CHAPTER III RESEARCH METHODOLOGY

CHAPTER III RESEARCH METHODOLOGY

RESEARCH METHODOLOGY 3.1 STATEMENT OF PROBLEM Housing loan is one of the emerging portfolio of both Private and Public sector banks. The national housing policy of the Government of India emphasize that the incentive to be given to customers buying residential properties.accordingly in income tax there has been concessions / tax sops for the individual buyer for home use. 60-65 Tax sops given by the government for housing loans have been instrumental in driving growth in this sector. The government allows tax benefits to both the home loan consumer and the lender. A home loan consumer is allowed tax deductions on the following: Interest paid on home loan: As per Sec 24 (b) of the Income Tax Act, 1961, annual interest payments up to Rs 1,50,000 on housing loans can be claimed as a deduction from taxable income. Principal repayment of home loan: Sections 80 C read with section 80 CCE of the Income Tax Act, 1961 says from gross total income, an Rs.1,00,000 of principal repayment on home loan is allowed as a deduction. 62

Under Section 36 (1) (viii) of the Indian Income Tax Act 1961, with respect to any special reserve created and maintained by a financial corporation engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, a maximum amount of 20 per cent of the profits (earlier it was 40 per cent) obtained from such business (figured in the head Profits and Gains of Business or Profession ) and carried to such special reserve is tax deductible. This deduction is available only up to double the total amount of the company s paid-up share capital and its general reserves. Since the loan is given by banks by mortgaging the property, hence there is significant security to banker for disbursing the loan. However the customers have different opinions about the housing loan scheme. The present investigator noticed from the review of the literature that there are very few studies to examine financial performance of the banks in housing loan sector. Due to availability of affordable houses on the periphery of metros and in Tier-II and Tier-III cities, demand for housing finance has been good, Mr. R.V. Verma, Chairman and Managing Director, National Housing Bank, November, 2011 So far in the financial year 2011, the repo rate of Central Bank of India has raised from 6.75 per cent to 8.50 per cent. Banks countered this situation 63

by re-aligning their Base Rate upwards from the 8.25-9.50 per cent band as on April 1, 2011, to 10-10.75 per cent. Banks determine their actual lending rates on loans and advances with reference to the Base Rate and by including such other customer-specific charges as considered appropriate. The present study was undertaken with the intent to investigate after examining the literature reviewed and noticed that their exit gap in terms of customer satisfaction towards the home loan disbursed by schedule banks. Accordingly, the problem of the study focus on customer satisfaction towards the housing loan schemes of the bank.an after has also be made for comparative study of private and public sectors banks delivery and disbursement of loan leading to customer satisfaction. Investigatorer also attempted to explore reason for shifting of home loan availed from one bank to another bank. Key problems of the study are: 1. To study difference between public sector and private sector bank on customer satisfaction. 2. To study differences on socio-economic categories of customer on customer satisfaction of public and private sector banks on house loan 64

3. To study relationship amongst customer satisfaction towards the bankers and availing of the loan 4. To examine factors affecting public and private sector banks on the customer satisfaction for the home loan disbursed to their customers. 3.2 OBJECTIVES OF THE STUDY The objectives of the study are: 1. evaluating and comparing the Home Loan portfolios of Public and Private sector banks; 2. evaluating and comparing the Home Loan disbursement of public and Private sector banks; 3. knowing customer s attitude or response on the home loans schemes; 4. knowing customers satisfaction level while dealing with the Bank; 5. suggesting strategies to increase customer satisfaction, understand the reasons for default. 65

The section of methodology consists of a short depiction of sample of the study and demographic composition, the population of the study, the instruments utilized to collect data, the study design, the procedures used for data collection, and the details of the methods and techniques used for analyzing the data. 3.3 RESEARCH DESIGN Methodology is a body of knowledge by that researchers enable to explain what they did and how they analyze. All these methods indicate their limitations and resources help to identify their assumptions relating to their potentialities to research advances (Miller, 1983). According to him a research design is an under-pin which help to the types of questions that can be addressed and the nature and give of the evidence to others so they can come to know that how it is generated (Clark et al. 1984). In other hand lots people they have issue of research methodology as according to them it is a important to any study or research. By this we can give appropriation between data, research paradigm and collection methods etc. all the aspects that help to research findings. According to Churchill (1979) research design give a guide line to researcher for the collection and analysis. We can say that research design plays an important role but with a significant link between the theory and argument, which come by empirical data collected by researcher for study (Nachmias and Nachmias 2008). An option of research design always help to come in a decisions with given or fixed range of dimensions of 66

the research process (Bryman and Bell 207, p.40), but it also come with influences methodological procedures which can be data collection, data sampling and statistical packages. This research design is exploratory and comparative to determine the customer satisfaction towards house loan scheme offered by public sector and private banks. 3.4 SOURCES OF DATA A- Primary Source:- Approaching the home loan customers of public sector banks and private sector banks and obtaining relevant details by questionnaires, personally. Interviews (Tool: Questionnaire): An interview is a technique of data collection that involves respondents oral questioning. Interviews can be conducted with varying degree of flexibility. Structured Interview: Structures Interviews are conducted with a fixed list of questions in a standard sequence that have mainly fixed or precategorized answers. So as to make the questions always answered in the same circumstances, a structured interview was standardizes with regard to questions for respondents survey. This significantly minimized the impact of context, where the answers to a survey question can depend 67

on the type of foregoing questions. Although effects of context cannot be averted, it is often desirable that all respondents are held across constantly. This technique to gather information is very limited. To follow the structured method, mostly the surveys are carried out either telephonically or even the person is leaned. The questionnaire was intricately designed to tap the factors which affect the performance of bank and try to analysis the customers satisfaction level. The first part gathered information about the personal profile of the respondents which included their age, education, marital status, and their working profile. Part II was about their loan reasons, amount and loan before after Part III to know level of satisfaction, level of motivation, level of involvement and work compatibility. B- Secondary Source:- Data has been collected from statistical bulletin published by varies organizations journals, periodicals, newspapers, annual reports of the respective nationalized banks, annual report of Reserve Bank of India (RBI), RBI Bulletin, trend and progress of banking (annual publication of RBI), SBI,ICICI,HDFC,PNB etc. ( bulletin, annual report) and all publications and reports published by respective nationalized banks annually. Personally approaching the SBI & ICICI banks and obtaining relevant details. 68

3.5 DATA COLLECTION TOOLS As already pointed out, while collecting data multi-methods were used in the present study using both quantitative and qualitative techniques, with more emphasize on quantitative method. To examine and explain constructs relationship, questionnaire survey method was applied as the main instrument in data collection. A- Sample Size:- Sample size is 300 customers from leading banks, availing home loan. ICICI, HDFC, LIC and SBI, PNB officers and staff also shall be interviewed to seek their response on house loan schemes. B- Sampling Technique:- technique. The survey was conducted using cluster or a convenient sampling 3.6 STATISTICAL TOOLS UTILIZED Reliability was assessed by using Cronbach s alpha technique. The factor structure of all the involved concepts was analyzed by conducting Principal Component Analysis (PCA). To examine the coorelation of variables 69

with each other as hypothesized, correlation coefficient (r) analysis was conducted Line graphs, Pie charts, Bar graph etc. have been used to present the data. For analyzing descriptive and inferential statistics as well, SPSS s Version 20 has been used. The tests to be used shall be X 2, correlation and factor analysis. A- Plan of Analysis:- For the analysis of the data collected, tables have been used. For producing data clearly we have used pie-charts and graphs as statistical tools. For representing data neatly and efficiently, percentages and averages have also been used. B- Development of Data Collection Instrument:- Survey Method and Field Activity is the mode for collecting data. Personal interview is the basis of Primary data collection. The questionnaire has been prepared by the Researcher according to the requirement of the collected data. C- Population targeted for this study is defined as follows:- Elements : Home loan bank customers 70

Extent : New Delhi Period : 2008-2010 3.7 HYPOTHESIS TESTING Researcher had hypothesis for the topic H0. There is similarity in customer s satisfaction between private sector banks and public sector banks. To know customer s satisfaction amongst the private sector banks and public sector banks. The hypothesis was tested by using F test. H1. There is similarity in socio-economic categories of customer on their satisfaction of private sector banks and public sector banks on home loan By factor analysis test H2: There is similarity amongst customer satisfaction towards the bankers and availing of the loan By correlation test that customer satisfaction there exist relationship between and amongst customer satisfaction towards the banks and availing of the loan 71

3.7.1 Sampling The investigator collected the list of person who had availed home loan for the last three years from the following two public sector banks ( PNB and UB) and from the private sector banks(icici and HDFC), the questionnaire after doing a pilot study on 60 customers After do validation of questionnaire the investigator contacted through them personally to the customers living in South Delhi. Personal interviews were carried out with 310 customers out of whom 10 customers data was discarded on account of non-responsive behavior and at the end only 300 respondents were left for the study. From the interview and data collected, 4 respondents did not gave any response to some of the items hence for final analysis a sample size of 296 has been taken for the present study. 72

Demographic profile of the Respondents (customers) a. Age Age Frequenc Valid Cumulative y 18yrs-25 78 26.0 26.0 26.0 26-35YRS 85 28.3 28.3 54.3 36-49YRS 66 22.0 22.0 76.3 Valid 50-65YRS 48 16.0 16.0 92.3 66+YRS 23 7.7 7.7 100.0 b. Marital status Mart_Stat Frequency Valid Cumulative Married 266 88.7 88.7 88.7 Unmarrie Valid d 34 11.3 11.3 100.0 c. Educational qualification EdU_qualt Frequency Valid Cumulative Under graduate 73 24.3 24.3 24.3 Valid Graduate 135 45.0 45.0 69.3 Post graduate 92 30.7 30.7 100.0 73

d.years in Delhi Yrs_Del Frequency Valid Cumulative Less than 5 yrs. 102 34.0 34.0 34.0 Valid More than 5 yrs. 198 66.0 66.0 100.0 e. Customer Profile Cust_Profile Frequency Valid Cumulative Student 2.7.7.7 Housewife 5 1.7 1.7 2.3 Working Professional 83 27.7 27.7 30.0 Business 94 31.3 31.3 61.3 Valid Self 40 13.3 13.3 74.7 Employed Govt. service Employee 76 25.3 25.3 100.0 f. Reason for Loan Reson_loan Nonavailability of funds Reluctant to Valid pay cash in one go Frequenc y Valid Cumulative 129 43.0 43.0 43.0 101 33.7 33.7 76.7 Tax benefit 34 11.3 11.3 88.0 Other 36 12.0 12.0 100.0 74

g. Source of Information Source_Information Frequency Valid Cumulative Newspapers 90 30.0 30.0 30.0 Magazines 61 20.3 20.3 50.3 Banners/ Hoardings/ 110 36.7 36.7 87.0 Valid Pamphlets Word of mouth 25 8.3 8.3 95.3 Any other source 14 4.7 4.7 100.0 h. Loan Before Loan_Before Frequency Valid Cumulative Yes 93 31.0 31.0 31.0 Valid No 207 69.0 69.0 100.0 i. Loan Future Loan_Fut Frequency Valid Cumulative Yes 188 62.7 62.9 62.9 Valid No 111 37.0 37.1 100.0 Total 299 99.7 100.0 Missing System 1.3 Total 300 100.0 75

j. Awareness of Scheme Aware_Scheme Frequency Valid Cumulative Yes 93 31.0 31.0 31.0 Valid No 207 69.0 69.0 100.0 k. Reason of Bank Reson_Bank Frequency Valid Cumulative Near to home 40 13.3 13.3 13.3 attractive loan schemes 75 25.0 25.0 38.3 Amount of loan 48 16.0 16.0 54.3 Fine Customer 25 8.3 8.3 62.7 Valid services Rate of Interest 72 24.0 24.0 86.7 Personal Relation 24 8.0 8.0 94.7 Other 16 5.3 5.3 100.0 l. Need for Loan Need_Loan Construction for new house Purchase of Valid new house Renovation of old House Frequenc y Valid Cumulative 129 43.0 43.0 43.0 110 36.7 36.7 79.7 61 20.3 20.3 100.0 76

m. Loan Amount Amount Frequenc Valid Cumulative y < 1 Lakh 44 14.7 14.7 14.7 1 lakh to 5 lakh 100 33.3 33.3 48.0 5 lakh to 10 Valid lakh 115 38.3 38.3 86.3 > 10 Lakh 41 13.7 13.7 100.0 n. Type of Bank Type_Bank Private bank Valid Frequency Valid Cumulative 152 50.7 50.7 50.7 Public Bank 148 49.3 49.3 100.0 o. Rate of Interest of Private Bank ROI_Pvtbank Frequency Valid Cumulative Yes 134 44.7 44.7 44.7 Valid No 166 55.3 55.3 100.0 77

p. Rate of Interest of Public Bank ROI_Pubbank Frequency Valid Cumulative Yes 202 67.3 67.3 67.3 Valid No 98 32.7 32.7 100.0 q. Security Deposit Security_Deposit Frequency Valid Cumulative Bank security 63 21.0 21.0 21.0 (F.D) Gold 39 13.0 13.0 34.0 Valid Land Papers 148 49.3 49.3 83.3 Third person security 37 12.3 12.3 95.7 Other 13 4.3 4.3 100.0 r. Margin of Private Bank Margin_Pvtbank Frequency Valid Cumulative Yes 152 50.7 50.7 50.7 Valid No 141 47.0 47.0 97.7 3 7 2.3 2.3 100.0 78

s. Margin of Public Bank Margin_Pubbank Frequency Valid Cumulative Yes 158 52.7 52.7 52.7 No 135 45.0 45.0 97.7 Valid 3 7 2.3 2.3 100.0 t. Language Language Frequency Valid Cumulative Hindi 88 29.3 29.3 29.3 English 162 54.0 54.0 83.3 Valid Punjabi 25 8.3 8.3 91.7 Others 25 8.3 8.3 100.0 3.7.2 ANOVA test Collection of statistical models along with their associated procedures, in which the observed variance in a particular variable is partitioned into components attributable to different sources of variation, is called analysis of variance (ANOVA). ANOVA provides a statistical test of check the parity of the means of several groups, and generates t-test to more than two groups. 79

For this reason, ANOVAs are useful when two, three or more means are compared. This test has been used for comparison of respondents having relationships with different age groups, qualifications, nature of work, income groups, overall work experience and customer satisfaction of customers availing home loan from public sector and private sector bank 3.7.3 FACTOR ANALYSIS Statistical method used to represent variation between given variables by the researcher is called Factor Analysis. Lower number of unobserved variables is always called factors. In particular, researcher can explain what he or she want to prove by the help of many tests but factor analysis is one of the main test which is very well known and trustworthy, for example, that variations in any number observed,variables mainly reflect the variations in a single unobserved variable. It can be joint variations in response for the unobserved in latent variables. Principal component analysis (PCA): It is most significant part of factor analysis. PCA play a linear combination of variables which can be the maximum variance from the variables. PCA clarifies the maximum proportion among all of the remaining variance. That is why it called principal axis method and it has always resulted in orthogonal factors. 80

Factor loadings: As a part of loadings in PCA, the factor loadings play role between the variable (rows), factor (columns) and correlation coefficients. Alike Pearson s, the squared factor loading is the percent of variance in all the variables account for by each factor. After percent of variance in all the variables by each factor, add the sum of the squared factor loadings (column) and divide by the number of variables. (Note the variance of a standardized variable is 1). Interpreting factor loadings: By confirmation factor analysis, it gives conformation that independent variables are signified by a particular factor loadings should be 7 or higher, on the rationale.7 levels indicate half of the variance by the factor. But.7 standard is a higher cannot meet in real life data. That is the reason the researchers should use them only for exploratory purposes, but if it is use a lower level.4 for the central factor that can meet in real life. We have understood that interpretation of every factor loadings must be done in theory and there is no need to focus on cutoff levels. In rotation pattern, we will have both structure matrix and pattern matrix. The structure matrix is - orthogonal rotation, which represents the variance is measured by a factor, which can be either a unique or common contributions basis, unique contributions or both-the pattern matrix, while representing the lower the pattern of coefficients with common contributions to variance. For oblique pattern the researcher has to looks both terms the structure and pattern coefficients on the time giving attributing a label to a factor. 81