Tamilnadu has made a rapid stride in the development of urban cooperative banks with an aim to provide adequate and timely financial assistance to help the small entrepreneurs, middle class and weaker sections of the society. The present study was undertaken to analyze the perception of customers towards home loans of Public Banks of Tamilnadu. The paper examined the satisfaction level and problems faced by customers while availing loans. A sample of 100 customers of the bank comprising of public servants, Public sector employees and self-employed from its three branches serving Chennai, Kanchipuram and Thiruvallur Districts has been selected. The research has found that the customers of the bank were highly satisfied with the home loan services in relation to its services, transparency, time taken for loan approval, employee co-operation and query handling, prima facie of some problems like procedural delays, lack of knowledge and red-tapisim. The results further revealed that the main reason for people to prefer this bank is the trust of the customers in the bank, lower interest rates and easy repayable installments.

1. 497
Kasthuri and Dr P.Uma Rani, “Customer Perceptions and Satisfaction Towards Home Loan at Public
Banks of Tamilnadu” – (ICAM 2016)
CUSTOMER PERCEPTIONS AND SATISFACTION TOWARDS HOME
LOAN AT PUBLIC BANKS OF TAMILNADU
Kasthuri
Ph. D student in Mother Teresa Women’s University, Kodaikanal
Dr P.Uma Rani
Professor –Faculty of Management Studies
Dr. MGR. Educational & Research Institute, Chennai-95
ABSTRACT
Tamilnadu has made a rapid stride in the development of urban cooperative banks with
an aim to provide adequate and timely financial assistance to help the small entrepreneurs,
middle class and weaker sections of the society. The present study was undertaken to analyze
the perception of customers towards home loans of Public Banks of Tamilnadu. The paper
examined the satisfaction level and problems faced by customers while availing loans. A
sample of 100 customers of the bank comprising of public servants, Public sector employees
and self-employed from its three branches serving Chennai, Kanchipuram and Thiruvallur
Districts has been selected. The research has found that the customers of the bank were highly
satisfied with the home loan services in relation to its services, transparency, time taken for
loan approval, employee co-operation and query handling, prima facie of some problems like
procedural delays, lack of knowledge and red-tapisim. The results further revealed that the
main reason for people to prefer this bank is the trust of the customers in the bank, lower
interest rates and easy repayable installments.
Key words: Home Loans, Customer Perceptions, Customer Satisfaction, Financial Assistance
Cite this Article: Kasthuri and Dr P.Uma Rani. Customer Perceptions and Satisfaction
towards Home Loan at Public Banks of Tamilnadu, 7(2), 2016, pp. 497-501.
http://www.iaeme.com/ijm/index.asp
INTRODUCTION
Over the last few decades the role of loan sector has undergone a paradigm shift. It is widely
recognized as an important aspect of the source of loan for the people and considered it as a short and
long-term investment. In today’s competitive business world every customer is significant for the
lending home loan. The customer expectations are very high so it should be kept in mind and offer
them best possible service. The outcome of the study shows that the level of customer awareness
towards Home Loan is good with the benefits and service what they are giving and most of the people
wants to go for investments.
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2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 -
6510(Online), Volume 7, Issue 2, February (2016), pp. 497-501 © IAEME Publication
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Kasthuri and Dr P.Uma Rani, “Customer Perceptions and Satisfaction Towards Home Loan at Public
Banks of Tamilnadu” – (ICAM 2016)
OBJECTIVES
1. To know general perceptions about home loans of Public banks, Tamilnadu.
2. To study the satisfaction level of customers about home loans of Public banks, Tamilnadu.
3. To study the major problem faced by customers while availing home loans
REVIEW OF LITERATURE
As an alternative, the Bay Bi’thaman Ajil (BBA) home financing provides a pathway to avoid interest
and engaged in transactions involving riba or usury and gharar or uncertainty. Nonetheless, after 27
years of BBA home financing implementation, there has been growing criticism on its practice due to
high pricing, using interest rate as its benchmark, non Shariah compliance and hardship to customers
(Meera and Razak, 2005).
This violates the legal maxim which requires equivalent counter value (‘iwad) for a legitimate sale
(Rosly, 2005). According to Dusuki (2008), the current practice is similar to Bay’ al-‘Inah (sale and
buy back) which is a contentious sale as the banks does not take risk and liability in owning the
property. This practice is also not acceptable by international scholars (Meera and Razak, 2005).
The DP concept or musharakah mutanakisah was introduced to overcome the criticism on BBA.
Fishbein and Ajzen (1975) introduces TRA to establish relationship among beliefs, norms and attitudes
towards intention to behave. It is a widely studied model from social psychology, which is concerned
with the determinants of consciously intended behaviors.
In term of the tool of analysis, many studies on TRA have been conducted using Structural
Equation Modeling (SEM). For example, Choo et al. (2004) focuses the study using TRA on Indian
consumers’ purchase for new food. Lin and Lee (2004) and Zhikun and Fungfai (2009) utilize the
theory to find out the managers’ intention to encourage knowledge sharing among employees while
Shih and Fang (2004) studies Taiwanese intention to adopt internet banking.
Furthermore, Amin et al. (2009) uses SEM in TRA framework to study accounting students’
intention to enroll for Islamic accounting courses. Meanwhile, Kim et al. (2009) studies the mobile
technology use for shopping in the United States. The results of all the above studies confirmed the
relationship between attitude and subjective norm on buyers’ intention to the behavioral intention.
METHODOLOGY AND DATA
The study was conducted in 2014. Public sector banks were selected by random sampling method. A
sample of 100 respondents equally representing each bank was selected for the study. The primary data
was collected by administering a questionnaire on the selected sample. The primary data was collected
through questionnaire. The secondary data was collected from websites, books and journals.
RESEARCH ANALYSIS
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Age group 100 1.00 3.00 2.1100 .69479
Marital Status 100 1.00 2.00 1.1000 .30151
Sex 100 1.00 4.00 1.5300 .55877
Qualification 100 1.00 5.00 3.1500 .88048
Income level 100 1.00 3.00 1.9400 .88557

3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 -
6510(Online), Volume 7, Issue 2, February (2016), pp. 497-501 © IAEME Publication
499
Kasthuri and Dr P.Uma Rani, “Customer Perceptions and Satisfaction Towards Home Loan at Public
Banks of Tamilnadu” – (ICAM 2016)
FACTOR ANALYSIS
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .847
Bartlett's Test of Sphericity
Approx. Chi-Square 1.597E3
Df 210
Sig. .000
Communalities
Initial Extraction
Interest rates charged by this bank 1.000 .689
The amount of EMI charged 1.000 .602
The rate of processing fees 1.000 .597
The Documentation procedure 1.000 .757
The Documentation charges 1.000 .721
Sanctioning period 1.000 .716
The bank is transparent in their charges 1.000 .708
The bank has better repayment procedure 1.000 .755
Payment of fore closure charges 1.000 .734
The paper work is less 1.000 .568
The bank employees are easily accessible 1.000 .644
The bank Procedure is simple for getting loan 1.000 .720
The hidden charges of the bank 1.000 .675
Tenure period to repay the loan 1.000 .582
Bank provide accurate information 1.000 .589
Bank gives breadth and depth service to customer 1.000 .790
I will avail use of this Bank all my bank activities/ transactions 1.000 .782
I will not consider switching away from this bank 1.000 .671
Bank offers prompt and efficient services 1.000 .853
The Bank cares about success of its customers 1.000 .753
The bank is very concerned with the security for my transactions 1.000 .641
Extraction Method: Principal Component Analysis.

4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 -
6510(Online), Volume 7, Issue 2, February (2016), pp. 497-501 © IAEME Publication
500
Kasthuri and Dr P.Uma Rani, “Customer Perceptions and Satisfaction Towards Home Loan at Public
Banks of Tamilnadu” – (ICAM 2016)
FINDINGS
1. It is found that 51 % of the respondents are in the age group of 31-45 years and other are less
than 19% -30 yrs.
2. It is found that 90% are married and 10% are unmarried.
3. It is found the Gender equal importance for male & female are given.
4. 42% of the respondent are in the income group of 3 lakhs, and 36% respondent are in the
income group of above 5 lakhs
5. Factor analysis shows that among the variables that gives more satisfaction to customers are
prompt and efficient services of the bank and next comes the breadth and depth service to
customers.
CONCLUSION
In the emerging competitive environment and IT era, with little or no distinction in the product
offerings, it is the quality of service that sets one bank apart from another. The results of the study
indicate variables that gives more satisfaction to customers are prompt and efficient services of the
bank and next comes the breadth and depth service to customers.thus it provides more . maximum
satisfaction to customers of public sector banks.Improved customer satisfaction through SERVQUAL
would result in a positive word-of-mouth and consequently better customer acquisition and retention
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