Submitted in partial fulfillment for the requirement of the degree Of Master of Business Administration

Session: 2005-2006

Under the guidance of:

submitted by:

Dr. DINESH KUMAR Institute of management studies H.P. University Shimla

ANUPAM SHARMA M.B.A. (2005-07) Roll no.444 / 6898



1. 2. 3. 4. 5. 6. 7. 8

Acknowledgement Executive summary Introduction Research Design Housing Finance Current Scenario Company Profile ICICI Bank Unique features of home loan schemes of 4 banks ICICI Bank HDFC Bank SBI Bank UTI Bank Findings and analysis Conclusion Recommendations References Annexure

3 4 5-7 8-9 10-21 21-24 25-32 33-44

8. 9. 10. 11. 12.

45-51 52 53 54


A roof over one's head and ground beneath one's feet count as the bare necessities of life. There’s nothing quite like owning a home, however humble, to give one that warm and glowing feeling. But when one buys a home, one has much more than a feel-good purchase in mind: it’s also a crucial investment decision, perhaps the biggest spending decision of one's life. There are ample opportunities today for young salaried investors to plan their moves early and buy a house at the right time — and at the right price. Every individual aspires to own a home. But many either spend a lifetime saving to purchase a house or exhaust money on monthly house rents. The project at one level, is about India’s great housing boom, At another, it is about people with rising salaries and falling mortgage rates to buy homes. Five years ago, mortgage rates ranged between 16 percent and 18 percent; today, the range is 8-15 percent. The aim of this research project was to analyse the home loans and HomeSaver loans with a view to arrive at the most popular loan schemes offered by the banks under study and to conclude from the analysis the best possible schemes which would keep the bank ahead of competition. The purpose of the study is to find the critical factors that are essential for any housing loan scheme and especially for Homer Saver Scheme of Standard Chartered Bank to become the most favored scheme in the Indian scenario. The reasons being the features that the scheme provides are not being provided by many of the housing finance companies. The study encompasses comparing the housing loan schemes of the major players in the business and deriving out of it the best possible ideas for the bank to become the leader in the housing loans segment.


"It was Never so easy to build your own house"
A roof over one's head and ground beneath one's feet count as the bare necessities of life. There’s nothing quite like owning a home, however humble, to give one that warm and glowing feeling. But when one buys a home, one has much more than a feel-good purchase in mind: it’s also a crucial investment decision, perhaps the biggest spending decision of one's life. There are ample opportunities today for young salaried investors to plan their moves early and buy a house at the right time — and at the right price. In the process, not only do they fulfill that cherished dream of owning a house, but also put themselves on the path to acquiring property that would meet the needs and aspirations of their growing family, even as it leads to wealth creation. Every individual aspires to own a home. But many either spend a lifetime saving to purchase a house or exhaust money on monthly house rents. Take a house loan and let the monthly rent (easily converted into affordable EMIs) build you your dream home . Profitable Proposition “The overall demand in the residential sector has grown by about 7-8 per cent annually for the period 99-2005 as compared to the period 93-99. The growth is on account of two main factors:


 One , income-tax exemption;  Two , with no similar rebates available for individuals in the high-income group, they are creating a second asset. Most banks have changed the way interest is calculated from annual rests to monthly rests. Under the annual rests method, the EMIs (equated monthly installments) one pays through a year are factored in as part-repayment of the principal component only at the end of each year. In other words, one has to pay interest even on the installments one has paid until they’re reduced from the principal at the end of each year. Under monthly rests, the principal is lowered by the appropriate amount each month. The thumb rule being that the more frequently interest is calculated, the better for the creditor. Recently, HDFC added monthly rests on its fixed-interest loans apart from annual rests. As a result, the fall in EMIs on fixed-interest loans (where the interest rate is constant for the entire tenure of the loan, irrespective of changes in the lending rates) is more pronounced than on floating-rate loans (where the loan interest rate varies with changes in the interest rates). For example, the EMI on a 15-year, fixed-interest loan for Rs 15 lakhs has come down by Rs 840; the corresponding fall in the EMI on a floating-rate loan is only Rs 465. Apart from lowering the cost of one's loan, the switchover to monthly rests has another advantage: it makes it easier to compare loans. With increasing competition, lenders are also lowering and in some cases, even waiving-service charges (processing fee, administrative fee and so on). Even a one percent point 5

No lender has announced a permanent lowering of service charges. In other words. ones EMIs on the same loan and tenure may differ greatly. depending on whom one borrows from. but one stands to lose if interest rates rise again. So. There are several ways in which interest can be calculated.reduction in the processing fee translates into a saving of Rs 15. remember. Some lenders charge interest on monthly outstanding balances (or rests). A floating-rate loan lets one take advantage of further falls in interest rates. 6 . others on yearly rests and still others on daily rests. Also. but they’re offering these at special events or for specific periods. interest rates fall. If. Processing and other fees too add to the cost. On the other hand. with the same one. a fixed-interest loan immunises oneself to interest rate jumps. floating-rate loans make sense only when the interest rates are high and are expected to fall. however. and one's capacity to ride the interest rate changes. Locking in Choosing a housing loan is not a straightforward decision. but not the other way. one can foreclose one's loan and refinance at a lower rate-either with another lender or. that lenders allow one to switch from a fixed rate loan to a floating rate loan. increasingly. A decision on whether one should go in for a fixedrate or a floating-rate loan is a function of two factors: One's perception of where interest rates in the economy are headed.000 on Rs 15 lakhs loan for borrowers. Here’s a tip: ones monthly payment is the lowest when interest is charged on a daily reducing balance.

ons. iii. iv. Comparative analysis in tabulated form of all 4 banks at a glance. v. Recommendati Identification of the most popular and favoured loan scheme with Advantages or strong points of each of the schemes of the selected Identification of loan schemes of various public and private sector banks 7 . reason. banks. for comparative study and analysis. Identification and detailed study of home loans for each selected bank. ii. vi. Scope The scope of this analysis will encompass the following aspects:i.AIM The aim of this comparative analysis of home loans is to study the various schemes offered by various institutes with a view to arrive at the most favoured or popular scheme for implementation in our own organization and to affect changes and improvements to own existing schemes and policies.

but today it’s the fastest growing private sector bank in the country. iii.India’s largest public sector banks with largest number of branches across the country. vi. journals and other available documents. Guidance from my mentor Basis for selection of following Internet data bank. UTI Bank . iv.It has been a leader in the housing loan segment. Professional books on the 8 . HDFC . ICICI . banks-: SBI . ii. Personally approaching the selected banks and obtaining relevant details. Collection of data from magazines.India’s largest private sector bank and also it has increased its market share tremendously in the housing loan segment.although presently its market share is quite low. relevant topics v.Methodology The analysis and comparative study of home loans and home saver loans will be undertaken by adopting the below mentioned methodology:i.

The application goes through an appraisal by the credit department and a personal interview with the borrower in some cases and the amount of loan to be sanctioned is determined.210. Amount of loans provided vary from Rs. Repayment periods vary from 5 to 20 years and HFCs have many types of payment structures and schemes. the risk associated with these loans is also higher . with some part of most HFCs portfolio consists of loans to corporate bodies that in turn either build housing for customers or employees or pass the loan on to the employee as housing loan.000 to Rs. Loans to others consist of loans extended to Builders/Developers and Co-operative Societies. Product Process Flow The process of issuing a housing loan by HFCs involves as the first step an application that is submitted by the borrower.5%-1% of the loan amount. 1 crore. A processing fee is charged at this stage to cover administrative overheads. consequently these form a small part of the portfolio for any HFC. The approval letter is sent to the 9 . Loans are largely provided to individuals.HOUSING FINANCE Product description Loan amounts extend upto 60%-85% of the value of property sought to be financed. Most Housing Finance Companies (HFCs) provide loans for home improvement and home addition as well. this varies from 0. Although the margins on these loans are higher.

applicant who has to pay administrative fee again along with the acceptance letter. 10 . Equated monthly instalments (EMI) including principal and interest components are paid by the borrower until the period of the loan. A legal appraisal of title related documents is then carried out before the mortgage is created and disbursed. Incase of pre-payment HFCs charge a penalty of about 1% if the prepayment is done within 5 years of sanction. The process is depicted in Exhibit 2.3.

Exhibit 2.3: Product Process Flow for Housing Finance Enquiry Application with processing fee submission Credit Appraisal Interview Checking with guarantor Verification with employer Recommendation to the Sanctioning Authority Sanction by committee Defer Approval Reject Letter to applicants Acceptance Letter with Administrative fees Legal title Documents review Signing loan disbursement documents EMI repayment Prepayment Penalty Charge 11 .

The loan disbursement schedule is decided by the Step 9 Step 10 HFC according to the stage of construction (if property under construction)or a one time payment is made if property is ready for possession 12 .Listed below are the steps involved in availing of a home loan: Step 1 Step 2 A person applies for a home loan. The applicant chooses a Housing Finance Company Step 3 (HFC) and hands over the income documents to the executive. tenure of service. etc. The executive meets the applicant and briefs him the entire loan process. of the applicant and approves the loan amount. The income documents are handed over to the HFC for eligibility and approval. After approval. The HFC verifies the documents and checks the repaying capacity. along with a list of original property title documents that have to be handed over to the HFC. requirements and the various options available. an offer letter is given to the applicant Step 4 Step 5 Step 6 by the HFC. The applicant gives the original property title Step 7 Step 8 documents to the HFC. The HFC scrutinises the legal and technical aspects of the original title documents. If the HFC is satisfied as to the legal & technical aspects of the documents then the applicant is called to sign the loan agreement. saving habits.

WHAT ALL CAN ONE TAKE A LOAN FOR: There are different types of home loans tailored to meet ones needs.Step 11 Step 12 The applicant gets possession level of of the property the depending upon the property. 13 . Home Conversion Loan: This is available for those who This is given for expanding or : This loan is available for the extending an existing home. Home Improvement Loans : These loans are given for : This is the basic home loan for the implementing repair works and renovations in a home that has already been purchased by the client. Through home conversion loan. For eg: addition of an extra 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. completion of The applicant starts paying the EMIs. Here’s are some of them: Home Purchase Loans purchase of a new home. the existing loan is transferred to the new home including the extra amount required. eliminating the need of pre-payment of the previous loan. Home Extension Loan: room etc. Home Construction Loan construction of a new home.

It varies between Rs. The bridge loans help finance the new home. An important requirement of most banks/HFCs is that one pays up the entire loan before one retires. this could make loads of difference. The longer the tenure. the additional thousands will definitely put a strain on ones finances. one will have to cough up 15%-20% of the loan amount as a down payment. Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. the city one resides in among other such factors. with a few lenders offering tenure of 20 years or more (ICICI has recently launched a 30 year loan). this may not be much.Land Purchase Loans: This loan is available for purchase of land for both construction or investment purposes. Tenure Generally. 1 crore depending on the lender. An apartment costing Rs 10 lakh may get 85 per cent financing.5 lakh. But for figures running into lakhs. salary. Amount This largely depends on a number of factors like ones age. As a rule of thumb. one will have to arrange for the remaining Rs 1. the maximum tenure of home loans is 15 years. So depending on ones earning potential and bank balance. more one pays in total interest. depending upon the HFC. one can choose an appropriate tenure. One can 14 .1 lac to Rs. For eg. 2. So. If one takes this into account. For smaller amounts. until a buyer is found for the home. profession. but ones monthly payments will be less.

15 . The interest rates may vary from institution to institution and generally range from about 9. In today's falling interest rate scenario one should use this vehicle to lower ones debt payments as much as possible. It gives one the opportunity of prepaying ones high cost debt and gets a lower cost one. The longer the tenure. one can take a new loan from another bank/HFC to pay back an old loan before its natural tenure. Repayment is in the form of EMI's (equated monthly installments). Interest Rate Without doubt the most important parameter to factor into ones calculations. the more one pays in interest.always prepay ones entire loan amount before it is due.75%. Refinance This is a concept that is yet to catch on in the home loan market but is bound to be a major service in the months to come. Under this facility. but ones monthly payment will be less. There is a trend to do away with the pre-payment penalty being imposed by some lenders so its best one checks on this as well. The lender facilitates the shift by paying the outstanding and transferring the asset to their portfolio.25% to around 10.

Miscellaneous charges A heading that should be ignored at one’s peril! The interest rates and EMIs are not the only cost factor. or may be charged separately as interest tax. b) Processing Charge It's a fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount.5 per cent or 3 per cent. The various other fees. A 0 . it could be just one fee (either administration or processing) but could yet work out to be much more if it is considerably higher at. which is usually between 1% and 2% of the amount being pre paid.5% administration fee and a 0.00. The loan amount received by you can be less than the processing fee. d) Commitment Fees 16 . 2. which one is required to pay along with the margin amount. c) Prepayment Penalties When a loan is paid back before the end of the agreed duration a penalty is charged by some banks/companies. would amount to Rs 5. say. This tax is some times included in the interest rate of the loan.000 loan.000. Other times. Never underestimate how much the processing and administration fees amount to. are: a) Interest Tax This is the tax payable on the interest paid on a home loan and not the principal. say. a Rs 5.5% processing fee on.

PEST ANALYSIS Political  Real estate sector is a major focus since 2002 – 2003 budget. and use them commercially. e) Others It is quite possible that some lenders may levy a documentation or consultant charge.5 lakh would promote larger investment in ownership housing.Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.  Withdrawal of NOC on transfer of immovable properties to improve buoyancy in the housing market. 17 . communication and PSUs. 1 lakh to Rs. defense.  Enhancement of tax exemption of interest payment on housing loans from Rs. 1.  Center has taken steps to boost housing sector like rural Housing schemes and tax benefit schemes etc  100% FDI in housing sector  the government also planned to unlock huge land resources currently lying unused under railways.

 Funds for urban Infrastructure development fall short by more than 10 times the requirement. new investments and O & M costs for next ten years is Rs.000 Crores.50. Comprehensive legislation for enabling framework for securitisation to boost financing.1250 crores to Rs 2500 crores  Modifications of rent control act up between domestic and foreign 18 .  Repeal of land ceiling regulation act provides a major push in the housing sector  Tardy process of planning approvals in the Indian politics  High stamp duty .  Joint ventures coming players  Government double its equity in HUDCO from Rs. 2. Economical  4.2% growth in construction industry in past 4 years  According to estimate of the Rakesh Mophan Committee total requirement for urban infrastructure development covering backlog. property tax and  Minimum acreage area allowed for development by FDI ventures at 100 acres  The current laws regarding foreclouser make it difficult for the housing finance companies to acquire the asset in case of any default by the borrowers.

 NPA’s are as low as 0.  Demand for pollution free environment.  Community Finance Institutions.  With the manpower insensitive services industry likely to continue outperform manufacturing in the years to come it is expected that need for employees and housing for them is likely to continue to grow.8% in housing finance which attract more and more finance companies to enter in to housing finance sector.  RBI recently agreed to reduce the risk wattage for housing finance from 100% to 75 % . 19 .  Housing construction in India accounts for just 1% of GDP  ADB provides dollar 300 million housing loans for India for a repayment of 25 years plus a grace period of 5 years Social  Housing demand is basically generated by low-income groups that have no or only limited financial resources to house themselves.  The majority of funding for housing relies on informal means. and NGOs are proven financially sustainable and have expanded their networks because of the reliability and lower interest rate.  Earthquake awareness among general masses. These employees are the major customers of the housing finance companies.Foemal finance for new housing in urban areas represents only 22% meanwhile that in the rural ones the share is about 7%.

1% & Rural 1. 20 .8% Technology  New financing instruments in housing  New construction techniques  Rating of real estate and construction projects  New design mechanism for earthquake resistance  New technology in construction materials production.  Demand for all the infrastructure requirement and amenities for the housing  Building his own home is a dream for every Indian  Poor service provided by housing finance companies. More preference for outskirts locations.  Annual Growth rate of population Urban 3.

and have stabilized around the 10% mark.Interest rates over last few years In te r e s t R a te s in L a s t fe w ye a rs interest rates 20 15 10 5 0 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 in te re s t ra te s y e a rs We can see from the graph that interest rates have consistently fallen from 1999 to 2003. But from 2005 the interest rates have once again started moving in northward direction 21 .

FORMERLY ICICI. in the process. In view of this reorientation of the business. the name of the company was changed from LIMITED to LIMITED (ICICI PFS) ICICI CREDIT CORPORATION ICICI PERSONAL FINANCIAL SERVICES effective March 22. It is now a focal point for marketing and distribution of all retail asset products for ICICI.ICICI BANK Profile Of The Company ICICI Personal financial services limited (ICICI PFS). ICICI commenced its custodial services business in 1992 and played a pioneering role in the business when it accepted the custodian role for the first ever GDR issue by an Indian corporate (Reliance Industries Limited).CREDIT. including auto loans. During the year 1998-99. has established relationships with all the major overseas depository banks 22 . 1999. ICICI has a major market share in the segment and acts as custodian of 41 ADR/GDR issues and. was one of the first four companies to obtain registration as a non-banking financial company (NBFC) from the Reserve Bank of India (RBI) on September 10. 1934. The company has thus become a critical part of ICICI’S retail strategy aimed at offering a comprehensive range of products and services to retail customers. consumer durable finance and other financial products. 1997 under the new section 45 IA of the Reserve Bank of India Act. there was a significant shift in the company’s operations from leasing and hire purchase to distribution and servicing of all retail products for the ICICI Group.

equity. submission and follow up for various applications for regulatory approvals including initial application by FII’S/OCB with SEBI/RBI. High net worth individuals As a value added service ICICI custodial services division assists the clients in preparation. Large corporate 8. Institutions looking for proprietary investments 5. 1999. the value of assets held in our custody exceeded US 2 billion. FIIs b. Private investment companies 7. OFFSHORE FUNDS d. ICICI expanded its custodial operations by offering custodial services to overseas institutional investors including foreign institutional investors (FII’S) and as on June 30. money market instruments GDR/EURO issues conversions and GDR arbitrage to: 2. At present. Overseas Institutional Investors like a. After its success in the GDR segment. OCBs c. 23 . ICICI offers a full range of custodial services for primary and secondary market operations pertaining to debt.operating in the Indian Market. VENTURE FUNDS 3. Mutual funds 6. Overseas Govermental Agencies 4.

PERSONAL BANKING At ICICI BANK. they are committed to making banking a pleasure. With Mobile Commerce . investment schemes. Each service offers their customers security. and facilities. This commitment is manifested in the services they offer – a wide range of accounts. customers can perform a wide range of query-based transactions from their OrangeTM (MUMBAI) and AIRTEL ( DELHI) Mobile Phone. • Access multiple accounts 24 . without even making a call. flexibility of operation and maximum returns. The various services provided under this is as follows: • Maxi Cash – savings Account • Quantum – Fixed Deposits • Quantum optima – Value added Savings Account • Money plus – Current Account • ATM • Phone Banking • Treasure Chest – Locker facility • Power Pay Payroll • Retail Treasury Instruments CORPORATE BANKING MOBILE COMMERCE ICICI Bank now brings Bank Account and ICICI Credit Card to customers fingertips.

• Balance enquiry to the linked accounts • Cheque book requests • Mini statement – Listing of last three transactions • Request for account statements (by mail or fax) ICICI Attractive interest rates Door-step service from enquiry stage till final disbursement No guarantor required Can transfer your existing high-interest rate loan Can transfer your existing high-interest rate loan Special 100% funding for select properties 25 .

whichever is earlier.Home loan • You must be at least 21 years of age when the loan is sanctioned. stability/ continuity of your employment/ business are some of them. Loan Amount A number of factors are taken into account when assessing your repayment capacity. fixed deposits and LIC policies may also help to enhance eligibility. there are ways by which you can enhance your eligibility. qualifications. if there are any co-owners they must necessarily be co-applicants. Your income. put him/her as a co- applicant. 26 . • Did you know that your fiancée's income can also be considered for sanctioning the loan on your combined income? The disbursement of the loan. Incidentally. number of dependants. • Providing additional security like bonds. assets and liabilities. age. However. • If your spouse is earning. will be done only after you submit proof of your marriage. • The loan must terminate before or when you turn 65 years of age or before retirement. • You must be employed or self-employed with a regular source of income. The additional income shall be included to enhance your loan amount. however.

Our affordable home loans can make all the difference to your dream of owning your home. If so. when the company looks at the total cost. it could be that having one might enhance your credibility with us. Also. what you ultimately are entitled to will have to conform within the limits fixed for each loan. HOME LOANS We at ICICI Bank understand the value of owning your own home. However. A one stop shop for all your real estate needs. Refer to the table for a loan option that suits your need best FIND THE RIGHT HOME Introducing Home Search .While there is no need for a guarantor. What you get 0% brokerage on first sale properties Access the entire market under one roof Site visits to properties short listed by you Help in negotiating the best price Help with legal documentation Sanctioning 27 . 0% processing fee for a limited period.Our FREE online property search facility. The final amount to be sanctioned will depend on your repayment capacity. our loan officer would provide you with the necessary details. registration charges. transfer charges and stamp duty costs are included.

Disbursement 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. On satisfactory completion of the above. Certified IT returns for latest 3 years. Age verification: PAN card. Passport. Income Documents e. Loan Enclosure letter. 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. Voters ID. on registration of the conveyance deed and on the investment of your own 28 .Documents Passport size photograph. Processing Fee cheque. License. please note that it is for your own good. You may be asked to submit further legal documents if required by ICICI or its approved lawyers. Bank statement for the last six months.g. Each and every single document asked for will be verified and checked to ensure your safety. Latest Form 16. While you may be under the impression that the list of documents asked for is rather extensive. The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if applicable) is also needed. These are the documents required for sanctioning a loan. Do retain photocopies of all documents being submitted by you.

0% processing fee Agreements Disbursement Requests Post-dated cheques Personal guarantor's documents.contribution. as the case may IC IC I B ank Home L oans Disbursement F Y 03 86 595 F Y 02 22 370 F Y 01 0 6 770 20000 40000 60000 80000 100000 Rs . The disbursement will be in favour of the builder/seller. In Mn 29 . Standard documents: Loan be Adjustable Rate Loans Home Loans/Land Loans: Special offer . the loan amount (as warranted by the stage of construction) will be disbursed by ICICI.

However. Applicant and Co. Adjustable Rate Home Loan Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). if there is a change in RPLR. and vice versa when the interest rate decreases. the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan. However. Maximum Term 20 years subject to your retirement age.Applicant to the loan Home Loans can be applied for either individually or jointly. The rate on your loan will be revised every three months from the date of first disbursement. Proposed owners of the property. the interest rate on your loan may change. the EMI on the home loan disbursed will not change*. If the interest rate increases. bungalow from developers o Existing freehold properties 30 . will have to be co-applicants. row house.Unique features of HDFC housing loan schemes • Maximum loan 85% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer. the co-applicants need not be coowners. Fixed Rate *Conditions Apply • • • • • 2-in-1 Home Loans Purpose • Purchase of o Flat.

parents and their children. this helps executives buy a bigger home today! Flexible Loan installments Plan Often customers.o o Properties in an existing or proposed co-operative housing society or apartment owner's association First Power of Attorney purchases in Delhi for DDA flats allotted before 1992. No Charges for • • • • • Part or Full Prepayment of loan under Adjustable Rate (except in case of prepayment through a refinance from other bank or institutions prepayment charges will be applicable) Fixed Rate . The parent is nearing retirement and their children have just started working.Part prepayment upto 25% of opening loan outstanding in a financial year Replacement of cheques Income Tax Certificates Accelerated Repayment Option Multiple repayment options Step Up Repayment Facility Helps young executives take a much bigger loan today based on an increase in their future income. wish to purchase properties together. • Self Construction Processing Fees 1% of the loan amount applied plus applicable service taxes and cess. This option helps such customers combine the incomes and take a long term home loan where in the 31 .

Customers can fix the installments they wish to pay till the time the property is ready for possession. Anything over and above the interest paid by the customer goes towards Principal repayment. Whenever you get an increment. we have introduced a special facility of Tranche Based EMI. The minimum amount payable is the interest on the loan amount drawn. increase in your disposable income or have lumpsum funds for loan prepayment. Documents required-: Salaried Customers Application form with photograph Identity and Residence Proof Latest Salaryslip Form 16 Self Employed Professionals Application form with photograph Identity and Residence Proof Education Qualifications Certificate and Proof of business existence Last 3 years Income Tax Self Employed Businessman Application form with photograph Identity and Residence Proof Education Qualifications Certificate and Proof of business existence Business profile 32 . you can benefit by • • • Increase in EMI means faster loan repayment Saving of interest because of faster loan repayment You can invest lumpsum funds rather than use it for loan prepayment. Accelerated Repayment Scheme Accelerated Repayment Scheme offers you a great oppourtunity to repay the loan faster by increasing the EMI. To help customer save this interest. Tranche Based EMI Customers purchasing an under construction property need to pay interest ( on the loan amount drawn based on level of construction) till the property is ready .installment reduces upon retirement of the earning parent. The customer benefits by starting EMI and hence repays the loan faster. The return from the investments also gives you the comfort of paying the increased EMI.

Employees in Oil sector. Teachers. Scientists.returns (self and business) Last 3 years Income Tax returns (self and business) Last 3 years Profit /Loss and Balance Sheet Last 6 months bank statements (self and business) Processing fee cheque Last 6 months bank statements Last 3 years Profit /Loss and Balance Sheet Processing fee cheque Last 6 months bank statements Processing fee cheque Unique features of SBI home loan schemes-: -: No cap on maximum loan amount for purchase/ construction of house/ flat • • • • • • • • Option to club income of your spouse and children to compute eligible loan amount Provision to club expected rent accruals from property proposed to compute eligible loan amount Provision to finance cost of furnishing and consumer durables as part of project cost Repayment permitted upto 70 years of age Free personal accident insurance cover Optional Group Insurance from SBI Life at concessional premium (Upfront premium financed as part of project cost) Interest applied on daily diminishing balance basis ‘Plus’ schemes which offer attractive packages with concessional interest rates. Employees. 33 . Journalists (in select cities) etc. margins and processing fee to Govt.

etc.5 lacs and above.• • • • • • Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban Development Authority/ Housing Board. in respect of allotment of sites/ house/ flat No Administrative Charges or application fee Prepayment penalty is recovered only if the loan is pre-closed before half of the original tenure (not recovered for bulk payments provided the loan is not closed) Provision for downward refixation of EMI in respect of floating rate borrowers who avail Housing Loans of Rs. to avail the benefit of downward revision of interest rate by 1% or more In-principle approval issued to give you flexibility while negotiating purchase of a property Attractive packages in respect of loans granted under tie-up with Central/ State Governments/ PSUs/ reputed corporates and tie-up with reputed builders Package of exclusive benefits: • • • • • Complimentary international ATM-Debit card Complimentary SBI Classic/ International Credit Card with waiver of joining and first year’s fees Option for E-banking Concessional package under ‘Credit Khazana’ for prospective car loan borrowers whose accounts are conducted satisfactorily 50% concession in charges in respect of all personal remittances/ collection of outstation cheques Purpose Purchase/ Construction of new House/ Flat Purchase of an existing House/ Flat 34 .

) if the house/ flat being purchased is proposed to be rented out  Regular income from all sources Margin Purchase/ Construction of a new House/ Flat/ Plot of land: 15% Purchase of an existing House/ Flat: 15% 35 . subject to aggregate repayment obligations not exceeding 57.50% of NMI/ NAI  Applicant(s) aged over 45 years of age– 48 times NMI or 4 times NAI. etc.Purchase of a plot of land for construction of House Extension/ repair/ renovation/ alteration of an existing House/ Flat Purchase of Furnishings and Consumer Durables as a part of the project cost Takeover of an existing loan from other Banks/ Housing Finance Companies Eligibility Minimum age 21 years as on the date of sanction Steady source of income Loan Amount  Applicant/ any one of the applicants are aged over 21 years and upto 45 years – 60 times Net Monthly Income (NMI) or 5 times Net Annual Income (NAI). provided they have a steady income and his/ her salary account is maintained with SBI  Expected rent accruals (less taxes. cess. subject to aggregate repayment obligations not exceeding 50%of NMI/ NAI To enhance loan eligibility you have option to add:  Income of your spouse  Income of your son/ daughter living with you.

if the property cannot be mortgaged Maximum Repayment Period  For applicants upto 45 years of age: 20 years  For applicants over 45 years of age: 15 years Moratorium Upto 18 months from the date of disbursement of first instalment or 2 months after final disbursement in respect of loans for construction of new house/ flat (moratorium period will be included in the maximum repayment period) Disbursement  In lump sum direct in favour of the builder/ seller in respect of outright purchase  In stages depending upon the actual progress of work in respect of construction of house/ flat etc. 36 .Repairs/ Renovation of an existing House/ Flat: 20% Processing Fee 0.50% of Loan amount (including Service Tax) Prepayment Penalty 2% of the loan prepaid if the prepayment is made before expiry of half the original tenure.. Security  Equitable mortgage of the property  Other tangible security of adequate value like NSCs. LIC policies etc.

Documents  Completed application form  Passport size photograph  Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License  Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/ Voters ID  Proof of business address in respect of businessmen/ industrialists  Sale Deed. (as applicable and subject to satisfaction report from our empanelled lawyer)  Copy of approved plan and approval from the Local Body  Statement of Bank Account/ Pass Book for last 6 months ‘SBI-Flexi’ Home Loans A customized product designed to enable borrowers to hedge their Home Loan against unfavourable movement in interest rates.5 lacs (Other terms and conditions – as applicable to regular Home Loans) ‘SBI-Maxgain’ Home Loans An innovative and customer-friendly product to enable you to earn optimal yield on your savings and minimize interest burden on Home Loans. Agreement of Sale. Non encumbrance certificate. The product gives you a one time irrevocable option to choose one of the three customized combinations of fixed and floating interest rates and also to choose the order in which the fixed and floating rate will be availed. Land/ Building Tax paid receipt etc. Minimum Loan Amount: Rs. 37 . Letter of Allotment. with no extra cost.

Minimum Loan Amount: Rs. (House should be constructed within 5 years from the date of availment of ‘SBI-Realty’ Housing Loan) (Other terms and conditions – as applicable to regular Home Loans) (* relaxation considered on case to case basis) ‘SBI-Freedom’ Home Loans A revolutionary product designed for customers 38 . The loan is available for a maximum amount of Rs.5 lacs (Other terms and conditions – as applicable to regular Home Loans) ‘SBI-Realty’ Home Loans A unique product if you are on the look out for a loan to purchase a plot of land for house construction.20 lacs* and with a comfortable repayment period of upto 15 years. The product serves to minimize your interest cost by enabling you to park your surplus funds in ‘SBI-Maxgain’ (with the benefit to withdraw the surplus funds whenever you require). specially in the wake of low yields from other deposit/ investment avenues.The loan is granted as an Overdraft facility with the added flexibility for you to operate your Home Loan Account like your SB or Current Account. You are also eligible to avail another Housing Loan for construction of house on the plot financed above with the benefit of running both the loans concurrently.

in (Please specify your City & contact numbers with STD code) 39 . (Other terms and conditions – as applicable to regular Home Loans) Unique features of UTI home loans • • • • • Attractive Interest Rates Balance Transfer facility available Doorstep Service Option to choose from Floating rate or Fixed Rate Free Fire & Personal accident insurance Reach us To apply for a Home Loan.who are on the look out for a source of finance for a property they want to invest in without mortgaging the same. All you have to do is pledge any financial security that you have and you will get a Home Loan for your dream home. You also have an option to take the loan by way of mortgage of the property and pledge financial securities in lieu of margin money. giving you the option to repay through regular EMIs or through maturity proceeds of the securities pledged. A must-take for those who do not want to pay stamp duty for mortgage of their property or go through the hassles of creation of just • • • Apply online SMS <UHL City Name> to 4646 Write to us at: homeloan@utibank. Repayment is highly customized.

• Contact any of our Branches / Offices Products offered Home Loans for • • • • • • • • Purchase of a plot of land and Construction of a house thereon Construction of a house on plot of land already owned Purchase of a new house / flat Purchase of old house / flat which is not more than 15 years old (Home Acquisition Plan) Extend /Renovate/Repair of a house or flat already owned by self (Improvement/Extension Plan) Take-over of existing Housing Loan (Balance Transfer) Pre-allotment Booking finance Loan takeover with additional refinance (Balance Transfer + Top up). Documents Required Purpose Proof of Identity Salaried Voter's ID Card / Driving License / PAN card / Photo Credit Card / Employees ID card OR Defense / Police / Government Department ID card Latest salary slip Others Voter's ID Card / Driving License / PAN card / Photo Credit Card Proof of IT Returns for the last 40 .

Bank account statement / Latest Electricity Bill / Latest Mobile OR Telephone Bill / Latest Credit Card statement / Latest LIC policy / Insurance Premium Receipt / Employers letter certifying the current mailing address / Latest NSC / other similar instruments indicating the address / Existing House Lease agreement 2 years and Computation of income for the last 2 years certified by a CA Bank account statement / Latest Electricity Bill / Latest Mobile OR Telephone Bill / Latest Credit Card statement / Latest LIC policy / Insurance Premium Receipt / Latest NSC / other similar instruments indicating the address Proof of Residence Bank Last 6 months Statement / Pass Book where salary/income is credited Guarantor Form Optional Last 6 months Optional 41 .Income showing all deductions or Form 16 along with recent salary certificate.

Repayment period of pre allotment bookings of housing loans shall not exceed 1½ year. to the Bank.Rs.1 lakh · Maximum . by way of deposit of title deeds.50 lacs Margin · 15% in the case of Home Loans.Loan amount Home Loan · Minimum . Insurance We are offering free Fire & Personal Accident insurance cover to our Power Home Customers Disbursement 42 .Rs. Where the individual building is built on a plot of land. which is already charged. · 25% in case of Improvement/ renovation loans Terms and Conditions Repayment • • • Repayment period for Home Loans shall not exceed 20 years. Repayment period of Improvement / renovation / extension of existing property shall not exceed 10 years. Security Equitable Mortgage of the property to be financed. there is no further requirement of collateral security.

Processing Charges / Admission Fee Processing fee equivalent to 1% of the loan amount (applied for) will be collected along with the application form (taxes as applicable). otherwise Nil. The terms & conditions mentioned above and elsewhere under the scheme are subject to modification from time to time solely at Bank's discretion Switching Cost: Switching from the Floating rate scheme to the Fixed rate scheme and vice versa is permissible. The applicant will undertake to inform the Bank as and when there is a change in address / employment.The loan will be disbursed in full or in suitable installments. as assessed by the Bank directly to seller / builder / local development authority / supplier of materials etc. Other Conditions • • Bank reserves the right to reject any application without assigning reasons thereof. Penalty for early closure 2% of the principle outstanding in case of takeover by other bank / HFC. If a fixed rate customer wants to reschedule the loan to a lower interest rate. the same is also permissible 43 . taking into account the requirement of funds and progress of construction.

5% 1% 2% 2% lac (Rs) Administr Prepaymen t Fee SBI Floating 1 lacs to 1 crore Monthly 8.0% 2% Monthly 9.5% 2% 44 .50% 9.75% 2063 0.25% 2102 2089 0.00% 2076 1.Comparison of interest rates of the four banks-: Floating interest rates in case of loan Tenure of 5 Years Procressi Name of the Bank Annual or Type Loan Slab Monthly Rent ng Rate of Interest EMI per Fee & ation Fee ICICI HDFC Floating 3 lac to crore Floating 1 lac to 50 Monthly lac 1 lac to 50 UTI Floating lacs Monthly 9.

Fixed interest rates in case of loan Tenure of 5 Years Procressi Name of the Bank Annual or Type Loan Slab Monthly Rent ng Rate of Interest EMI per Fee & ation Fee ICICI HDFC Fixed Fixed 3 lac to 1 Monthly crore 1 lac to 50 Monthly lac 1 lac to 50 UTI Fixed lacs Monthly 11.5% 1% 2% 2% lac (Rs) Administr Prepaymen t Fee SBI Fixed 1 lacs to 1 crore Monthly 9.50% 2162 2150 0.50% 2100 0.0% 2% 10.75% 10.00% 2175 1.5% 2% 45 .

50% 9.25% 1280 0.00% 1267 1.25% 1293 1280 0.0% 2% 9.5% 1% 2% 2% lac (Rs) Administr Prepaymen t Fee SBI Floating 1 lacs to 1 crore Monthly 9.Floating interest rates in case of loan Tenure of 10 Years Procressi Name of the Bank Annual or Type Loan Slab Monthly Rent ng Rate of Interest EMI per Fee & ation Fee ICICI HDFC Floating 3 lakh to 1 Monthly crore Floating 1 lac to 50 Monthly lac 1 lac to 50 UTI Floating lacs Monthly 9.5% 2% 46 .

50% 1364 1351 0.5% 2% 2% lac (Rs) Administr Prepaymen t Fee SBI Fixed 1 lacs to 1 crore Monthly 9.0% 2% 10.75% 1310 0.75% 10.5% 2% 47 .Fixed interest rates in case of loan Tenure of 10 Years Procressi Name of the Bank Annual or Type Loan Slab Monthly Rent ng Rate of Interest EMI per Fee & ation Fee ICICI HDFC Fixed Fixed 3 lac to 1 Monthly crore 1 lac to 50 Monthly lac 1 lac to 50 UTI Fixed lacs Monthly 11.5% 0.00% 1378 1.

THE MARKET SHARE OF DIFFERENT BANKS IS GIVEN BELOW-: SWOT ANALYSIS STRENGHTS: • ICICI HFC has bought about a paradigm shift in the way the industry now markets Home Loans 33% 48 .

products are marketed almost like consumer goods • Discounts on Rates or Fees or Special Gifts • Cross-sell Initiatives – Home Loan- home Search-pl • Exhibitions – Bring in ‘Touch and Feel’ to Our Product • With Builders. Shopping Arcades • Distribution reach • Geographical expansion – adding larger numbers of spokes and outreaches to existing hubs • Penetration of distribution networks • Increased contact points • Alternate channels – more fulfillment channels. at Govt. channels 49 more lead generation .• Shift from ‘Walk-in’ to ‘Doorstep Service’ • In ICICI HFC. Offices. Builder Camps. Other Products • Property Shows • Road Shows /Rallies – Create Awareness and Bring Visibility • ‘In-shop’ Promotions – Worksite Helpdesks.

Simpler . Arial or the Universe family of fonts may be used • Brand Values – Authority.08 • Colors • Blue. Grey. Maroon. Orange. Smarter . Solidity and Professionalism • Corporate Baseline – • Safer . Modernity. Some marketing initiatives • Tie Ups With Consumer Durables and Manufacturers Customers • Free Personal Accident Insurance • Cross Sell Activities for Discounts to 50 .• Counselor network • I-Bank • Insurance agents BRANDING • Logo • ‘I-Man’ – 1:1. Yellow • Fonts • Zurich.

51 .WEAKNESSES : . OPPORTUNITIES: • Ample scope for financing flats and apartments for the salaried class in the higher income group. THREATS: • Nationalized Bank and PNB • Market leader HDFC and other banks like SBI. Union upcoming private banks.

Adoption of flexible and more lenient penalty should the customer fail to deposit the payment on time. 5. Restriction to be reduced to bare minimum for loan advances and for repayment.RECOMMENDATIONS The following suggestions are strongly recommended: 1. For e. 4.g. To broaden the customer base the vast middle income strata should be fully exploited 2. offer long-term repayment facilities and have no age restriction to choosing repayment. The maximum age for repayment could be the procedure. 3. Simplify proof. The penalty should be on case to case basis rather then the same for the entire customer base. and demand only the basic essential 52 . reduce service charges.

and housing loans. needs to undergo special contract to government implementation. Service class to be exploited by offering special reduced rates and linking the This with repayment from the source from where the pay-cheque to the employee is issued. Such facility will help grow fast retail segment of the bank. Customers now grab everything that comes their way but they do their own survey of optimum loans. the customer is indeed the king. 6. With innumerable choices before him. 7. It is therefore imperative that if a bank has to succeed in the competitive world.increase to 65-70 years of age. Offer multiple repayment loans. same is the case with banks. it should be 53 . organisation ensure CONCLUSION The Indian customer has come a long way from purchasing to fulfilling their needs from buying a house.

customer centric progressive driven by highest standards of corporate governance and guided by sound ethical values and above all should be cordial and should have personalize customer services. 54 . There is scope of exploiting the vast middle income group by releasing loans with special interest rate which would be beneficial to both parties.technological savvy. Financial Management -:By Van Horne 55 www.REFERENCES 1) 2) 3) 4) 5) 6) 7) 8)

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