You are on page 1of 107

CONTENTS

Acknowledgement

Executive Summary

Chapter 1 Introduction

Chapter 2 Products

Chapter 3 Objectives and Rationale of the Project

Chapter 4 Review of Literature


4.1 Business Process
4.2 Types of Appraisal
4.3 Property Documentation
4.4 Know Your Customer Compliance
4.5 Repayment Track Record based lending
Chapter 5 Research
5.1 Methodology
Research Design

5.2 Sample Design


5.3 Research Tools and Questionnaire
5.4 Analysis
a) Porters five forces model
B) SWOT Analysis
c) Comparative study of ICICI Bank Ltd and HDFC

Chapter 6 Research Findings

Chapter 7 Summary and Conclusion

Bibliography

Executive Summary
Against the milieu of rapid urbanization and a changing socio-economic scenario, the
demand for housing has grown explosively. The importance of the housing sector in the
economy can be illustrated by a few key statistics. According to the National Building
Organization (NBO), the total demand for housing is estimated at 2 million units per year
and the total housing shortfall is estimated to be 19.4 million units, of which 12.76
million units is from rural areas and 6.64 million units from urban areas. The housing
industry is the second largest employment generator in the country. It is estimated that
the budgeted 2 million units would lead to the creation of an additional 10 million manyears of direct employment and another 15 million man-years of indirect employment.

A year equates a century, knowledge compresses time and the information technology
sweeps the world, gathering momentum with each new application, soaring towards fresh
goal, rapidly opening vistas hitherto unknown. Here we are, in the 21

century.Years
st

that catapults us towards new challenges at every stage of endeavor. It gives us good
reason for aiming high.

Keeping the above philosophy in mind, this project is carried out with an objective to
identify
The
Ltd.
various
the basic
areas needs
covered
of in
thethe
applicants
report are:
and the process of
6 Home Loans in ICICI Bank

Business Process of Home loans


Types of Appraisal
Property Documentation
Know your customer compliances
Repayment Track Record lending

The final outcome of the report is to find out the number of the applicants who have
applied for bank loans in the month of June and the analysis of the population applying
for Home Loans through the sample size 40.

The report includes the various products that are introduced by the bank such as Home
Loans, Loan against property, Land Loan, Property OD, Lease Rental Discounting,
Balance Transfer, etc. It consists of questionnaire which helped to analyze the final
outcome of the report.

Introduction

ICICI Bank is Indias No. 1 Home Loans Provider. At ICICI Bank Home Loans, it offers
unbeatable benefits to ensure that the customers get the best deal without any hassles.
And ICICI Bank makes it extremely easy for them by offering

Attractive loan interest rates

Home loan amounts starting from Rs.2 lakhs

Term loans up to 20 years

Free Personal Accident Insurance

Insurance options for your home loan at attractive premium

With varied offering of house loans and home finance, ICICI Bank Home Loans gives an
opportunity to select the perfect loan as per the needs of the customers who can choose
from:

Adjustable Rate Home Loan

Fixed Rate Home Loan

Part fixed, Part Floating Rate Home Loan

Smart fix Home Loan

Money Saver Home Loan and also

Balance Transfer of your existing home loan from other banks.


8

And the other categories that the customers can avail are :

Land Loans
Office Premises Loans
Home Improvement Loan and
Home Loan for NRI.Customers can also leverage their existing property to get

Loan against Property


Property Overdraft or Lease Rental Discounting.

All of these are available on an adjustable rate or a fixed rate.

Challenges in the growth path


The housing finance industry is going to observe polarization of the players
For survival, the Housing Finance Institution should have

-:

Good investment in people and system


Should have strong Business Origination process in place
Excellent Credit Appraisal Skills
Monitoring the Systems in place
Strong Collection mechanism in place
HFIs survival can be at stake

ICICI Bank

RCLG
(Retail Customer Liability
Group)

RAPG
(Retail Assets Product
Group)

RCLG deals in Accounts i.e.,


Current, savings and fixed.
It looks after the liability side of
the bank that constitutes the
withdrawals and deposits of the
customer.

Sales
department

COPS
Credit
/ CAM Operations
department

Sales Manager
Credit Manager
DMA / DSA
CPA (Credit
(Direct marketing Processing Analyst
Agency/ direct sales
Agent)
Sales Department

Department

Collection
Department

Area Operations Manager Collection


Customer Account Manager Manager
DEO (Data Entry Operator)

It basically search the customer who is in need of loan and pitches

the different kinds of customer accordingly.

Credit
and
Technical
Department
reports of the
It
customer
is responsible
and hisfor
property.
Credit Documentation,
10
Profile check, Legal

Operations Department

It is responsible for punching end to end. It does NDC

according to the RBI norms and performs after sales services. It collects the Post Dated
Cheques.

Collection Department

It functions at the time when any customer is in default.

19 th
February 1999The launch of ICICI Bank Home Loans
Scenario then
New to the business
Formidable competition
End to End delivery of the product through the DMA being done for the first time
Ambitious growth plans

Home loans Highlights


Customer base (as on march 2005):
Year-to-Date.276756 (Sanction cases)
Life-to- Date..687364 (Sanction cases)
Book Size (as on March 2005) Rs.33175.20 crores
Disbursement (YTD).Rs.18871.00 crores
11

Now Year 2007


1000 + locations
845 + Direct marketing Agencies
10000 + FOS across the country
Centralized Call Centers covering all major states and cities
Leveraging corporate relationships
Cross sell initiatives: leveraging customer centric data warehouse infrastructure.

Polarization Future Scenario


Weak HFI with high cost of funds & poor system would end up as DSA sourcing
business in the market.
HFIs with low cost of funds but poor system may turn out to be buyers of MBS
HFI with good systems in place but with high cost of funds need to look at
Securitization.
HFIs with Low cost funds and good systems would be the major players.

Low margins & High delinquency can increase the lending rate to
cover the cost of operations.
Can force the HFIs to re-look at its business
12
model.

Products and Documentation

Products: We Offer:Products Home Loan & XSELL


1. Home Loans (HL) & Variance
MV Lending
Smart Fixed
Part Fixed & Part floating
Fixed ROI with MMC
EMI in under construction stage
Max Money SURF

2. Money Saver

3. Home Improvement Loan (HIL)

4. Land Loans (LL)

5. Office Premises Loan (OPL)


6. Top
7.
Balance
UpTransfer
Loan (BT)

13

8. Cross Sell to Auto loans

9. No Income Proof Loan (NIP)

Products LAP / OD

Loan Against Property (LAP)

Property OD (Residential / Commercial)

Income Surrogate Banking Product

Lease Rental Discounting (LRD)

New product introduced on June 4, 2007


Lap on Land
Features
1. There
boundary
:- must be
wall.
a plot number. The plot must be properly
14
demarcated by fencing or

2. There must be change in transaction within last 10 years. The title must be
changed.

3. Land usage must be residential. Commercial, agricultural or industrialized land is


not considered.

4. It should be DLA or Municipal approved.

5. The loan amount can be between 7- 50 lakhs


Low Loan To Value i.e., 16.25 % ROI on 30 % LTV
16.50 % ROI on 35 % LTV

6. Minimum Plot Area must be 800 square feet


Maximum can be 10000 square feet.

7. Tenure for repaying the loan would be 10 years.

8. Case can be made on Income Basis or Repayment Track Record (RTR) of all
kinds of loans i.e., auto loans, medical equipment loans, personal loans.
9. LAP
Non
onProfessional
Land can be(SENP)
given to&allSelf
kinds
employed
of customers
Professional
15 Salaried,
(SEP).
Self Employed

Home Loans : Key Features

Purpose

: To purchase, construct or extend new or existing flat / house

Loan to value (LTV) ratio is 85 %. This includes stamp duty, registration charges
and amenities.
Amenities on Stamp paper : We can add Maximum of 20% of Agreement value.
Maximum Tenor : 20 years (15 years for SENP retail & non retail)
Only for first sale builder properties.
Loan amount : From Rs.2 lac to Rs. 3 Crore
Validity of Loan Approvals : 6 months from the date of Sanction Letter.

LTV Norms

In case of Resale :
A) If COP = MV, Loan Amount = 85% of COP (LTV 85%)
B) If COP > MV, Loan Amount = 85% of MV (LTV 85%)
Example : COP : Rs.25 Lacs & MV : Rs.20 lacs
Loan Amount : Rs.17 lacs
C) If COP < MV, Loan Amount = 80% of MV subject to 100% of COP
Loan Amount
Example
: Rs.20
: COP
lacs: Rs.20 lacs & MV : Rs.25 lacs16

LTV Norms > Rs.100 lacs


Cap based on COP
For Property value > Rs.100 lacs & <=Rs.200 lacs, the max LTV will be 80 %.
Property value > Rs.200 lacs, the max LTV will be 75%

Cap based on MV
For Property value > Rs.100 lacs & <= Rs.200 lacs, the max LTV will be 75%
Property value > Rs.200 lacs, the max LTV will be 70%

Also Valuation will be mandatory for all cases > Rs. 100 lacs.

17

MV Lending LTV Norms

MV Lending
To bridge customers requirements between circle rates specified by sub-registrar and
transaction value. For example transaction in certain sectors are as given below

Location

% of MV

Delhi

25 40 %

Banglore

60 65 %

LTV Based on the lower of the two : In case of purchase in ready / resale cases
1.Lower of the TWO
1. 80 % of the Market Valuation if the property is valued up to Rs.50 lacs
65 % of the Market Valuation if the property is valued at more than Rs.50 lacs
(Lower of 2 valuations done will determine market valuation).
2.100 % of agreement value / sale deed (with stamp duty paid) + stamp duty +
registration + society transfer charges + state electricity board connection charges +
amenities agreement (without stamp duty )

The cost
Stamp
Duty
of Amenities
+ Registration
should
charges).
not exceed 200 % of (Agreement
18
Value / Sale Deed +

If Amenities Agreement is not on stamp paper, then that component of the loan amount
would be done as Top Up loan with norms of Home Loans.

However, the overall restriction of 80 % / 65 % or 100 %, as mentioned, would apply.

03 Years Fixed Smart Fixed

03 Years fixed gives option to customer to look at fixed rate for the first 03 years and
subsequently the product moves into floating reference rates
Fixed from the first date of disbursement based on weighted average rate of
interst.
At the end of 03 years it will move to FRR on immediate reset date which could
be 03 years to 03 years and 03 months.

Products : Home Loan & BT + Top-up & MV lending possible


Margins for FRR set at the time of Sanction.

19

Part Fixed & Part Floating

Customer can opt for combination of them.


02 separate tranches would be given on the same date.
Amount under each category decided at the time of sanction itsef.
Combination of two should be minimum of Rs.1 lac and each tranch should be of
Rs.50000/Products : HL / LL / NRI / OPL / HIL / LAP (R&C)

Not applicable to MV Lending or all loans with two tranches.

Process
02 separate application forms
02 LAN numbers for the loans
Common Sanction Letter
Common HLD
Common I/T certificate on cross linking of files.
Prepayment on each tranche possible but foreclosure on completion of both the
loans.

Eligibility
Basedason
FOIR
the combination
for calculation
of purpose.
the loan EMI for the other
20 loan would be considered

Fixed with MMC


A new product variant for Home Loans with a variation in Fixed rate of interest with
Money Market Conditions (Fixed MMC)
Salient features :Fixed MMC rates can be offered for Home Loans & Balance Transfer of Home
Loans only.
Fixed MMC rates can be offered only to Resident Indians. Thus, Home Loans
with Fixed MMC rate cannot be offered to NRIs
The Fixed MMC rate can be offered only for new sanctions. Conversion from
fixed ROI to Fixed MMC rate and vice versa would not be allowed.
All Fixed MMC rate loans would be booked under the following scheme Finnone/
APS :
a) Individual Home Loan with Fixed MMC
b) BT of HL with Fixed MMC
New format of the sanction letter for Home loans with Fixed MMC
A new Home Loan Document (agreement) with the following mentioned on the
top cover With Money Market Condition Clause for Fixed Rate of Interest.

21

EMI Under Construction

Purpose :

Commence EMI in under Construction Project.

Target Segment :

Home Loans to Resident Indian

Features :
Offered to APF Projects.
Customers pay EMI from the first disbursement on total sanctioned amount.
EMI remains constant with term changing
Disbursed amount keeps changing
Disbursed amount not more than Sanctioned amount.
Subsequent disbursement would be at the end of the month.

EMI Under Construction : Example

Sanctioned amount Rs. 10.00 lacs


ROI
Tenor 240 months
EMI
1st Disbursement Rs.5 lacs
Reduced Tenure 79 months
Principal O/s At the end of 03 months Rs.485114.00
2ndDisbursement
Balance
O/s
principal
Tenure
= Rs.
240
after
485114.00
3 03
= 237
months
+ 200000.00
Rs.2 lacs= 685114/- 22

7.5 %
Rs.8056/-

EMI

Rs.8056.00

Revised Tenure 124 months


Full & Final after 03 months
Balance Principal O/s 673721 + 300000 = 973721/Revised Tenure 233 months
Maximum Tenure 240 6 = 234

23

Step Up Repayment Facility (SURF)

Concept SURF
The tenor is divided in three parts ; viz.
a) Primary
b) Secondary
c) Tertiary
The installments will increase beginning from the least in Primary & the highest
in Tertiary.
Installment in Primary period to cover interest, in the current rate scenario
Rs.625/-per lacs

Types of SURF
Category I
Category II

Category I
Monthly Income > Rs.25000/Applicant is employee of Select Corporate (i.e., Category 0 and Category 1
worksite list)
Should NOT be aemployee
Self Employed
of Pvt. NonLtd Companies,
Professional.
Prop.
24 Concerns, Trusts.

Category II
Monthly Income > 15000/Should NOT be employee of Pvt. Ltd Companies, Prop. Concerns, Trusts.
Should NOT be a Self Employed Non- Professional

Benefits :SURF

Enhanced Eligibility
Opting for SURF could raise the eligibility by up to 30% above the eligibility in a
normal repayment pattern.
Ex. Term 20 yrs , ROI 7.5% , Income pm 25000/- , Normal eligibility
Rs.17.07 lacs , Enhanced Eligibilty Rs.22.14 lacs & Increase in Eligibility 30%.
Easy Installments in Primary period, lower strain on cash flows.

25

Features : SURF
Eligible Entities (Only Individuals)
a) Salaried
b) Self Employed Professional

Eligible not Eligible Products:


a) Only Home Loans (Top Ups not permitted)
b) BT of Home Loans shall also not be permitted SURF

Term possible 15-20 years (both terms included)


Not Eligible :
a) Self Employed Non Professional
b) Employees of Pvt. Ltd Companies, Prop. Concerns, Trusts.
Rate of Interest Only Adjustable Rate Loans
Deviations / Re schedulements
a) No Deviations permitted
b) No Re Schedulements permitted.

Documents SURF
Sanction
Letterb)
Automated
Letter capable
Agreements
a)
Normal
Amendatory
loanSanction
Agreement
Agreement
26of generating SURF letter.

Income Tax Benefits


IT Certificate to show both ; Interest payable & Actual Interest paid.
In case if Negative Amortization :
a) No IT benefit available on capitalized interest Sec 24 (b)
b) No IT benefit available on re-payment on capitalized interest sec 80C
Part Pre-Payments Adjustments will be made first towards the capitalized
portion.

27

Land Loans : Key Features

Purpose :

To acquire a site / plot of land for residential use

Maximum Tenor :

LTV Ratio :

20 years (15 years for SENP retail & 10 years for SENP non-retail)

85% of the cost, if allotment is directly from Development Authority

75%of the cost, if purchase from Development / Resale / Society

Fee : Same as Home Loan

Amount of Loan :

Rs.2 lacs to 50 lacs

In HUB & Spoke Locations

Land Loans + Construction


LTV would be 85% of Land + Estimated Construcction
Provided land has been purchased in last one year OR 100% of estimated construction
based on technical report which is lower.

28

In Spoke Loactions

Only land loan would not be financed.


Land Loan + Construction would be considered.
First disbursement would happen only after the construction has reached plinth
level.
75% of land cost can be given provided land has been purchased in the last 01
year.
In HUB locations for Land + Construction

Disbursement for land would be done.


Case would be Pre EMI
In case the applicant avoids construction

the scheme ID should be changed

To avoid giving I/T benefits certificate on the case

29

Office Premises Loan : Key Features

Purpose :

To purchase / construct office premises

Maximum Tenor :
SENP Retail

Resident Indian

= 15 years.

SENP Non Retail = 10 years.

LTV Ratio :
85% of the cost of property for doctors.
60% of the cost of property for others.

Fee : Processing and Administrative fee of 0.5% each

Amount of Loan :

From 2 lacs to 1 crore.

Eligible Entities :
Professionally Qualified Self Employed Individuals & only Qualified Chemist
NRIs

Other
Minimum
Loan
Norms
available
:3 years
for Experience
improvement
as of
Practicing
office premises
Professional
30

Maximum of 30% of the cost of the property.

LAP / Home Equity Loan

Loan Against Property : Key Features

Purpose :

For Marriage, Business, Education, Medical Treatment, Purchase of Property,

etc.

Maximum Tenor :

LTV Ratio :

15 years (10 years for SENP)

45% for commercial and 60% for Residential

LTV + FOIR (Non retail) :

Subject to maximum of 120% for residential and 105% for

commercial with no LTV deviation.


FOIR for Salaried :
Amount of Loan :
Eligible Entities :

50% & SENP Retail : 55%


From Rs. 5 lacs to 100 lacs
Salaried, SEP & SENP

Minimum value of property :


Other norms :

Rs. 7 Lacs across all cities.

Loan can be availed only against the self occupied property.


31

Balance Transfer

Balance Transfer : Key Features

Purpose :

Take over of housing loans taken from other HFC / Bank at a higher rate than

current rate.

Tenor :

Maximum term not to exceed as applicable under product category OR

Residual age of property as determined by the site engineer

LTV :

85%

Fee : Same as Home Loan

Amount of Loan :

Outstanding principal amount of the existing loan + prepayment

charges + fee payable to ICICI HFC subject to applicable LTV norm, calculated on the
cost of property.
Disbursal to be in favor of HFCs / Banks whose loan is being prepaid.
Repayment track
Documents
Required
record: Pre
for the
Sanction
last twelve months to be 32
verified.

Outstanding Principal statement from existing HFC / Bank


Declaration-cum-Undertaking of legal documents submitted with earlier HFC /
Bank
Legal verification
Letter to the builder / society / DA as per letter drafted by ICICI HFC

Documents Required : Pre Disbursal


Letter of Authority & Power of Attorney in favor of ICICI representative to
collect original docs & mortgage release letter from HFC / Bank.
Cases Pending with Sub Registar : BT applications where property title
documents are pending will not be accepted.

Documents Required : Post Disbursal


Original receipt required from HFC / Bank for the amount disbursed
Mortgage release letter & No dues letter required.
Original title deeds as per list provided.
Acknowledged copy of notice sent by the legal agency of ICICI to the
landowner.

BT OF EMPLOYER LOAN WOULD B E RESTRICTED


GOVERNMENT.
33 TO CENTRAL % STATE

34

Top Up Loan

Purpose :

To purchase of Consumer Durable, Vehicle, Furnishing of Home, Family

Vacation, Daughters Marriage, Childs Education Or any other personal requirement of


the borrower.

Maximum Tenor :

as per individual product norms

Fee : Same as Home Loan

Amount of Loan :

Rs.50000 to 20 lacs

Validity of loan approval :

Entitled Borrowers :

3 months from date of sanction.

Borrowers for the Top up loan must be the same as the existing

ICICI loan

Security of Loan :

Extension of mortgage on the property financed.

Top Up Loan is offered on following products :


Home loan
Balance Transfer Home Loans
(LoanNRP
Balance
available
Transfer
on fully
NRP
disbursed cases & NIL post disbursement
35
pending documents)

Home Improvement Loan

Purpose :

Improvement of residential premises.

Maximum Tenor :

LTV Ratio :

15 years

70% of the estimate subject to

45% of the market valuation of property prior to fianancing

Fee : Same as Home Loan

Amount of Loan :

From Rs.1 lac to 50 lacs

Eligible Entities :
Salaried
SEP
SENP

Eligible Improvements
Property
disbursement
has to be occupied
: by at least
Being1 completed
applicant towithin
the 36
loan.
12 months from the date of first

Lease Rental Discounting

Purpose :

Enable the consumer to raise funds (and increase liquidity) against future

expected funds from property leased out by him.

Maximum Tenor :

LTV Ratio :

9 years (subject to balance lease period)

50% of market valuation subject to


85% of the NPV of furure expected rentals discounted at the applicable ROI
( net of TDS)

Eligible Entities :
Salaried
SEP
SENP (Non Retail)

Amount of Loan :

From Rs.10 lacs to 1 crore

37

No Income Proof Loan

Purpose :

To purchase, construct or extend new or existing flat / house

Eligible Entities :

Self Employed Individuals only

Fee : Admin fee of 0.5% & proc fee of 0.5%

Amount of Loan :

LTV Ratio :

from Rs.2 lac to 50 lacs

For loan amount > Rs.25 lacs, LTV 60% of COP or 65% of MV (whichever

is lower)
For loan amount < Rs.25 lacs,

Method I II III IV
MV (%) 40 50 60 65
COP (%) 75 70 65 60

Documentation :
Proof of continuity of business 05 years
Bank Statements 6 months (verification required)
a) Current Account
Out Cheque
Stop
Payment
b) Savings
returns
returns
Account
not
02more
in least
than0606months
in 06 months.
38

Maximum number of transactions 10 per month


EMI not to exceed 10% of the average monthly bank credits for the last 06
months
Average balance on 10

th , 20 th& 30 thfor last 06 months should be greater than 02

times EMI.
Client / Supplier References -2
Copy of title document
RTR of 12 months if EMI of existing loan is more than 25% of the proposed
EMI
OCR : By Cheque prior to disbursement & No PDD
No deviations permitted.

39

Income Surrogate Banking Product

Purpose :

Surrogate product for Home Equity Loan

Target customers with good banking record.

Lap Income Surrogate Banking Product


1. Approved Borrower Entities Resident Indians (SEP & SENP)
2. Loan Amount
Min. Rs.5 lacs
Max. Rs.30 lacs
3. Term Max.10 years (Term should not exceed propertys residual age)
4. Loan type Fixed and Floating.
5. Min Property Value Rs. 15 lacs (as per technical valuation)across all
cities.
6. LTV
i) Residential property 35%
ii) Commercial property 25%
7. Bank Statement
i) Photocopies of updated bank statements for the last one year
from current a/c of the firm / company.
ii) Photocopies of updated bank statements for the last one year
8. Client reference
fromrequired
applicants.
current 3a/c
large
/ savings
creditors.
a/c
40 of the individual applicants and co-

9. Business to have continuity for the last 3 years.


10. Personal discussion is mandatory.
11. CC accounts EMI to be less than or equal to 10% of the inward flow into
the bank a/c in last 6 months.
12. Other accounts EMI to be less than or equal to 15% of the inward flow
into the bank a/c and average balance to be more than 1.5times the EMI in
the last 6 months.

41

Adjustable Rate Home Loan

Purpose :

Facility of variable ROI

Eligible Entities :

Existing and new customers

Eligible Products :
Home loan
Land Loan
NRI
OPL
LAP
BT
Top Up

Max. term of Loan :

20 years for Salaried and SEP

15 years for SENP

Monthly reducing
Date of
EMI
shall
change
remain
: constant,
1st dayexcept
of eachinquarter
the following
(as per calendar
three
42 instances
year) :

1.

Negative amortization

2.

Term of loan exceeding : 30 yrs for salaried & self employed

20 yrs for SENP


3.

Term of loan exceeding : Retirement age for salaried.


65 years for self employed applicants whose income is

considered for eligibility.

Switching of R ates Between Switch fees ICICI Bank

Others

Portfolio
Fixed to fixed 1.75% 1.75%
Fixed to floating 1.75% 1.75%
Floating to fixed 1.75% 1.75%
Floating to floating 0.5% 1.75%
Change in ROI on account

1.75% 1.75%

of change in Tenor Fixed to


fixed

43

THIRD PARTY PRODUCT

Icici Home Finance Loan Shield with ICICI Lombard


Loan Shield For Resident Indian
Loan Shield for a period of 05 years.
Loan care Insurance
Property Insurance offered free one year in case of commercial property.

Maximum Cover : Rs.1050000


Minimum Age : 20 years
Maximum Age : 50 years ( loan cover ends at 55 years)
Loan Care is maximum of 05 years
Property Insurance : Same Tenure & cover commences after completion of work
Feature : Based on Medical declaration no medical check up.

Loan Shield
Loan Care Features : Salaried & Self Employed
1. Default due to Death : Principal o/s paid
2. Permanent disability due to accident : Principal o/s repaid
3. Critical
In caseillness
of Salaried
leadingonly
to hospitalization
12 EMIs would
andbeloss
covered
44
of income

Unemployment due to retrenchment


1. Closure of unit due to financial health or M&A
2. Closure due to action by Public Authority.
3. Termination from job due to ill health.
Any illness pre-existing or repoted within 90 days or loss of job within 90 days not
covered.
Salaried employees would be paid maximum of 03 monthly EMIs in case of default.
Policy ends on attaining at the age of 55 years
Policy ends with closure of loan account.
No refund of premium on part prepayment
Part Premium refund in case of full closure
Claim settlement in 21 days.

45

Home Assure Prudential (Group Policy)


Customer Segment : Individuals opting for Single premium
Age Group : 18 to 60 years ( Maximum on attaining 70 yrs)
Sum Assured : Rs. 25000/-To Home Loan scheme
Product Feature
No medical examination upto Rs.15 lakhs
Death Cover : principal o/s as per the sanction letter
Part / Under Construction : Cover can take 0/1/2 + tenure of the loan.

Joint Cover Possible provided both are earning


Cover would cease on Full closure or BT
Surrender Value : 70% of single Premium ( Balance Term / Policy Term)
Exclusions : No claim within 45 days
No claim due to suicide within 01 year

46

OBJECTIVES AND RATIONALE OF THE PROJECT

Main objective:
To find out the utility of Home Loans in general public and analyze the number of
customers applying for Home Loans in ICICI. To learn the process of Home Loans.

The basic necessity of general public is food, clothing and SHELTER. So , for the
fulfillment of the last need ICICI has introduced many products according to the
status of the applicant.
Economic Growth of the country is predicted by its Infrastructure and Real Estate
Therefore, ICICI has made easy by granting loans by easy methods and normal
rates.
Home loans are of big amounts therefore, it comprises of many important
documents and deeds which have to be studied with due importance.
Government is concentrating on one important aspect that every person should
have his/ her own house through home loans which facilitates deduction in
Income Tax.
All the NBFCs are interested in granting Home Loans because it is of large
amount .
It is the
money
onlylenders
type ofto
loan
NBFCs.
which is coordinated and continued
47
from the time of

Personal Objective :

I choose this project in order to have the detailed study of the topic Home Loans
as it comprises of many formalities and legal deeds.
To have the practical knowledge because in future every second person will be in
need of Home Loans
ICICI Bank specializes in Home Loans so to gain knowledge regarding career
prospects.
It helps in calculating Income and eligibility of the customer, Study of ITRs,
Legal and Technical study of any property and even profile check.

48

REVIEW OF LITERATURE

THE BUSINESS PROCESS THE ICICI WAY

Business model

ICICI HFC currently functions through four sales channels :


a) DMA Network
b) Counselor Teams
c) Relationship Managers
d) ICICI bank B ranches
All channels function independently of each other
Processing and appraisals are done in house and on-site to reduce TATs

Role of the DMA / DME / COUNSELOR

The face of ICICI Bank Home Loans


Representing everything that ICICI HFC promises
a) Superior service
b) Excellent products
c) End to end solutions
The person who has to ensure that we fulfill every promise that we make to the
A consultant
customerand guide to the customer

49

Risk Containment Unit (RCU) Process

Purpose Control frauds entering the system


a) Pre-Sanction Stage
b) Pre-Disbursement Stage
Pre sanction stage verifies files based on triggers.
The files are either
a) Screened No triggers found. Allowing credit process to continue
b) Sampled Implying verification required with source of document
c) Credit Referred Based on Credit Manager request
Pre Disbursement Stage verifies property document.

Field Investigation (FI) Process

Purpose Collection process of ensuring customer verification


a) Residence FI
b) Employment FI
c) Tele FI of both residence and office
Property verification
This FI
done
Operation
of Shoot
all the
Process
iscodone
applicants
of all the
whos
applicants
incomeand
is considered.
50
co-applicants. The office FI is

Sanction Process
b) NDC Check
c) Data Entry in Finnone
d) Storage of sanctioned files
Disbursement Process
a) NDC Check
b) Date Entry in Finnone
c) Preparation of Cheque
d) Storage of Dockets

Sanction Process

Normally, it would take 4-7 days for the sanction process from the date of receipt of
all the documents at IHFC
The customer calls the bank
Banks representative visits the customer and explains the loan product
Now customer provides the bank with Income and Personal documents as
listed in the brochure
Again the representative visits the customer to validate information
Documents
Bank
delivers
arethe
credit
offerappraised
letter along
andwith
decision
a listtaken
of51legal
on documents
the sanctionrequired.
of the loan

CUSTOMER

DMA/COUNSELLOR
BSM
RO

FIRE FI

FI AGENCY

RCU

RECEIVES FI
BCM

COPS

DEDUP

Disbursement Process
Normally, it would take 4-7 days for the disbursement process from the date of
receipt of all the documents at IHFC
The customer calls the bank for disbursement
Banks representative visits the customer and collects the Legal Documents.
Loan Documents and PDCs from the customer.
An IHFC lawyer vets the legal documents.
An IHFC Site Engineer visits the property to verify stage of construction.
Disbursement
The
disbursement
cheque
cheque
is prepared.
is delivered to the customer.
52

Customer

DMA

RO

BCM
Fires and Receive Legal and
Technical

Sales
department

53

Firstly, starts the work of Relationship Officer

Purpose

: To provide Single Point contact to the customer and handhold him through the

process of Enrolment, Sanction and Disbursement.


Enrolment
Ensure entry of new DME leads and updation of existing leads in CMS
Make Welcome Call to customers for all new logins
Ensure Welcome Letter is sent to all new customers at the time of login.

Sanction
Resolve with customer all enquiries raised by CPA / BCM on the Sanction file
Make Sanction Call to all customersand inform them regarding all disbursement
documents required and take DID.
Attach Annexure containing list of disbursement documents with all Sancction
Letters

Disbursement
Ask the customer regarding Express Disbursement during Welcome Call
Inform customer about the pending documents, if any, as per the legal report and
set
DME
Introduce
Make
cheque
a Disbursement
Call
is appointment.
ready
Centre to
call
thetocustomer
customerduring
to inform
the disbursement
him
54 that the disbursement
call

Next is Branch Credit Manager

Purpose :

To provide credit decision for snction and disbursement in order that the

commitment to the customer on turnaround time is fulfilled


Sanction
Check the Sanction file for Credit compliance and eligibility norms and authorize
sanction
Coordinate with the higher authority for the cases that require approval

Disbursement
Scrutinize complete docket and DM and authorize disbursement
Ensure completion and clearing of dockets put on hold by branch operations
Coordinate with the outsourced agency for collection of PDDs
Impart training to Back office and DMEs regarding policy and process changes

55

What is Contact Management System ?

It is a Lead Management System.


It appointments the Scheduler.
Records all touch points with customer.
Acts as a reminder for all follow ups.

56

Flowchart

Add Contact

Leads With DMA

Fix Appointment
Remainder for Customer
Update Diary
Take a Print of Schedule
NO
DME Meets
The
Customer
YES
NO
Customer
Interested
YES

DME Collects Documents and Returns


the DSR to the Back Office

Close

All
Documents
Collected

NO

YES
Sanction Process
57

Benefits of CMS
Availability of Information
Structured Planning
Ensures no loss of leads
Online feedback to Call Center and Marketing Manager
Increase in Productivity
Better service to the customer.

Introduction to Credit
Why is Credit essential ?
It is important to evaluate cases for credit so as to have a quality portfolio, remove frauds,
have control checks to see the performance of the portfolio

Whom do we want to fund ?


Anyone who will
Repay all the installments
Repay installments on time

58

Things to look at in credit

Ability to Pay

Intention to Pay

How do we judge it ?

Industry Trends

Income received by the customer

Background of Individual

Disposable Income

Previous Repayments

Other sources of income

a) Car loans

Possibility of Cash income

b) Housing loans

Petrol pump owners, doctors, etc.

c) Credit cards loans

d) Cellular repayments

Income can always be window dressed

Income Document Analysis

59

In case of salaried look at Fixed & Variable Income


Compare Gross Income

and Net Income

Savings in Social Security Funds


b) Mandatory contribution
c) Additional Contribution
d) Withdrawals in Social Security Funds
Contribution towards other savings
Deduction or payment of all obligations
Look at Form 16 for Annual benefits & any obligations too.

In case of Self Employed / Non Proffesional


Comprehensive look at ITRs of last 3 years
Computation of Income
Balance Sheet and P& L certified by C.A

Stability of Income
In case of Salaried
Look at the Organization employed with
The Industry in which it operates
Skillofsetyears
No.
and in
Educational
the Organization
Qualification
/ Industry

60

In case of Self Employed


Family business or start-up
Business volume vis a vis Industry Standard
Understanding of industry structure/ Forces operating

Health of Bank Statement


Verification of Bank Statement
In salary case, number of credits to be checked Fixed & Variable
In business case, check the average balance for liquidity
Large credit or debit entries
Recurring debits on account of loan repayment
b) Inward Cheque bounces
c) Outward Cheque bounces
d) Verify with debtors or creditors list to know
e) The impact on business
Stop Payment Instruction
Minimum Balance charges

61

Family Background
Family
No. of dependents
Age of dependents to understand the expenses
Additional earnings of family members cash flow
Dependence of parents / family members staying in hometown
Any ancestral or self owned property
Family dependent on salary income or diversified income i.e., rental, agriculture,
business, small savings
Family reference / Business reference
As per the norms maximum should be 5
Applicants Lifestyles match between Income & Savings & Expenses
Habits like excessive drinking Reference check
Family members with medical history
b) Claims made under various Income Tax Benefit
c) Any banking transaction showing payments
d) Information provided by FOS / FI / Personal Visit
Appreciation of Insurance
a) Family medical cover is a good indication
b) Life Insurance Planning for the Future of the family
62

Geographical Restrictions
Customer Residence / Property not in Negative Area. Customer does not belong to
Negative Profile category. Customer Residence / Property not beyond Geographical
limits.
In case customer working outside Geo limit
Property to be purchased should be within Goe limits
Immediate family member to be within Geo limit & to be taken as co- applicant
PDC to be issued from Bank Account to be in Geo limit
Waiver of FI subject to positive office tele check & residence FI of family
member (within Geo limit

63

Customer Profile
Where applicant and co-applicants income are combined, the minimum income
per applicant should be Rs.4000/- pm
Work site is further classified as : Category 0 & Category 1
Employees working with Trust should be approved & noted by the Policy & Risk.
Employees working with Private Ltd.Companies
AGE
a) Minimum Age 21 years
b) Maximum Age 65 years OR retirement, whichever is Earlier.(The
maximum age at the time of completion of loan)
There will be cases where the co-applicant who is the owner of the property does
not fit into the above categories. In these situations the age criteria is relaxed as
follows:
a) Min Age 18 years (At Loan origination )
b) Max Age 70 years at application or 80 yrs (at loan maturity )

64

Customer Profile

SAL SEP SENP NRI

Income not below 7K in other


cities.
Income not below 9K in Metro
town.
(Banglore, Delhi, Chennai,
Mumbai)

WORK SITE OTHERS

CASH Pvt.Ltd

Age Proof
Passport
Driving license
Life Insurance Policy
Birth Certificate
Election ID
School leaving certificate
Employee ID (only for PSU / Govt.employees)
PAN Card
SSC / HSC Admit
Mark Sheet
Card

65

School / College passing Certificate (printed format with personal details of the
applicant handwritten are acceptable)
Salary slip (if date of birth is mentioned)
Domicile certificate
Age proof is waived for all applicants whose income is not considered for eligibility.
However, age proof is mandatory for applicants below 20 years age & above 65
years, even if his/her income is not considered for eligibility.

Negative Profile
Daily wage laborers / Mathadi Workers
Drivers and conductors of SRTC/ Taxi drivers/ Auto Rickshaw Drivers/
Commercial Vehicles Drivers
HUF
Anti Social Elements
Politicians
Mine and Quarry workers
Firma engaged in parcel movement
Plantation
Employees
Class
4 employees
/ of
Time
ChitShare
fund/Companies
Stock Broking/ Investment66
Companies

Garment Exporters
Employees of BIFR Companies
Watchmen
Security Services- Companies and their Employees
Stock B rokers
Real estate agents
Tour Operators
Cable Operators
Employees of NBFCs below AA rating
Film stars
Employees of Dot Com Companies
Bar Owners
Builders

Additional Documentation for Specific Cases


Cash salary One Additional Proof required
Form 16/ ITR/ PF Statement / Appointment Letter / Increment Letter
Job confirmation proof for applicants less than 23 years
If Existing Loans are not being considered proof for the same.
Annual
certificate.
benefits - Form 16 / Appointment Letter / Increment
67
Letter / Employer

68

Documents Required
Salaried
Application Form with photo
6 months Bank statements ( 3 months for work site )
Not more than 02 or 01 cheque bounces in case of normal and worksite cases
respectively
KYC Documentation (Address / Identity / Signature)
Age Proof
Latest Salary Slip / Certificate 4 salary slips for variable salary
Form16
Processing Fee Cheque

Mode of Repayment
EMI
Post Dated Cheques
Auto Debit
ECS
Deduction at Source (only for salaried)

Pre EMI
Post Dated
Auto
Debit Cheques

69

Payment Cycle
1

st and 10 th of every month

Now the work starts in Operations Department:

The file logins from the Credit Department to Operations Department with 2 types
of documents
a) Customer related documents
b) Bank related Documents / Mandatory Documents

Customer Documents consist of his Bank Statements, latest ITRs, Financial


Statements, PAN No., Id Proof, DOB Proof, etc.
Bank related documents are
a)

Application form

In Application Form all compulsory fields should be

filled up by the customer with no overwriting.


All the data entry should be done by the DEO.
b)

Dedup It is a software which has all the past data of all the customers

c)

who have applied for home loans previously which helps trace any
defaulter.
FI
number
/ TVR
of theapplicant
This is done
in order
by the
to bank
avoid
70 toany
verify
fraud
thebeforehand.
residence and telephone

NDC is done by the DEO as per the NDC checklist.


Final NDC is done by CAM
If there is any discrepancy the file is sent to Credit Department for re-credit with
reasons of hold.
Publishing of hold cases is done in MIS at the end of every day.
If the file is clear and there is no discrepancy, then the data is entered in finnone
by DEO.(Finnone is a software based on oracle which is the master of storing all
the entries and transactions done on daily bases)
Now, CAM authorizes the transaction i.e., Maker Checker which means the
CAM will check the transactions and authorize them finally.
Finally when the case is clear, a Loan Account Number (LAN) is generated which
is the primary key to identify the case for the bank.
Now, at the end of the day the files are dispatched to Regional Operations.

After sales services performed by Operations Department:


Request of Statement of Accounts.
Request for Repayment Schedule.
SwapPayment
Conversion
Part
Foreclosure
of Cheques.
(condition change in agreement) 71

NOC + Document Collection


At the time of Sanction:
When the file reaches the Regional Operations it is login at two places:
a) Processing Cell
b) Storage Cell
In processing cell
a) Firstly, the processing cheque is pulled out.
b) Banking of Cheque is done
c) Finally the cheque is released.
If the cheque is clear, entry is done in the account otherwise, the case is rejected.

In Storage Cell, the papers are divided in two types


a) Customer papers which are retained till the term of loan is completed.
b) Bank papers are shedded after some time i.e.,3 years or so.

Now the sanction is clear and processing fee is released.

At the time of Disbursement:


The docket is login from Credit to Operations Department. Docket is an important
envelop containing different papers.
Types
a)
Fullof&Disbursement:
Final Disbursement - Eg. Applicant sanctioned72loan of amount 5

lacs and disbursement is done as and when the PF cheque is released.


b) First & Subsequent Disbursement Eg. Applicant first Sanctions for
purchase and then subsequently for construction so, the amount is
granted in installments.
c) Enhancement / Reduction Eg. Applicant if in future decides to
increase or decrease the amount of loan sanctioned, then again the
file of increased amount has to be sanctioned. And in case of reduction
the amount id directly deducted.
d) Back to Back Disbursement Eg. It is done in the case of High Net
Individual (HNI) who takes loan more than 20 lacs. In this type of
Disbursement the file and docket both are done side by side.

Contents of Docket :
Loan Agreement There are 2 copies of loan agreement, one for the abnk and the
second for the customer (including the stamp papers with stamp duty as per
respective State Stamp Act.
Disbursement Memo It captures the entry of all financial details & entry is done
in Finnone.
Legal & Technical Deviation Sheet This is signed by the person who takes all
the liabilities regarding the loan granted.

73

Cheque Submission Form It is for the acknowledgment taken from the customer
as per how many cheques have been issued and received and the entries are done
so as to avoid any future misunderstanding between the bank and the customer.
Disbursement Request Form It is necessary as to know on whose name the loan
is applied and granted. And where to pay.
Pop Sheet It contains all the contents of the docket to avoid misplacement of
any important paper. And entry is done again.
Over The Counter Sheet (OTC) It is to exchange the deed with the cheque.
PDC Pouch / Pre EMI Pouch It contains all the entries of cheque details.
Cheque Acknowlegement Its purpose is to take cheque acknowledgement from
the customers.
Legal Report It consists of Non Encumbrance Certificate (NEC) + record of 13
years of the property which is mortgaged.
Technical Report It shows the valuation of the property and the estimate taken
by the architecture.

Punching Process:
Financial details are entered by Disbursement Memo.
Property Details are entered with the help of Legal Report.
Technical
byisTechnical
Report,
And Sheet.
Finally
all other
theDetails
cheque
contents
cut
are checked,
and directly
verified
handover
and entered
to74thewith
customer
the help
or of
through
Pop Over

the counter (OTC)


And the Docket is dispatched to Regional Operations (RO) / Central
Operations (CO).

Post Disbursal Documents:


Banking of Cheques
Realization of Cheques.

75

Types of Appraisals
There are basic two types of appraisals done to investigate about the cases that are logged
into the bank:

Technical Appraisal

Construction Structure
Load Bearing Wall Structure
Entire Load on Walls
Cost of Construction Lower
Prevalent in Small Towns

RCC Frame Structure Reinforced Concrete Cement


Entire Load on Columns and Beams
Construction of Commercial and Residential Complex
High Usage of Equipment

Mixed Structure
An Overview
Methods of
Approach
forValuation
Valuation

76

Market
Income
Cost

Methods of Valuation
Method of Comparison
Income Approach to Valuation
Summation or Cost Method
Residual Method

Method of Comparison
Property Rate is worked out on other similar properties that have been sold in near
past.
Circle Rates are compared.
Broker Feedback is compared.
No Standard Formula to work out value of property.
Factors vary from locality to locality.

77

Things to Observe while visiting a site:


Distance from Bus Stop and Railway Station
Accessibility of Site, Infrastructure Facility
Availability of Municipal Transport.
Development of Surrounding Area.
Building wise details of Construction.
Look out for Deviations.
Check Quality of Construction & Structural soundness.
Verify Amenities & Assess their True Value through Materials at site.

How Do We Fund ?
Structure Base
a) Load Bearing or RCC
b) Bungalow or Flat
Builder
a) Track Record
b) Projects Completed
c) Category A,B,C (Matrix)
a) Cost
Lending
b)
c)
StageInvolved
Security
of Construction

78

Adherence to Process

Technical Executive
Check on the progress of the work.
Check on activity levels on or Not
Arrive at cost incurred by Seeing Completed Structures.
Amenities in and around the Site.
Quality of Construction
Accessibility
Negative Area
Plan Validation
a) Check Frauds
b) Set Back Check measure from Plinth (Has to measure)
c) Check whether it Confirm Building Plans
Authentic Valuation of the property (to be dealt in details)
What is to be checked at the Site and From whom
Building Rules Critical Rules (please provide hand outs of the critical building
rules)
79

APF Process
Revised APF Process
Sourcing DMA / BSM
Technical Manager

Fire Legal
Fire Technical

APF Process Advantages

Entire legal and technical due diligence is done in one single stroke.
Monitoring is on project wise unlike unit wise.
It is a win win situation for the developer customer bank.
Retrieval of project details is easy.
Total Value of the property and amount of constructed area coming up in the
market is known.
Market Share of ICICI and project wise market share can be evaluated.
Tracking of property prices becomes easier
Exposure level per project can be evaluated.
Double funding on the project can be reduced
Better TAT
Generating
control
huge database of property rates across India.
80

Turn Around Time / Amenities Valuation

For Normal Technical Report 24 hours


For APF reports 05 days
Communication should be perfect, in case plans not received.
No site visits without building plans
No amenities valuation unless actually verified at the site.
Valuation not to include Stamp Duty and Registration Charges or Water and
Electricity Charges.

Legal Appraisal

Appraisal for Home Finance

Appraisal Process for Home Finance has two distinct stages:


Sanction Stage
Disbursement
Relatesappraisal
Legal
toStage
CreditofAppraisal
the property
for the
financed
individuals.

81

Technical appraisal of the property financed.

Legal Appraisal

Transfer of Property
Living person conveys his interest , right or title to one or more person(s)
Person includes Individual, Association of persons, Partnership, Company or
Trust.
Transfer of property must be done by a written registered document.
Sale for a value exceeding Rs.100/- requires registration.

Transfer of Property may happen by


Inheritance
Gift
Government Allotment
Purchase
Exchange
Partition
Release
Transfer
SaleofDeed
Tiltle Deed

82

Agreement for Sale


Allotment letter
Lease deed
Gift Deed
Probated Will
Develop Agreement
Deed of Exchange
Deed of partition
Release Deed

Concept of Contract
There has to be an offer and acceptance
Creation of an agreement
To be valid contract there should be NO coercion, undue influence, fraud,
misrepresentation or mistake.

Competence to Contract
The person should not be a minor.
He should
Minor
permission
to beberepresented
of of
sound
Court.
mind.
by Guardian and can transfer
83property with the

84

Property Documentation
Classification into two parts:
1. Types of Transactions
2. Classification of Documents

Transaction type
Builder
Society
Development Boards / Authorities
Self Construction
Resale Transaction

Classification of Documents
Land Related Documents
Government Land Records
Plans and Permissions
Individual Title Documents
85

Property Documentation

Situation : Purchase from Builder


Land Related Documents Sale Deed / Partnership Deed / Development
Agreement, POA
Government Land Records Extracts from Registrars office, Mutation Entries
Plans And Permissions Approved Plans and Permission, ULCA permission,
Tax receipts, Commencement certificate, Occupation
certificate, Land use certificate, Building permission.
Individual Title Documents Agreement for Sale, RR, Letter to Sub Registrar, NOC
to mortgage, OCR

Situation : Allotment from Development Authority


Land Related Documents NA
Government Land Records NA
Plans & Permission NA
Individual Title Documents Allotment Letter, OCR, NOC / PTM from DA, Unit
Layout, Sale Deed / Lease Deed

Situation : Purchase from Society


Land Related Documents Sale / Lease Deed in favor of Society, Bye Laws,
Society Registration Certificate.
Government Land Records Extracts from Registrars office
Mutation Entries
Plans & Permission Approved plans, NA permission, ULCA permission,
Tax Receipts, CC, OC, Land use certificate, Building
permission.
Individual Title Documents Allotment Letter, agreement for Sale, RR, Letter to
Sub registrar, NOC from Society, OCR, Share
Certificate.

86

Situation : Self Construction


Land Related Documents Same as individual title documents
Government Land Records Extracts from Registrars office
Mutation Entries
Plans & Permission Approved plans, NA permission, ULCA permission,
Tax Receipts, Commencement Certificate, Occupation
Certificate, Land use certificate, Building permission,
Possession Certificate, Location Certificate.
Individual Title Documents Sale Deed of the land, RR, Letter to Sub registrar
previous title documents, Land Layout.

Situation : Purchase on Resale


Land Related Documents As per the applicable transaction
Government Land Records Extracts from Registrars office
Mutation Entries
Plans & Permission As per the applicable transaction
Individual Title Documents Sale Deed , RR, Letter to the Sub registrar, Prior
Deeds, NOC to Mortgage, OCR, Share Certificate.

87

Know Your Customer (KYC) compliance


(A)

The matrix of the documents that are required to be collected for resident

individual borrowers is as below, any one document from each of the document
category would be required :

Document Category Salaried SEP & SENP


Residence Address
Proof

Passport

Passport

Driving license

Driving license

Election Id card

Election Id card

Utility bill (not more than 3


months old)

Utility bill (not more than


3 months old)

Latest (not more than 3


months old)statement of
account / passbook
maintained with any
scheduled bank, duly
certified by the bank
confirming the address

Latest (not more than 3


months old)statement of
account / passbook
maintained with any
scheduled bank, duly
certified by the bank
confirming the address

Letter from the existing


Banker (scheduled
commercial bank) in
original verifying the name
and address on the banks
letterhead.

Letter from the existing


Banker (scheduled
commercial bank) in
original verifying the
name and address on the
banks letterhead.

Copy of registered lease /


leave and license
agreement which are not
expired along with the
utility bill in the name of
the landlord / owner
confirming address.

Copy of registered lease /


leave and license
agreement which are not
expired along with the
utility bill in the name of
the landlord / owner
confirming address.

Residential Certificate
issued by Municipal
corporation / local self
government bodies
Latest
True
confirming
general/
company
months
annual
Copy
premium
ofpremium
old
life
Gas
(not
receipt
address.
ininsurance
88
case
more
receipt)
of
ofthan 12

Residential Certificate
issued by Municipal
corporation / local self
government bodies
Latest
annual
company
12general/
months
confirming
premium
True
premium
(not
life
old
Copy
more
insurance
in
receipt
address.
receipt)
of
case
than
Gas
of

connection book.

connection book.

Certificate issued by Ward


Officer maintaining
election roll certifying
address of the applicant.

Certificate issued by
Ward Officer maintaining
election roll certifying
address of the applicant.

Letter from employer


certifying residential
address. Name and
Designation of the issuing
authority must be clearly
mentioned.
@ The passport $ driving license as above should be current i.e., the same should not be
expired.

Clarification :
A single document can be accepted provided it serves the requirement for multiple proofs
and the current residential address is same as on the proof submitted for individuals.
Thus, the preferred document for the Photo Id, Residence Address & Age Proofs is
Passport / Election Id / Driving License.
For reference the list of documents accepted as Age Proof is given below
Salaried SEP SENP
Age Proof

Passport
Driving license

Passport
Passport
Driving license Driving license

Election ID

Election ID

Election ID

PAN Card

PAN Card

Life Insurance
Policy

Life Insurance
Policy

Birth Certificate

Birth Certificate

Birth Certificate

School leaving
certificate

School leaving
certificate

School leaving
certificate

Employee Id
(only for PSU /
Govt. employees

Employee Id
Employee Id
(only for PSU / (only for PSU /
Govt. employees Govt. employees

SSC
// HSC
Admit
(Printed
SSCformat
School
Card
Sheet
passing
HSC
/ college
with
Mark
certificate

PAN Card

Life Insurance
Policy

SSC
// HSC
Admit
SSC
/ /HSC
Admit
89 (Printed
SSCformat
School
Card
Sheet
passing
HSC
/ college
with
Mark
certificate
(Printed
passing
SSC
School
format
HSC
certificate
/ college
Sheet
Mark
Card
with

personal details of the


applicant handwritten are
acceptable)

personal details of thepersonal details of the


applicant handwritten
applicant
are handwritten are
acceptable)
acceptable)

Salary Slip (if


date of birth is
mentioned)

Salary Slip (if


date of birth is
mentioned)

Domicile
certificate

Domicile
certificate

Ration Card

Ration Card

Salary Slip (if


date of birth is
mentioned)
Domicile
certificate
Ration Card

(B) Documents required for individual NRI / PIO borrowers


Document category
Identity Proof In case the customer is a NRI
a. Photocopy of the relevant pages of the passport where
the customers name, address, date of birth, date & place
of issue, expiry date, photograph, signature & stamp
regarding stay outside India appear.
b. Photocopy of valid work permit / employment visa. In
case of expired visas, duly acknowledged petitions made
to the Visa Authorities for renewal of Visas will be
accepted as a valid document.
In case the customer is a PIO
a. Copy of the relevant pages of his current passport.
b. Copy of his PIO card
Or
Copy of past Indian passport of self / parent / grand- parent
along with a self declaration as ICICI format duly notarized
and stamped for requisite value.
Adress Proof A copy of at least one of the following Address proog outside
aor.Rent
b.
c.
d.
e.
f.
Residential
Driving
Credit
Overseas
within
Utility
Receipt
Card
Bill
India
license
/ Indian
Permit
Bills
: bank
(Government
90 StatementIssued Identity Card)

The address proof must match with the communication address


mentioned on the application form.

(C) Documents required for non individual borrowers :


Document category
ID proof

Office Address Proof

Partnership Firm

Partnership Deed

Company
Articles of Association, Memorandum of
Association, Certificate of Incorporation.
Any one of the following documents:
Latest (not more than 3 months old) Utility Bill like
Telephone Bill, Electr icity Bill confirming address.
Letter from the existing Banker (scheduled commercial
bank) in original. Existing banker must verify the name
and address of the entity on the banks letterhead
Latest (not more than 3 months old) statement of
account / passbook maintained with any scheduled
commercial bank, duly certified by the bank confirming
the address.
Copy of registered lease / leave and license agreement
which are not expired along with the utility bill in the
name of the landlord / owner confirming address.
Certificate issued by Municipal Corporation / local self
government bodies confirming address.
Latest available Income Tax Assessment order
confirming address.
Latest available Wealth tax Assessment order
confirming address.
Sales Tax registration certificate confirming address.
Valid Shops and Establishment Certificate confirming
address.
Factory registration certificate confirming address.
Latest Premium receipt of general / life insurance
company (not more than 12 months old in case of annual
premium receipt)

In case of/ non


directors
signatories.
promoters
individual
who would
applicants,
be required
KYC will
as the
also
cobe
applicants
91
required for
and
thealso
partners
all authorized
/

92

Repayment Track Record Based lending


Auto loans

Introduction of RTR based product


Capitalize on Repayment History of applicant
Focused on Auto Loan Customers
Auto Loan Customers of
a) ICICI Bank
b) Other lenders

Product Highlights
Opportunities to give home loans to approved list of auto loan customers
Should have serviced for a minimum period of 12 months
Or RTR should not have been closed before 12 months back
Product can be offered for
a) Home loans
b) Home premises only for doctors
c) HL for SEP & SENP
Minimum Maximum Loan : Rs.5 Rs.25 lacs

Product Features
RTR of commercial vehicles not acceptable
a) Scorpio / Qualis
b) Sumo / Tata Indicab
Multiple lending on same RTR not acceptable
Lending to Directors / Partners
a) Based on RTR of the firm / Pvt Ltd. company
b) Director / Partner > 76% should come as Co-applicant / Guarantor
c) Stake to be verified by CA / CS or Returns of ROC
Loan To Value as per product norms
All other norms as per the product category
Customer Segment
Resident Indian
1. Salaried
Transporters
2. Self Employed
3.
/ Taxi fleetNon
Professionals
Operators
Professional
Not acceptable

93

Target Segment

Self Employed
Professional /
Non
Profesional

Salaried

Already having Auto Loans with ICICI B ank and other


Institutions

Product Working
Eligibility
1. Minimum Seasoning 12 months
2. Seasoning EMI Multiplier
>12 months 1 times of the current EMI for Auto
>18 months

loan
1.25 times of the current EMI for Auto
loan

Parameters
1. EMI in arrears (current) Nil
2. Defaults
RTR Health

Peak not more than 30 days

For 12 months RTR 0 Cheque bounces in 12 months


For 24 months RTR Maximum 02 cheque bounces
For 36 months RTR Maximum 03 cheque bounces

Loan Amount based on RTR working


Example
Mr.
Loan
Rakesh
Amount
1 hasinAccent
lacs Auto
15000*1.25
loanloan
paying
EMI
/ 927
EMI
*1.25/
= Rs.20.22
Rs.15000/EMI factor
lacs94per
for lac
the loan tenure

PROCESS OF RTR

IMP

Completely filled in Home Loan form.


Bank statement considered for RTR.
Repayment Track for the applicable repayment
period.
Age Proof / Signature Proof
Processing Fee Cheque
Proof of existence in case of SEP / SENP
Field Investigation
Office address proof.

LAP: 03 years continuity of business Proof of Existence


Client Reference 02 large suppliers / customers.

PROCESS

Waiver

Income Documents Salary Slip,


cash salary, second income proof /
annual benefits.
Form No. 16
Job confirmation proof.
Income Proof for SEP / SENP.
Research Methodology

95

RESEARCH METHODOLOGY
Research Design:
The Research Design can be grouped under 2 sectors i.e., Primary
source and secondary sources.

Research
Design

Primary
Source

Interviews
with
customers /
DMAs

Secondary
Source

Websites and
Intranet of
ICICI Bank
Ltd.

Questionnaire

Other than these primary and secondary sources the study of various cases of the
applicants by going through the files guided to make an analysis and findings regarding
the status of Home Loans in the current scenario. Even by assisting the Credit Processing
Analyst, the analysis and findings were approved by them.

Sample Design:
The data collected from the questionnaire is of sample size 40.
The questionnaires have been filled by the customers through Direct Marketing Agencies
of ICICI Bank Ltd. and their Direct Sales Agent.
The questionnaires were distributed equally among 4 DMAs equally and the response
collected through them was of great use.
96

Research Tools and Questionnaire:

QUESTIONAIRE:

1. NAME OF THE APPLICANT:

AGE:

2. PROFESSION:

3. LOAN AMOUNT:

4. TENURE:

5. PRODUCT APPLIED FOR:

6. MODES OF PAYMENT:
(a) ECS (b) PDCs (c) DAS

(d) SI

(e) Any other

7. PROPERTY MORTGAGED:

8. ANY OTHER LOAN TAKEN ON SAME PROPERTY:

9. PREFFERED BANK FOR HOME LOANS:


(a) IC IC I (b) HDFC (c) SBI (d) PNB (e) Allahabad Bank

10. LOAN TAKEN FROM ANY OTHER BANK, IF YES WHICH BANK AND FOR
WHAT PURPOSE:

11.
OF INFORMATION
FOR
THE MARKETING
VARIOUS
HOME
LOANS
PLANS:
12. SOURCES
(a)
ARE
YES
NEWSPAPER
U SATISFIED
(b)
(b)NO
WITH
BANKTHE
(c)SERVICES
DIRECT
PROVIDED
BY
AGENCY
ICICI?
97 / DSA

Analysis:
In last 10 years the rate of growth in the number of applicants have been at a faster pace
because the individuals have vast knowledge about the benefits of Home Loans.
Year No. of Applicants
2002-03 7,73,562
2003-04 9,65,291
2004-05 13,42,097
2005-06 15,27,945
2006-07 17,95,048
2007-08 19,84,164
(These figures are of a particular state)

Secondly, the applicants applying for Home Loans were of young age as compared to
past 10 years. Then the applicants ranging above 45 years were more in number applying
but now there are applicants of even 25-30 years. The tenure to repay the loan has also
decreased because of the increase in Income Obligation ratio.

But since last 1-2 years there is a stable percentage of individuals applying for it because
of the increase in the rate of interest and strict norms of RBI. They are as follows:
a) Rate of Interest will be less for people in minority.
b) Applicants applying for more than 50 lacs who are High Net Individuals (HNI) are
provided with some percentage of rebate.
c) Applicants taking loan for the second time for Home loans are under strict supervision
and verification.

This is done because the customers take loans for investing money by taking HL and
enjoying the redemption and deductions.
Bank has even introduced Know Your Customer (KYC) documents which constitutes of
all the personal and professional details of the applicants and the co-applicants applying
for home loans which helps the bank to get the information about the customers and
judge the purpose of applying for HL.

98

FIVE FORCES OF PORTERS MODEL OF ICICI

SUPPLIERS
POWER

BARRIERS
TO ENTRY

RIVALRY

THREAT OF
SUBSTITUES

BUYERS POWER DEGREE OF

RIVALRY

Supplier Power
Increased Dependence on IPOs
There is a growing dependence of corporates on broking houses with the rising number
of IPOs coming to the market.
Buyer Power
Lack of Expertise Curtails Bargaining Power
Retail investors often lack the knowledge and expertise in the financial sector that calls
them to approach the broking houses.
Low Product Differentiation Proves Beneficial
The retail broking services provided by the various companies is homogeneous with very
low product differentiation. This allows customers to enjoy a greater bargaining power.
Degree of Rivalry
Move towards consolidation
Lot of brokerage companies are moving towards consolidation with the smaller ones
Increased
Various
Online
There
becoming
brokerage
for
isTrading
foreign
internet
anFocus
increasing
either
industry.
Competes
banks
as
of compared
Banks
franchisees
like
demand
in
with
ABN
Retail
tofor
Traditional
approaching
Amro
for
online
Broking
theand
larger
trading
Brokerage
others
the
brokers
brokers.
due
are99to
planning
orconsumers
closing
to enter
operations.
growing
the Indian
preference
retail

Barriers to Entry
Entry of Foreign Players
New forms of trading including T+2 settlement system, dematerialization etc are
strengthening the retail brokerage market and attracting foreign companies to enter the
Indian industry.
Threat of Substitutes
Alternative Investment Options
Various alternative forms of investment including fixed deposits with banks and post
offices etc act as substitutes to retail broking products and services.

100

SWOT ANALYSIS

Strength
Advanced Technology
Providing innovative products and technology
Leverage technology to satisfy customer demands.
Add value to share holders.
Weakness:
Too many subsidiaries
High cost of funds
Opportunities:
Higher capital base
First mover advantages
Threats:
Competition from other industry rivals like HDFC.
Concern over NPA despite provisioning

Thus, ICICI has been able to use technology to provide value added service to its
customers during the last few years. For ICICI, technology is an integral part of their
business. However, their overall progress could have been smoother but for certain
internal and extraneous factors and also a pressure on spreads due to a competitive
market.

101

Comparative study of ICICI Bank Ltd. and HDFC Bank

E ven their offices reflect their attitudes. ICICI Bank's headquarters in suburban Mumbai is a
huge, edifice in glass and granite. HDFC Bank's office in central Mumbai is
imposing
comparatively
smaller and more sedately furnished. The two banks have carried forward their style
statement
in to business. ICICI Bank thinks big, is all for growth and hungry for market
their
approach
share.
HDFC Bank is more conservative and cautious, grows at a measured pace, without taking
any
undue risks.
ICICI Bank's assets in the retail space stand at Rs 56,000 crore (Rs 560 billion). In
comparison,
the tally for HDFC Bank is Rs 18,000 crore (Rs 180 billion). ICICI Bank also leads HDFC
Bank inevery segment they are present in. But that's just the current update.
almost
The DNA of the strategy
ICICI Bank began its retail banking venture in mid-1999. By January 2000, it had moved
on to
introducing
home loans, car loans, personal loans and credit cards. Realising the need for a
bigger retail deposit base, the bank started building a branch and an ATM network. The
acquisition of Bank of Madura in March 2001 added 263 branches, many of them in cities
where
ICICI Bank did not have a presence.
The merger of the erstwhile financial institution ICICI Limited with the bank in April
2002, gave itcorporate
a
ready-made
clientele. The flip side was that ICICI Bank had Rs 10,000 crore (Rs
100
billion) of restructured assets for which it had to make provisions.
On the other hand, HDFC Bank kick started its operations in 1995 with a focus on
corporate
banking, targeting the top-end of the market.HDFC Bank ventured into retail lending in
1998,before
a
year
ICICI Bank. But in products like credit cards, it was slow to get off the mark.
For
instance, its credit cards were launched only two years ago. By then ICICI Bank had been
present in the credit card business for nearly three years.
However, HDFC Bank was handicapped because it could not sell home loans (because its
parent HDFC was in the business), though it has been originating them in the past oneand-a-half
years. For ICICI Bank, home loans are 46 per cent of its retail assets.
A banking consultant observes that ICICI Bank is far more aggressive. Though ICICI
executives
do not admit it, industry sources observe that ICICI's pricing has been far more
competitive,
whichit more customers.
probably brought
According to some industry experts, growth for ICICI Bank may have come at the cost of
quality.
ICICI Bank denies this.
Calling
the
customer
publicity
Both
used
In
theby
players
past
both,
(In
two
comparison,
targeted
including
years, thedirect
bank
same
ICICI
sales
has
customer
hasspent
agents
spentless
--Rs
(DSAs),
thethan
185
upper-middle
crore).
Rswere
100HDFC
the
crore
same.
class.
(Rs
Bank
The
Yet,
1 billion)
says
marketing
there
that
was
onitsaspends
channelsfocused
difference.
advertising
always
have
mainstream
and
advertising.
on other channels such as direct sales and
102
phone banking rather than

Better pick-up
The numbers tell the story. ICICI Bank's retail deposits are nudging Rs 60,000 crore (Rs
600
billion) and in FY06, it grew its deposits by 47 per cent compared with the industry
deposit
of
14 pergrowth
cent. HDFC Bank's retail deposits are about Rs 23,000 crore (Rs 230 billion).
Even in
home
loans, ICICI Bank commands 30 per cent of the market, having eaten into housing
finance
pioneer, HDFC's share.
Share of the wallet
Mar-05 HDFC

Bank

ICICI
Bank

Branches 467 565


ATMs 1,147 2,000
Cities 211 371
Retail assets (Rs
crore) 18,000 56,000
Deposits (Rs crore) 38,000 99,800
Car loans (Rs crore) 2,500 11,500
Credit cards (Mn) 1.3 3
Retail customers
(Mn) 6.4 13.7
Cost of deposits (%) 3.2 4.5
Net interest margin
(%) 3.2 2.4
Net NPLs (%) 0.2 2
Even in the number of customers ICICI Bank leads by a distance
(See table: Share of the
wallet ). Nearly 14 million customers bank with ICICI Bank, while the number for HDFC Bank
less thanis half (6.4 million). ICICI Bank has issued 3 million credit cards -- that is more
thannumber
twice of HDFC Bank's credit card users. However, industry observers point out that
the
ICICI
Bank's effective users for credit cards may not be high.
Nonetheless, they concede that even with a discounted customer base, the numbers will
still be Even in businesses like online trading where the risks are relatively low, ICICI
strong.
Bank
commands a two-thirds marketshare.
'Tell all' street
The stock market has always valued HDFC Bank at a huge premium -- at the current price
of RsHDFC Bank is valued at 3.5 times price to forward book (valuation based on
585,
estimated
book
value in FY
06 of Rs 165). The multiple for ICICI Bank that quotes at Rs 415, is just 2.1
(estimated
book
value
Rsthan
194).
The
reason:
the
impeccable
quality
offor
HDFC
Bank's
sheet.
HDFC
higher
With
than
Bank's
NPLs
thatoperations
of
of
ICICI
less
Bank's
are
also
0.2
2.4
per
more
per
cent,
profitable
cent.
compared
Also,
--ititsis
with
net
able
2interest
per
to access
cent
margin
deposits
ICICI
at 3.2
at
Bank,
per
a lower
cent
its
balance
are
books
is
On
cost.
But
way
definitely
an
round
average,
oneinof
itfar
the
pays
better
banking
an interest
shape.
sweepstakes
of 3.2 perhas
cent
clearly
whilegone
ICICI
103toBank
ICICIshells
Bank.out 4.5 per cent.

RESEARCH FINDINGS:

The data collected through questionnaires with the help of Direct Sales Agent and Direct
Marketing Agencies has been of great importance to analyze many details regarding all
the captions that are there in the questionnaire of sample size 40. They are as follows:

Age: The applicants ranging between the age of 30 - 45 years are the ones who
have applied for Home Loans large in number, it is because they are financially
stable and sound. But now a days customers ranging between 25 30 are even
applying for Home Loans because they are aware of the benefits that can be
availed by applying for Home Loans.

Profession:
Mostly, the Self Employed Non Professionals i.e., business persons
who are involved in their family business apply for Home Loans. Salaried are less
in number.

Tenure & Loan Amount


: The tenure which the bank and the customer finally
arrives at is according to the eligibility of the applicant in consideration to his
a) Age As the bank itself assumes that is the person capable enough physically
and financially that hell be able to repay the loan in the fixed tenure.
b) Profession either the person is salaried which shows he has a fixed income per
month and thus the installments will be on time, if the applicant is SEP or SENP
then there can be any gain or loss and so the tenure and amount of loan is fixed
accordingly.

Product applied for:

The most preferred products in Home Loans are:

Home Loan
It is specially for the purpose of construction and purchase.
Benefits of Home loans
Cheaper Rates RBI has given a margin of 0.75% which deducts
from the current prevailing rates.
Easily granted.
Amount of loan granted 50% of the salary in case of salaried
class.
Rebate / deduction in Income Tax.
Itbenefit
is normally
given
for the
purpose
ofmargin
purchase
ofthe
land
forso
Benefits Land
Investment
of Land
for Loan
future.
Loans Normal
RBI
beneficial
rates
hasofnot
the
for
Asgiven
it
customer.
theis government
granted
any
deduction
for
104the
andof
purpose
is
merely
ofbecause
for
investment
personal
it is
not

There is no rebate in Income Tax.

LAP (Loan Against Property)


It is given for different purposes against any
property which is mortgaged with the bank and is released when the loan is
over.
Benefits of LAP
Rates at which the loan is granted is above margin
It is also known as Mortgage Loan.

Modes of Payment
: After the whole analysis, the final conclusion is that
more than 60% of the applicants repay the loan through PDCs.
Property Mortgaged
: Applicants can mortgaged any free property which
they own. Free property includes:
Residential ( commercial and non-commercial)
Commercial

Any other loan taken for the same property:


Out of sample size 40, mostly
have not applied for any other loan simultaneously but through Credit
Information B ureau of (India) limited (CIBIL) and DEDUP records show that
at time of applying for HL customers itself take a check that they have
already repaid their dues of other loans.
Preferred bank for Home Loans:
According to the survey through
questionnaire shows that ICICI Bank Ltd. is the most preferred
bank but this is because questionnaires have been filled by the applicants
applying in ICICI. Otherwise, HDFC is second market leader in Home Loans.
Loan from any other bank:
Out of sample size of 40 customers mostly have
not applied in any other bank but some number of applicants are customers of
any other bank.
Sources of information for the various home loan plans:
Features launched
by the bank in different plans of HL is outsourced through Direct Sales agents
and agencies. And even some customers or can say general public prefers
bank
99%
by
ICICI
as
of the
the
Bank
most
applicants
Ltd.
reluctant
in sample
source ofsize
availing
are
105
satisfied
information.
by the services provided

SUMMARY AND CONCLUSION:


The report made on ICICI Home Loans concludes by findings of various benefits to the
customer, government, builders and HFCs / Banks.
There is a growing tendency of investing at a younger age, increase in NRI demand in
real estate, increased urbanization, owning property now more economical than renting.
Government committed to simplifying Mortgaged Backed Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI)
Act 2002. There is tax benefit to the customers and rationalization of stamp duty.
Builders are now a days focusing on end users rather than Investors and there is
improvement in quality of constructions.
The final outcome of the report gives the following data:
JUNE 2008
FILES LOGIN 100( Ist Disbursement) 49 ( Sub Disbursement) 52 ( Final Disbursement)
FILES CLEAR 46 ( Ist Disbursement) 26 ( Sub Disbursement) 47 ( Final Disbursement)

The graphs below shows the market leadership of ICICI as compared to HDFC and SBI.
Market leadership

Sanctions (in Rs.Crore)


30000
25000
20000

ICICI
HDFC
SBI

15000
10000
5000
0
2004 2005 2006 2007
2005

2006

2007

2008

106

Market leadership
Disbursement (in Rs.Crore)
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0

ICICI
HDFC
SBI

2004 2005 2006 2007


2005

2006

2007

2008

Market share of ICICI


Year 2003 04: 25000 crore
Year 2004 05: 41000 crore
Year 2005 06: 53000 crore
Year 2006 07: 65000 crore
Year 2007 08: 85000 crore ( projected)

Market Share

2007 SBI
2008
2006
2007
2005
2006
2004
2005
0% 50% 100%

OTHER PSBs
LIC
OTHER HFCs
FBs
Pvt Bks
HDFC
ICICI
StanChart
Citi
107

108

Bibliography:

Pandey I.M., Financial Management


Chandra P., Financial Management
Khan & Jain, Financial Management
V.Sharan, Financial Institution & Services
Induction program book of ICICI Bank Ltd.
www.ICICIBank.com
www.homeloans.com

109