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FRANCHISEE ICICI BANK HOME LOAN

EXECUTIVE SUMMARY

Shelter is the necessity of human being besides employment that creates to the core need of

food & clothing this ideology promoted govt. to identify housing development as the sector of

top priority. It was estimated that one million housing units required per annum which,

estimates outlay assessed for the financial year 1990-91 alone was Rs.2000 corers.

Today, besides housing financing agencies number of non banking financial institutions, are

engaged in financing housing schemes have catered to the requirement of all strata of Society

with special focus on low income & lower middle income groups helping , them to realize the

cherished dream of owning abode.

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INTRODUCTION

HOUSING SCENARIO IN INDIA:-

The growth rate of the economy might go up to levels up to 6%, if the revival is kept up.

Share markets are not entirely looking up, though they are stabilizing at levels, which can be

termed as reasonable. Industrial growth rate, which was wallowing at a low of 1.5%, is

now at around 5%. In fact, industrial credit given out by banks which in normal times would

be about 4-5 times of bank credit given to housing, had in the last few years reduced to levels

below advances to housing loans. But the happy feature is that industrial growth is picking

up. Even, the steel sector, which was hopelessly down, is now having hopes of revival.

It is only housing, amidst all these that seems to have kept up fairly stable front. Yes, the late

90s saw even housing go through a bad phase. But, then with that phase crossed, there has

been a steady revival and stabilization of the market at levels, which can be termed as

reasonable from the point of view of both the customers and those on the supply side.

Housing is a basic need and like any basic human need will be constantly in demand. The

potential for housing in this country is huge by NHB estimates. And the requirements by NI

IB estimates are around 20 million houses. There are other estimates, which suggest that it is

at a much higher level. Even going by the conservative estimate taken by the NHB, the

requirements in the area of housing are massive. This really means that a lot of investments

cab is there in the coming years and there is room for multiple players.

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The customer who is purchasing a house today has not only the options of competitively

lowest rates of interest, but also choice of different types of loans starting from the house-

purchase or house-building loans to house-improvement loans, home equity loans [loans on

mortgage of property], home extension loans, NRI loans etc. It has never been better than this

ever before.

As far as availability of finance to the retail customers is concerned, there has been a

tremendous improvement in the possibility over the last few years. There are over 32 NHB

recognized Housing Finance Companies which dot the map of this country with their

presence all-over. The nationalized banks have in addition made housing a thrust area and

added to the reach for advancing loans to individuals. The LICHFL, which organization I

happen to represent, itself has over 200 centers in this country, which are covered by their

physical presence. Leading Housing Finance organizations like the HDFC, ICIC also have a

widespread network all over the Country giving out loans to customers for housing. The

banking major, SB J covers over 500 centers through their branches where personal banking

division functions. The other banks too are not far behind in their reach out to the house

purchasing public.

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FRANCHISEE ICICI BANK HOME LOAN

LITERATURE REVIEW

Home Loans

Brief review of the performance

The housing sector plays an important role in the economic development of the

country. Every rupee invested in housing adds 78 paisa to the GDP.Over 269 industries are

directly or indirectly dependent on the housing sector.

There is an estimated shortage of 20 million housing units in the country with an

estimated investment requirement of over Rs 1500 billion. In this context it is important to

note that that the organized housing finance industry barely accounts for 30% of the home

loans disbursed in the country. The last few years have seen the home loans market growing

at a CAGR of over 30 percent. Certain fiscal, social and regulatory drivers have mainly

fueled the growth:

• Changes in demographic profile including increase in the rate of household formation due to

structural shift from joint family system to nuclear family

• Ever increasing middle class, migration of population and increasing urbanization

resulting in acute shortage of housing units

• Increase in disposable income levels due to decrease in marginal tax rates and increase in

total income levels

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• Tax benefits and other fiscal incentives announced in the Union Budgets

• Increasing affordability of housing property purchase due to declining interest rates and

stable property prices

• Decline in the average house cost to annual income ratio to around 4-5 from 11-14 during

the last decade resulting in an affordable EMI as a percentage of monthly income

• Aggressive lending by banks to the housing sector due to lower credit off take by the

corporate sector, attractive spread and lower non performing assets.

The major players in Indian housing Finance industry are the housing Finance

Companies ("HFCs"), Scheduled Commercial Banks, and Co-operative Banks. The total

incremental disbursements of the HFCs and the Banks have increased from approx Rs 16,000

cr in 1998-99 to approx. Rs 39,000 cr

THE housing finance industry is getting increasingly commoditised. Competition

within the sector is ensuring that players offer consumers flexibility and feature to choose

form. Features such as adjustable plans, lower processing fees, monthly rests, low interest

rates low EMI and lower margin money no pre payment penalty have become common

across the industry.

IN 2002-03 with direct incremental disbursements! growing from approx Rs 10,500 cr to Rs

34,000 cr during the same period. The year 2002-03 has witnessed a growth of 29 percent in

total incremental disbursements and 33 percent in direct incremental disbursements over that

of last year.

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Total incremental disbursement less Bank loans to HFCs, Bank investments in

NHB/HUDCO Bonds and Bank loans to employee.

The incremental disbursements of HFCs is estimated to have increased by 21 percent to

approx. Rs 18,000 cr with incremental disbursements of HDFC, the leading HFC increasing

31 percent from Rs 7,616 cr to Rs 9,951 cr during 2002-03. However, the aggregate market

share of HFCs as a whole declined.

The HFCs have mostly lost market share to the banks with the worst hit being inflicted on

the small and medium HFCs. The total outstanding loans of HFCs are estimated to have

increased by 21 percent to Rs 46,500 cr in the year 200£f-0&r>The share of the direct loans

outstanding of HFCs to total loans outstanding is estimated to have declined from 74 percent

in 2001-0|fto 64 percent in 200^0^2. Reduced offtake by the corporate sector has increased

the banks focus on the retail finance market over the last 2 years with significant increase in

disbursements to the housing finance market. Banks find the housing finance market an

attractive segment to lend due to lower NPA levels, lower risk weight age and higher risk

adjusted profitability. The total incremental disbursements of the banks have registered an

increase of approx. 38 percent to Rs 19,500 cr. The total loans outstanding of the Banks to the

housing finance sector have increased by 43 percent to Rs 48,000 crorc.

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Major developments during the year

The year 2002-03 witnessed the commercial banks becoming aggressive players in the

home loans market and a dramatic fall in interest rates across all maturities. This fall in

interest rates was driven by the decreasing bank rate and the increased competition with in the

banks themselves and between the Banks and HFCs. There was a growing emphasis on the

adjustable rate loans due to the decreasing interest rate scenario. In presenting the Union

Budget for 2002-03 the Hon'ble finance minister announced that National Housing Bank

would launch a Mortgage Credit Guarantee Scheme, which would be provided to all housing

loans thereby fully protecting lenders against default. Towards this end the Asian

Development Bank (ADB) approved an investment of up to USS10 million equivalent in

November 2002 to help pioneer the first mortgage Guarantee company for India.

HOME LOAN INDUSTRY:

The demand - supply gap in housing in colossal (estimated at 21.23 million in urban

areas and 13.66 million in rural area). Yet home financing continues to have a limited spread

in India. Organized home-loans account for only 14% of total housing investment and add up

to about 20% of home purchases. Traditionally the mindset of Indians is debt-averse. Home

loan companies could do little to change this attitude as they have a narrow base and

beseeched with their own set of problems.

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• Presently many companies in both private and public sectors offer home finance. The

prominent players amongst are only few. HDFC in the private sector and LIC Housing

Finance, Can Fin Homes in the public sector of the leading names in the industry. Many

commercial banks like Corporation Bank, Bank Of Baroda and foreign banks like Citibank,

HSBC, ANZ Grindlays are all getting very active in this business.

For public sector companies like L1C, G1C, SB1 and the nationalized banks, home

finance was a logical extension of their existing businesses. They have massive network of

branch office networks, a captive base of clientele, staff experienced in real estate matters

and importantly, access to cheap sources of funds. For them therefore, the setting up of

housing finance subsidiaries to service captive-market shares was a logical development.

Absence of such entry-level advantage clearly affected many other players who could not

make much headway in business, which is largely retail in nature.

The true glory for making home-finance a household name however, goes to the

Housing Development Corporation Ltd.(HDFC), which through a mix of good customer

service and energetic sales pitch captured a sizeable market share in a sunrise industry.

The creation of the National Housing Bank (NHB) is a true milestone in the industry's

growth-path. NHB initiated operations in 1990s as an apex financing institution for granting

loans to home-finance companies. It streamlined the operating rules, business procedures,

interest rates and created a favorable climate for other home-finance companies to take a

serious look at this business. It is now mandatory for all home finance companies to follow

the prudential norms laid down by NHB. This has brought discipline into the market and

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helped even the small players to access concessional finance from NHB to remain

competitive.

It is the lack of low cost and stable long term sources of funds that has been the crux

of the problem. Though there are about 383 Housing Finance Companies today, the

disbursement by the leading 26 HFC's eligible for refinance from National Housing Bank

constitute almost 95% of loans. And of these, two- LIC Housing and HDFC - virtually

command the retail market with their assets.

However, it is here that banks might have an edge. Even before the cut in Bank Rate,

a bank's average weighted cost of borrowing was a low 10-1 1% allowing them to lend at

13-14% and afforded them a comfortable spread. Currently, a bank's cost of borrowing has

dipped even further to 8-8.5%. Sensing the opportunity, most of the banks are now setting up

separate home-finance divisions to leverage their personal banking relationships with a

captive database of account holders.

The year 1996-97 witnessed poor growth of about 5% following the slump in

property prices. Thereafter, in 1997-98 the market rebounded with a 23.5% growth with

disbursals totaling Rs. 5,700 crore.

The total flow of funds sanctioned to the housing sector in 1999-2000 was Rs.

21623.51 crore for 32.15 lakh housing units in the country under various housing finance

schemes. This represented an increase of 27.34 % over the years. In the current year (up to

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FRANCHISEE ICICI BANK HOME LOAN

September 2000) a total of Rs. 11791.27 crore has been sanctioned for 19.63 lakh-housing

units. In terms of disbursements a total of Rs. 19475.88 crore was disbursed for 28.55 % over

previous year. In the current year (up to September 2000) a total of Rs. 8482.97 crore have

been disbursed for 6.93 lakh housing units.

The National Housing Bank (NHB) was established in July, 1988, under the National

Housing Bank Act, 1987, as an apex bank , on the lines of IDBI and as a wholly owned

subsidiary of the RBI. It is the principal agency to promote housing finance institutions at the

regional and local levels, and to provide financial and other support to such institutions

connected with housing and human settlements. The major objectives of NHB are to

promote, establish, support or aid in the promotion, establishment and support of housing

finance institutions and to make loans and advances or render any form of financial

assistance whatsoever to housing finance institutions and scheduled bank or to any authority

established under the Central Act and engaged in slum clearance and to frame guidelines for

housing finance institutions to follow for availing of the refinance from the NHB and for

registration as the eligible housing finance institution.

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NHB Guidelines

In pursuance of its objectives, as the principal agency to promote a sound, healthy,

viable and cost effective housing finance institutions/companies and to provide financial and

other support to them, the NHB has issued operating guidelines for the HFC's in India. They

must conform to these guidelines to the eligible for financial/re finance support from the

NHB. Presently, it provides to eligible HFC's refinance facilities in respect of housing loans

for acquisition/construction of new housing units. The important guidelines are briefly

summarized in this section.

Eligible Institutions

There are 29 HFC's in the country, which are registered with the NHB as the apex

institution/housing bank with statutory obligation to regulate and supervise the housing

finance industry. They are as follows:

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LIST OF APPROVED HOUSING FINANCE COMPANIES

1. Andhra Bank Housing Finance Ltd

2. BOB Housing Finance Ltd

3. Can Fin Homes Ltd

4. Cent Bank Home Finance Ltd

5. Corporation bank Homes Ltd

6. Dewan Housing Finance Corp.Ltd

7. GIC Housing Finance Ltd

8. GRUH Finance Ltd

9. GLFL Housing Finance Corp. Ltd

10.Global 1 lousing Finance Corp. Ltd

1 1. Happy Home Profin Ltd

12.Housing Development Finance Corp. Ltd

13.Housing and Urban Development Corp. Ltd

14. Home trust Housing Finance Ltd

15. Ind Bank Housing Ltd

16. LIC Housing Finance Ltd

17. Livewell Home Finance Ltd

18. Maharishi Housing Development Fin. Corp. Ltd

19. Mercantile I lousing Finance Ltd

20. Orissa Rural Housing & Development Corp. Ltd

21. Parashwanath Housing Finance Corp. Ltd

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FRANCHISEE ICICI BANK HOME LOAN
22. PNB Housing Finance Ltd

23. Peerless Abasan Finance Ltd

24. SBI Home Finance Ltd

25. ICICI Home Finanace

26. Saya Housing Finance Company Ltd

27. Vyasya Bank Housing Finance Ltd

28. Vij ay a Home Loans Ltd

29. VI Bank Housing Finance Ltd

30. Weizmann Homes Ltd

What are the types of Home Loans available?

Home Purchase Loans: There are the basic home loans for the purchase of a new

home,

* A loan for ready built house / flat

Home Improvement Loans: These loans are given for implementing repair works and

renovations in a home that has already been purchased by you.

Home Construction Loans: These loans are available for the construction of a new home.

Home Extension Loans: Are given for expanding or extending an existing home. For example

addition of an extra room, etc.

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Home transfer Loans: Are 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 a Home Conversion Loan, the existing loan is transferred to the new home

including the extra amount required, eliminating the need for pre-payment of the previous

loan.

Land Purchase Loans: These loans are available for purchase of land for both home

construction or investment purposes.

Balance Transfer: Balance Transfer loans help you to pay off an existing home loan and avail

the option of a loan with a lower rate of interest.

Refinance Loans: These loans help you pay off-the debt you have incurred from private

sources such as relatives and friends, for the purchase of your present home.

Loans To NRls: Are tailored for the requirements of NRIs wishing to build or buy a home in

India.

The overall City

We are now talking about one of the oldest, strong & prominent & well-cultured historical

place called as Belgaum.

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Well, centuries have passed and today it's an entirely different story. Belgaum has now

become one of the important & considered cities in the state of KARNATAKA.

Belgaum is now marching with a tag of fast growing, redeveloping city with a population of

over 6 lakhs approximately. Nearest well-developed cities to Belgaum is HUBL1-

DHARWAD, from Karnataka & Panaji from GOA, Kolhapur & Sangli from Maharastra.

Belgaum is exactly at the center between Bombay & Bangalore

Belgaum city has been the divisional as well as district headquarters since long the cit}' is

located at a distance of 502 kms. from Bangalore. The place is almost equidistance from

Mumbai and Bangalore. The city is on National Highway No. 4 and directly approachable

from Bangalore by Rails it is important station between Bangalore and Miraj. There is also

an Airport at Sambra about 12 kms. east of Belgaum.

Prominent places in Belgaum are :

Tilakvadi,Bhagya nagar,Channamma Nagar, Mahantesh nagar,Sadashiv Nagar Angol are

famous for their well designed -well maintained row houses & Bunglows .

Shapur galli,Hira market,Belgaum market are a shoppers delight.

Partly the Tilakwadi area & almost the entire ChoguleWadi is dedicated for military

training.The cantonment area.the camp area arc totally dedicated to this military personnel &

the areas are maintained quite well by this personnel. The famous Military Mahadev mandir is

totally managed by the military & is real tourist & picnic center, because of the exclusive

gardens & greenery round the place.

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Education Centres: The city has many reputed educational institutions. Jawaharlal Nehru

Medical College, Gogte Insitute of Technology, KLE's College of Engineering and

Technology, Raja Lakhamgouda College of Eaw, Lingaraj College for Arts and Commerce

are major centres of Higher Education.

Belgaum school for the Blind and KLE's School of Agriculture are very special institutes

with a rare noble cause, the city has a large well built stadium.

Industries.

The city has a multinational Aluminum Factory. The factory has recently been taken over by

the Biria Group of Industries.Polyhydron, & Ashoka Iron works Ltd. Few minor industries

like knitting, forging are functioning.

* Some small scale industries like Foundaries lathe work is done in Udyambagh, situated 8

km from Belgaum city.

Business:

Good in the field of Textile wholesale garments.

Automobile spare parts..

Languages Spoken: Kannada. Marathi Hindi. English.

Mode of transport : Connected by bus train & Air.

ICICI HOME FINANCE COMPANY LIMITED.-(consumer friendly housing finance

company).

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FRANCHISEE ICICI BANK HOME LOAN

STATEMENT OF THE PROBLEM

“Survey report on Customer Expectations and Awareness level with a view to enhance

customer base of ICICI Bank home loan”

Through this project, the sales manager wants to know the factors affecting the sale of

ICICI Bank home loan.

PURPOSE OF THE STUDY

The main purpose of the survey was conducted in Belgaum City to get much

information as much as possible. To know the market share of ICICI Bank home loan.

 To know the customer attitude towards ICICI Bank home loan

 To increase the customer base of ICICI home loan.

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FRANCHISEE ICICI BANK HOME LOAN

SCOPE OF THE STUDY:-

The scope of the study is in Belgaum city for ICICI Bank home loan. The scopes of

study selected areas are

 NEHARU NAGAR

 SHIVBASVA NAGAR

 SADASHIV NAGAR

 TV CENTER

 HANUMAN NAGAR

 AZAM NAGAR

 CHANNAM NAGAR

 TIKALWADI

 DWARAKA NAGAR

 HINDWADI

 SHAHPUR

OBJECTIVE OF THE STUDY

1) To know the awareness level of customer to words ICICI Home loan

2) To know customer attitude towards rate of interest of home loan

3) To get the suggestion for the improvement of quality of service

4) To improve the customer base of ICICI home loan

5) To know the know the kind of people expected from the ICICI Bank Home Loan

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FRANCHISEE ICICI BANK HOME LOAN

COMPANY PROFILE

Overview:

The Industrial Credit and Investment Corporation of India Limited (ICICI) was

founded by the World Bank, the Government of India and representatives of private

industry on January 5. 1955 to encourage and assist industrial development and

investment in India. Over the years, ICICI has evolved into a diversified financial

institution. ICICI's principal business activities include medium-term and long-term

project financing for the infrastructure and manufacturing sectors, corporate finance to

meet the treasury requirements of Indian companies, lease finance as well as a

comprehensive range of financial and advisory services. The liberalisation of the Indian

economy in the 1990s offered ICICI an opportunity to provide a wider range of financial

services. For regulatory and strategic reasons, ICICI set up specialised subsidiaries in the

areas of commercial' banking, investment banking, non-banking finance, investor

servicing, broking, venture capital financing and state-level infrastructure financing.

ICICI Bank is India's second-largest bank with total assets of about Rs.l 12,024

crore and a network of about 450 branches and offices and about 1750 ATMs.

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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

specialized subsidiaries and affiliates in the areas of investment banking, life and non-life

insurance, venture capital, asset management and information technology.

ICICI Bank's equity shares are listed in India on stock exchanges at Chennai,

Delhi, Kolkata and Vadod.ara, 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).

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 Ltd, 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.

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In the 1990s, ICICI Ltd 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 Ltd 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 Ltd 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 Ltd 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.

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The merger would enhance value for ICICI Bank shareholders through a large capital

base and scale of operations, seamless access to IClCl'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 Ltd, and

its subsidiaries. In October 2001, the Boards of Directors of ICICI Ltd and ICICI Bank

approved the merger of ICICI Ltd, and two of its wholly owned retail finance subsidiaries,

ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI

Bank. Shareholders of ICICI Ltd and ICICI BANK approved the" merger 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.

History:

ICICI Home Finance Company Limited was incorporated on May 28, 1999 as 100% sbidiary

of ICICI Personal Financial Services Limited (ICICI PFS). ICICI Home Finance Company

Limited, was set up with the objective of providing long term housing loans to individuals and

corporate. The Company was registered on March 30, 2000 with National Housing Bank

(NHB) under National Housing Bank Act, 1987 in terms of Housing Finance Companies

(NHB) Directions, 1989. With effect from May 3,2002, ICICI Home Finance has become a

100% subsidiary of ICICI Bank Limited.

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OVERVIEW:

ICICI Home Loans are at present available to customers in 150 cities/towns across the

country. Loans are offered for purchase of new homes, purchase of resale homes and home

improvement. Besides, the company also offers loans for commercial property and loans

against existing property. The loans are offered for tenors up to 30 years. The company has

also introduced several customer friendly services such as 'door-step' service, 'know your

loan on phone' facility and 'ICICI Home Search' - free property brokerage services.

Year In Review:

In the financial year 200]\ICICI Home Finance sanctioned loans totaling Rs.j,388

crores and disbursed Rs. \611 crores. The company has also introduced a Balance Transfer

Scheme for its customers wherein an individual, who might have taken a loan at a higher

interest rate, can now replace their existing loan with a lower interest loan. They have also

introduced "Free Personal Accidental Death Insurance" scheme for all its customers availing

home loans. ICICI Home Loan recently has also introduced adjustable rate loans.

Documents, which need to be submitted along with the application form, are:

Personal documents

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FRANCHISEE ICICI BANK HOME LOAN

• Duly completed application form along with the signatures of all the applicants.

• Latest passport size photographs of each of the applicants.

• Photocopies of updated bank statements of all the applicants for the last six months of

both the operating and the salary accounts (if they are separate accounts.)

• Proof of age and residence. The documents which could be submitted for the same

are - Passport, Drivers License, Election ID, PAN Card, Ration card, LIC policy,

School leaving certificate (can only be age proof)

• Signature verification from the current banker as per the format provided by ICICI

Ltd.

 Details of all other obligations and loans taken along with proof of the original loan

amount, outstanding balance, EMI and repayment record

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FRANCHISEE ICICI BANK HOME LOAN

Financial documents: For salaried

individuals:

• - Latest Salary slip / certificate with deductions

• Employment details for the last year

For self employed individuals:

• Last three years profit and loss accounts and balance sheets for individual and/or

company/firm as applicable, duly certified by a Chartered Accountant.

• Last three years income tax acknowledgments, both personal and business.

• Advance tax challans if available

• Profile of the business/es on the letterhead. The profile should contain the date of

incorporation of the firm/company, partners/directors, if any, nature of business, list of

suppliers and clients.

« Partnership deed, memorandum of association and articles of association as

applicable.

• Bank statement for the last six months of the operating business account.

Documents of the place of business such as ownership documents like the sale agreement

for the place of business if it is owned, Lease agreement for the office if the property is

leasehold, in case the property is a shop, registered documents giving proof of ownership

under the Shops and Establishments Act or Sales Tax / Excise Duty certificate.

List of the properly documents to be submitted by the borrowers:

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FRANCHISEE ICICI BANK HOME LOAN

Please note -

1) You must retain photocopies of all original documents being submitted by you for your own

future reference.

2) You nlay be asked to submit further legal documents if required by'the ICICI or their

approved lawyers.

Documents common for all cases

• Original stamped receipts for the payments already made to the builder / seller, till

date.

• 37 I Clearance from the appropriate Income Tax authorities if, applicable.

List of additional amenities from builder where applicable.

Documents for specific cases:

1) Under construction / Direct from Builder

• Original Agreement with the builder duly stamped and registered (if the same has

been received from the Sub-registrar's office) and the original money receipt issued

by the Sub-registrar, for the registration fee paid by the applicant.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 26


FRANCHISEE ICICI BANK HOME LOAN

OR

• Pending Registration, following documents to be obtained.

• Certified true copy of the agreement with the builder.

• Original money receipt issued by the Sub-Registrar.

• Acknowledged copy of the authority letter, addressed by the applicant to the Sub-

Registrar (Draft 1 attached).

• Copy of the letter acknowledged by the builder/reseller in case he or his

representative did not accompany applicant to Sub-Registrar's office to admit

registration (To be taken if applicable) (Draft 6 attached).

• No Objection Certificate from the builder on his letterhead. (Draft 2 attached).

• Letter from the builder/architect indicating the latest progress of construction for under

construction cases.

2) Directly in Registered Co-operative Housing Society

• Original Allotment letter from society specifying the flat number and cost of the flat

allotted.

• No Objection Certificate from the society, on their letterhead, (Draft 3 attached).

• Original share certificate issued by the society (if issued)

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 27


FRANCHISEE ICICI BANK HOME LOAN

5) Purchased in resale:

a) Where society has not been registered

b) In a registered co-operative society :

c) Previous chain of Sale Agreements, (original / copies). ♦ Present Agreement in

original, between the vendor and purchaser duly stamped and registered.

OR

• Pending registration - following documents to be obtained:

Certified true copy of the agreement between the vendor and the purchaser.

• Original money receipt issued by the Sub-Registrar.

• Acknowledged copy of the authority letter, addressed to the Sub-Registrar, (Draft 1

attached).

• Copy of the letter acknowledged by the builder/reseller in case he or his

representative did not accompany applicant to Sub-Registrar's office to admit

registration (To be taken if applicable) (Draft 6 attached).

 No Objection certificate from the builder/society, (Drafts 4 and 5 attached)

 Original share certificate issued by the society (copy of original not yet

transferred).

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 28


FRANCHISEE ICICI BANK HOME LOAN

4)Directly from any Development Authority

 Original allotment letter from the Development Authority.

 No objection certificate from the Development Authority (as per their own format).

Original receipts, issued by the Development Authority, for the payments made for

the flat.

5) Construction of house on a separate plot of land

 Original registered Sale deed / Lease deed / Partition deed / Gift deed under which the

plot of land has been acquired by you

OR

 Pending Registration, following documents to be obtained

 Certified true copy of the agreement with the builder/seller.

 Original money receipt issued by the Sub-Registrar.

 Acknowledged copy of the authority letter addressed by the applicant to the sub-

Registrar (Draft 1 attached).

 Copy of the letter acknowledged by the builder/reseller in case he or his

representative did not accompany applicant to Sub-Registrar's office to admit

registration (To be taken if applicable) (Draft 6 attached).

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 29


FRANCHISEE ICICI BANK HOME LOAN

 Original receipts for the payment made for the plot, if separately available.

All previous documents of title-in respect of the plot in your possession.

7/12 extract of Property card as applicable for the property along with the record of rights in

Form No. 6.

Index II

• N. A. permission & latest N. A. tax receipt. Title report for

the property under consideration.

• Detailed estimate of the cost of the project.

• Approved building plans.

Any other legal document required by ICICI or ICICI's approved lawyers in order to

certify a clear title.

Eligibility

Home loan

« You 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.

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FRANCHISEE ICICI BANK HOME LOAN

• You must be employed or self-employed with a regular source of income.

Land loan

• You 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.

• You must be employed or self-employed with a regular source of income.

• You must be purchasing a plot of land for residential use.

• The purchase has to be from a development authority or from a registered co-

operative society.

• The purchase of the land must be for the construction of a house.

• The plot of land must be clearly demarcated with clear boundaries.

Office premise loan

• You 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.

• You must be self-employed with a regular source of income.

• The loan can be for the purchase / construction / extension of a non-residential

property.

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FRANCHISEE ICICI BANK HOME LOAN

• A loan for renovation or improvement will be given only at the time of acquisition of

property.

• Professionally qualified and self-employed individuals (doctors, pathologists, chartered

accountants, cost accountants, company secretaries, architects, engineers, consultants,

lawyers, chemists) can apply.

• A minimum of 3 year's work experience is a must.

Home Equity Loans

• You 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.

• Your must be employed or self-employed with a regular source of income.

• You must be the owner of a self-occupied property.

A number of factors are taken into account when assessing your repayment capacity. Your

income, age, number of dependants, qualifications, assets and liabilities, stability/ continuity

of your employment/ business are some of them.

However, there are ways by which you can enhance your eligibility.

• If your spouse is earning, put him/her as a co-applicant. The additional income shall be

included to enhance your loan amount. Incidentally, if there are any co-owners they

must necessarily be co-applicants.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 32


FRANCHISEE ICICI BANK HOME LOAN

• Did you know that your finances income can also be considered for sanctioning the

loan on your combined income? The disbursement of the loan, however, will be done

only after you submit proof of your 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 you with the necessary details. The

final amount to be sanctioned will depend on your repayment capacity. However, what you

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.

Sanctioning

Documents

♦ Passport size photograph.

♦> Age verification: PAN card, Voters ID, Passport, License.

♦ Bank statement for the last six months.

♦ Income Documents e.g. Latest Form 16, Certified IT returns for latest 3 years.

♦ Processing Fee cheque.

♦ Loan Enclosure letter.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 33


FRANCHISEE ICICI BANK HOME LOAN
These are the documents required for sanctioning a loan. You may be asked to submit further

legal documents if required by ICICI or its approved lawyers.

Your loan will be disbursed after you identify and select the property or home that you are

purchasing and on your submission of the requisite legal documents.

While you may be under the impression that the list of documents asked for is rather

extensive, please note that it is for your own good. Each and every single document asked for

will be verified and checked to ensure your safety.

This may take some time but we want to ensure a clear title and will complete all the legal and

technical verifications to ensure that you have full rights to your home.

The 230 A Clearance of the seller and / or 371 clearance from the appropriate income tax

authorities (if applicable) is also needed.

On satisfactory completion of the above, on registration of the conveyance deed and on the

investment of your own contribution, the loan amount (as warranted by the stage of

construction) will be disbursed by ICICI.

The disbursement will be in favour of the builder/seller.

List of documents for disbursement

Standard-documents:

• Loan Agreements

• Disbursement Requests

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 34


FRANCHISEE ICICI BANK HOME LOAN

• Post-dated cheques

• Personal guarantor's documents, as the case may be

Some documents are specific to each state. For further information, please contact the nearest

office.

Repayment

What is the repayment tenure?

Home Equity Loans - Maximum loan tenure of 15 years.

Office premise loan - Maximum loan tenure of 15 years.

Home loan - Maximum loan tenure of 30 years

How is the loan repaid?

All loan repayments are done via equated monthly installments (EMI).

What is an EMI?

An EMI refers to an equated monthly installments. It is a fixed amount which you pay every

month towards your loan. It comprises of both, principal repayment and interest payment.

When does the repayment start?

EMI payments start from the month following the month in which the full disbursement has

been made.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 35


FRANCHISEE ICICI BANK HOME LOAN

How is the EMI paid?

The EMI is to be paid ever}' month through post-dated cheques (PDCs) or direct deductions

from your salary. If you are opting for PDCs, then you will have to provide 36 upfront. The

PDCs are to be dated on the I s' of every month. However, if you receive your salary a few

days later, no problem. We provide the flexibility of dating the cheques for the 7 th of the

month.

What ifaPDC bounces?

In the case of a bounced cheque or delayed payment, charges and outstanding dues will be

charged as per the prevailing company policy. You can replace old PDCs with new ones

within 5-7 working days.

What is pre-EMI interest?

In the case of part disbursement of the loan, monthly interest is payable only on the

disbursed amount. This interest is called pre-EMI interest (PEMI) and is payable monthly till

the final disbursement is made, after which the EMIs would commence.

When do I pay PEMIs?

The first PEMI is payable by cheque by the end of the month in which the disbursement is

made and each subsequent PEMI at the end of every month till the commencement of EMI.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 36


FRANCHISEE ICICI BANK HOME LOAN

Interest Rates for Resident Indians

Adjustable Rate Loans Home Loans /

Land Loans:

The interest rate on ICICI Bank Home Loans / Land Loans is linked to the ICICI Bank

Floating Reference Rate (FRR) and moves up or down with the FRR.The FRR for ICICI

Bank Home Loans is currently 7.75% p.a.The EMI table for Adjustable Rate Home Loan /

Land Loan is given below:

Tenure (yrs) Rate of Interest * EMI per Lac


Upto 5 years 7.50 % 2004
6-10 years 7.50 % 1188
11-15 years 7.50 % 928
16 - 20 years 7.50 % 806

• 0% Processing Fee

• Interest calculated on the basis of monthly rest. «

Maximum tenure of 20 years.

• No fee for part prepayment.

• Interest rates would be adjusted periodically with change in FRR .

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 37


FRANCHISEE ICICI BANK HOME LOAN
Interest rates for fresh adjustable rate home loans for loan amount greater than Rs.5

lakhs. Conditions apply.

Office Premises Loan:

The current rate of interest for these loans is 9.75% for all tenures. The interest rate on these

loans is linked to the ICICl Bank Floating Reference Rate (FRR) and moves up or down

with the FRR .

The EMI table is below:


Upto 5 years i 9.25% 2113
given
6-10 years 1 9.25% 1308 ..
11-15 years i 9.25% 1060
i

• Interest calculated on the basis of monthly rest.

• Maximum tenure of 15 years.

• A pre-payment fee of 2% on the amount prepaid, either in part or full.

Home Equity Loans:

The current rate of interest for these loans is 9.15% for residential property and 10.25% for

commercial property. The interest rate on these loans is linked to the ICICl Bank'Floating

Reference Rate (FRR) and moves up or down with the FRR .

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FRANCHISEE ICICI BANK HOME LOAN

The EMI table is given below

Interest calculated on the basis of monthly rest.

Maximum tenure of 15 years.

No fee for part prepayment.

Fixed Rate Loans

Home Loans / Land Loans:

The EMI table for Fixed Rate Home Loans / Land Loans is given below :

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 39


FRANCHISEE ICICI BANK HOME LOAN
• The ICICl Bank Floating Reference Rate is currently 7.75% p.a.

ICICl Home Loan offers following types of loans

Home loans Office premise loans

Loan against property Loan for

NRIs Balance transfer Land loans

• The disbursement will be in favour of the builder/seller.

Document Required from NRIs

!. Passport size photographs of all the applicants 2. Copy

of the passport and visa . 3. Copy of work permit (if

applicable)

4. Copy of the CDC (if you are employed in the merchant navy)

5. Bank statements for the last six months (domestic and international)

6. General Power of Attorney as per our draft duly attested by the Indian Consulate in the

country of residence (i.e., when NRI is not in India)

7. General Power of Attorney as per our draft can be locally notarised (if NRI is in

India)

8. Copy of the employment appointment letter and contract

9. Copy of the labour/identity card (translated in English and countersigned by the

Indian Consulate), if employed in the Middle East

Salary certificate (in English) specifying name, date of joining, designation and salary

details.

Theoretical Perspective
BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 40
FRANCHISEE ICICI BANK HOME LOAN
Types of home loans

• Rent or Buy? -

• Property as an Investment Avenue :

The spectrum of loans for home-related needs is broadening with new varieties being

launched frequently. Apart from taking a plain vanilla loan for buying a home you can take

loan for purchase of land, construction of home, making improvements in your present

home, refinancing your existing home loan and so on. Recently HDFC has launched home

equity loan for taking loan for your other needs, against home as collateral.

You can take a loan for purchase of land. Though most of the lenders require you to

build your own home on the land (that too within a stipulated period), a few give it even if

you purchase land as an investment. You can apply separately for a construction loan to

build a house on the land you have purchased.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 41


FRANCHISEE ICICI BANK HOME LOAN
You can take a stamp duty loan for paying the stamp duty on your purchase of a

home. Stamp duty range between 10-12% of the purchase cost of the home. It can be very

substantial in cities like Mumbai and Delhi where the price of real estate is high.

If you want to add a floor to your present home or expand it, you can take a Home

extension loan.

If you want to repair your present home, you can take a home repair or Improvement

loan.

Some lenders are offering home conversion loan, where you can buy a Jaigger home

without prepaying the loan on the existing home. Your existing loan is transferred to your

new home and you get additional finance as required.

In case you want to buy a new home and sell your existing one, and you can not find

a buyer for your home, you can get a bridge loan. It is a short-term loan that covers the

period till you sell off your old home and buy a new one. You can repay them either in

lumpsum or in installments.

If interest rates fall you can replace your high cost home loan with a cheaper loan

usually from another borrower. This is called refinance loan.

Rent or Buy?

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 42


FRANCHISEE ICICI BANK HOME LOAN
In determining whether you should buy a home or rent it, think about how long

you're planning to stay in it. It generally doesn't make economic sense to buy a home if

you are not planning to retain it for some time. Why? Because it costs money to buy a

house and sell it and to take a loan and then prepay it. It would have to appreciate in value

very quickly between the buying and the selling to make it financially worthwhile.

Then there is rate of return you can earn by investing the cash you would save by

not buying (this is called opportunity cost). Though the lax laws are hell bent on making

home buying very attractive, renting it might be a better idea, financially as planning to

stay there for less than 6-7 years.

The various costs associated with buying a home with loan are:

• Stamp duty payable on purchase price, it ranges from 10-12%

• Broker fee in the range of 1 -2%, if you are using a broker

• Documentation and other processing fee on loan in the range of 2-3%.

Along with the above there is lots of labour involved in terms of choosing a flat,

arranging for down payment, etc. If you sell a home, it again involves search costs of

looking . for a buyer and then while prepaying the loan you might have to shell out 2%

prepayment penalty.

Property as an Investment Avenue

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FRANCHISEE ICICI BANK HOME LOAN

If you are planning to buy a home as an investment, you should understand the

peculiarities of real estate as an investment.

First of all real estate prices are very sticky in the short term, so unless you are willing to

wait for a really long term it will test your patience to the hilt. People who bought property

in Mumbai during the early nineties boom will have to wait for a long time even for

recovering their principal.

Then the locality in which you are buying a flat may go out of fashion and lose its

premium value. South Bombay may not remain such a hep place in coming times, with

suburbs getting livelier by the year. The flat is somewhat a perishable item, meaning that it

will lose its charm and newness with time, which will affect its valuation. If you bought a

flat in Kalbadevi or Chandni Chowk you may not get a very high price as the flat wears

down with time. N4any lenders don't lend for flats older than 25 years (a few don't lend for

even 5 years old ones).

If you are not planning to stay in your home, to cover loan repayments and other

variable costs, you might think of renting it out. In case you didn't notice, Indian laws are

known to support tenant all the way! So if you are stuck with a not so decent tenant you

might have to try and forget your ownership of the flat!

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FRANCHISEE ICICI BANK HOME LOAN

By drawing such a pessimistic picture, I don't want to bias you against buying flat as

an investment avenue, but if you do get biased I don't mind! Because I really believe that

you should understand the pros and cons of any investment before putting even a rupee

there. In any case buying a plot may be a more sound investment decision than buying a

flat. Apart' from a very few cities like Mumbai, Bangalore, flats are not known to appreciate

very fast.

Ideally, you should find a home loan even before you start looking for a home. Not

only will you know what you can afford, but you'll feel more confident knowing that you

have a certain amount of money at your disposal.

With the home loan market heating up with intense competition and lowest interest

rates ever, home loan shoppers never had it so good. But there is scope for reducing your

loan costs further, if you spend some time shopping around.

The type of loan depends on :

• Purpose of the Loan

• Nature of the Loan (Term Loan or Overdraft)

• Nature of Interest (Floating or Fixed)

Interest Rate (Daily, Monthly, Quarterly, Semi-Annually or Annually Reducing

Balance)

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 45


FRANCHISEE ICICI BANK HOME LOAN

Purpose of the Loan - Loan from banks and Housing Finance Companies (HFC's) can be

taken for the following reasons -

• Construction of Property

• Purchase of Property

« Site Loans

• Extension of Property

• Repairs and Maintenance of Property

Nature of the Loan - Most of the HFCs offer term loans, banks offer both term loan

and overdraft facilities. In case of Term Loans, the loan amount is fixed and interest is

charged on the whole loan amount. You should opt for a term loan when you want to make

a fixed installment payment for the property. An ideal situation for term loan would be

buying of an under construction or ready property where the loan amount you will opt for

is known in advance. Over draft facility is preferred where the amount required is not

determinable, for eg. when the loan is taken for repairs and maintenance.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 46


FRANCHISEE ICICI BANK HOME LOAN

Term Loan:

Pros

• The period of term loan can go up to 30 years.

• Once the loan is disbursed there is no yearly review. Cons

• In case of earlier payment, pre-payment charges are levied.

• A fixed liability is created every month this takes away flexibility.

• Interest is charged on full amount of loan though it may not be utilized.

Overdraft Facility

Pros

• Interest is charged only on the amount drawn.

• There is no fixed liability every month.

• The loan can be repaid earlier without any pre-payment charges. Cons

• The loan facility is restricted to one year. It may be renewed after

bank reviews the facility.

There is a commitment charge involved, and if the loan facility is not availed a

commitment fee is will be charged.

• The interest rate is higher than interest charged on term loan.

Nature of Interest - Fixed Rate Plan

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 47


FRANCHISEE ICICI BANK HOME LOAN
In fixed rate plans, the rate of interest remains the same through the tenure of the

plan. Keep these points in mind while shopping around for the loan 1) Calculate EMI

EMI is the first scale on which you should measure different loans. Don't get swayed

by the interest rate quoted by the lender, instead look at the EMI for the same repayment

tenure.

Along with the quoted interest rate, the effective interest rate depends on the reducing

balance method used by the lender. Reducing balance is the method of reducing the

principal amount repaid, from the outstanding ioan amount. Every time you make a

payment, the interest you pay is calculated on balance outstanding principal.

. To take an example, assume you borrow Rs. 1 lac for 15-years. If the reducing balance

method is monthly, then in the first month you would pay interest on Rs. 1 lac plus a small

amount towards principal, say x. In second month, the interest would be calculated on a

principal of Rs. 1 lac minus x. In case the reducing balance method is yearly, even in second

month the interest would be calculated on entire Rs. 1 lac. The principal is reduced for the

purpose of calculating interest, only after 1 year.

The reducing balance can be of 4 types: daily, monthly, quarterly and yearly. In the

first method, the principal is reduced ever}' day as if you were making repayment of the

principal on a.daily basis. In normal course it is practically same as monthly reducing, as we

make payments on monthly basis. But if you are partially prepaying a loan, it changes the

effective interest rate, as the new repayment requirements are calculated after reducing your

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 48


FRANCHISEE ICICI BANK HOME LOAN
principal and given effect on the same day. In the other methods, the reduction in the

principal outstanding is made at the end of every month, quarter or year.

The effective rate of interest increases with the increase in the period of reducing

balance. Hence the EMI in the monthly reducing balance method will be lower than in the

quarterly reducing balance which in turn will be less than the annual reducing balance

method for the same rate of interest.

Use our tool to find the effective rate of interest for different reducing balance

methods :

1) Processing and other fee :

While applying for a loan, you have to pay a certain charge on the amount applied

for. The charge is calculated on the amount of loan applied for and not on the amount

actually sanctioned. This charge varies with the lender and may be a fixed amount

irrespective of the amount applied for or may be a percentage of the loan applied for. This

amount, paid upfront, effectively reduces the money you get.

If the processing charge is 2% of loan applied for, and you apply for Rs. 10 lacs, you

will have to pay Rs. 20,000 as processing fee upfront. And if the loan sanctioned is Rs. 8

lacs, the money you actually receive is 7.80 lacs (8 lacs minus 20,000 processing fee you

paid), but you have to pay the interest on 8 lacs.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 49


FRANCHISEE ICICI BANK HOME LOAN

This can make big difference in the real cost of the loan. Look for the lowest fees

lenders.

2) Commitment fee

In case you've got your loan sanctioned, before buying a flat or your builder is not

delivering the property on schedule, some lenders may lev}' a commitment fee on the loan

amount sanctioned.

3) Prepayment penalty

Generally if every thing else is same, try to get a lender who doesn't charge a

prepayment penally. This is a great way of getting rid of your debt in case your fiscal fitness

improves. Also if the interest rates fall, you can go for replacing the higher cost loan with a

lower cost one.

Documentation required by the lenders

Common (for salaried as well as self-employed borrowers)

Proof of Age

Proof of Residence

Photograph

Bank Statements for the past six months For salaried borrowers

Latest salary slip or statement

Form 16 For self-emploved borrowers

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 50


FRANCHISEE ICICI BANK HOME LOAN
I-T returns for the last 3 years

Balance sheet for the last 3 years

P&L accounts for the last 3 years

Tax challan for the last 3 years Flat and house

Sales affidavit/ letter of allotment in case of society or association of persons

Original vendor's sale deed

Original sale agreement

I-T clearance as the case may be

• Encumbrance certificate

Buying a home is surely a big drain on your pocket. But fortunately you have a very

unlikely ally on your side, the Government. It has made great tax laws to make owning a

home a lot more affordable.

You get a tax exemption on interest paid upto Rs. 100,000 p.a. on a new home bought

and possessed before April 1, 2003. If you are in the middle of an existing loan the old limits

continue.

Also you get a 20% tax rebate on principal repayments upto Rs. 20,000 . So you get a

maximum tax rebate of Rs. 4,000.

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FRANCHISEE ICICI BANK HOME LOAN

The tax reliefs granted are for the construction or acquisition of a new house. The

basic purpose of this is to give a boost to the housing industry. If you replace an old loan by

taking a new loan you are not eligible for this exemption. If you want to avail of these

attractive tax laws, the way to go is: selling your present home, prepaying the debt and

buying a bigger home by taking a new lower interest loan.

One important thing to keep in mind is that you must get the delivery of your home

before April 1, 2003. If you don't gel this you will get a tax benefit of upto Rs. 30,000 p.a.

on interest. A good option can be to buy a ready-possession property.

Refinancing

There are various kinds of insurance covers available for a home owner. The various

options may be insurance against fire, against other disasters, burglary, etc. many lenders

may insist on getting your home insured to safeguard their interest. In case the house is

destroyed in a fire and you decide lo leave that behind along with your loan, the lender will

be left high and dry without any collateral.

Apart from getting the mandatory ones you should try to get insurance as per your

circumstances. Like if your not living in quake prone or riot prone area you might want to

skip taking their insurance cover.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA) 52


FRANCHISEE ICICI BANK HOME LOAN
Refinancing is not very prevalent in India, but is going soon going to be an active

field. It gives you the opportunity of prepaying your high cost debt and get a lower cost one.

In today's falling interest rate scenario you should use this vehicle to lower your debt

payments as much as possible.

If you are able to find a house that is for sale by owner, one that you like, which you

feel is priced at or below market — by all means, go for it. It may be that someone you

know has decided to sell or somebody you know knows somebody who ... You may have

found the place through the classifieds in your local paper. Or may be a net savvy guy like

you know the right nooks of the cyber world to hunt around.

But if you are new to a city or have to buy a house in a hurry, brokers of course

provide a valuable service. Ask for referrals at your work place or around you to find the

right kind of the agent.

An agent plays an important role of bringing together a buyer and a seller and reduces

the search costs and inconvenience for both the parties. But he takes a fat commission on the

deal and if you can avoid the broker you will obviously save on the commission. V,

My kind of home

You've filled out your wish list and figured out how much you can afford. Now comes

the trickier question, what kind of home to buy? A not so good house in a very good locality,

a great house in a not so good locality, a new house, an old house, a flat in the downtown

area or an independent bungalow in a distant suburb.

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One fact of life about homes is that a far from good house in a posh locality is worth a

lot more than a posh house in a down market locality.

New Vs Old Home

One of the main advantages of a new home is... it's new! Another advantage is the

design process. If you sign a new home contract early enough in the building process, you

can make some, if not all, of the decisions about the design.

In case of new but unsold home, your bargaining position is quite strong, as the

builder wants to liquidate his flats and move on.

How Much You Can Afford

The first step in finding a home is figuring out how much you can afford. It probably

means you're going to take a home loan. As it happens there is wide gap in what you need

and what the bank is willing to lend you. The amount of loan the bank gives you depends on

three things: income, credit worthiness, and collateral. The bank would like to know:

1. If you make enough money to pay back the money,

2. What's your risk profile, and

3. If you have a co-guarantor or something of value should you be unable to pay back.

In general, the lender will want you to come up with at least 15% of the value of your new

home for a down payment before he will give you a home loan. The lender will plug your

income numbers into a couple of formulas to determine your repaying capacity. He will have

some norms for deciding your upper limit of loan, like your take home salary after loan

repayment should be more than 50% of your gross income, etc.

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The bank will have to wait for 15 years or so for getting its money back. So it would

like to make guesses about your future repayment capacity also. It may depend on various

factors, subjective as well objective, such as the kind of job you have, whether you are

salaried or self-employed, your family background, etc.

The bank may also ask for a co-guarantor or some other security to increase the

amount of loan.

This is what a lender might look for, but your affordability of course depends more on

you. You may like to think about questions like should you rent instead of buying, what is

your time horizon, and what is your comfort zone.

Before you borrow, figure out whether you can really afford it. Just because the bank

will lend, doesn't mean that you should take it. Your house payment is just one piece of your

financial puzzle. Are you planning on having a bigger family? What other sacrifices you

might have to make that home a reality?

One important aspect to understand before taking affordability decision is that your

home is the collateral for your home loan, meaning if you are unable to make the repayments

the lender can take possession of your home. Use our tools to get an accurate snapshot of

your financial picture and find out what you can afford.

What lenders look for? Lenders look at many different aspects of your financial life, some of

them may be following:

• Your ability to come with the cash

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The lenders will not give a loan for the full purchase price of the home. They require

you to contribute some of your own money upfront, this may be in the range of 15-20% of

the home price. You also have to pay 2-3% of loan amount in processing and other fee.

• Your income

Lenders want to make sure that you earn enough to pay the costs of owning a home.

For this they may compare your monthly loan repayments with your gross salary. Generally

your take home salary should not be less than 40% of your gross salary after making all loan

payments.

• Your debt

The lenders also want to see that you are not burdened with lots of debt. That's why

they look at your monthly debt commitments, such as auto loan payments, personal loan

payments, etc.

• Your job history

Lenders like people with steady career path. If you hop jobs too fast you may miss a

point or two in your credit report.

The various parameters of a housing loan are tenure, amount and interest rate.

The tenure of a loan tells you that how long will it take to pay off the loan. In India

generally the maximum tenure of the home loans is 15 years, with a few lenders offering

tenure of 20 years, 1CICI has recently launched a 30 year loan. The longer the tenure, more

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you pay in total interest, but your monthly payments will be less. Generally most of the

lenders require you to pay the entire loan before you retire.

Amount of loan is how many rupees you borrow, it depends on number of factors

like your age, your salary, your profession, your city. Lenders ask you to put 15% to 20% of

the home cost upfront before they disburse the loan. The loan amount varies between Rs.

25,000 to Rs. 1 crs. depending on the lender. Interest rate is the cost of borrowing the

money. It depends on the amount of loan you take and the time period of the loan. While

most of the lenders charge higher rate for more loan, some lenders are doing away with this

practice.

There are two kinds of loan possible: fixed rate loan and adjustable rate loan.

In fixed rate loan, the interest you pay on the loan remains constant through out the

tenure of the loan. In adjustable rate loan, the interest rate may vary depending on the

underlying benchmark. A benchmark is an interest rate that is used for calculating the

interest rate. The lender while giving out the loan decides the time period after which the

interest rate is changed, known as reset frequency.

Choosing between a fixed rate and an adjustable rate loan depends on your future

views of the interest rate. If you think that interest rate in future will fall from the present

levels, adjustable rate loan will make sense. Otherwise in lower interest rate period locking

your loan at a fixed interest rate is a good idea. Any way as adjustable loan rates are not

available widely in India, it's a non-issue. I have written about it, just to make you future-

proof. The monthly payment you make on your loan is known as EMI, Equated Monthly

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Installment. It is constant over a period of time. EMI increases with increasing rate

of interest and reduces with increasing tenure.

An important part of the lending process is the upfront fees charged by the lender. It

may be documentation fee, processing fee, etc. The same varies from lender to lender and

makes a significant impact on your total borrowing cost. The same may depend on the

amount of loan requested by you or the amount actually disbursed by the bank.

The option of prepaying the loan is always there, it means repaying the entire loan

amount before its due. Some lenders charge prepayment penalty and others do not. It is

generally better to take a loan without prepayment penalty, as in case the interest rates fall

you have the option of refinancing the loan. More about it later.

The loan is disbursed, i.e. is the money is given to you, after you have selected the

home, completed all the legal documentation and have brought in your own contribution in

full towards the purchase. In case your property is under-construction, the disbursement is

made in parts according to the stage of construction.

Before the disbursement you will have to submit to the lender all legal papers of the

property along with the agreement with the seller of the property. If you are buying a flat you

may be asked to provide a No-Objection Certificate (NOC) from the housing society.

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ORGANIZATION CHART

CEO

Regional Manager

Zonal manager

Branch Manager

Territory Manager

Area Manager

Sales Manager

Asst /Unit Manager

Agency
Manager

Unit manger

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SAMPLING

 Stratified random sampling method

 Sample size100

 General customer and existing customer of ICICI Bank

SAMPLING PROCEDURE

From large number of customer in Belgaum City were we select stratified

random sampling

FIELD SAMPLING.

 Directly approached respondents

 Research Design

Selection of data collection method

Primary data: for a study of this nature of data is primary data it is collected through

by making survey, which is the systematic collection of information directly from the

respondent

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Secondary data

 Information from the company broachers

 Information collected from website other which is pert pertaining housing finance

company

 ICICI Bank Records ,reports and magazine

SELECTION OF MEASUREMENT TECHNIQUE

Quantative analysis, bar, and pie chart

Limitation Of Study

Since sample size is only 100 which is not representative of the population as

whole.

Information partly based on secondary data and hence the authenticity of the

can be visualized and is measurable.

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Level of accuracy of the results restricted to the accuracy level with which the

customers have given their answers and the accuracy level of the answers cannot be

predicted.

It is quite difficult to convenience some people the data was collected for the

purpose of survey only. Some degree of skepticism in customer mind. Employees of

some housing finance companies hesitated to furnish the information

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ANALYSIS OF GRAPH

The sample size selected survey was100.the respondent are general customer and some

existing customer of ICICI bank.

Were available survey at their opinion was taken to know customer expectation and

awareness level of ICICI bank

Awareness level

INTERPRETATION

According to the survey 97% people aware of ICICI Bank& remaining 3% not aware of

ICICI Bank.

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Types of Loan

Interpretation:

100% respondent aware of home

85%respondent aware of vehicle loan

75%respondent aware of two wheeler loan

67%respondent aware of personal loan

48% respondent aware of educational loan

others is 0

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Customers of ICICI bank

Interpretation

Out of 100 respond 40 %respondent of ICICI Bank

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Have you availed home loan of ICICI bank

Interpretation

Out of 40 respondents 21 respondents are availed home loan form ICICI


Bank

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The Percentage Of Respondent Who Are Aware Of ICICI Bank Providing Home Loans For
The Below Options.

Interpretation

According to my survey out of 21 respondent 20 respondent are aware of ICICI Bank home

loan even provide fund for purchase a Flat , land ,renovation of home & Extension of home

But 4 respondent aware of office purchases commercial premises purpose

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Type of loan preferred

Interpretation

Respondents have given equal impotents for both long term & short term loan offered by

ICICI bank

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Reasons for taken the home loan from ICICI bank

Interpretation:

According to survey 75%respondents say that easy accessibility and wide range of product,

remaining 25%respondents feel that tenure.

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Rate of interest of ICICI bank home loan

Interpretation

Above graf show that out of 21 respondents 71% of respondents say that ROI of ICICI

bank home loan is high remaining 6 respondents 29% the rate of interest of ICICI bank is

moderate.

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Satisfactory level of ICICI home loan

Interpretation

Out of 21 respondents 13 respondents are not satisfied by ICICI bank home loan But 8

respondents are satisfied with ICICI bank home loan.

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Availing of home loan

Interpretation

According to survey 65% respondents are availing period 1-5 year & 15% respondents are

availing period 6month,10% respondents are availing period 6-10

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Overall Grade ICICI bank home loam

Interpretation

According my survey 80% respondents are say that performance of ICICI bank is Ok, 10%

respondents are say that performance of ICICI bank is Good & 10% respondents are say that

performance of ICICI bank is Bad.

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Reason behind preferring the other bank

Interpretation

According to this survey 40% respondents preferring other banks for Rate of interest & 20&

respondents preferring other banks for Service & 25%respondents preferring other banks for

Reference.

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FINDINGS

 out of 100 respondent 97% of respondent aware of ICICI Bank it is really good point for

the company view

 100% respondent aware of home loan

 out of 100respondent 40%of the respondent are the customer of ICICI Bank

 out of 40 respondent 21 respondent have availed home loan of ICICI Bank

 out of 21 respondent 20 respondent are aware that ICICI bank home loan even provide

for purchasing of flat , purchase of land ,renovation of home& exetension of home

 only 3 respondent are aware that ICICI bank home loan even provide for office purchase

and commercial premisis purpose.

 Respondent have given equal importance for both long term and short term loans offered

by the ICICI bank.

 18 respondents says that the reason for the taking the home loan from ICICI bank is easy

accessibility and wide range of product offered by the bank. and 3 respondent says that

the reason is tenure.

 15 respondents feel that rate of interest of ICICI bank is high and remaining 6

respondents feel that as moderate.

 13 respondents are not satisfied by the ICICI bank home loan.

 17 respondents says that over all performance of the ICICI bank home loan is ok.

 79 respondents have prepare other bank mainly because of low rate of interest, quality of

service and reference.


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SUGGESTIONS

 The rate of interest should be minimized for the benefit of the customers.

 Sales executive should give correct information to the customers. Regarding the

processing fees and administration fees. their should not be hidden charges.

 ICICI must keep in more frequent touch with customer after the disbursements of the

loan. They should have customer relationship management policy.

 Maintain the aggressive promotional activities to attract new customers.

 The respondent not having clear information about home loan. So bank must give

litter importance to advertisement such as T.V advertisement Wall magazines and bill

board etc

 The service of the ICICI bank must be improved

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CONCLUSION

One of the basic needs of human being is shelter. On wants to live always in a house of his

own rather than in a house in a house where he has to pay rent.

So here there is an opportunity for ICICI bank to promote home loans to the customers who

are in the need to buy a house.

So ICICI should promote its advertising in the commercial area to make the customer aware

about ICICI home loan.

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QUESTIONNAIRE

Dear sir/madam

I am pleased to introduce myself as MBA student of PES&T Belgaum Institute of

Management studies, Belgaum. As a part of Curriculum I have undertaken a research study

the “Survey Report on Customer Expectations and Awareness level with a view to

enhance customer base of ICICI Bank home loan” The information provided by you will

be strictly kept confidential and used for academic purpose only.

NAME: ADDRESS: AGE

CITY: AGE:

OCCUPATION: PHONE NO:

GENDER: Male Female

1) Are you aware of ICICI Bank?


a) Yes b) No

2) Which are the different types of loans are you aware of

a) Personal loan b) Education loan c) Home loan

d) Vehicle loan e) Two wheeler loan f) others:

3) Are you a customer of ICICI bank?

a) Yes b) No

(If no go to question no.12)

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4) Have you availed home loan of ICICI Bank?

a) Yes b) No

(if no go to question no.7)

5) Are you that aware ICICI Bank home loan of even provide fund for
a) Purchase of plat b) Purchase of land

c) Office purpose d) Commercial premises purpose

e) Renovation of home/office f) Extension of home/office

6) What type of loan do you prepare?


a) Short term b) Long term

7) What are the reasons to take the home loan from ICICI Bank?
a) Service b) Rate of interest c) Reference

d) Easy accessibility e) Tenure f) wide range of product

8) How do you feel about rate of interest of ICICI Bank home loan?
a) Very high b) High c) Moderate d) Low

9) Are you satisfied with ICICI Bank home loan?


a) Extremely satisfied b) satisfied c) Neither satisfied

d) Nor dissatisfied e) Extremely dissatisfied

10) Can you suggest any improvement in the quality of service?

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11) Can you grade overall performance of ICICI Bank home loan?

a) Excellent b) Good c) Okay d) Bad e) Worst

12) who is your existing Banker

13) When did you availed the loan ?


a) 6month b) 1-5years

c) 6-10years d) More than 10years

14) Your relationship with existing banker

15) The reason for preferring other Bank is

a) Service b) Rate of interest c) Reference

d) Easy accessibility e) Tenure f) Wide range product

g) Others _________

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BIBLIOGRAPHY

The data was collected from the list of Books and websites given below:

Principal Management : By Phillips Kotler

Marketing Management : By Phillips Kotler

Marketing Research : By Parshuram

Sales Report of companies

www.ICICI.com

www.apanloan.com

www.icicibank.com

www.google.com

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