaround 16% in 2006. Our vast network is failing to attract the new and demanding youngcustomers," SBI said in that statement, which is addressed to all SBI officers and employees andaimed at changing their attitude towards customers.

The statement was jointly signed by chairman OP Bhatt, managing directors TS Bhattacharyaand Yogesh Agarwal and top office bearers of its officers and employees associations. To

address these issues, both the management and unions have agreed to work hand in hand. Theyhave appealed to the bank's staffs to go flat out to increase its customer base."Let us be consciousof the customer's overall needs rather than only the transaction at hand. Let us expand ourcustomer base," the statement read.

The bank has nearly 37 lakh savings bank accounts in the Bengal circle itself.Meanwhile, thecountry's largest and oldest bank has offered an 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 subordinateemployees.

2.8 Section

FINANCIAL STATUS OF THE ORGANISATION:

PNB financial status for last five years:

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Annual results

year Sales Operating profit Interest Gross profitEPS

(Rs)

Mar ' 08 14,265.02 10,029.21 8,730.86 4,006.24 64.98

Mar ' 07 11,537.48 7,149.74 6,022.91 3,230.64 48.84

Mar ' 06 9,584.15 5,721.06 4,917.39 2,874.77 45.65

Mar ' 05 8,459.85 4,683.04 4,453.11 2,707.21 44.72

Mar ' 04 7,778.94 4,056.84 4,154.99 3,120.86 41

Balance sheet

Balance sheet

Mar ' 08 Mar ' 08

Mar ' 07 Mar ' 07

Mar ' 06 Mar ' 06

Mar ' 05 Mar ' 05

Mar ' 04 Mar ' 04

Sources of funds Uses of funds

Owner's fund Fixed assets

Equity share capital Gross block

315.3 3,699.64

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315.3 2,247.74

315.3 2,106.92

315.3 1,875.65265.3

1,645.93

Share application money Less : revaluation reserve

- 1,535.70

- 293.85

- 302.38

- 312.49

- 321.04

Preference share capital Less : accumulated depreciation

- 1,384.12

- 1,237.92

- 1,076.69

- 910.42

- 746.08

Reserves & surplus Net block

10,467.35 779.83

9,826.31 715.98

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8,758.68 727.84

7,533.50 652.74

4,425.47 578.81

Capital work-in-progress

-

Loan funds -

-

Secured loans -

- -

- Investments

- 53,991.71

- 45,189.84

- 41,055.31

Unsecured loans 50,672.83

1,66,457.23 42,125.49

1,39,859.67 Net current assets

1,19,684.92 Current assets, loans &

advances

1,03,166.89

4,380.84

87,916.40

3,980.80

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3,762.79

3,101.44

3,261.18

Less : current liabilities &

provisions

14,798.23

10,178.51

9,518.93

12,194.80

8,114.48

Total net current assets

-10,417.38

-6,197.71

-5,756.14

-9,093.36

-4,853.30

Miscellaneous expenses not

written

-

-

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-

-

-

Total Total

1,77,239.88 44,354.15

1,50,001.28 39,708.10

1,28,758.90 36,027.01

1,11,015.69 42,232.20

92,607.16 37,850.99

yearOperatin

g income

Material

consumed

Manufacturing

expenses

Personnel

expenses

Selling

expenses

Adminstrative

expenses

Expensescapitalise

d

Costof

sales

Operating

profit

Otherrecurring

income

Adjusted

PBDIT

Mar '08

15,925.65 0 -

2,461.54 23.31 1,247.47 -

3,732.33

3,462.46

231.62

3,694.08

-

Mar '07

12,104.24 -

2,352.45 18.03 1,360.77 -

3,731.25

2,350.09

186.67

2,536.76

-

Mar '

06 9,791.12 -

2,114.

97 20.15 941.38 -

3,076.

51

1,797.2

3

131.5

4

1,928.

77

-

Mar '05 9,712.63 -

2,121.

23 19.16 933.6 -

3,073.

99

2,185.5

3

470.6

9

2,656.

22

-

Mar '04 9,617.34 -

1,654.06 10.85 1,764.91 -

3,429.82

2,032.53 59.85

2,092.38

-

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Cash flow

Mar ' 08

Mar ' 07

Mar ' 06

Mar ' 05

Mar ' 04

Profit before tax

3,295.91

Financialexpens

es

Depreciation

Adjusted PBT

Taxcharges

AdjustedPAT

Nonrecurring

items

Reportednet profit

Earnigsbeforeappropria

tion

Equitydivide

nd

Preferencedividen

d

Dividendtax

Retainedearnin

gs

8,730.86 170.23

3,523.85 1,247.15

2,047.63 1.13 2,048.76 2,064.28

409.89 - 69.66

1,584.73

6,022.91 194.8

2,341.96 629.05

1,539.33 0.76 1,540.08 1,723.57

409.89 - 63.11

1,250.57

4,917.39 186.65

1,742.12 412.83

1,436.66 2.65 1,439.31 1,439.31

189.18 - 26.53

1,223.60

4,453.1

1 183.28

2,472.9

4 495.49

1,409.

50 0.62 1,410.12 1,410.12

174.1

8 - 23.48

1,212.

46

4,154.99 181.45

1,910.93 660.79

1,108.45 0.24 1,108.69 1,108.69

106.12 - 13.6

988.97

P

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2,169.13

2,033.87

1,904.74

1,768.68

Net cashflow-operating activity

1,756.13

-10,144.34

14,961.44

1,073.53

529.29

Net cash used in investing activity

-444.46

-159.41

-465.64

-349.83

-176.20

Netcash used in fin. activity

1,873.54

1,157.57

-793.13

1,544.81

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390.24

Net inc/dec in cash and equivlnt

3,185.21

-9,146.17

13,702.66

2,268.51

743.33

Cash and equivalnt begin of year

15,645.52

24,791.69

11,089.03

8,820.51

8,077.19

Cash and equivalnt end of year

18,830.72

15,645.52

24,791.69

11,089.03

8,820.51

SBI financial status for last five years:

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Annual results

Year SalesOperatingprofit

InterestGrossprofit

EPS (Rs)

Mar ' 09 - - 24.67 -24.63 -16.42

Mar ' 08 - - 21.36 -18.24 -12.17

Mar ' 07 0.9 0.35 21.29 -4.79 -3.19

Mar ' 06 0.44 -0.06 21.3 -21.17 -14.13

Mar ' 05 0.66 -0.03 21.3 -20.35 -13.58

Balance sheet

Mar ' 08

Mar ' 07

Mar ' 06

Mar ' 05

Mar ' 04

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Sources of funds

Owner's fund

Equity share capital

15.00

15.00

15.00

15.00

15.00

Share application money

-

-

-

-

-

Preference share capital

-

-

-

-

-

Reserves & surplus

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-309.56

-291.32

-286.64

-265.66

-245.35

Loan funds

Secured loans

-

-

-

-

-

Unsecured loans

-

-

-

-

-

Total

-294.56

-276.32

-271.64

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-250.66

-230.35

Uses of funds

Fixed assets

Gross block

0.57

0.57

0.72

0.72

2.86

Less : revaluation reserve

-

-

-

-

-

Less : accumulated depreciation

0.10

0.10

0.24

0.24

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1.59

Net block

0.48

0.48

0.48

0.48

1.27

Capital work-in-progress

-

-

-

-

-

Investments

-

-

-

-

-

Net current assets

Current assets, loans & advances

11.44

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-

Total

-294.56

-276.32

-271.64

-250.66

-230.35

Notes:

Book value of unquoted investments

-

-

-

-

-

Market value of quoted investments

-

-

-

-

-

Contingent liabilities

0.22

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0.21

0.22

10.40

10.40

Number of equity sharesoutstanding

150.00

150.00

150.00

150.00

150.00

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(Lacs)

Profit loss account

Mar ' 08

Mar ' 07

Mar ' 06

Mar ' 05

Mar ' 04

Income:

Operating income

1.02

0.90

0.44

0.66

10.90

Expenses

Material consumed

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-

-

-

-

-

Manufacturing expenses

0.03

-

-

-

-

Personnel expenses

0.12

0.09

0.14

0.20

0.72

Selling expenses

-

-

-

-

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0.03

Adminstrative expenses

0.29

0.41

0.29

0.48

12.45

Expenses capitalised

-

-

-

-

-

Cost of sales

0.44

0.51

0.44

0.68

13.20

Operating profit

0.58

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0.39

0.01

-0.03

-2.30

Other recurring income

2.53

12.16

0.10

0.79

-

Adjusted PBDIT

3.11

12.55

0.11

0.76

-2.30

Financial expenses

21.36

21.35

21.36

21.30

28.66

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Depreciation

-

-

0.01

0.02

1.02

Other write offs

-

-

-

-

-

Adjusted PBT

-18.24

-8.80

-21.26

-20.56

-31.98

Tax charges

-

0.01

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0.01

-

-

Adjusted PAT

-18.25

-8.81

-21.27

-20.56

-31.98

Non recurring items

-

-

0.01

0.08

-2.95

Other non cash adjustments

-

4.13

0.27

0.17

9.65

Reported net profit

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-18.25

-4.67

-20.99

-20.31

-25.29

Earnigs before appropriation

-312.32

-294.08

-289.40

-268.42

-248.11

Equity dividend

-

-

-

-

-

Preference dividend

-

-

-

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Mar ' 07

Mar ' 06

Mar ' 05

Mar ' 04

Profit before tax

-18.24

-4.67

-20.98

-21.06

-25.29

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Net cashflow-operating activity

-4.89

5.65

0.08

-7.02

88.19

Net cash used in investing activity

-

-

0.01

0.85

29.46

Netcash used in fin. activity

-

-

-

-0.46

-131.50

Net inc/dec in cash and equivlnt

-4.89

5.65

0.09

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-6.64

-13.85

Cash and equivalnt begin of year

16.16

10.51

10.42

17.06

30.91

Cash and equivalnt end of year

11.27

16.16

10.51

10.42

17.06

2.9 SectionFUTURE PLANS:PNB future plans:PNB has initiated various steps in a bid to expand its operations in the state of Kerala.These include opening new branches and increasing the number of its core bankingsolutions branches. PNB currently has 71 CBS branches in Kerala and has registeredgood growth from this region.PNB in looking at increasing its international presence and in line with this, thecompany is planning to set up offices in UK, Singapore, Hong Kong and Canada. TheCanada office is likely to open very soon, while the other locations are likely tocommence operations by end of this fiscal year.

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PNB unvieled its plans to raise additional capital of Rs. 21,000 million to fund itsbusiness expansion plans for this current fiscal.SBI future plans:SBI has set for itself an ambitious target of credit linking 1 million SHGs up to March2008.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 itssix associated banks with it within this fiscal.SBI drawn up a home-grown strategy to carry out the merger programme and we maytake up such mergers one by one, or two at a time or in a phased manner. SBI wantthe future mergers to be as smooth as the merger.Post-merger, the size of SBIsbalance sheet will cr-oss Rs 12,00,000 crore and its profitablity will increased.

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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 theincrease in the number and percentage of higher-priced home mortgage loans andcontinued differentials across demographic groups. Here we assess three possibleexplanations for the observed increase in 2005 over 2004: (1) changes in lenderbusiness practices; (2) changes in the risk profile of borrowers; and (3) changes inthe yield curve environment. Results suggest that after controlling for the mix of loantypes, credit risk factors, and the yield curve, there was no statistically significant

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fully exploit less penetrated markets. Recently targeted populations that havehistorically been denied homeownership opportunities have offered the mortgageindustry novel hurdles to overcome. Industry participants in combination with easedregulatory standards and the support of the GSEs (Government SponsoredEnterprises) have overcome many of them.

If there is an economic disruption that causes a marked rise in unemployment, thenegative impact on the housing market could be quite large. These impacts come inseveral forms. They include a reduction in the demand for homeownership, a declinein real estate prices and increased foreclosure expenses.These impacts would be exacerbated by the increasing debt burden of the U.S.consumer and the reduction of home equity available in the home. Although we haveyet to see any materially negative consequences of the relaxation of credit standards,we believe the risk of credit relaxation and leverage can't be ignored. Importantly, arelatively new method of loan forgiveness can temporarily alter the perception ofcredit health in the housing sector. In an effort to keep homeowners in the home and

reduce foreclosure expenses, holders of mortgage assets are currently recasting ormodifying troubled loans. Such policy initiatives may for a time distort the relevancy ofdelinquency and foreclosure statistics. However, a protracted housing slowdowncould eventually cause modifications to become uneconomic and, thus, credit quality

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statistics would likely become relevant once again. The virtuous circle of increasinghomeownership due to greater leverage has the potential to become a vicious cycleof lower home prices due to an accelerating rate of foreclosures.6) In dec 2002 Melissa B. Jacoby had studied about the Home Ownership Risk Beyonda Subprime Crisis: The Role of Delinquency Management. They studied that Public

investment in and promotion of homeownership and the home mortgage market oftenrelies on three justifications to supplement shelter goals: to build household wealthand economic self-sufficiency, to generate positive social-psychological states, and todevelop stable neighborhoods and communities. Homeownership and mortgageobligations do not inherently further these objectives, however, and sometimesundermine them. The most visible triggers of the recent surge in subprimedelinquency have produced calls for emergency foreclosure avoidance interventions(as well as front-end regulatory fixes). Whatever their merit, I contend that a systemof mortgage delinquency management should be an enduring component of housingpolicy. Furtherance of housing and household policy objectives hinges in part on the

conditions under which homeownership is obtained, maintained, leveraged, and - insome situations - exited. Given that high leverage or trigger events such as job lossand medical problems play significant roles in mortgage delinquency independent ofloan terms, better origination practices cannot eliminate the need for delinquencymanagement.One function of this brief essay is to identify an existing rough framework formanaging delinquency. Legal scholarship should no longer discuss mortgageenforcement primarily in terms of foreclosure law and instead should include otherdebtor-creditor laws such as bankruptcy, industry loss mitigation efforts, and third-party interventions such as delinquency housing counseling. In terms of analyzing

this framework, it is tempting to focus on its impact on mortgage credit cost andaccess or on the absolute number of homes temporarily saved, but my proposedanalysis is based on whether the system honors and furthers the goals of wealthbuilding, positive social psychological states, and community development. Becausethose ends are not inexorably linked to ownership generally or owning a particularhome, a system of delinquency management that honors these objectives shouldstrive to provide fair, transparent, humane, and predictable strategies for home exit aswell as for home retention. Although more empirical research is needed, this essaystarts the process of analyzing mortgage delinquency management tools in theproposed fashion.

7) In 1999 Yoko Moriizumi had studied about the Current Wealth, Housing Purchaseand Private Housing Loan Demand in Japan.Japanese households accumulate wealth for downpayments at a high rate. Therefore,

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current wealth plays an important role in home acquisition as public loans whosedirect mortgage lending is a strong support for home purchasers. We estimate thewealth effect on private mortgage debt as well as housing consumption by applying amodel where mortgage debt demand is derived from house purchase decisions andis determined jointly with housing consumption. We use a simultaneous equation

Tobit estimation method. Wealth effects on private mortgage debt, likelihood ofborrowing, and housing consumption are not elastic. On the other hand, a change inhousing consumption affects the likelihood of borrowing elastically much more thanthe private mortgage amount of borrowers. Housing and private mortgage marketsfluctuate very closely with the number of participants in the mortgage market.Therefore, the number of housing starts is linked strongly to the private mortgagemarket.

8) Robert B. Avery and Allen N. Berger had studied about the Loan commitmentsand bank risk exposure. They studied about the Loan commitments increase abank's risk by obligating it to issue future loans under terms that it mightotherwise refuse. However, moral hazard and adverse selection problems

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potentially may result in these contracts being rationed or sorted. Dependingon the relative risks of the borrowers who do and do not receive commitments,commitment loans could be safer or riskier on average than other loans. theempirical results indicate that commitment loans tend to have slightly betterthan average performance, suggesting that commitments generate little risk or

that this risk is offset by the selection of safer borrowers.

9) Sumit Agarwal,Souphala Chomsisengphet and John C. Driscoll had studiedabout the Loan commitments and private firms. They studied that, Most loansare in the form of credit lines. Empirical studies of line demand have beencomplicated by their use of data on publicly traded firms, which have a wide

menu of financing options. We avoid this problem by using a uniqueproprietary data set from a large financial institution of loan commitmentsmade to 712 privately-held firms. We test Martin and Santomero's (1997)model, in which lines give firms the speed and flexibility to pursue investmentopportunities. Our findings are consistent with their predictions. Firms facinghigher rates and fees have smaller credit lines. Firms with higher growthcommit to larger lines of credit and have a higher rate of line utilization. Firmsexperiencing more uncertainty in their funding needs commit to smaller creditlines. Almost all firms convert unused credit line portions into spot loans andtake out new lines.

10) Faik Koray and Eric T. Hillebrand had studied about the Interest Rate Volatility andHome Mortgage Loans . they studied that The U.S. economy has experiencedsubstantial fluctuations in real and nominal interest rates since the 1970s. Thispaper investigates empirically the relationship between home mortgage loansand volatility in mortgage rates for the period 1971:02 through 2003:03.Contrary to common wisdom, we find a positive relationship between mortgagerate volatility and home mortgage loans. Further investigation indicates thatthis is due to volatility in the bond market. In times of high interest volatility,households disinvest in government securities and invest in real assets, whichyield a positive relationship between mortgage rate volatility and homemortgage loans.

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private mortgage insurance (PMI) on mortgage markets. The data confirms that in theyears leading up to the mortgage crisis home buyers and lenders have aggressivelyused piggyback loans to avoid taking out PMI on first mortgages. Multiple-mortgagefinancing packages as a percent of newly originated mortgages (mortgagesoriginated 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 seasonedmortgages (mortgages originated more than five years prior to the origination date)also increased by a modest amount. Further comparisons reveal a large decrease inthe proportion of mortgages with PMI with the largest decreases in PMI coverageoccurring among newly originated multiple-lien packages. Data from the SCF wasused to compare five financial characteristics (credit card debt, installment loans,consumer credit, home-owners equity, and liquid assets) for multiple-lien versussingle-lien households. The comparisons suggest single-lien households tend to haveslightly stronger financial variables than multiple-lien households. The data does notsupport 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 ofhome equity loans increased mortgage holder risk in several different ways and wasa contributing factor to the 2008 mortgage and financial crisis. This change in lendingand borrowing behavior is not a subprime market problem.

13) In aug 2007 Michael LaCour-Little had studied about the The Home Purchase

Mortgage Preferences of Low- and Moderate-Income Households. Housingpolicy in the United States has long supported homeownership, yet variationpersists across income groups. This article employs recent mortgageorigination data to focus on the revealed preferences of low- and moderate-income (LMI) households in home purchase mortgage choice. I identify thefactors associated with conventional conforming, FHA, nonprime and speciallytargeted programs. Empirical results show that individual credit characteristicsand financial factors, including pricing, generally drive product choice, withsome variation evident when loans are originated through brokers. Results alsoindicate that targeted conventional programs effectively compete withgovernment-insured products in the LMI segment.

14) In 24 oct 2008 David C. Wheelock had studied about the GovernmentResponse to Home Mortgage Distress: Lessons from the Great. They studied

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15) In march 2001 Tullio Jappelli and Maria Concetta Chiuri had studied about theFinancial Market Imperfections and Home Ownership: A Comparative Study.They explore the determinants of the international pattern of home ownershipusing the Luxembourg Income Study (LIS), a collection of microeconomic dataon fourteen OECD countries. In most, the cross-section is repeated over time

and includes several demographic variables carefully matched between thedifferent surveys. This allows us to construct a truly unique internationaldataset, merging data on more than 400,000 households with aggregate paneldata on mortgage loans and down payment ratios. After controlling fordemographic characteristics, country effects, cohort effects and calendar timeeffects, we find strong evidence that the availability of mortgage finance - asmeasured by outstanding mortgage loans and down payment ratios - affectsthe age-profile of home ownership, especially at the young end. The resultshave important implications for the debate on the relationship between savingand growth.

16) In 10 dec 2007 Irina Paley and Chau Do had studied about the Explaining theGrowth of Higher-Priced Loans in HMDA: A Decomposition Approach. Theperiod 2004-2005 showed a significant increase in Home Mortgage DisclosureAct (HMDA) rate spread reporting. Following the Oaxaca (1973), Blinder (1973),and Fairlie (2005) decomposition techniques, this study identifies the fraction

of the increase due to the flattening of the yield curve. Even after controlling forchanges in borrower risk characteristics, the findings reveal that during 2004-2006, the flattening of the yield curve explains a significant amount of theincrease in rate spread reportable loans. This is the case for both prime andsubprime originations.

17) In feb 1 2009 Vincent W. Yao and Eric Rosenblatt and Michael LaCour-Little hadstudied about the unique paired loan dataset containing information onmultiple conventional conforming mortgage loans of households to examinehome equity extraction decisions over the period 2000-2006. The main questionaddressed is how much households borrow when refinancing their currentmortgage debt in a cash-out transaction. We also provide estimates of themarginal effect of certain borrower characteristics. Results contribute both tothe literature on refinancing behavior and the role of house price appreciation

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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 CorporateLoan Market Globally Integrated? A Pricing Puzzle. We offer evidence thatinterest rate spreads on syndicated loans to corporate borrowers areeconomically significantly smaller in Europe than in the U.S., other things equal.Differences in borrower, loan and lender characteristics associated withequilibrium mechanisms suggested in the literature do not appear to explainthe phenomenon. Borrowers overwhelmingly issue in their natural homemarket and bank portfolios display significant home "bias." This may explainwhy pricing discrepancies are not competed away, but the fundamental causes

of the discrepancies remain a puzzle. Thus, important determinants of loanorigination market outcomes remain to be identified, home "bias" appears to bematerial for pricing, and corporate financing costs differ in Europe and the U.S.

19) In july 2005 Gwilym B.J. Pryce and Patric H. Hendershott had studied abot theThe Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage

Interest.Mortgage interest tax deductibility is needed to treat debt and equityfinancing of homes equally. Countries that limit deductibility create a debt tax penaltythat presumably leads households to shift from debt toward equity financing. Thegreater the shift, the less is the tax revenue raised by the limitation and smaller is its

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negative impact on housing demand. Measuring the financing response to alegislative change is complicated by the fact that lenders restrict mortgage debt to thevalue of the house (or slightly less) being financed. Taking this restriction into accountreduces the estimated financing response by 20 percent (a 32 percent decline in debtvs a 40 percent decline). The estimation is based on 86,000 newly originated UK

loans from the late 1990s.

20) In 1 nov 2007 Marsha Courchane studied about The Pricing of Home MortgageLoans to Minority Borrowers: How Much of the APR Differential. The publicreleases of the 2004 and 2005 HMDA data have engendered a lively debate overthe pricing of mortgage credit and its implications regarding the treatment of

minority mortgage borrowers. We provide a unique empirical assessment ofthis issue by using aggregated proprietary data provided to us by lenders andan endogenous switching regression model to estimate the probability oftaking out a subprime mortgage, and annual percentage rate ("APR")conditional on getting either a subprime or prime mortgage. We find that up to90 percent of the African American APR gap, and 85 percent of the HispanicAPR gap, is attributable to observable differences in underwriting, costing andmarket factors that appropriately explain mortgage pricing differentials.Although any potential discrimination is problematic and should be addressed,our analysis suggests that little of the aggregate differences in APRs paid by

minority and non-minority borrowers are appropriately attributed to differentialtreatment.

21) In 1991 Susan M. Wachter and Paul S. Calemhad studied about the CommunityReinvestment and Credit Risk: Evidence from an Affordable Home LoanProgram.This study examines the performance of home purchase loansoriginated by a major depository institution in Philadelphia under a flexiblelending program between 1988 and 1994. We examine long-term delinquency inrelation to neighborhood housing market conditions, borrower credit historyscores, and other factors. We find that likelihood of delinquency declines withthe level of neighborhood housing market activity. Also, likelihood ofdelinquency is greater for borrowers with low credit history scores and thosewith high ratios of housing expense to income, and when the property isunusually expensive for the neighborhood where it is located.

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o 4 respondents did not answer.

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2)From howmany years you are associated with this bank?

Less than 1 year101-5 years 24More than 512

051015202530Less than year1-5 yearmore then 5Series1Series2

Interpretation:-

oTotal Number of Respondents was 46o10persons are associated less than 1 yearo24persons are associated from 1-5 years.o12persons are associated frommore than 5 years.o3)How do you come to know about the home loan schemes ofthat bank?

News paper18Television 14

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Internet 10other resources 4

02468101214161820News paperTelevisionInternetOtherresourcesSeries1Series2Interpretation:-

oTotal Number of Respondents was 46o18persons came to know from newspapero14persons came to know from televisiono10persons cameto know from interneto4persons came to knowfrom other resources4)Are you aware of thesetype of home loans?

Home purchaseloan 9Home constructionloan 18Homeimprovementloan 6Homeequityloan4Land purchase loan9

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02468101214161820Homepurchase loanHomeconstructionloanHome improvement loanHome equityloanLand purchase loanSeries1Interpretation:-

oTotal Number of Respondents was 46oOnly 4 persons know home equity loan.oMany of peoples know home construction loan.o9 peoples know home purchaseloan.o6 peoples knowhome improvement loans.5)Are you aware all termsand conditions of home loans?

Yes 40No 6

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051015202530354045YesNoSeries1Interpretation:-

oTotal Number of Respondents was 46.oMany of persons know all terms and conditions of home loan i.e. 40.

o6 persons had not know properly about all termsand conditions.6)Are you satisfy with theinterestratecharges by your bank?

Strongly agree12Agree30Disagree4strongly disagree0

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0246810121416Strongly agree AgreeDisagreestronglydisagreeSeries1Interpretation:-

oTotal Number of Respondents was 46

o12among all consumers are strongly agreed by interest rate of the bank.o30among all consumers are agreed by interestrate of the banko4among all consumers are disagreed by interestrate of the banko0 among all consumers are strongly disagreed by interest rate of thebank7)Your bank offer which type of services?

Mobile banking24Net banking15Forex banking7

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051015202530Strongly agreeAgreeDisagreestronglydisagreeSeries1Interpretation:-

oTotal Number of Respondents was 46.

o8 persons strongly agreethat bank home loan processing is fast.o26 persons agree that bank home loan processing is fast.o9 persons disagreethat bank processing is fast.o3 persons strongly disagree that bank processing is fast.9)Do you satisfy with the after home loan services provided by your bank arebest ascompare to other bank?


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05101520253035Strongly agreeAgreeDisagreestronglydisagreeSeries1Interpretation:-


o12among all consumers are strongly agreed by after sale services ofthe bank.o30among all consumers are agreed by after sale services of the banko4among all consumers are disagreed by after sale services of the banko0 among all consumers are strongly disagreed by after sale services ofthe bank10)Does the cost of homeloan is appropriate, according to your demand?

Yes 33No 13

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oTotal Number of Respondents was 46.o33 persons said thathome loan is appropriate according to theirdemand.

o13 personssaid that home loan isnot appropriate according to theirdemand.11)Are you satisfy with the employees behaviour of the bank?


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0510152025Strongly agree AgreeDisagreestronglydisagreeSeries1Interpretation:-


o19 persons very satisfied with the employee behaviour of thebank.o23 persons satisfied with the employee behaviour of the bank.o4 persons disagree with the employee behaviour of the bank.oNo one is disagree with the employee behaviour of the bank.o12)Does the bank give any discount upon loan services?

Yes 40No 6

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o40 persons said that bank give discount upon loan services.oOnly 6 persons said that bank does not give any discountupon loanservices.13)Are you satisfy by the time taken in sanctioning the loan?

Yes 34No 12

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oTotal Number of Respondents was 46.o34persons are satisfied by the time taken

o12persons are not satisfied by the time taken14)Have you face any difficulty during taking theloan?

Yes 39No 7

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oTotal Number of Respondents was 46.o39 persons face difficulty during taking the loan.

oOnly 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?

Excellent24Good 18Average4below average0

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051015202530ExcellentGood Average belowaverageSeries1Interpretation:-


o24 persons give excellent grade of the bank.o18 persons gove good grade to the bank.oOnly 4 persons give average grade to the bank.oNo none give below average gradeto the bank.PNB:NO.50

1)Whatis your occupation?

Business man 17Student0Government Employee23Other 0House wife 7

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02468101214161820Less than 1year1-5 yearsMore than 5Series1Interpretation:-


o17persons are associated less than 1 yearo19persons are associated from 1-5 years.o11persons are associated frommore than 5 years.3) How do you come to know about the home loan schemes of that bank?

News paper12Television 22Internet 9other resources 4

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0510152025NewspaperTelevision InternetotherresourcesSeries1Interpretation:-

oTotalNumber of Respondents was 47o12persons came to know from newspaper

o22persons came to know from televisiono9persons came to knowfrom internet.o4 persons came to know from other resources.4) Are you aware of these type of home loans?

Home purchaseloan 9Home constructionloan 19Homeimprovementloan 9Homeequityloan2Land purchase loan8

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02468101214161820Homepurchase loanHomeconstructionloanHome improvement loanHome equityloanLand purchase loanSeries1Interpretation:-

oTotal Number of Respondents was 47.oOnly 2 persons know home equity loan.oMany of peoples know home construction loan.o9 peoples know home purchaseloan.o9 peoples knowhome improvement loans.5)Are you aware all terms and conditions of home loans?

Yes 34No 13

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oTotal Number of Respondents was 47.oMany of persons know all terms and conditions of home loan i.e. 34.

o13 persons had not know properly about all terms and conditions.6)Are you satisfy with the interest rate chargesby your bank?


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0510152025303540StronglyagreeAgreeDisagreestronglydisagreeSeries1Interpretation:-

oTotal Number of Respondents was 47.o11among all consumers are strongly agreed by interest rate of the bank.o34among all consumers are agreed by interestrate of the banko2among all consumers are disagreed by interestrate of the banko0 among all consumers are strongly disagreed by interest rate of thebank7)Your bank offer which type of services?

Mobile banking26Net banking13Forex banking8

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051015202530MobilebankingNet bankingForex bankingSeries1Interpretation:-


o26 persons said that bank offermobile banking services.o13 said thatbank offer net banking services.oOnly 8 persons said that bank offer forex bankingservices.8)Do you agree that your bank loan processing is fast?


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o4 persons strongly agreethat bank home loan processing is fast.o21 persons agree that bank home loan processing is fast.o13 persons disagree thatbank processing is fast.o9 persons strongly disagree that bank processing isfast.9) Do you satisfy with the after home loan services provided by your bank arebest as compare to other bank?


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o14among all consumers are strongly agreed by after sale services ofthe bank.o29among all consumers are agreed by after sale services of the banko4among all consumers aredisagreed by after sale services of the banko0 among all consumers are strongly disagreed by after sale services ofthe bank10) Does the cost of home loan is appropriate, according to your demand?

Yes 29No 18

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oTotal Number of Respondents was 47.o29 persons said thathome loan is appropriate according to theirdemand.

o18 personssaid that home loan is not appropriate according to theirdemand.11)Areyou satisfy with the employees behaviour of the bank?


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oTotal Number of Respondents was 47.o16 persons very satisfied with the employee behaviour of thebank.o25 persons satisfied with the employee behaviour of the bank.o6 persons disagree with the employee behaviour of the bank.oNo one is disagreewith the employee behaviour of the bank.12)Does the bank giveany discount upon loan services?

Yes 35No 12

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oTotal Number of Respondents was47.o35persons said that bank give discount upon loan services.

oOnly 12 persons said that bank does not give any discountupon loanservices.13)Are you satisfy by the time taken in sanctioning the loan?

Yes 30No 17

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oTotal Number of Respondents was 47.o30persons are satisfied by the time taken

o17persons are not satisfied by the time taken14)Have you face any difficulty during taking the loan?

Yes43No 4

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oTotal Number of Respondents was 47.o43 persons face difficulty during taking the loan.

oOnly 4 persons does not face any difficulty duringtaking the loan.15)Which grade you want to give of home loan schemes of the bank?

Excellent18Good 20Average8below average1

640510152025ExcellentGood Average belowaverageSeries1

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Interpretation:-

o Total Number of Respondents was 47.o 18 persons give excellent grade of the bank.o 20 persons gove good grade to the bank.

o Only 8 persons give average grade to the bank.o 1 person give below average grade to the bank.

CHAPTER 55.1 SectionCONCLUSION:All the people are availing loan facility from both the banks. No. of respondents ofSBI were 46 and 47 of SBI Bank. Peoples are relating with PNB more satisfy withthe interest rate as compare to SBI. SBI peoples much know about home loansthen 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 toSBI. Peoples related with SBI is more satisfy with the employee behaviour ascompare to PNB.People are more satisfied by SBI for time taken for sanctioningthe loan. From all this I conclude that SBI bank provide good home loan servicesas compare to PNB and many peoples are very satisfied from SBI.5.2 SectionLIMITATIONSAlthough best of the efforts were made to conduct a prefect survey but still it facescertain limitation. Following were certain limitation of this project.1.The survey was conducted only on 100 respondents.

2.Some of the respondents did not answer all the questions, which could hamperthe final results to a certain extent.3.The study confines itself to the respondents of NAWANSHAHARregion only. Hence findings would not be relevant to other cities.

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CHAPTER 6REFERENCES:

Craig, Ben R. and Thomson, James B.,Federal (August 2001). Home Loan

Bank Lending to Community Banks: Are Targeted Subsidies Necessary? FRBof 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 FinancialEconomics, Vol. 4, No. 4, pp. 63-74, December 2006. Available at

SSRN: http://ssrn.com/abstract=959359

LaCour-Little, (May 18, 2007) Michael,Economic Factors Affecting HomeMortgage Disclosure Act. SSRN: http://ssrn.com/abstract=992815

Borde, Stephen F. May/June 1991 ,Is the Savings and Loan Industry FacingExtinction?The Secured Lender,Vol.47.SSRN:http://ssrn.com/abstract=151018

Rosner, Joshua (June 29, 2001).,Housing in the New Millennium: A HomeWithout Equity is Just a Rental with Debt,Available atSSRN: http://ssrn.com/abstract=1162456

Jacoby, Melissa B.( dec 2006) Home Ownership Risk Beyond a SubprimeCrisis: The Role of Delinquency Management. Fordham Law Review, Vol. 76,2008; UNC Legal Studies Research Paper No. 1074442. Available at

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SSRN: http://ssrn.com/abstract=1074442

Moriizumi, Yoko,Current Wealth, (dec 1999) Housing Purchase and PrivateHousing Loan Demand in Japan. Journal of Real Estate Finance and

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Economics, Vol. 21, Issue 1. Available atSSRN: http://ssrn.com/abstract=237815

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 HomeMortgage Loans. Applied Economics, Forthcoming. Available at SSRN:http://ssrn.com/abstract=923358 Lin, Emily Y. and White, Michelle J. (November 2000),Bankruptcy and theMarket for Mortgage and Home Improvement Loans. Michigan Law andEconomics Research 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 PrivateMortgage Insurance: Recent Trends & Potential Implications. Available at

SSRN: http://ssrn.com/abstract=1277353 LaCour-Little, Michael,The Home Purchase Mortgage Preferences of Low-and Moderate-Income Households. Real Estate Economics, Vol. 35, No. 3, pp.265-290, Fall 2007. Available at SSRN: http://ssrn.com/abstract=1007862 orDOI: 10.1111/j.1540-6229.2007.00190.x Wheelock, David C(October 24, 2008)..,Government Response to HomeMortgage Distress: Lessons from the Great Depression.Federal Reserve Bankof St. Louis Working Paper No. 2008-038A. Available atSSRN: http://ssrn.com/abstract=1289440 Chiuri, Maria Concetta and Jappelli, Tullio, (March 2001) Financial MarketImperfections and Home Ownership: A Comparative Study. CEPR DiscussionPaper No. 2717. Available at SSRN: http://ssrn.com/abstract=264399 Do, Chau and Paley, Irina,Explaining the Growth of Higher-Priced Loans inHMDA: A Decomposition Approach. Journal of Real Estate Research, 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 RealEstate Research, 2009. Available at SSRN: http://ssrn.com/abstract=1336049

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Nini, Greg and Carey, Mark, (August 2004) Is the Corporate Loan MarketGlobally Integrated? A Pricing Puzzle. FRB International Finance DiscussionPaper No. 813. Available at SSRN: http://ssrn.com/abstract=585742 Hendershott, Patric H. and Pryce, Gwilym B.J. (July 2005).,The Sensitivity ofHomeowner Leverage to the Deductibility of Home Mortgage Interest.NBER

Working Paper No. W11489. Available atSSRN: http://ssrn.com/abstract=762768

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Courchane, Marsha, (November 1, 2007). The Pricing of Home MortgageLoans to Minority Borrowers: How Much of the APR Differential Can WeExplain? Available at SSRN: http://ssrn.com/abstract=1374872 Calem, Paul S. and Wachter, Susan M. (Nov 1, 1999),CommunityReinvestment and Credit Risk: Evidence from an Affordable Home Loan

Program. Real Estate Economics, Vol. 27. Available at SSRN:http://ssrn.com/abstract=145360

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CHAPTER 7QUESTIONNAIRE:Name____________Qualification_________Age 18-25 . 25-35. 35-40. Above .

Gender_________

16) What is your occupation?

Business man . Government employee .House wife . Student .Other .

17) From how many years you are associated with this bank?

Less than 1 year . 1-5 .More than 5 year .

3) How do you come to know about the home loan schemes of this bank?

News paper . Television .Internet . Other resources .

4) Are you aware of these type of home loans?

Home purchase laon . Home construction loan .Home improvement loan . Home extention loan .Home equity loan . Land purchase loan .

5) Are you aware all terms and conditions of home loans?

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Yes . No .

6) Are you satisfy with the interest rate charges by your bank?

Strongly agree . Agree .

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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 .

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Average . Below average .

16) Any suggestions that you want to give___________________________________

_____________________________________________________________________

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