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SUMMER TRAINING

PROJECT REPORT
ON
HOME LOAN SCHEMES OFFERED BY
DIFFERENT BANKS
CONTENTS

1. Introduction
2. Objective
3. Company Profile
4. Industry Scenario
5. Analysis of Different Banks
♦ HDFC
♦ IDBI
♦ STANDARD CHARTERED
♦ ABN-AMRO BANK
6. Comparison of Bank Facilities
7. Comparison of interest of different banks
8. Research Methodology
9. Data Analysis
10. SWOT Analysis
11. Conclusion
12. Recommendation
13. Bibliography
INTRODUCTION

A roof over one's head and ground beneath one's feet count as the bare
necessities of life. There’s nothing quite like owning a home, however
humble, to give one that warm and glowing feeling. But when one buys
a home, one has much more than a feel-good purchase in mind: it’s also
a crucial investment decision, perhaps the biggest spending decision of
one's life. There are ample opportunities today for young salaried
investors to plan their moves early and buy a house at the right time —
and at the right price. In the process, not only do they fulfill that
cherished dream of owning a house, but also put themselves on the
path to acquiring property that would meet the needs and aspirations of
their growing family, even as it leads to wealth creation. Every individual
aspires to own a home. But many either spend a lifetime saving to
purchase a house or exhaust money on monthly house rents.

Take a house loan and let the monthly rent (easily converted into
affordable EMIs) build dream home .

Profitable Proposition
“The overall demand in the residential sector has grown by about 7-8
per cent in the past few months as compared to the same period last
year. The growth is on account of two main factors:
 One , income-tax exemption;
 Two , with no similar rebates available for individuals in the high-
income group, they are creating a second asset.

Add to this the stable property prices over the last year and plunging
interest rates, planning for dream home could not have been better
timed. Rock-bottom interest rates, standardization of the periodicity of
interest calculation across lenders (which makes it easier to compare
loans), lower interest charges, waiver of loan application processing
fees and, a customer-friendly attitude is reason enough to celebrate the
ascension of the home loan consumer as the king.
In response, private players like ICICI Bank , IDBI Bank , Standard
Chartered Bank and a few others too lowered their rates. Market leader
ICICI also brought down its interest rates to 8.0%, very recently, to
participate in the interest rate war. If one is still not satisfied with the
lowered loan rates, there’s more. Some industry watchers believe the
floating home loan rate will slip to 8 per cent for long-term loans in
another two to three years.

Most banks have changed the way interest is calculated from annual
rests to monthly rests. Under the annual rests method, the EMIs
(equated monthly installments) one pays through a year are factored in
as part-repayment of the principal component only at the end of each
year. In other words, one has to pay interest even on the installments
one has paid until they’re reduced from the principal at the end of each
year. Under monthly rests, the principal is lowered by the appropriate
amount each month. The thumb rule being that the more frequently
interest is calculated, the better for the creditor. Recently, ICICI added
monthly rests on its fixed-interest loans apart from annual rests. As a
result, the fall in EMIs on fixed-interest loans (where the interest rate is
constant for the entire tenure of the loan, irrespective of changes in the
lending rates) is more pronounced than on floating-rate loans (where the
loan interest rate varies with changes in the interest rates). For
example, the EMI on a 15-year, fixed-interest loan for Rs 15 lakhs has
come down by Rs 840; the corresponding fall in the EMI on a floating-
rate loan is only Rs 465. Apart from lowering the cost of one's loan, the
switchover to monthly rests has another advantage: it makes it easier to
compare loans.
OBJECTIVE OF THE STUDY

The objective of this research is to analyse the home loans with a view to
arrive at the most popular loan schemes offered by the banks under study
and to conclude from the analysis the best possible schemes which would
keep the bank ahead of competition.

The purpose of the study is to find the critical factors that are essential for
any housing loan scheme and the most favored scheme in the Indian
scenario. The reasons being the features that the scheme provides are not
being provided by many of the housing finance companies.
ICICI BANK

OVERVIEW

ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659
crore at March 31, 2005 and profit after tax of Rs. 2,005 crore for the year ended
March 31, 2005 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about
560 branches and extension counters and over 1,900 ATMs. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its specialised
subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. ICICI Bank set up its international
banking group in fiscal 2002 to cater to the cross border needs of clients and
leverage on its domestic banking strengths to offer products internationally. ICICI
Bank currently has subsidiaries in the United Kingdom, Canada and Russia,
branches in Singapore and Bahrain and representative offices in the United States,
China, United Arab Emirates, Bangladesh and South Africa.
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and
the National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business
Conduct and Ethics for its directors and employees

At April 4, 2005, ICICI Bank, with free float market capitalization* of about Rs.
308.00 billion (US$ 7.00 billion) ranked third amongst all the companies listed
on the Indian stock exchanges.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank
was reduced to 46% through a public offering of shares in India in fiscal 1998, an
equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's
acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001,
and secondary market sales by ICICI to institutional investors in fiscal 2001 and
fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the
Government of India and representatives of Indian industry. The principal objective
was to create a development financial institution for providing medium-term and
long-term project financing to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institution offering only project finance to a
diversified financial services group offering a wide variety of products and services,
both directly and through a number of subsidiaries and affiliates like ICICI Bank. In
1999, ICICI become the first Indian company and the first bank or financial institution
from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the
emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that
the merger of ICICI with ICICI Bank would be the optimal strategic alternative for
both entities, and would create the optimal legal structure for the ICICI group's
universal banking strategy. The merger would enhance value for ICICI shareholders
through the merged entity's access to low-cost deposits, greater opportunities for
earning fee-based income and the ability to participate in the payments system and
provide transaction-banking services. The merger would enhance value for ICICI
Bank shareholders through a large capital base and scale of operations, seamless
access to ICICI's strong corporate relationships built up over five decades, entry into
new business segments, higher market share in various business segments,
particularly fee-based services, and access to the vast talent pool of ICICI and its
subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank
approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries,
ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in
January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by
the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI group's financing and banking operations, both
wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and cross
holdings among public sector entities.

HISTORY

ICICI Personal financial services limited (ICICI PFS), FORMERLY


ICICI- CREDIT, was one of the first four companies to obtain
registration as a non-banking financial company (NBFC) from the
Reserve Bank of India (RBI) on September 10, 1997 under the new
section 45 IA of the Reserve Bank of India Act, 1934.
History of ICICI
1955 : The Industrial Credit and Investment Corporation of India
Limited (ICICI) incorporated at the initiative of the World Bank,
the Government of India and representatives of Indian
industry, with the objective of creating a development financial
institution for providing medium-term and long-term project
financing to Indian businesses. Mr.A.Ramaswami Mudaliar
elected as the first Chairman of ICICI Limited
: ICICI emerges as the major source of foreign currency loans
to Indian industry. Besides funding from the World Bank and
other multi-lateral agencies, ICICI also among the first Indian
companies to raise funds from International markets.

1956 : ICICI declared its first Dividend at 3.5%.

1958 : Mr.G.L.Mehta was appointed the 2nd Chairman of ICICI Ltd.

1960 : ICICI building at 163, Backbay Reclamation was inaugurated.

1961 : The first West German loan of DM 5 million from Kredianstalt


was obtained by ICICI.

1967 : ICICI made its first debenture issue for Rs.6 crore, which was
oversubscribed.

1969 : First two regional offices in Calcutta and Madras were


opened.

1972 : Second entity in India to set-up merchant banking services.


: Mr. H. T. Parekh appointed as the third Chairman of ICICI.

1977 : ICICI sponsors the formation of Housing Development


Finance Corporation. Managed its first equity public issue

1978 : Mr. James Raj appointed as the fourth Chairman of ICICI.

1979 : Mr.Siddharth Mehta appointed as the fifth Chairman of ICICI.


1982 : Becomes the first ever Indian borrower to raise European
Currency Units.
: ICICI commences leasing business.
1984 : Mr. S. Nadkarni appointed as the sixth Chairman of ICICI.
f1988 ICICI promotes TDICI - India's first venture capital company.
:

1993 : ICICI sets-up ICICI Securities and Finance Company Limited


in joint venture with J. P. Morgan.
: ICICI sets up ICICI Asset Management Company.
1994 : ICICI sets up ICICI Bank.

1996 : ICICI becomes the first company in the Indian financial sector
to raise GDR.
: ICICI announces merger with SCICI.
: Mr.K.V.Kamath appointed the Managing Director and CEO of
ICICI Ltd

1997 : ICICI was the first intermediary to move away from single
prime rate to three-tier prime rates structure and introduced
yield-curve based pricing.
: The name "The Industrial Credit and Investment Corporation of
India Limited " was changed to "ICICI Limited".

: ICICI announces takeover of ITC Classic Finance.

1998 : Introduced the new logo symbolizing a common corporate


identity for the ICICI Group.
: ICICI announces takeover of Anagram Finance.
1999 : ICICI launches retail finance - car loans, house loans and
loans for consumer durables.
: ICICI becomes the first Indian Company to list on the NYSE
through an issue of American Depositary Shares.

2000 : ICICI Bank becomes the first commercial bank from India to list
its stock on NYSE.
: ICICI Bank announces merger with Bank of Madura
.
2001 : The Boards of ICICI Ltd and ICICI Bank approved the merger
of ICICI with ICICI Bank.

2002 : Moodys' assign higher than sovereign rating to ICICI.


ICICI AT PRESENT
At present, ICICI offers a full range of custodial services for primary and
secondary market operations pertaining to debt, equity, money market
instruments GDR/EURO issues conversions and GDR arbitrage to:
1. Overseas Institutional Investors like
a. FIIs
b. OCBs
c. OFFSHORE FUNDS
d. VENTURE FUNDS
2. Overseas Govermental Agencies
3. Institutions looking for proprietary investments
4. Mutual funds
5. Private investment companies
6. Large corporate
7. High net worth individuals

As a value added service ICICI custodial services division assists the


clients in preparation, submission and follow up for various applications
for regulatory approvals including initial application by FII’S/OCB with
SEBI/RBI.

PERSONAL BANKING
At ICICI BANK, they are commited to making banking a pleasure. This
commitment is manifested in the services they offer – a wide range of
accounts, investment schemes, and facilities. Each service offers their
customers security, flexibility of operation and maximum returns. The
various services provided under this is as follows:
• Maxi Cash – savings Account
• Quantum – Fixed Deposits
• Quantum optima – Value added Savings Account
• Money plus – Current Account
• ATM
• Phone Banking
• Treasure Chest – Locker facility
• Power Pay Payroll
• Retail Treasury Instruments

CORPORATE BANKING
MOBILE COMMERCE
ICICI Bank now brings Bank Account and ICICI Credit Card to
customers fingertips. With Mobile Commerce , customers can perform a
wide range of query-based transactions from their OrangeTM (MUMBAI)
and AIRTEL ( DELHI) Mobile Phone, without even making a call.

• Access multiple accounts


• Balance enquiry to the linked accounts
• Cheque book requests
• Mini statement – Listing of last three transactions
• Request for account statements (by mail or fax)

Facilities Provided By ICICI


Attractive interest rates
Door-step service from enquiry stage till final disbursement
No guarantor required
Can transfer your existing high-interest rate loan
Can transfer your existing high-interest rate loan
Special 100% funding for select properties

Vision And Strategy


With a mission to build a world class bank, ICICI has adopted the
strategies of:
· Building a world class business: Focus on core business, provide
superior customer service, and generate maximum returns and benefits
for shareholders.
· Staying lean and focused: Is vest in core business, optimal usage
of resource, and manage performance by balancing cost and risks.
· Recognised as a winning organization: Develop capability to the
fullest, instill global thinking, and inject of pride in to people to get
connected to ICICI.

Introducing MoneySaver from ICICI Bank

Simply open an account with ICICI Bank


and deposit your savings in this account.
You pay interest only on your
outstanding home loan minus your
accumulated savings in the account.
Which means that you pay less and also
repay your loan faster! You can also use
a MoneySaver account like a regular
bank account.
How MoneySaver works for you
Normal Home
Loan Details MoneySaver
Loan
Loan Amount (Rs.) 10 lakhs 10 lakhs
Interest Rate* 8% 8%
Total Interest (Rs.) 10,07,457 5,10,922
Original Tenor
240 240
(months)
Actual Tenor (months) 240 133
Savings in Interest
4,96,535 (50%)
(Rs.)
Savings in Tenor
107 (45%)
(months)

ICICI Home Loan offers following types of loans-

. Home loans

Office premise loans

· Loan against property

· Loan for NRIs

· Balance transfer

· Land loans
Loan Against Property

Finance your dreams with Loan Against Property:

Get a loan upto Rs.3 crore


Payable in easy monthly installments over a period of 15 years or less
Available against Residential as well as Commercial properties
Also available is overdraft against your property

You have the option of going for either fixed or floating rate loans.

Adjustable Rate Loans

Rate of interest charged on Residential property: 9.75% p.a.


Rate of Interest charged on Commercial Property: 10.25% p.a.

EMI Table on Loan Against Property (adjustable rate)


Residential Commercial
Loan Tenure
EMI / lakh (Rs.) EMI / lakh (Rs.)
5 years 2113 2138
10 years 1308 1336
15 years 1060 1090

Fixed Rate Loans

Rate of interest charged on Residential property: 10.5% p.a.


Rate of Interest charged on Commercial Property: 11% p.a.

EMI Table on Loan Against Property (fixed rate)


Residential Commercial
Loan Tenure
EMI / lakh (Rs.) EMI / lakh (Rs.)
5 years 2150 2175
10 years 1350 1378
15 years 1106 1137
Processing fee: Nil.
Admin fee: 1% of loan amount (plus applicable service tax).

Office Premises Loan

EMI Table for Office Premises Loans


Adjustable Rate Fixed Rate
Rate of EMI / lakh Rate of EMI / lakh
Loan Tenure
Interest (Rs.) Interest (Rs.)
5 years 10.25% 2138 11% 2175
10 years 10.25% 1336 11% 1378
15 years 10.25% 1090 11% 1137

sProcessing fee: 0.5% of loan amount (plus applicable service tax)


Admin fee: 0.5% of loan amount (plThe Office Premises Loans repayment is by
Equated Monthly Installments (EMIs) comprising of interest and principal amount
calculated on monthly rest.

Following are some features of Office Premises Loans:

You can avail of a loan of a minimum of Rs.2 lac* to a maximum of


Rs.1 crore
You can opt for a payback term of upto 15 years
You could also include your spouse as a co-applicant for the loan and
ICICI Bank
shall include his / her income to enhance your loan
es Loans
ICICI Loans for NRIs
It is one of the things that you passionately want to own. A dream that represents
years of effort, extra hours of work, sacrificed luxuries, and above all sustained
pleasure of creating wealth little by little to afford your dream.Your home. Your very
own small world in your country the fond memories of which you carry to your place
of work in distant lands. At ICICI we realise what owning your home in your country
means to you. And, wish to share your passion through ICICI Home Loans.
Presented to you right at the comfort of your home. We'll have our representative to
call on you at home, to understand your specific needs of speed and convenience
and help turn your dream home into a reality. Addressed below are some of your
concern in getting a Home Loan.

Eligibility

You are eligible for an ICICI Home Loan to construct or purchase a house/flat or
extend your existing house if you are: Non-Resident Indian holding a valid Indian
passport Over 25 years. A salaried individual.

Our representative will tell you in detail about the documents that you are required to
submit along with the application form. An indicative list is given below:

Passport size photograph of all the applicants

Copy of the passport and visa.

Copy of work permit (if applicable)

Copy of the CDC in case of customers who are empolyed in the merchant navy.

Bank Statements for the last six months-both domestic and international

General Power of Attorney as per our draft duly attested by the Indian consulate in
case the NRI is not in India. If the NRI is in India then the POA can be locally
notarised.

Copy of your appointment letter and contract.

Copy of the labour card/identity card (translated in english and countersigned by the
consulate) if employed in the Middle East.
Salary certificate (in english) specifying name,date of joining,designation and salary
details.
Some querry asked from customer regarding HOME LOAN
1. Can customer avail of Home Loan from ICICI?

Ans: Yes, customer can avail a Home Loan from ICICI, if you plan to construct or
purchase a house/flat or extend your existing house/flat. You must be:
Non-Resident Indian holding a valid Indian passport over 25 years. A salaried
individual.

2. When customer can apply for the Home Loan?

Ans: customer can apply for the Home Loan even before you have selected your
property. A loan amount would be sanctioned to you, based on your repayment
capacity, which will help you decide your budget and plan the buying of your house.

3. What is the loan amount customer can get?

Ans: customer can get a Home Loan ranging from a minimum of Rs. 5 lac to
maximum of Rs. 25 lacs.

A maximum of 75% of the cost of the property or the cost of construction as


applicable. Your repayment capacity as determined by us, taking into account your
age, income, qualifications, number of dependents, assets, liabilities,
stability/continuity of your employment/business and the co-applicants income.

4. Who can be a co-applicant for the loan?

Ans: Customer could include your spouse as a co-applicant for the Home Loan and
we shall include his/her income to enhance your loan amount. Further, in case there
are any other co-owners they too need to be co-applicants. In the absence of a co-
applicant, we would required a gaurantor from you.

5. Over how many years can customer repay the loan?

Ans: Customer have the option of selecting a term, you are comfortable with, upto 7
years. The term does not extend beyond your retirement age or on your reaching 60
years of age whichever is earlier.

6. But can customer prepay the loan ahead of schedule?

Ans: Yes, this is possible on request provided the necessary details given to us are
as per our norms. There are no pre-payment charges.
Interest rates

1. What is the rate of interest?

Ans: The rate of interest is 11.25% p.a. for a period of 5 years and 12.25% p.a. for a
period of 7 years. Equated Monthly Installments (EMIs) per lac work out to Rs. 2,269
and Rs. 1,841 respectively.

Documentation and security

1. What is the security required against the loan ?

Ans: Customer need to provide security of the property and / or such other
additional/collateral security as may be mutually agreed.

2.What documents are required to get the loan sanctioned ?

Ans: representative will discuss the documents you are required to submit in detail.
An indicative list is given below :

Passport size photograph of all the applicants


Copy of the passport and visa.
Copy of work permit (if applicable)
Copy of the CDC in case of customers who are empolyed in the merchant navy.
Bank Statements for the last six months-both domestic and international
General Power of Attorney as per our draft duly attested by the Indian consulate in
case the NRI is not in India. If the NRI is in India then the POA can be locally
notarised.
Copy of your appointment letter and contract.
Copy of the labour card/identity card (translated in english and countersigned by the
consulate) if employed in the Middle East.
Salary certificate (in english) specifying name,date of joining,designation and salary
details.

Loan sanction and disbursements

1) How will customer get the loan disbursed ?

Ans: Customer loan will be disbursed on your identification and selection of the
property Submission of the legal documents legal and technical clearance of your
property.
On satisfactory completion of the above and on your investment of your own
contribution, the loan amount (as warranted by the stage of construction) will be
disbursed by ICICI. The disbursement will be favouring the Builder/Seller.

Repayments and Fees

1.What is the fees payable ?

Ans: Customer pay only 2% of the loan amount, which includes:


Processing fees - Rs.500 (at the time of application)
Administration fees - Balance amount(i.e 2% - Rs.500, will be deducted from the
amount disbursed).

2.How do customer repay the Home Loan ?

Ans: The Home Loan repayment is by EMIs comprising of interest and principal
amount calculated on annual rests. EMIs can be paid by Post Dated cheques from
your NRE / NRO / FCNR / NRNR account and any such accounts as permitted by the
RBI. In case of part disbursement of the loan, monthly interest is payable only on the
disbursed amount. This interest is called Pre-EMI interest and is payable monthly till
the final disbursement is made, after which the EMI's would commence.

Main Advantages of ICICI Home Loans

1. Free personal accident insurance


2. Door step service
3. No fees for part prepayment
4. And of course attractive interest rates

Free Personal Accident Insurance from ICICI Home Loans

With every home loan you will get a Personal Accident Insurance absolutely FREE.
Which means, in case of your accidental death, your family -

· Does not have to repay the balance loan amount


· Can continue to stay in the home
Home Insurance
A comprehensive coverage on your home and the contents
within it against uncertainties of both natural and man-made
calamities like fire, burglary, gas cylinder explosion, terrorism
etc.

• Insure your Home against both natural & man-made calamities


• Covers both the structure and contents of your home
• Protection against fire, burglary, gas cylinder explosion, seepage etc.

• Avail a 25% off on 5-year and 15% off on 3-year policy

FEATURES
Attractive interest rates
Door-step service from enquiry stage till final disbursement
No guarantor required
Can transfer your existing high-interest rate loan
Can transfer your existing high-interest rate loan
Special 100% funding for select properties

Home loan
• customer must be at least 21 years of age when the loan is
sanctioned.
• The loan must terminate before or when you turn 65 years of
age or before retirement, whichever is earlier.
• Customer must be employed or self-employed with a regular
source of income.

Loan Amount
A number of factors are taken into account when assessing repayment
capacity. Customers income, age, number of dependants, qualifications,
assets and liabilities, stability/ continuity of customer employment/
business are some of them.

However, there are ways by which you can enhance your eligibility.
• If cusstomer spouse is earning, put him/her as a co-applicant.
The additional income shall be included to enhance loan amount.
Incidentally, if there are any co-owners they must necessarily be co-
applicants.
• customer fiancée's income can also be considered for
sanctioning the loan on your combined income? The disbursement of
the loan, however, will be done only after submit proof of marriage.
• Providing additional security like bonds, fixed deposits and LIC
policies may also help to enhance eligibility.

While there is no need for a guarantor, it could be that having one might
enhance your credibility with us. If so, our loan officer would provide
customer with the necessary details.

The final amount to be sanctioned will depend on your repayment


capacity. However, what customer ultimately are entitled to will have to
conform within the limits fixed for each loan.
Also, when the company looks at the total cost, registration charges,
transfer charges and stamp duty costs are included.

HOME LOANS
We at ICICI Bank understand the value of owning your own home. Our
affordable home loans can make all the difference to their dream of
owning home.
0% processing fee for a limited period.
Refer to the table for a loan option that suits their need best
FIND THE RIGHT HOME
Introducing Home Search - Our FREE online property search facility. A
one stop shop for all their real estate needs.

What you get


0% brokerage on first sale properties
Access the entire market under one roof
Site visits to properties short listed by you
Help in negotiating the best price
Help with legal documentation

Loan, sweet home loan: ICICI Bank home loan information


ICICI Bank's home loans are a boon for those looking to buy a
house or flat
Home is more or less a lifetime investment and hence home loans are an integral
part of every person who dreams and wants to have a living space of his own. A
once in a lifetime investment needs a loan and that is how a home loan comes into
the scheme of things in your life.

ICICI Bank, one of the largest private sector banks in India, is a major player in the
home loan category, with attractive interest rates and a host of incentives to the
customer seeking a house loan. Gone are the days when you seek salvation in
endless paperwork in the run up to the elusive golden pot of housing loans. It has
almost become a doorstep service, with golden carrots like personal accident
insurance and special 100 per cent funding for select properties dangling in front of
you.
Eligibility for home loans

For availing the ICICI Bank home loan, the age limit is at least 21 years. Another
eligibility criteria is that you must be employed or at self-employed (Read: The bank
wants to make sure that you can pay off the loans).

The loan repayment must end when the person who availed it turns 65 or retires
from service, whichever comes first.

For land loan the apart from the aforementioned conditions, the person availing
loans should be purchasing the property for residential use and the purchase has to
be from a development authority or a registered co-operative society. The land in
question must be for construction of a house, with clearly marked boundaries,
leaving no room for legal wrangle on this count.
The office premise loan can be for purchase or construction or extension of a non-
residential property, but the bank insists on a 3-years’ work experience.
Professionally qualified self employed individuals are eligible to apply.

To avail home equity loans, or loans against property, you must also be the owner of
a self-occupied property.
Loan amount

A host of factors, including income, age, number of dependents, assets and liabilities
as well as stability of count when the loan amount is sanctioned. But the eligibility for
bigger loans is also enhanced by some factors.

If the loan applicant’s spouse is earning, the person can be a co-applicant which will
enhance the amount. Co-owners, as a rule, must be co-applicants also. Your future
spouse’s income can also be considered as combined income for loan, but the loan
would be disbursed only after you tie the knot and produce the marriage certificate.

Additional securities like bonds, fixed deposits and LIC policies also enhance
creditworthiness. The final loan amount depends on your repayment capabilities,
within the limits set for each type of loan. Registration, stamp duty and transfer
charges are included in total costs.

Documents

Salaried Self Employed Self Employed Non


Customers Professionals Professionals
Application form Application form with Application form with
with photograph photograph photograph
Age proof Age proof and office proof Age proof and office
address proof
Latest Salary-slip Proof of business Proof of business
existence existence
Form 16 Last 3 years Income Tax Business profile
returns (self and business)
Last 6 months Last 3 years P/L and B/S Last 3 years Income
bank statements Tax returns (self and
business)
Processing fee Last 6 months bank Last 3 years P/L and
cheque statements B/S
Processing fee cheque Last 6 months bank
statements (self and
company)
Processing fee cheque
Disbursal of loans

The loan amount is disbursed after the required documents are submitted and after
you have selected the home or property. A 230 A clearance of the seller or 371
clearance from IT authorities are also necessary. After the conveyance deed is
registered and you invest own contribution the loan amount will be disbursed in
favour of the builder or seller. Loan agreements, request for disbursement, post
dated cheques and in some cases personal guarantors request are required
documents for disbursal. Documents may vary from state to state.
You can opt for fixed or adjustable rates.
In case of adjustable rates for Home/Land loans, the rate varies with the ICICI
floating reference rate. There is no processing fee. The administration fee is 0.5% of
the total loan amount, plus the service tax. The interest is calculated on monthly
remaining amount. A part prepayment documentation charge of Rs. 500 is charged
for part prepayment. The maximum tenure is 20 years.

For office premises loan, a processing fee of 0.5 % and an administration fee of
another 0.5% is charged. Interest is calculated on the balance amount every month
and maximum tenure is 15 years. A documentation charge of Rs 500 plus service
charge is levied for part-prepayment.

For Home Equity loans, or loans against property, the administration fee is one per
cent of the total loan amount plus service tax, while the interest is on monthly
remaining amount. Maximum tenure allowed is 15 years and a documentation
charge of Rs 500, plus service charge will be levied for prepayment.

In Fixed rate loans, the interest remains unchanged through out the tenure. For
home/land loans the applicable rate of interest is 8.75 %. Administration fee is 0.5%
of the loan amount plus service tax. Prepayment documentation charge of Rs 500
plus service charge is levied.

For office premises loans, a processing fee of 0.5 % and an administration fee of
0.5% is levied. The rate of interest is 11%.

For Home Equity loans, there is no processing fee. The administration fee is 1% plus
f the loan amount plus service tax. The rate of interest is 10.5% for residential
properties and 11% for commercial properties.
The repayment tenure varies. For Home Equity and office premises loans the
maximum tenure is 15 years, while for home loans the maximum tenure is 30 years.
The loans are to be repaid via equated monthly installments or EMIs. EMIs comprise
both principal amount and interest. The
EMI starts the month after the full disbursement of loan is made. This can be either
deducted from your salary, or paid through post-dated cheques, dated normally to
the first of every month, which can be extended to any date till 7th of the month,
depending on the salary date. Bounced cheques and delayed payments will attract
charges. Post-dated cheques can be replaced within 5-7 working days.

Applications can be put in even before selecting property. The applicant can select a
property even if he is not residing in the city, but the ICICI bank needs to have
operations in that city. You can withdraw from the loan within six months of the
approval. You can apply for home loans online.

NRI schemes

ICICI Bank also offers home loans for non resident Indians as well as people of
Indian origin from Australia, Canada, France, Germany, Gulf Cooperation Council
countries, Honk Kong, Italy, Japan, Malaysia, New Zealand, Singapore US and UK.

Loans are offered for purchase, construction, extension or renovation of a new


residence. The maximum tenure for salaried is 15 and self-employed is for 10 years.
For GCC countries, tenure is between 11-15 years, and minimum qualification is
post graduate/professional qualification.

For US and other countries, minimum qualification is diploma/graduation. Applicant


should be employed for a minimum of three years abroad. The maximum loan
amount is Rs 1 crore and minimum is Rs 5 lakh. Applications can be made online
and there is facility to track the status online too.
Fixed rate
Tenure (yrs) Rate of Interest EMI per Lac
*
9% 2075.836
Upto 5years
6 years 9% 1802.554
15 years 9% 1014.267
20 years 9% 899.726
• The interest rate is calculated on an monthly reducing basis.
• 0%
• Processing Fee.
• No fee for part prepayment
Exhibit 2.3: Product Process Flow for Housing Finance

Enquiry

Application with processing fee


submission

Credit Appraisal

Checking with

Interview
Verification with
employer

Recommendation to the Sanctioning Authority

Sanction by committee

Defer Approval
Reject

Letter to guarantor applicants

Acceptance Letter with Administrative fees

Legal title Documents review

Signing loan disbursement documents

EMI repayment Prepayment Penalty Charge


Listed below are the steps involved in availing of a home loan :

Step 1 A person applies for a home loan.


The executive meets the applicant and briefs him the entire
Step 2
loan process, requirements and the various options available.
The applicant chooses a Housing Finance Company (HFC)
Step 3
and hands over the income documents to the executive.
The income documents are handed over to the HFC for
Step 4
eligibility and approval.
The HFC verifies the documents and checks the repaying
Step 5 capacity, saving habits, tenure of service, etc. of the
applicant and approves the loan amount.
After approval, an offer letter is given to the applicant by the
Step 6 HFC, along with a list of original property title documents that
have to be handed over to the HFC.
The applicant gives the original property title documents to
Step 7
the HFC.
The HFC scrutinises the legal and technical aspects of the
Step 8
original title documents.
If the HFC is satisfied as to the legal & technical aspects of
Step 9 the documents then the applicant is called to sign the loan
agreement.
The loan disbursement schedule is decided by the HFC
according to the stage of construction (if property under
Step 10
construction)or a one time payment is made if property is
ready for possession
The applicant gets possession of the property depending
Step 11
upon the level of completion of the property.
Step 12 The applicant starts paying the EMIs.

WHAT ALL CAN ONE TAKE A LOAN FOR:


There are different types of home loans tailored to meet ones needs.
Here’s are some of them:
Home Purchase Loans : This is the basic home loan for the purchase of
a new home.
Home Improvement Loans : These loans are given for implementing
repair works and renovations in a home that has already been
purchased by the client.

Home Construction Loan : This loan is available for the construction of


a new home.

Home Extension Loan: This is given for expanding or extending an


existing home. For eg: addition of an extra room etc.

Home Conversion Loan: This is available for those who have financed
the present home with a home loan and wish to purchase and move to
another home for which some extra funds are required. Through home
conversion loan, the existing loan is transferred to the new home
including the extra amount required, eliminating the need of pre-
payment of the previous loan.

Land Purchase Loans: This loan is available for purchase of land for
both construction or investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell
the existing home and purchase another one. The bridge loans help
finance the new home, until a buyer is found for the home.

Amount
This largely depends on a number of factors like ones age, profession,
salary, the city one resides in among other such factors. It varies
between Rs. 2 lac to Rs. 3 crore depending on the lender. As a rule of
thumb, depending upon the HFC, one will have to cough up 15%-20% of
the loan amount as a down payment. For smaller amounts, this may not
be much. But for figures running into lakhs, this could make loads of
difference. For eg. An apartment costing Rs 10 lakh may get 85 per cent
financing. So, one will have to arrange for the remaining Rs 1.5 lakh. If
one takes this into account, the additional thousands will definitely put a
strain on ones finances.

Tenure
Generally, the maximum tenure of home loans is 15 years, with a few
lenders offering tenure of 20 years or more (ICICI has recently launched
a 30 year loan). The longer the tenure, more one pays in total interest,
but ones monthly payments will be less. So depending on ones earning
potential and bank balance, one can choose an appropriate tenure. An
important requirement of most banks/HFCs is that one pays up the
entire loan before one retires. One can always prepay ones entire loan
amount before it is due. There is a trend to do away with the pre-
payment penalty being imposed by some lenders so its best one checks
on this as well.

Interest Rate
Without doubt the most important parameter to factor into ones
calculations. The interest rates may vary from institution to institution
and generally range from about 7.0% to around 8.0%. Repayment is in
the form of EMI's (equated monthly installments). The longer the tenure,
the more one pays in interest, but ones monthly payment will be less.

Refinance
This is a concept that is yet to catch on in the home loan market but is
bound to be a major service in the months to come. Under this facility,
one can take a new loan from another bank/HFC to pay back an old
loan before its natural tenure. It gives one the opportunity of prepaying
ones high cost debt and gets a lower cost one. In today's falling interest
rate scenario one should use this vehicle to lower ones debt payments
as much as possible. The lender facilitates the shift by paying the
outstanding and transferring the asset to their portfolio.
Miscellaneous charges
A heading that should be ignored at one’s peril! The interest rates and
EMIs are not the only cost factor. Never underestimate how much the
processing and administration fees amount to. A 0 .551% administration
fee or processing fee on, say, a Rs 10,00,000 loan, would amount to Rs
5,510 . Other times, it could be just one fee (either administration or
processing) but could yet work out to be much more if it is considerably
higher at, say, 2.5 per cent or 3 per cent. The various other fees, which
one is required to pay along with the margin amount, are:
a) Interest Tax
This is the tax payable on the interest paid on a home loan and not the
principal. This tax is some times included in the interest rate of the loan,
or may be charged separately as interest tax.

b) Processing Charge
It's a fee payable to the lender on applying for a loan. It is either a fixed
amount not linked to the loan or may also be a percentage of the loan
amount. The loan amount received by you can be less than the
processing fee.

c) Prepayment Penalties
When a loan is paid back before the end of the agreed duration a
penalty is charged by some banks/companies, which is usually between
1% and 2% of the amount being pre paid.

d) Commitment Fees
Some institutions levy a commitment fee in case the loan is not availed
of within a stipulated period of time after it is processed and sanctioned.

e) Others
It is quite possible that some lenders may levy a documentation or
consultant charge.
INDUSTRY SCENARIO

The housing finance industry , encompassing banks and housing


finance companies (HFCs), has exhibited a 36 per cent growth between
April and December 2004 despite the high prepayment levels
experienced by some HFCs.

Were it not for prepayments, the industry's outstanding assets would


have grown at a higher 43 per cent. Aggressive marketing efforts of
banks and HFCs have further precipitated this trend.

Banks have an inherent advantage in retail finance, especially in


housing loans, because of the lower cost of funds, existing retail
relationships in liability products and large branch network.

It is expected that banks will further increase their market share in the
housing finance sector in the medium term.

It is also expected that the housing finance sector will maintain its high
growth rates in future given that the key growth drivers the
government's thrust on the housing sector in terms of fiscal incentives
for individual housing loans coupled with the demand-supply gap in
housing - would remain strong.
HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was


amongst the first to receive an ‘in principle’ approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector, as part of the
RBI’s liberalization of the Indian Banking Industry. It was incorporated in
August 1994 in the name of ‘HDFC Bank Limited’ , with its registered
office in Mumbai. HDFC began operations as a Scheduled Commercial
Bank in January 1995.

About the Promoter


HDFC, the promoter, is India’s premier housing finance company and
enjoys an impeccable track record in India as well as in international
markets.

Since its inception in 1997, HDFC has maintained a consistent growth in


its operations and profitability and over the past 5 years has achieved
annual growth rate of 25 – 30 %.

Its outstanding loan portfolio covers over a million dwelling units.


HDFC has developed significant expertise in retail mortgage loans to
different market segments and also has a large corporate client base in
relation to its housing related credit facilities and its investment portfolio.
With its tremendous brand equity, strong reputation in the Indian and
international financial services market, large shareholder base and
unique consumer franchise, HDFC was ideally positioned to promote a
bank in the Indian environment. HDFC (together with its fully owned
subsidiary HDFC Investments Ltd.) owns about 31% of the equity.

They had started with a strategic alliance with the NatWest group in UK
with 20% equity, which was divested later on. The bank also signed a
memorandum of understanding for strategic business collaboration with
nd
the Chase Manhattan Bank in February 2 1999.

Business Philosophy
The mission of HDFC Bank is to be world class Indian bank. This would
imply a bank that would meet various financial needs of its customers in
a convenient and cost effective manner at international standards of
service.
The bank seeks to achieve the status of a "preferred organization"
among its major constituents- customers, shareholders, regulators,
employees, suppliers etc.-while maintaining the highest levels of
integrity and corporate governance.

The business philosophy at HDFC Bank is based on four core values


:Operational Excellence, Customer Focus, Product Leadership and
People.

Competitors
Bank faces strong competition in all of their principal lines of business.
Their primary competitors are large public sector banks, other private
sector banks, foreign banks and, in some product areas, non-banking
financial institutions.

Wholesale Banking: Principal competitors in wholesale banking are


public and new private sector banks as well as foreign banks. The large
public sector banks have traditionally been the market leaders in
commercial lending. Foreign banks have focused primarily on serving
the needs of multinational companies and Indian corporations with
cross-border financing requirements including trade, transactional and
foreign exchange services, while the large public sector banks have
extensive branch networks and large local currency funding capabilities.

Retail Banking: In retail banking, their principal competitors are the


large public sector banks, which have much larger deposit bases and
branch networks, other new private sector banks and foreign banks in
the case of retail loan products. The retail deposit shares of the foreign
banks is quite small by comparison to the public sector banks, and have
also declined in the last five years, which we attribute principally to
competition from new private sector banks. However, some of the
foreign banks have a significant presence among non-resident Indians
and also compete for non-branch-based products such as auto loans
and credit cards. They face significant competition primarily from foreign
banks in the provision of debit cards and also expect to face competition
from foreign banks when we begin offering credit cards. In mutual fund
sales and other investment related products, their principal competitors
are brokers and foreign private banks.

Treasury: In treasury advisory services for corporate clients, they


compete principally with foreign banks in foreign exchange and
derivatives trading, as well as the State Bank of India and other public
sector banks in the foreign exchange and money markets business.

Loans
HDFC Bank brings you a wide range of loans to cater your financial
needs.
The bank offers the following loans-
· Personal Loans
· Consumer Loans
· Auto Loans
· Loans against shares
· Loans against RBI Bonds
· Loans against Insurance policy
· E-instant loans-gives the facility of loan approval in 60 seconds on
the internet.

HDFC has offices spread all over the country. This extensive network
helps HDFC in providing service to large and well spread out clients.
This network of interconnected offices (on Data Circuits) helps HDFC to
process applications for purchase of property anywhere in India. HDFC
has further established an office in Dubai and Service Associates in
Kuwait, Oman and Qatar to make it easier for Middle East based Non-
Resident Indians to apply for a loan to HDFC - India.
HDFC is the pioneer of housing finance in India and has been a leader
in the business for the last 23 years. HDFC has vast experience and a
very committed and skilled staff to handle housing loan applications and
solving customer problems.

HDFC Bank brings home loans at your doorstep. With over 25 years of experience, a
dedicated team of experts and a complete package to meet all your housing finance
needs, HDFC Ltd. - our parent company, helps customer realize your dream.

Features & Benefits

Home Loan - We offer home loans for individuals to purchase (fresh / resale) or
construct houses. Home loans can be applied for jointly. HDFC finances up to
90% of the cost of the property (Agreement value + Stamp duty + Registration
charges).

Home Improvement Loan - HIL facilitates internal and external repairs and other
structural improvements like painting, waterproofing, plumbing and electric works,
tiling and flooring, grills and aluminium windows. HDFC finances up to 85% of the
cost of renovation (100% for existing customers).

Home Extension Loan - HEL facilitates the extension of an existing dwelling unit.
All the terms are the same as applicable to Home Loan.

Land Purchase Loan - Be it land for a dream house, or just an investment for the
future, HDFC Land Purchase Loan is a convenient loan facility to purchase land.
HDFC finances up to 70% of the cost of the land (Conditions Apply). Repayment
of the loan can be done over a maximum period of 10 years.

Choose from Fixed Rate or Floating Rate with options to structure your loan as
Partly Fixed or Partly Floating.

Flexible repayment options to suit your individual needs


.
E-age saving account - As a special offer you can open an HDFC Bank E-Age
Savings Account at a lower Average Quarterly Balance of Rs. 2,500, instead of
the regular Rs. 5,000. You can avail of benefits like free Phone Banking, Free Net
Banking, 24-Hour ATM access, Inter-branch/Inter-city banking, a personalized
cheque book and much more.

Free International credit card - Enjoy a waiver on the fees for the first year on
International Credit Card from HDFC Bank. The credit card is accepted world-
wide and comes with the most comprehensive insurance coverage. You can even
withdraw 30% of your entire credit limit through the ATM.

Loan cover Term Assurance Plan - HDFC Standard Life Insurance Company
Ltd. offers an insurance plan*, which is designed to ensure that life's uncertainties
do not affect your family's interests and your precious home. LCTAP provides a
lump-sum payment on the unfortunate demise of the life assured.

This pure risk plan is designed in a way that the cover decreases as you repay
your home loan making it a low cost premium insurance plan.
*Insurance is the subject matter of solicitation.
Automated Repayment of Home loan EMI - Customer can give standing
instructions to repay your Home Loan EMIs directly from your HDFC Bank
Savings Account, thus, saving you the trouble of procuring, signing and tracking
post-dated cheques
.
HDFC also offer In-house scrutiny of Property documents for your complete
peace of mind.

Customer privileges - If you are an existing HDFC Bank Home Loan customer,
you can avail of other loans (such as Personal Loans, Car Loans, Two-wheeler
Loans and Loan against securities) at lower interest rates.
If you are an HDFC Bank account holder, we have special rates for you.

HOME LOAN SCHEMES


PURPOSE
HDFC Ltd. offers loans for the following purposes:
• Land Purchase
• Home Construction/Purchase
• Home Extension
• Home Improvement loans
• Short-term Bridge Loans
• Non-Residential Premises Loans For Professionals

LOAN AMOUNT
Loans can be availed up to a maximum of 85% of the cost of the
property (including the cost of the land). HDFC lends up to a maximum
of Rs. 1,00,00,000 on a Home Loan to an individual.

LOAN TENURE
You can repay the loan over a maximum period of 20 years.

RATE OF INTEREST
Interest is calculated on annual rests. Principal repayments are credited
at the end of HDFC's financial year. The effective rate of interest varies
depending on the term of the loan. For a loan with a term of 15 years,
the effective interest rate would be higher by 0.37% per annum than the
indicated rate of interest.

SECURITY
Typically the security for the loan is a first mortgage of the property to
be financed, normally by way of deposit of title deeds and/or such other
collateral security as may be necessary.

Interim security may be additionally required, if the property is under


construction. Collateral or interim security could be assignment to HDFC
of life insurance policies, the surrender value of which is at least equal
to the loan amount, guarantees from sound and solvent guarantors,
pledge of shares and such other investments that are acceptable to
HDFC.

The title to the property should be clear, marketable and free from
encumbrance. To elaborate, there should not be any existing mortgage,
loan or litigation which is likely to affect the title to the property
adversely.

Interim security may be additionally required, if the property is under


construction. Collateral or interim security could be assignment to HDFC
of life insurance policies, the surrender value of which is at least equal
to the loan amount, guarantees from sound and solvent guarantors,
pledge of shares and such other investments that are acceptable to
HDFC.

DOCUMENTATION
Following documents should be produced for approval of loan:
a) Common for all applicants:
1. Allotment letter of the co-operative society /
association of apartment owners.
2. Copy of approved drawings of proposed
construction / purchase.
3. Agreement for sale/sale deed/detailed cost
estimate from architect/engineer for the property to be purchased /
constructed.
4. If you have been in your present employment /
business or profession for less than a year, mention details of
occupation for previous 5 years, giving position held, reasons for
change and period of the same.
5. Applicable Processing Fees.
6. Any other information regarding your repayment
capacity that is necessary and will assist HDFC in appraising the
case.
b) Additionally,
If borrower is Employed:
1. Latest salary slip/salary
certificate showing all deductions.
2. If your job is transferable,
permanent address where correspondence relating to the application
can be mailed.
3. A letter from your employer
agreeing to deduct the monthly installment towards repayment of the
loan from your salary. This will expedite the processing of your loan
application.

If borrower is Self-Employed:
1. Balance Sheets and Profit & Loss Accounts of
the business/profession along with copies of Individual Income Tax
Returns for the last three years certified by a Chartered Accountant.
2. A note giving information on the nature
business/profession, form of organization, clients, suppliers, etc.

ELIGIBILITY
The repayment capacity as determined by HDFC will help in deciding
how much one can borrow (the cost of the property or Rs. 1 crore,
whichever is lower). Repayment capacity takes into consideration
factors such as income, age, qualifications, number of dependants,
spouse's income, assets, liabilities, stability and continuity of occupation
and savings history. And, of course, HDFC's main concern is to make
sure customer can comfortably repay the amount they borrow

TAX BENEFIT
Resident Indians are eligible for certain tax benefits on principal and
interest components of a loan under the Income Tax Act, 1961. Interest
repayment of Rs. 1,00,000 p.a. (for a loan on or after April 1, 2000) can
get borrower a tax saving up to approximately Rs. 33,000 p.a.
Moreover, customer can get added tax benefits under Sec 88 on
repayment of principal amount up to Rs. 20,000 p.a. which can further
reduce borrower’s tax liability by Rs. 2,000 p.a.

About the product


HDFC's Home Loans offers you various unique benefits and are easy to
arrange and repayable in easy monthly instalments. The terms of the
loan can be structured according to customer unique requirements.

Home Loans can be applied for by either individually or jointly.


Proposed owners of the property, in respect of which the loan is being
sought, will have to be co-applicants. However, the co-applicants need
not be co-owners.
Loans can be availed upto a maximum of 85% of the cost of the
property (including the cost of the land). HDFC lends upto a maximum
of Rs. 1,00,00,000 on a Home Loan to an individual. You can repay the
loan over a maximum period of 20 years .theyl determine the loan
amount after evaluating the repayment capacity of the individual.
HDFC's main concern is to help individuals comfortably repay the
borrowed amount.

Get in touch with your nearest HDFC office today. We will be pleased to
discuss and help you realise your plans for a house

USP
Superior Processing Capacity : HDFC has over the years invested
substantially into computer systems and training. This has enabled
HDFC to respond to customer needs and build up capabilities to
approve loans on the spot or disburse them fast.

Branch Network : HDFC has offices spread all over the country. This
extensive network helps HDFC in providing service to large and well
spread out clients. This network of interconnected offices (on Data
Circuits) helps HDFC to process applications for purchase of property
anywhere in India. HDFC has further established an office in Dubai and
Service Associates in Kuwait, Oman, Qatar, Bahrain and Saudi Arabia
to make it easier for Middle East based Non-Resident Indians to apply
for a loan to HDFC - India.

Experienced and Trained Staff : HDFC is the pioneer of housing


finance in India and has been a leader in the business for the last 25
years. HDFC has vast experience and a very committed and skilled staff
to handle housing loan applications and solving customer problems.

Free Counselling : HDFC believes that it is in the business of providing


solutions to an individuals need for owning a house, and not just in the
business of providing finance. Keeping this in mind HDFC will provide
free counselling to on how and where to buy a house in India (Property
Services) or what are the prices and trends in the real estate market or
what precautions one should take before buying a house. This service is
offered at any of HDFC's offices.

Legal and Technical Guidance : HDFC has qualified Legal and


Technical staff who liase with the developers to collect and scrutinise
the property documents and permissions. We have Master Files of most
projects being developed by reputed developers. It has always been
HDFC's endeavor to protect the interest of the borrower, as we believe
that buying a house is one of the most important decisions in his life.

Extension Products : Over the last 25 years, HDFC has developed


various products in response to the needs of our customers. Today we
offer Home Loans, Adjustable Rate Home Loans, Home Extension
Loans, Home Improvement Loans, Home Equity Loans, Short Term
Bridging Loans and Land Purchase Loans.

Flexible (Customised) Repayment Schemes : Keeping in mind the fact


that each individual has a unique problem requiring unique solutions,
HDFC has developed various repayment options like Step Up
Repayment Facility, Flexible Loan Instalment and Balloon Payment
Scheme.

Pari Passu/ Second Mortgage Arrangements : HDFC has a tie-up with


a large number of Public Sector Organizations and banks which enables
us to offer loans to your employees with the flexibility of their spouse
also availing a loan from his/her own employer.

Safe Document Storage Facilities : HDFC has state of art storage


facilities, which are theft and fire proof, at various locations where loan
and property documents are stored. In this way valuable documents are
stored safely over the period of the loan and are released almost
immediately after a customer repays his loan.

Post disbursement services:


a) The exemption in respect of interest on borrowed capital is Rs
1,50,000 under section 24 (b) of the Income Tax Act. Further interest
on housing loans can now be taken into account by an employer
while computing the tax to be deducted from an employee's salary.
b) HDFC sends interest certificates to its customers well in advance
which enables them to take advantage of the tax exemption in their
monthly salary
c) We can transfer files of customers from one location to another in
case of transfer of the customer in course of his job.
d) A customer, after availing of a loan can approach HDFC anytime
thereafter to increase the Equated Monthly Installment which will help
him repay the loan faster. This facility is offered free of charge to our
customers.

Electronic Mail : HDFC through its e-mail service can promptly respond
to queries. In addition, HDFC can promptly send it is application form
cum brochure and other details on its loan products by e-mail to
interested individuals. For Non-Resident Indians, our interactive
Website offers another means for contacting us. In our effort to reach
out globally dispersed Non-Resident Indians, we will continuously
enhance our Website.

Home Conversion Loans : HDFC offers the option of a Home


Conversion Loan to its existing customers who are interested in moving
to a new house. Through this scheme customers can apply to have their
existing loan transferred towards the purchase of the new home.
Customers may also apply for an additional loan amount for the
purchase of the new house. This gives the customer the option of selling
their existing house, if they wish to, without having to repay their old
loan.

Applications can be made before selecting property : Individuals may


make an application for a loan even if the property has not been
selected or the construction has not commenced. HDFC can provide
assistance in locating an appropriate house to such customers.

Home Improvement Loans : As an exclusive offer to it's existing


customers HDFC offers Home Improvement Loans upto 100% of the
improvement cost as compared to Home Improvement Loans of upto
70% of the improvement cost offered to the general public.

Fee
A processing fee of 0.5% of the loan amount applied for i.e. Rs. 5 per
Rs. 1000 of the loan applied for is payable when the application form is
submitted to HDFC. This fee is in respect of costs incidental to the
application.
For example :
Loan applied for Fees
Rs. 20,000 Rs. 100
Rs. 1,00,000 Rs. 500

On approval of the loan, a loan offer is made to you. On acceptance of


the offer, you will have to pay an administrative fee of 0.5% of the loan
approved. You can also pay the processing and administrative fees
upfront i.e. 1% of the loan at the time of submission of the loan
application itself.
Rate of Interest
Adjustable rate of Interest
The interest rate on your ARHL is linked to HDFC's Retail Prime
Lending Rate (RPLR). The rate of interest is revised every three months
from the date of first disbursement, if there is a change in RPLR.
However, the EMI on the ARHL will not change. For instance, if the
interest rate increases, the interest component in EMI will increase; the
principal component would reduce, resulting in an extension of the term
of the loan and vice-versa when the interest rate decreases. customer
will be provided with an annual statement indicating the details of the
interest and principal payments made during the year.
Annual Rest Option
Term of Loan (No. of Years) Rate Per Annum (%p.a)
1 – 20 8.00
Monthly Rest Option
Term of Loan (No. of Years) Rate Per Annum (%p.a)
Upto 5 9.00
6 - 10 9.25
11 – 20 9.75
Rate of interest under ARHL is linked to HDFC's RPLR (Retail Prime
Lending Rate) which currently is 8.00% per annum.
customer repay the loan in EMIs comprising principal and interest.
Pending final disbursement, you pay interest on the portion of the loan
disbursed. This interest is called pre-EMI interest .
EMI per Rs.1,00,000 for Annual Rest
Option
Term of loan (No. of years) Rupees
20 979
EMI per Rs.1,00,000 for Monthly Rest
Option
Term of loan (No. of years) Rupees
5 2,076
10 1,281
20 949

There is no early redemption charge on repayment of a loan ahead of


schedule.

Fixed rate of interest


The current applicable fixed rate of interest in respect of the total loan
approved is are as follows:
Annual Rest Option
Term of Loan (No. of Years) Rate Per Annum (%p.a)
Upto 5 9.25
6 - 10 9.25
11 – 20 9.75
Monthly Rest Option
Term of Loan (No. of Years) Rate Per Annum (%p.a)
Upto 5 9.25
6 - 10 9.50
11 – 20 9.75
You repay the loan in Equated Monthly Instalments (EMIs) comprising
principal and interest.
EMI per Rs.1,00,000 for Annual Rest
Option
Term of loan (No. of years) Rupees
5 2,157
10 1,313
20 963
EMI per Rs.1,00,000 for Monthly Rest
Option
Term of loan (No. of years) Rupees
5 2,088
10 1,294
20 966

Pending final disbursement, customer pay interest on the portion of the


loan disbursed. This interest is called pre-EMI interest .
An early redemption charge of 2% of the amount being prepaid is
payable on repayment of a loan ahead of schedule.

How to Apply
customer can either download (in a pdf format) the application form or,
get the application form by email or normal mail. Alternately, customer
can collect the application forms from any of your nearest HDFC
Offices.

customer need to submit it along with supporting documents and the


processing fees at any HDFC office that is convenient to the customer.
customer can make payments by cheque marked "Payee's account
only" drawn on a bank in a city where HDFC has an office, by demand
draft (payable at par to HDFC) or by cash.
Customer can make an application at any time after they have decided
to acquire a house, even if the house has not been selected or the
construction has not commenced.
HDFC will consider your application, make enquiries as it deems
necessary and convey its decision to you. On approval of the loan, a
loan offer is made to you. On acceptance of the offer, you will have to
pay an administrative fee for the loan approved.

customer can take disbursement of the loan after the property has been
technically appraised, all legal documentation has been completed and
you have invested your own contribution in full (Own contribution is the
total cost of the property less HDFC's loan). The loan will be disbursed
in full or in suitable instalments (normally not exceeding three in
number) taking into account the requirement of funds and progress of
construction, as assessed by HDFC and not necessarily according to a
builder's agreement.
Supporting Documents to be attached :
For approval of loan
a) Common for all applicants:
1. Allotment letter of the co-operative society / association of apartment
owners.
2. Copy of approved drawings of proposed construction / purchase.
3. Agreement for sale/sale deed/detailed cost estimate from
architect/engineer for the property to be purchased / constructed.
4. If you have been in your present employment / business or
profession for less than a year, mention details of occupation for
previous 5 years, giving position held, reasons for change and period
of the same.
5. Applicable Processing Fees.
6. Any other information regarding your repayment capacity that is
necessary and will assist HDFC in appraising the case.

b) Additionally,
If You Are Employed:
1. Latest salary slip/salary certificate showing all deductions.
2. If job is transferable, permanent address where correspondence
relating to the application can be mailed.
3. A letter from employer agreeing to deduct the monthly instalment
towards repayment of the loan from the salary. This will expedite the
processing of your loan application.

If You Are Self-Employed:

1. Balance Sheets and Profit & Loss Accounts of the


business/profession along with copies of Individual Income Tax
Returns for the last three years certified by a Chartered Accountant.
2. A note giving information on the nature of business/profession,
form of organisation, clients, suppliers, etc.
IDBI BANK

IDBI, the tenth largest development bank in the world has promoted
world class institutions in India. A few of such institutions built by IDBI
are The National Stock Exchange (NSE), The National Securities
Depository Services Ltd.(NSDL), Stock Holding Corporation of India
(SHCIL) etc. IDBI is a strategic investor in a plethora of institutions
which have revolutionized the Indian Financial Markets.

IDBI promoted idbi bank to mark the formal foray of the IDBI Group into
commercial Banking. This initiative has blossomed into a major success
story. idbi bank , which began with an equity capital base of Rs.1000
million (Rs.800 million contributed by IDBI and Rs.200 million by SIDBI),
commenced its first branch at Indore in November 1995. Thereafter in
less than seven years the bank has attained a frontranking position in
the Indian Banking Industry.

idbi bank successfully completed its public issue in February 99 which


led to its paid-up capital expanding to Rs.1400 million. The promoters
holding consequent to this public issue stood reduced to 71% with IDBI
holding 57% and SIDBI 14% of the paid up capital of IDBI Bank. This is
in line with the requirement of RBI which stipulates that eventually the
promoters holding should be brought down to 40%.

The Bank
The birth of idbi bank took place after RBI issued guidelines for entry of
new private sector banks in January 93. Subsequently, IDBI as
promoters sought permission to establish a commercial bank and
retained KPMG a management consultant of international repute to
prepare the groundwork for establishing a commercial Bank. The
Reserve Bank of India conveyed it's in principle approval to establish
idbi bank on February 11th, 1994. Thereafter the Bank was incorporated
at Gwalior under Companies Act on 15th of September 1994
(Registration No. 10-08624 of 1994) with its Registered Office at Indore.
The Certificate for Commencement of Business was received on 2nd of
December 1994.

Management Team - The Core Strength of The Bank

Since August 2000 idbi bank has witnessed a transformation in the top
management structure with top talent from foreign banks and private
banks coming together to create a world-class management team. Mr
Gunit Chadha joined idbi bank as its Managing Director & CEO after
spending 16 years with Citicorp in New York and India, on 22nd August
2000. He laid out the bank's immediate priorities, amongst them being
building up a performance driven customer focused organization.
Existing talented people within the bank were re-aligned to a functionally
driven Product & Sales organizational structure. Also, to align employee
interests with shareholder interests founder Stock Options (ESOPs) in
October 2000 covering 75 % of the existing employees of idbi bank were
distributed.

Key recruits into the top management team were:


In January 2001, Janak Desai joined in as Country Treasurer after an
outstanding innings at Standard Chartered Bank and ABN Amro.

In February 2001. Ajay Bimbhet joined as Head-Retail Banking to lead


retail banking at idbi bank . Ajay comes after a strong and brilliant 25
year career at ANZ Grindlays.

In December 2000, Neeraj Bhushan Bhai joined idbi bank as the Chief
Technology Officer. Neeraj has been a major success story in the
assignments handled by him earlier as Chief Information Officer of
Sharekhan.com and Chief Technology Officer of ICICI Infotech in their
technology initiatives.
In April 2001, Subramanian Kumar joined idbi bank as Head -
Operations after earning accolades during his stint at Standard
chartered Bank, Dubai and previously at HDFC Bank.

In May 2001, Ulhas Deshpande joined as Head - HRD. He has more


than 18 years of rich human resource experience, of which over 10
years has been in heading the HR function in premier organizations-
Hindustan Ciba Geigy, Merind, Parke Davis and most recently as Head-
HR at Tata-AIG.

In August 2001, Susheel Kak joined as Head - Corporate Banking after


a 25 years of varied banking experience in SBI and Deutsche Bank in
Singapore and India.

Idbi bank is growing at a very fast pace. Recently, the no. of employees
have crossed 1000 mark from 777 employees as on 1st April 2001 and
it is expected to cross 1200 by the end of this financial year. The Bank
also has a state-of-the-art training centre at Belapur and every
employee receives on an average at least 40 hours of training in a year.

Technology and Tech Initiatives


Keeping in line with its policy of leveraging technology to drive its
business, idbi bank deployed Finacle, the e-age banking solution from
Infosys to consolidate its position, meet challenges and quickly seize
new business opportunities. Entire Finacle rollout was remarkable
considering the fact that it was implemented across all branches in a
record time-frame of 5 months. Finacle will provide the critical
technology platform to propel the bank's new thrust and direction.

The bank has also implemented Kondor+ - a treasury Front Office


software from Reuters and ITMS- treasury back office software from
Synergy Login. Achievement of these significant milestones is
consistent with idbi bank 's continued focus to create customer and
shareholder value through deployment of superior technology.
Investments in technology is part of the plan to put in place building
blocks for creating the right organisational infrastructure which will help
idbi bank in consistently delivering superior products, convenient access
channels and efficient service to our retail and corporate customers. Of
the total investments of over Rs. 75 crs, large investment has been
made in back-end technology to strengthen processes, systems and
control. This, in the long run, propelled by a top quality management
team will clearly set idbi bank apart from its competitors.

Strategic Retail Initiatives


idbi bank in the previous calendar year initiated its formal foray into
retail banking. idbi bank 's depository services product E-Sec is a major
success story and the bank today is in the top three league in India in
this segment. A spate of retail products were introduced such as home
finance, loans against shares, educational loans, car loans, Sweep in
account, SMS/WAP mobile banking etc. on very competitive terms.

Retail Bank has acquired software for its Retail Assets products. Also,
on its way is Internet Banking with Bancaway, from Infosys. idbi bank
has recently launched its upgraded, state-of-the-art telebanking product
across 17 centres with latest software from BK Systems. Mobile banking
(WAP/SMS) from Hexaware, which is mobile service provider
independent, launched during FY01. We have also migrated to an Open
Architecture "Oasis" ATM Switch capable of providing features like Bill
Presentation Payment and personalised messaging.

The bank has recently announced its strategic alliance with TATA AIG
General Insurance Company for selling General Insurance Products
through select branches & ATMs of idbi bank .

The bank announced a landmark strategic alliance to make available


widely, both organisations' products through each others' distribution
channels. Now you can buy coveted savings Products like the National
Savings Certificates and Kisan Vikas Patra on Internet .

The New products which are going to be announced shortly are Credit
Cards, Debit Cards etc.

Idbi bank is continuously looking for ways to leverage its technical


strengths and bring to the retail customer convenience products at
reasonable cost.

Corporate Banking and Credit


Idbi bank has launched its Cash Management Services in the 2nd
quarter of FY02 with powerful software from Cash Teck. The bank has
also invested in Credit Rating System software from CRISIL to
strengthen its corporate risk assessment mechanism. This goes live
from the first quarter of 2001-2002. Morevover, the bank is in the
process of investing in more back-end systems for Fixed Assets,
Payables, FTP and ALM.

Stronger Capital Adequacy


Capital Adequacy ratio of idbi bank is well above the RBI norm of 9%
and as on 30th June 2001 stood at 12.01%.-->
idbi bank has adopted Governance standards based on best practices
prevalent internationally. It has a structure of governance which meets
with the requirements prescribed by the Kumarmangalam Birla panel
and fully meets the recommendations by internationally acclaimed and
recognised norms of governance addressed by the Cadbury, Greenbury
and Meryn King committees.
Employee Contribution
idbi bank has more than 1000 talented and highly motivated employees
as on date.

The average age of the employee at idbi bank is 31 yrs.


85% of the employees are MBAs/CAs/ Professionally Qualified Bankers.
The bank has rolled out broad based grant of stock options covering
75% of the employees to align their interests with those of its
shareholders.
Buying a home of one's own is every individuals first stop in life. . Which
is precisely why, we at idbi bank , have pulled out all the stops to sew
together a home loan product that has flexibility as its very foundation.
Bank have created a product that is competitively benchmarked, that is
amply affordable and one that is customer-sensitive. Only because
when it comes to buying a house, the first thing customer need to do is
to feel at home with their bank.

IDBI Bank Home Loans

Buying a home of one's own is every individual's first stop in life. Which is
precisely why, we at IDBI bank have pulled out all the stops to sew together a
home loan product that has flexibility as its very foundation. We have created a
product that is competitively benchmarked, that is amply affordable and one that
is customer-sensitive. Only because when it comes to buying a house, the first
thing you need to do is to feel at home with your bank.

:: Is the interest rate fixed for the complete tenure of the


Loan?

IDBI bank offers you only Floating rate home loans


Under the floating rate option, interest rate varies from time to time, increase or
decrease as applicable.
Interest Rate Chart (Floating Rates)
Salaried Self Employed
Tenure (Years) Interest Rate (p.a.) Interest Rate (p.a.)
upto 5 7.50% 7.75%
10 7.50% 7.75%
15 7.50% 7.75%
20 7.50% -

:: Eligibility:

The bank will decide the loan amount based on your repayment capacity taking
into consideration factors such as your income,age,qualifications, number of
dependants, spouse's income, assets, liabilities,savings history, stability and
continuity of occupation etc. however, the maximum loan amount shall not
exceed 85 per cent of the cost of property which includes costs of property which
includes costs towards registration, stamp duties, amenities, utilities as
applicable.

Eligibility Criteria Other Charges


Salaried Self Employed MOF
NIL
Min 24 yrs Min 24 yrs Charges
Age Limit Admin
Max 58 yrs Max 65 yrs
Charges NIL
Loan Amount Min 2 Lakhs Min 2 Lakhs
(upfront)
(Rs.) Max 3 Cr. Max 3 Cr.
Pre-
Income p.a. Net Busi 1.00 Payment NIL
Gross 1.20 Lakh
(Rs.) Income Lakh (floating)
Minimum Guarantor NIL
Work 2 yrs 2 yrs
Processing
Experience 0.75%
Charge
:: Types of loans

You can avail home loans for constructing a house, purchasing a ready built
house / flat, residential plot and even for refinance of the existing home loans you
may have availed from other banks or housing finance companies.

:: Can customer repay the loan ahead of schedule?

Yes, customer can repay the loan ahead of schedule in part or in full, in event of
part payment you have an choice to reduce the tenure or installment as the case
may be, prepayment fees will be levied as per the policies of the bank.

:: What is the tenure of the Loan?

You can repay the loan over a maximum period of 15 years. Repayment will not
ordinarily be extended beyond the age of retirement (if you are employed ) or on
your reaching 65 years of age whichever is earlier. However IDBI bank will
endeavor to determine the repayment period to suit your convenience.

*The above information is computed from publicly available sources. Whilst all
care is taken in its compilation, Times Online money Ltd is not responsible for
any errors or mistakes therein.

Advantage

Interest Rate on Monthly Reducing


Balance
Home Loan services at Door Step
Simple Documentations
Personalized Service
Legal and Technical Assistance

Housing Loan Rates :


Floating rate loans have been institutionalized as the standard offering,
making it simple for new customers to benefit from favourable interest
rate changes in the future too.

SL#
Tenure (yrs) Rate of Interest EMI per Lac
*
Upto 5years 9.25 % 2088.00
6 - 10 years 9.75% 1308.00
11 – 20 years 10.00% 982.00

Pre-payment Fees
Pre-payment Fee of 2% on principal outstanding if the prepayments are
through institutional / HFC s Cheque / pay order.In case of customer
premature closing his home loan account with his own funds no
prepayment will be levied

STANDARD CHARTETRED BANK

Standard Chartered is the world's leading emerging markets bank. It


employs 27,000 people in over 500 offices in more than 50 countries in
the Asia Pacific Region, South Asia, the Middle East, Africa, United
Kingdom and the Americas.

The Bank serves both Consumer and Wholesale banking customers.


The Consumer Bank provides credit cards, personal loans, mortgages,
and deposit taking activity and wealth management services to
individuals and medium sized businesses. The Wholesale Bank
provides services to multinational, regional and domestic corporate and
institutional clients in trade finance, cash management, custody,
lending, foreign exchange, interest rate management and debt capital
markets.

With nearly 150 years in the emerging markets the Bank has unmatched
knowledge and understanding of its customers in its markets.

Standard Chartered recognises its responsibility lies to its staff and to


the communities in which it operates.

Today-Standard Chartered
Today Standard Chartered is the world's leading emerging markets bank
employing 30,000 people in over 500 offices in more than 50 countries
primarily in countries in the Asia Pacific Region, South Asia, the Middle
East, Africa and the Americas.

The new millennium has brought with it two of the largest acquisitions in
the history of the bank with the purchase of Grindlays Bank from the
ANZ Group and the acquisition of the Chase Consumer Banking
operations in Hong Kong in 2000.

These acquisitions demonstrate Standard Chartered firm committed to


the emerging markets, where they have a strong and established
presence and where they see their future growth.

At Standard Chartered they are committed to the communities and


environments in which they operate. Their Operations are focused on
the emerging markets and they believe that with appropriate policies
and practices in place they can be a legitimate influence for good by
promoting the highest standards of responsible business.

HOME SAVER FROM STANDARD CHARTERED BANK:


• A revolutionary home loan that gives the customer the potential to
save thousands of Rupees in interest on home loan.
• Lets the customer make additional deposits to reduce the loan
outstanding, without any penalties.
• Lets use the surplus funds in the account to invest when the right
opportunity arises.
• Finally, a home loan that easy access to surplus funds every day,
24 hours a day through a globally valid ATM-cum-Debit card

At Standard Chartered, recognize that owning a home is a very


important goal, and probably the largest investment in a lifetime. That's
why the company has created Home Saver.

Home Saver is a revolutionary new concept in home loans designed to


save interest thereby letting to pay off loan faster.

Here's how one can enjoy the Home Saver advantage


Every month, all the customer need is to do is deposit surplus funds, be
it there salary or other savings into Home Saver, instead of letting them
lie idle in different accounts. All this money then works towards reducing
there interest payable because the deposits automatically reduce the
balance outstanding on which the interest is calculated on a daily basis.

So, more the number of days one place into HomeSaver, greater is the
interest saving!

What's more, the customer continue to have total access to these funds
24 hours a day through the globally valid ATM-cum-Debit card!
Unique Features
• Freedom to save more
• Freedom to reduce your loan period
• Freedom to take a break from EMI payments
• Freedom to access your money - anytime, anywhere

HomeSaver is currently available in Bangalore, Chennai, Delhi, Kolkata,


Mumbai and Pune.
All the customer have to do is to call Phone Banking or contact us at
any of their branches and they'll assist you with a better understanding
of the products and in taking care of the formalities.
Still deciding which home loan to take? Choose the one that sets
free.
• Terms, conditions and RBI regulations apply. All loans at the sole
discretion of Standard Chartered Bank.

Freedom to save more


With HomeSaver, there is more to save than a normal low-cost home
loan. Because interest is calculated on daily balances, customer can
reduce interest cost substantially even if surplus savings are in the
account for only a day. For each day that outstanding balance reduces,
one pay less interest for that day.

Since that's interest saved not earned, customer save on taxes that
would otherwise pay on interest earned!

HomeSaver gives the flexibility and freedom to make excess payments


so that you can reduce the duration of your loan anytime, without
penalties.

Only HomeSaver gives you the flexibility to defer your EMI payment. So
if at any time, you are faced with an emergency and find it difficult to
pay EMI, customer can take a payment holiday* once every year- after
the first year without any penalty.

You have the flexibility of depositing and withdrawing cash just as you
would with your normal bank account. HomeSaver comes with a globally
valid ATM-cum-Debit Card, which allows you free* access to your
money from over 2000 ATMs across the country. Anytime, anywhere.

That's not all, customer also get a personalized cheque book,


Phonebanking and Internet banking - to add to the convenience of
banking with us.
The product is a combination of home loan and bank account that helps
reduce the interest and tenure of the loan. HomeSaver allows the
customer to pay back the home loan principal by utilising the excess
funds in the HomeSaver account. This reduces the overall interest
payment and the tenure of the loan.

The product allows customers to pool their salary, savings and surplus
funds lying in other accounts into HomeSaver that goes towards
reducing the balance principal outstanding. Since the interest is
calculated on daily outstanding balance, every rupee kept in HomeSaver
each day goes towards prepaying the loan that helps the customers pay
back the loan faster and save substantial interest.

One of the key benefits of HomeSaver is that customers need not


consciously work towards making partial prepayment to reduce interest
on the loan. All deposits and excess money lying in HomeSaver account
would automatically be used to reduce the balance outstanding. At the
same time, customers would continue to enjoy the flexibility and liquidity
of a normal bank account.

Further, the customers also enjoy the privilege of taking a payment


holiday on their equated monthly instalment (EMI) once a year after the
first year for any loan taken under HomeSaver.
This would allow the customer the flexibility to tide over a tight financial
situation without having to pay a penalty for skipping an EMI. "This is a
feature again unique to HomeSaver and not provided by any traditional
home loan,".

HomeSaver offers an opportunity to maximise savings whilst providing


flexibility and convenience to manage personal finances more
efficiently. Customers can pool their salary, savings and surplus funds
lying in other accounts ultimately reducing the balance principal
outstanding.
As the interest is calculated on a daily outstanding balance, funds kept
in the account go toward pre-paying the loan, rather than the interest
component, helping customers pay back faster and save substantial
interest, the bank claims.

The HomeSaver account further offers the same liquidity and flexibility
of a normal bank account and comes with an ATM - cum- debit card and
chequebook facility.

A customer can save up to 43 per cent or more on the interest component


depending on the deposits maintained by him in the account. Loans from
other institutions can be balance transferred to this account at a cost of 1 per
cent of the outstanding loan amount

:: Flexible Interest Rates

You can choose between fixed and floating rates of interest. You can also shift
between the two options during the loan period
Interest Rate Chart (Floating Interest Rate Chart (Floating
Rates) Rates)
Salaried Self Employed

Tenure (Years) Interest (p.a.) Tenure (Years) Interest (p.a.)


5 7.50% 5 7.50%
10 7.50% 10 7.50%
15 7.50% 15 7.50%
20 7.50% 20 -

Other Charges
MOF Charges NIL
Admin Charges
NIL
(upfront)
Pre-Payment (floating) NIL
Guarantor NIL
Processing Charge 0.50-1%

:: Options to suit your needs

Amount and Tenure


Only Loans for Homes offers you the options and flexibility to choose the loan
that's just right for you.
Consider the 85% finance options for construction renovation and extension. Or
the largest loan amount of Rs 1 crore. And a loan period of up to 15 years. A look
at the table will tell you how much you can benefit from Loans for Homes.
Loan to Value (up Upper Limit of Loan Max. Tenure of
Loan
to) (Rs) Loan (Yrs)
Self - construction 85% 1 crore 20
Home renovation 85% 25 Lakhs 15
Home extension 85% 1 crore 15
Home Buying 85% 1 crore 20

:: Eligibility:

Eligibility Criteria
Salaried Self Employed
Min 23 yrs Min 23 yrs
Age Limit
Max 58 yrs Max 65 yrs
Min 6 Lakhs Min 6 Lakhs
Loan Amount (Rs.)
Max No Limit Max No Limit
Net Busi
Income p.a. (Rs.) Gross 1.32 Lakhs Income 1 Lakh
(p.a.)
Minimum Work Experience 3 yrs 3 yrs

• Finance up to maximum of 85% of the price of property or the cost of


construction is provided.

• Applicant should be buying a house and must be residing with in the city
limits of areas where Standard Chartered operates.

:: Types of loans

Standard Chartered Grindlays offers you the worlds most complete home loan -
Loans for Homes. You can avail of a loan for any of the following purposes:
1) Buying a home under construction
2) Purchasing a constructed home
3) Constructing a home on a plot of land owned by you or your spouse
4) Extending your existing home
5) Renovating your existing home
:: Loan repayment

Determining Repayment Capacity


Your repayment capacity is assessed by considering your age, income, assets,
liabilities and employment. Your co-applicant's income can also be considered
towards repayment of loan.

Repayment of Loan
Repayment of your loan will be in Equated Monthly Installments (EMIs),
comprising principal and the interest. The (EMIs) will commence from the month
following full disbursement. The EMIs are payable every month and the date of
payment depend on the date of final disbursement. Postdated cheques towards
the EMIs will be collected at the time of disbursement.

:: Sanction and
disbursal

Sanction Process
You can count on us to get to work as soon as you submit your application with
all the required documents. You will hear from us much earlier than you expect!
All loans however, are at the sole discretion of Standard Chartered Grindlays.

Disbursal Requirements
Your loan will be disbursed after:
a) You have submitted all the necessary documents as prescribed by the Bank
b) The Bank has obtained legal opinion from its solicitors that the title to your
property is clear, marketable and free from encumbrances.
c) A satisfactory valuation report is received from the Banks approved valuers.

Disbursal of Loan
The loan amount will be disbursed directly to the seller of your home/plot of land,
once the bank approves your proposal. In case the construction /
extension/renovation of your home is in progress, the amount will be released in
tranches of Rs.50,000 based on the stage of completion.

:: Get your loan before locating your property

Customer can get your loan approved even before you have selected your
property, based on your income. This approval will help you decide your budget
and plan your finance better. However, final disbursal will depend upon the
property selected.

*The above information is computed from publicly available sources. Whilst all
care is taken in its compilation, Times Online money Ltd is not responsible for
any errors or mistakes therein.

ABN-AMRO BANK

Corporate Overview
Mortgage.com is the website to go to for mortgages from ABN AMRO, which is one of the
world’s top international banks. Its history dates all the way back to 1824. It is a publicly
traded company on multiple worldwide exchanges. Through their commercial units, they
have over 15 million customers worldwide. They have over 3000 branches around the world
in over 60 countries.
LaSalle Bank and Standard Federal are the two banks under the ABN AMRO family in the
United States. LaSalle Bank is based out of Chicago, Illinois. They are in control of over 58
billion dollars in assets. They are one of the top banks in the Midwest. Standard Federal
Bank history dates back to the late 1800’s. They are the top mortgage lender in Michigan.
They are in control of close 50 billion dollars in assets and have over 250 branches across
Michigan and Indiana.
Combined, LaSalle Bank and Standard Federal offer a huge assortment of financial services
to both consumers and businesses alike. This includes commercial banking, consumer
banking, online services, mortgages, checking, savings, money market, CD’s, investments,
insurance, and wealth management. Combined, they offer their consumers a wide
assortment of mortgage programs and services. This includes fixed rate loans, and
adjustable rate mortgages. LaSalle Bank and Standard Federal allow you to apply on the
phone, in person, or by mail. They currently do not offer online applications through their
main sites but through the ABN AMRO mortgage site, they do offer you the ability to apply
online.

Company Profile
ABN AMRO is one of the world's top international banks with over 15 million customers
worldwide. The bank has 3000 branches around the world in over 60 countries. In the
US, both LaSalle Bank and Standard Federal are subsidiaries of ABN AMRO. LaSalle
Bank is based out of Chicago, Illinois. They are in control of over 58 billion dollars in
assets. They are one of the top banks in the Midwest. Standard Federal Bank history
dates back to the late 1800?s. They are the top mortgage lender in Michigan. They are
in control of close 50 billion dollars in assets and have over 250 branches across
Michigan and Indiana.

Combined, LaSalle Bank and Standard Federal offer a huge assortment of financial
services to both consumers and businesses alike. This includes commercial banking,
consumer banking, online services, mortgages, checking, savings, money market, CD?
s, investments, insurance, and wealth management.

ABN AMRO also owns and operates the US based Mortgage.com website. Through
this website they offer their consumers a one of a kind mortgage program called
Guaranteed OneFee Mortgage. So instead of worrying about all of the different fees
you can have when taking out a mortgage, they take that stress out of the equation for
you. In addition, they make the mortgage process very easy for the consumer and
allow them to apply online. They clearly display all of the mortgage rates and have a
great education center that includes calculators and a home buying guide.

ABN Amro Ratings

Overall Experiences 1.00 of 5


Customer Service 1.00 of 5
Application Process 1.00 of 5
Rate
1.00 of 5
Competitiveness
Fee Structure 1.00 of 5

Independantly OUTLOOK MONEY date 15/sept./2004 published a product rating where the
ABN AMRO All Smiles Home Loan has been rated as the best product suite amongst the
MNC Banks in India.
Home Loans

Enjoy Flexible Home Loans Schemes and Huge Savings!

Now you can take a home loan for any term and any amount, and enjoy huge
savings on your interest rate as well!
Is it possible?
All Smiles Home Loans” Super Saver Packages from ABN AMRO Bank!
ABN AMRO Bank offers 3 kinds of Super Saver Packages:
Scheme: Super Saver Packages
2 Yrs. Super 8% for first 2yrs. There after the then Prevailing Floating
Saver Rate @ HPLR+50 Basis Points.
3 Yrs. Super 8.25% for 1st 3 yrs. There after the then Prevailing
Saver Floating Rate @ HPLR+50 Basis Points.
5 Yrs. Super 8.5% for 1st 5 yrs. There after the then Prevailing
Saver Floating Rate @ HPLR+50 Basis Points.

CAREERS
With a global team of over 110,000 staff, ABN AMRO is
committed to recruiting high-calibre individuals who have the
knowledge, experience and expertise to fulfil the
Organisation's Strategic Objectives.
Developing our people and rewarding them for excellence are
essential to our continued success in being able to maximise
client service and bring about customer delight!

LOANS ABN-AMRO OFFERED

 Personal loans

 Line of Credit

 Home mortgage

 Debt Consolidation

 Business Loans

 Credit Cards

 Life Disability state Consolidation Group

Personal Loans
A personal loan can be the right borrowing solution for many purchases and
major expenses, especially if you don’t own a home or don’t want to tap into
your homes equity

Line of Credit
State Consolidation Group line of credit offers convenient credit options that
can give you comfort of knowing you have access to money when you need it
no matter what the reason may be.

Home Mortgage
Considering State Consolidation Group for your home mortgage weather you
are a first time buyer or refinancing our interest rates are unbeatable and that’s
a fact.

Debt Consolidation
IAre the most common program@ State Consolidation combining all your bills
into one low monthly payment and settle with creditors and get your credit
back on track.

Business Loans
Weather it be your dream to start your own business, invest in a business or
just to expand on your business State Consolidation Group will make that
dream come true.

Credit Cards
25% of the people in the United States have problems with just getting their
credit started due to not having any credit (high risk) State Consolidation
Group can help you establish your credit with a secured credit card. During a 6
month period with no late payments you will have enough credit to do
anything possible.

Life Disability State Consolidation Group


Insurance is a type of policy that pays off outstanding credit balance in event
of your death. It is an ideal way for you to eliminate debt that would reduce the
value of your estate or would have to be paid by family members.
PERSONAL LOANS FROM ABN-AMRO BANK
Money for any purpose. This is what personal loans are for. Use the loan amount for
buying your favourite music system or take your family on a holiday or for a more
long term purpose like buy a computer for your child. And getting it is quite easy. A
salary slip, proof of personal identity and signature will be enough. ABN AMRO Bank
offers personal loans to salaried and Self-employed.
ABN Amro bank personal loan for self employed doctors is available in the following
cities:
Mumbai, Delhi, Calcutta, Chennai, Pune and Baroda.

SALARIED
For salaried persons, ABN Amro bank has two categories of eligible employers on
which a person is given loan and the eligibility varies, Category A and
Category B.

SELF- EMPLOYED PROFESSIONALS

ABN Amro bank has the most comprehensive list of approved self employed
professionals. Find out your loan amount.
SPECIAL ABN-AMRO PROGRAM
ABN Amro bank has certain special programs designed for the convenience of
customers, for example if you are a credit card owner, and would like to avail
personal loan to offset your credit card liability, then ABN has such a program just for
you.
Also ABN has special programs for its existing customers wherein they can avail of a
lower rate of interest.
.

COMPARISON OF BANKING FACILITIES

:: Bank Facilities

Phone Net Mobile


ATM Locker
Banking Banking Banking

HDFC Bank

ICICI Bank

Standard Chartered
Bank
Global Trust Bank

IDBI Bank

UTI Bank

Citibank

Centurion Bank *
HSBC

ABN - Amro Bank

COMPARISON OF INTEREST RATES


OF DIFFERENT BANKS

Home Loans Rate Comparator


Name of Fixed Floating
Tenure Prepayment Foreclosure
the Processing Fee
(yrs) ROI (%) EMI ROI (%) EMI Fee Charges
Institution
8.0
5000/- +10.2% If Pre-payment
5 (for 1st 3 31337 7.25 19920
ST* is
yrs)
made from
8.0
5000/- +10.2% own
10 (for 1st 3 31337 7.25 11741
ST* sources its NIL
yrs)
HSBC 2%*
8.0
5000/- +10.2% If Pre-payment
15 (for 1st 3 31337 7.25 9129
ST* is
yrs)
made from
8.0
5000/- +10.2% other
20 (for 1st 3 31337 7.25 7904
ST* HFI's its 2%
yrs)
Standard 20038- 0.5% - 1.00% + If Pre-payment 2%*
5 8.0 20277 7.5 - 8.0
Chartered 20277 10.2% ST* is
Bank 11871- 0.5% - 1.00% + made from
10 8.0 12133 7.5 - 8.0
12133 10.2% ST* own
15 8.0 9557 7.5 - 8.0 9271- 0.5% - 1.00% + sources its NIL
9557 10.2% ST*
8056- 0.5% - 1.00% +
20 8.0 8365 7.5 - 8.0
8365 10.2% ST* If Pre-payment
is
made from
In fixed ROI,
Entire 8.5% - 8679 – prepayment
tenure 8.75% 8838 charges will be
2% of principal
outstanding
amount
In floating
ROI, after 1
7.25 - 7904 - 0.5% +10.2% year of taking
HDFC 2%*
8.25 8521 ST* loan, there will
Money 7.5% - 8056 – be no charges,
Market 8.25% 8521 but if it is a
refinance
case, then it
will be 2% of
principal
outstanding
amt
8 - 8.25
31337-
(for 1st 3 7.75-8.0
31452
yrs) (loan 20157- 0.5% +10.2%
5
8.5 above 20277 ST*
(for 1st 5 20517 15 lacs)
yrs)
8 - 8.25 If Pre-payment
31337- 7.75-8.0
(for 1st 3 is
31452 (loan 12002- 0.5% +10.2%
10 yrs) made from
above 12133 ST*
8.5 (for 1st own
20517 15 lacs)
5 yrs) sources its NIL
IDBI
8 - 8.25 2%*
Bank 31337-
(for 1st 3 7.75-8.0 If Pre-payment
31452
yrs) (loan 9413– 0.5% +10.2% is
15
8.5 above 9557 ST* made from
(for 1st 5 20517 15 lacs) other
yrs) HFI's its 2%
8 - 8.25
31337-
(for 1st 3 7.75-8.0
31452
yrs) (loan 8210– 0.5% +10.2%
20
8.5 above 8365 ST*
(for 1st 5 20517 15 lacs)
yrs)
CitiBank 5 8.0 20277 7.5 20038 0.25% after file If Pre-payment 2%*
booking is
+10.2% ST* made from
0.25% after file
own
10 8.0 12133 7.5 11871 booking
sources its NIL
+10.2% ST*
0.25% after file
If Pre-payment
15 8.0 9557 7.5 9271 booking
is
+10.2% ST*
made from
0.25% after file
other
20 8.0 8365 7.5 8056 booking
HFI's its 2%
+10.2% ST*
0.5% +10.2% If Pre-payment
5 8.5 20517 8.0 20277
ST* is
0.5% +10.2% made from
10 8.5 12399 8.0 12133
ST* own
ICICI
0.5% +10.2% sources its NIL
Home 15 8.5 9848 8.0 9557
ST* 2%*
Finance
If Pre-payment
Co. Ltd
is
0.5% +10.2%
20 8.5 8679 8.0 8365 made from
ST*
other
HFI's its 2%
0.5% +10.2% If Pre-payment
5 8.5 20517 8.0 20277
ST* is
0.5% +10.2% made from
10 8.5 12399 8.0 12133
ST* own
State sources its NIL
Bank of 2%*
India If Pre-payment
0.5% +10.2%
20 8.5 8679 8.0 8365 is
ST*
made from
other
HFI's its 2%
7.5 - 7.75
20038- 19920- 0.5% + 10.2%
5 (for 1st 3 7.25-7.5 Lock-in period
20157 20038 Service Tax
years) = 6 months
7.5 - 7.75
11871- 11741- 0.5% + 10.2%
10 (for 1st 3 7.25-7.5 25 % of the
Kotak 12002 11871 Service Tax
years) principal
Mahindra 2%*
7.5 - 7.75 outstanding
Bank 9271- 9129- 0.5% + 10.2%
15 (for 1st 3 7.25-7.5 can be repaid
9413 9271 Service Tax
years) without penalty
7.5 - 7.75 every 6
8056- 7904- 0.5% + 10.2%
20 (for 1st 3 7.25-7.5 months.
8210 8056 Service Tax
years)

ST*-service tax
For HSBC and for Kotak Mahindra Banks, the EMIs have been calculated for the fixed
rates for the first 3 yrs only and not for the entire loan tenure.
The above information is computed from publicly available sources. Whilst all care is
taken in its compilation, Apnaloan is not responsible for any errors or mistakes
therein.
The rates are on Monthly Rest basis.
The effective interest rate does not include other charges given above.
Banks/HFCs have several special schemes depending on your employer, credit
profile etc. Which be different from the above. Please contact the banks for further
details.
Special features of product offerings:

Standard Chartered ANZ has launched the Home Saver Account . Along with
the Home Loan, your will get a FREE savings bank account into which you may
deposit your monthly salary. The EMI for the loan will be automatically reduced from
your account. The excess balance in your savings account will earn interest that will
be adjusted against your future EMI payments. The bank claims that the effective
interest rate gets reduced by upto 45% because of this scheme.

Citibank offer loans with no guarantors. Most banks require that you present a
guarantor who will back you up if you default on your loan repayment. It can often be
embarrassing to ask friends to stand guarantor as most banks do not accept relatives
as guarantors.
Citibank gives home loans upto 90% of the property value, the highest from any bank
( only Tata Hsg Fin. matched this offer)
Citibank offers a flexi-savings account to reduce your cost of borrowing. The
bank will automatically open a Saving Account from which you can give standing
instructions to deduct the EMI payments for the loan. You can then prepay the loan at
any point in time and be given instant credit for the same, in case you get a large
lump-sum annual bonus from your employer. Should you require money in an
emergency at any point you can avail of a over draft on this savings account at an
interest rate that is the same as that on your Home loan. This works out much
cheaper than taking an over draft on a normal savings account

Dewan Housing Finance and LIC Housing Finance Ltd. offers consumer loans to
their existing Home Loan customers at a discount to market rates. The customer has
to be a housing loan borrower for the period not less than 6 month with a good
repayment record
FREE DOUBLE PROTECTION PLAN in the form of Personal Accident Risk Cover
and Property Insurance

GIC Housing Fin. gives a free personal accident cover along with the loan. Oriental
Bank of Commerce has started to offer a free property insurance cover of the value of
property and a free accident cover of upto Rs. 5 lacs.
GICHFL gives Consumer loans for purchase of home equipment at the same interest
rate as the home loan to customers at rates of interest that are the lower than other
consumer loans. The total loan amount including the housing loan can be upto 90%
of the value of the home. The tenure of the consumer loan is restricted to 5 years.

HDFC offer Flexible (Customised) Repayment Schemes, keeping in mind the fact
that each individual has a unique problem requiring unique solutions, HDFC has
developed various repayment options like Step Up Repayment Facility, Flexible Loan
Instalment and Balloon Payment Scheme
Pari Passu/ Second Mortgage Arrangements: HDFC has a tie-up with a large number
Safe Document Storage Facilities: HDFC has state of art storage facilities, which are
theft and fire proof, at various locations where loan and property documents are
stored. In this way valuable documents are stored safely over the period of the loan
and are released almost immediately after a customer repays his

A customer, after availing of a loan can approach HDFC anytime thereafter to


increase the Equated Monthly Instalment which will help him repay the loan faster.
Home Conversion Loan offered to its existing customers who are interested in
moving to a new house

Through this scheme customers can apply to have their existing loan transferred
towards the purchase of the new home. Customers may also apply for an additional
loan amount . for the purchase of the new house. This gives the customer the option
of selling their existing house, if they wish to, without having to repay their old loan
The fixed rate loan can be converted to floating without any penalty charges.
However, you will be charged 2% if you refinance the loan from another company
Hudco will waive the last 2 EMI payments on the loan if the customer has a
perfect repayment record with no bounced cheques. The loan amount initially taken
must exceed Rs. 5 lacs and no prepayments where to have been made during the
tenure of the loan. This is not available for the Floating rate loan.
There is a discounted start-up fee for Government employees. The Administrating
fees stand reduced from 0.7% to 0.5% only.
Free triple insurance - property cover, earthquake cover and personal accident
cover. given free along with the loan ( not available for the Floating rate loan)
You can prepay the entire loan in any year without any prepayment penalty. Each
prepayment has to be atleast 10% of the outstanding loan. Howvere, the floating rate
loan has a 1% prepayment penalty.

HSBC offers flexible interest rate loans that can be reset every year depending on
the prevailing interest rates at that point. The new interest rate will be applicable for
the rolling one year
Guarantor is required only for loans more than Rs. 10 lacs. Else no guarantor
You can prepay upto 25% of the outstanding loan in any year without paying a
penalty. For amounts over that, 2% penalty levied.

ICICI launches a 30 year tenure home loan, the longest available


ICICI also launches a variable rate loan with a monthly rest basis versus the regular
fixed rate loan that is on an annual rest basis
No guarantors are required for loans upto 20 years in most cases
No pre payment fees for any part payment as long as the loan is not fully retired, else
2% charge on pre paid amount. You can repay upto 33% of the outstanding loan in
any year without paying penalty.
Free accident death cover for the owner
Special 100% funding for select properties
Higher eligibility for self-employed professionals through segment-specific schemes

LIC Hsg Finance Ltd. will lower quoted interest rate by 0.5% for loans covered by a
life insurance cover that is taken from LIC. The life cover must be taken for a
minimum period that covers the tenure of the Home Loan

SBI offers Home Loans with no start-up costs. Most banks charge as high as 2% as
processing and administrative fees
Prepayment is 2% if the entire loan is pre paid else it is 0%. Avoid this penalty by prepaying upto 99%
of your loan if need be
RESEARCH METHODOLOGY

Research Methodology is an important part of every project. Because it help in


knowing how to select representative sample from the world or the
general population, the right research tools and techniques to complete
the research.

To satisfy the customer the study of comsumer behavior is important because he is


the king. The Research Process is based on survey method, so in order
to implement the survey we go to Service Provider and the Services user
which is the customers.

The research involves the following steps :-

♦ Define the problem & research objective - The problem and objective is to
assess the services offered by various service provider and what
the consumer wants.

♦ Developing the research Plan - The second stage of research methodology is to


develop a research plan.The research plan desigined to take decesion on
the data soruces, research approaches, research, instruments, sampling
plan and contact methods.

Survey Research – It was a descriptive research.


♦ Research Instrument – The use of an effective research instrument is very
important. Because through this instrument we collect data. In this project
through observations & personal interviews were conducted.

Personal Interview – As we were doing direct selling. we interacted with my


customers are asked about there views in selecting a service and what
are there wants and expectations from a service provider

 Sampling Plan - After finalizing the research approch and instruments a


sampling must be designed.

♦ Sampling Unit –data have been collected from banks

♦ Sample size – It has been collected from four banks.


Sampling Procedure :- What process should be used to collect the sample. So,
representation samples, convenience sampling is used.

♦ Collect the Information :-After completing all the steps, the data are collected
from different sources.
♦Analyze the Information:-After the data is collected they are analyzed to Know
the findings. The data is then tabulated to develop frequency distribution.
♦Present the findings:-As the last step, the findings are
presented that are relevant to the major marketing
decisions.
DATA ANALYSIS

The home loans provided by various banks are more or less same at a
basic level. The banks generally try to go ahead of other banks in terms
of attracting number of customers to their countries. For this they are
trying to offer some unique services as per the unique requirements of
the unique and important customers.

In the next page various data’s have been shown which shows that are
the home loans provided by various banks and SCB have also tried to
compare the services offered by the banks,.
TRENDS IN INTEREST RATES OF HOUSING LOANS
Interest Rates Have Dropped

16 15
14 13.25
12.5
12
10
10
8
8
6
4
2
0
2001 2002 2003 2004 2005
And Housing Loan Disbursement Have Soare
HOUSING LOAN BEST INTEREST RATES

50,000 45,000
45,000
40,000
35,000 29,359
30,000
25,000 22,425
19,723
20,000
15,000 11,352
10,000
5,000
0
1999-00 2000-01 2001-02 2002-03 2003-04

ICICI
Tenure 1 lakh 5 lakhs 25 lakhs 100 lakhs
2 yrs 8% 8% 8% 8%
5 yrs 8% 8% 8% 8%
7 yrs 8% 8% 8% 8%
10 yrs 8% 8% 8% 8%
15 yrs 8% 8% 8% 8%
MARKET SHARE OF MAJOR PLAYERS

Market Share of Players


8
5
32
Standard Chartered Bank
Citibank
ICICI
HDFC
IDBI
OTHERS
5 45
10
Loan Tenure for 5 Years
Procressin
g
Name of Annual or
Fixed or Rate of EMI per Fee & Prepayment
the Loan Slab Monthly
Variable Interest lac (Rs) Administra Fee
Institution Rent
tion
Fee
Citibank Variable 2.1 lacs to 1 Monthly
10.25% 2137 2%+ nil
Home crore
Loan
2.1 lacs to 1
Home Variable Monthly 10.75%% 2162 2%+ nil
crore
Credit
10,000 to 1 Monthly
HDFC Variable 9.5% 2112 1.0% 2%
crore
ICICI
2 lac to 3
Home Fixed Monthly 9.25% 2088 .551% 2%
crore
Finance
1 lacs to 1
IDBI Bank Variable Monthly 9.75% 2112 1.0% nil
crore
2.1 lacs to 1
Standard Fixed 10.75%% 2162 1.0% nil
crore
Chartered Monthly
2.1 lacs to 1
Bank Variable 10.25% 2137 1.0% nil
crore
COMPARISON OF MAJOR PLAYERS

A floating interest rate allows customer to take advantage of interest


rate movements --they get immunity from adverse movements and reap
the benefits of any fall in interest rate. But a floating rate loan makes
sense only when interest rates are high, so that they can take
advantage of a possible fall. But predicting interest rate movements
could confound even seasoned market-watchers.

If they are looking for a home loan, be prepared to cough up a pretty


sum as down payment. The Reserve Bank of India, in a recent meeting
with bankers, cautioned banks against lending 100 per cent of the
property value. That’s because given the increasing competition in
home loans, some banks have been funding even 110 per cent of the
agreement value. This means your loan not only pays for the property, it
helps with stamp duty and registration charges, and even furnishings.
It’s been a sweet deal so far, as borrowers not only need have no
access to other funds, they also get tax breaks.

The RBI’s position is that lending such sums will mean additional risk for
the bank. In case of default, the bank may not have sufficient collateral
to recover dues, and may have to write off the additional borrowings.
However, bankers do not seem unduly worried. Non-performing assets
in the housing segment are quite low--below 1 per cent--and that, say
bankers, is due to the high asset quality.

As per officials of IDBI Bank: "For a house to become a home, there are
additional costs incurred by the borrower, which he meets by borrowing
from friends or family members. Also, the default risk in housing loans is
quite low, so they think that with proper checks, there’s nothing wrong in
lending more." IDBI Bank was the first to see this and slashed the
interest on its 15-year. They want to achieve a serious leadership
position in home loans, so they thought of giving the best possible rate
to the customers.
Housing finance companies like HDFC, however, lend only up to 85 per
cent of the agreement value. There has to be some equity and
commitment from the house buyer, so we ask for at least 15 per cent
down payment from the house buyer. They try to make sure that their
risks are well-covered.

For the moment, however, banks can continue lending more than 100
per cent of the property value. But if push comes to shove, and if RBI
makes its suggestion a rule, this sweet deal may not last long.

More proof that home is indeed sweet home. Bimal Jalan’s latest
announcement of a cut in bank rate is a clear sign that the soft interest
rate policy is all set to continue. The 25 basis points decrease in the
bank rate means the central bank has reduced the rate at which banks
borrow from it. This means that banks, in turn, could reduce the interest
rates they charge on housing mortgages.

Already, State Bank of India, one of the biggies in the housing finance
business, has announced a rate cut of 25 basis points. Its rates for
loans up to 10 years have been reduced to 8.75 per cent from 9 per
cent, and for loans over 10 years to 9.25 per cent from 9.5 per cent. The
cost of funds has come down; therefore, they have decided to reduce
their home loan rates.

When interest rates fall, lenders lower not the EMI amount but the
number of months that you pay those EMI’s. The table shows the
number of months by which your loan tenure is cut when interest rates
are lowered by 0.25 to 1 percentage point.
% cut -0.25 -0.5 -0.75 -1
20 yrs 11 20 29 37
15 yrs 5 10 14 18
10 yrs 2 4 6 8
On a 9 per cent Rs 1 lakh loan
There's good news for those wanting a home loan. Over the past few
months, lenders have been cutting interest rates on home loans by 25-
50 basis points. Banks like HDFC, ICICI Bank, and State Bank of India
have cut rates by 0.75 per cent in the last two weeks to 9.75 per cent for
15-year loans.

One reason for the rate cut is that borrowing costs have come down,
which is a result of a cut in interest rates in the general economy.

The general economy apart, lenders have been forced to cut rates to
keep up with competition. More players want to enter the home loan
market, and existing players are fighting for a larger share.

HDFC has also felt the heat. It has decided to reduce the review time of
its variable interest rate from 6 months to 3 months, so that existing
variable rate borrowers can benefit faster in the falling interest rate
scenario. ICICI too has kept pace with its peers. While interest rates on
fixed mortgages tend to be higher, ICICI has decided to offer the same
rate it charges floating rate borrowers.

Fixed rate products are not widely available now; lenders like IDBI and
Citibank do not offer fixed rate home loans. Others like Corporation
Bank are not extending fixed rates loans beyond a 10-year period. This
is good in the short-term, but if rates go up, floating rate borrowers may
be in for a tough time.
SWOT ANALYSIS OF ICICI BANK HOME LOAN SCHEME

STRENGTHS:
• Helps to make dream of a house comes true
• Customer gets various schemes from various banks
• Customer can create his property easily
• Use surplus funds to invest when the right opportunity arises

WEAKNESS:
• Product is very good but it is mainly suitable for the higher income
group and is not suitable for the middle income group.

OPPORTUNITIES:
• Ample scope for financing flats and apartments for the salaried class
in the higher income group.
• Offering Home loans with reduced interest rates for the personnel in
the armed forces.

THREATS:
• Nationalized banks like SBI, Union Bank and PNB
• Private Banks like HDFC and ICICI and Citibank with its Home Credit
scheme.
CONCLUSIONS

The Indian customer has come a long way from purchasing to fulfilling their needs
from buying a house. Customers now grab everything that comes their way but they
do their own survey of optimum loans; same is the case with banks, and housing
loans. With innumerable choices before him, the customer is indeed the king. It is
therefore imperative that if a bank has to succeed in the competitive world, it should
be technological savvy, customer centric progressive driven by highest standards of
corporate governance and guided by sound ethical values and above all should be
cordial and should have personalize customer services.

There is scope of exploiting the vast middle income group by releasing loans with
special interest rate which would be beneficial to both parties.
RECOMMENDATIONS

The following suggestions are strongly recommended:

1. To broaden the customer base the vast middle income strata should be fully

exploited

2. Simplify the procedure, reduce service charges, and demand only the basic

essential proof.

3. Most banks are reluctant to advance loan to the service class e.g. lawyers, police

officers etc.. This aspect must be exploited.

4. Adoption of flexible and more lenient penalty should the customer fail to deposit

the payment on time. The penalty should be on case to case basis rather then

the same for the entire customer base.

5. Restriction to be reduced to bare minimum for loan advances and for repayment.

For e.g. offer long-term repayment facilities and have no age restriction to

choosing repayment.

6. The maximum age for repayment could be increase to 65-70 years of age. Such

facility will help grow fast retail segment of the bank.

7. Offer multiple repayment loans.

8. Service class to be exploited by offering special reduced rates and linking the

repayment from the source from where the pay-cheque to the employee is

issued. This needs to undergo special contract with government organisation to

ensure implementation.
BIBLIOGRAPHY

1. www.timesofmoney.com

2. www.apnaloan.com

3. The Economic Times, 15 February 2005

4. The Financial Times, 06 December 2004

5. Philip Kotler, Marketing Management, 9th edition

6. Akkar ;Marketing Research

7. Business Today, July 20 2004 issue