a market survey of home loan with special reference to icici

STUDENT DECLARATION

My self BHAWANA student of BBA here by declared that the research

report entitled ‘A MARKET SURVEY OF HOME LOAN WITH

SPECIAL REFERENCE TO ICICI BANK” is completed and

submitted under the guidance of Mr. Amit faculty of management is

my original work. The imperial finding in this report is based on the data

collected by me. I have not submitted this project report to

Pt.DDUMC,Meerut or any other University for the purpose of

compliance of any requirement of any examination or degree.

BHAWANA

BBA VI SEM

ROLL NO.9732548

1

PREFACE

Marketing is a social & managerial process by which an individual and group obtain what they

need and want through creating offering and exchanging products of value with others.

Marketing is getting the right good and services to the right people to the right place, at the right

time at the right place with the right communication and promotion. It is the art of creating and

satisfying customer at a profit.

Advertising is one of the major tools of companies to direct pervasive communication to target

buyers and publics. An identified sponsor defines it as any paid from and non personal

presentation and promotion of ideas, goods or services.

Advertising is a cost effective way to disseminate message whether it is to saving account of

ICICI bank and give best service in Loan.

3

ACKNOWLEDGEMENT

Presenting a Summer Training project of this type is an arduous task, demanding a lot of

time. I cannot in full measure appreciate and acknowledgement the kindness shown and

help extended by various persons in this endeavor. I will remember all of them with

gratitude.

I must, however, especially Render & My special sincere thanks towards

Mr. AVNISH SRIVASTAVA (Regional Credit Manager), for giving me a chance to

take this project and for his valuable guidance, which helped me on all those points,

which I needed to include in, with full intensity.

My sincere thanks are also due to Mr.Amit Faculty of Management , &

for their significant help extended for the successful completion of the project. I highly

the help I got from them in providing me and lot of information regarding the functioning

of this organization.

I am really appreciative this organization (ICICI Bank, including all employees) for full

co-operation, support and motivation that they extended to me in completing my project

here.

I am always beholden to my God, for always being with me and showing me the

right ways, my family, for always doing favors to me and my friends and colleagues

consistently helped with encouragement and criticism throughout the project work, for

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always lifting my sights to higher vision, raising my personality beyond normal limitation

and for realizing me my strengths and potential, as I did not always welcome her

exhortation, “try again; you can do better.” But this project owes a great deal to it – and

so do I.

BHAWANA

6

CONTENTS

INTRODUCTION 8

COMPANY PROFILE 22

HISTORY OF THE COMPANY 27

PRODUCT PROFILE 33

HOME LOAN IN ICICI BANK 56

RESEARCH METHODOLOGY 75

OBJECTIVE OF THE STUDY 77

COLLECTION OF DATA 84

DATA ANALYSIS 87

FINDINGS 97

RECOMMENDATIONS AND SUGGESTIONS 99

LIMITATIONS 102

BIBLIOGRAPHY 104

QUESTIONNAIRE 105

7

INTRODUCTION

Banking is the backbone of a modern economy. Health of banking industry is one of the

most important pre-conditions for sustained economic progress of any country. The world of

banking has assumed a new dimension at the dawn of the 21 st century with the advent of tech

banking, thereby lending the industry a stamp of universality. In general, banking may be

classified as retail and corporate banking. Retail banking, which is designed to meet the

requirements of individual customers and encourage their savings, includes payment of utility

bills, consumer loans, credit cards, checking account balances, ATMs, transferring funds

between accounts and the like. Corporate banking, on the other hand, caters to the needs of

corporate customers like bills discounting, opening letters of credit and managing cash.

The Indian banking scene has changed drastically with the private sector making inroads

in an area hitherto dominated by large public sector banks. Growing disinvestment is likely to

impact the banking industry as well. There is every possibility of privatization of public sector

banks, leading to greater operational autonomy.

The development of the Indian banking sector has been accompanied by the introduction

of new norms such as Income Recognition and Capital Adequacy, by the government. The latter

implies that banks can lend on the basis of their respective capital base. These norms have

caused banks to construct equity on their own, before going in for debt. Disintermediation is a

real threat for banks. Of late, banks are adopting the EVA (Economic Value Added) concept

wherein revenues are viewed in the context of the risk associated with them.

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The New World order has ensured "Survival of the Fittest". New services are the order of

the day, in order to stay ahead in the rat race. Banks are now foraying into net banking,

securities, consumer finance, housing finance, treasury market, merchant banking and insurance.

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BANKING STRUCTURE

The Indian banking industry, which has Reserve Bank of India as its regulatory authority,

is a mix of the public sector, private sector, and foreign banks. The private sector banks are again

split into old banks and new banks.

SCHEDULED BANKS

Scheduled commercial banks are those that come under the purview of the Second

Schedule of Reserve Bank of India (RBI) Act, 1934. The banks that are included under this

schedule are those that satisfy the criteria laid down vide section 42 (60 of the Act). Some co-

operative banks come under the category of scheduled commercial banks though not all co-

operative banks.

PUBLIC SECTOR BANKS

Public sector banks are those in which the Government of India or the RBI is a majority

shareholder. These banks include the State Bank of India (SBI) and its subsidiaries, other

nationalized banks, and Regional Rural Banks (RRBs). Over 70% of the aggregate branches in

India are those of the public sector banks. Some of the leading banks in this segment include

ICICI Bank, Canara Bank, Bank of Maharashtra, Central Bank of India, Indian Overseas Bank,

State Bank of India, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of

Travancore, Bank of Baroda, Bank of India, Oriental Bank of Commerce, UCO Bank, Union

Bank of India, Dena Bank and Corporation Bank.

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PRIVATE SECTOR BANKS

Private banks are essentially comprised of two types: the old and the new. The old private

sector banks comprise those, which were operating before Banking Nationalization Act was

passed in 1969. On account of their small size, and regional operations, these banks were not

nationalized. These banks face intense rivalry from the new private banks and the foreign banks.

The banks that are included in this segment include: Bank of Madura Ltd. (now a part of ICICI

Bank), Bharat Overseas Bank Ltd., Bank of Rajasthan, Karnataka Bank Ltd., Lord Krishna Bank

Ltd., The Catholic Syrian Bank Ltd., The Dhanalakshmi Bank Ltd., The Federal Bank Ltd., The

Jammu & Kashmir Bank Ltd., The Karur Vysya Bank Ltd., The Lakshmi Vilas Bank Ltd., The

Nedungadi Bank Ltd. and Vysya Bank. The new private sector banks were established when the

Banking Regulation Act was amended in 1993. Financial institutions promoted several of these

banks. After the initial licenses, the RBI has granted no more licenses. These banks are gearing

up to face the foreign banks by focusing on service and technology. Currently, these banks are on

an expansion spree, spreading into semi-urban areas and satellite towns. The leading banks that

are included in this segment include Bank of Punjab Ltd., Centurion Bank Ltd., Global Trust

Bank Ltd., HDFC Bank Ltd., ICICI Banking Corporation Ltd., IDBI Bank Ltd., Induced Bank

Ltd. and UTI Bank Ltd.

FOREIGN BANKS

The operations of foreign banks, though similar to that of other commercial Indian banks,

are mainly confined to metropolitan areas. Foray of foreign banks depends on reciprocity,

economic and political bilateral relations. An inter-departmental committee has been set up to

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endorse applications for entry and expansion. Foreign banks, in the wake of the liberalization

era, are looking to expand and diversify. Some of the leading foreign banks that operate in India

are Citibank, Standard Chartered Grindlays Bank, Hong Kong Shanghai Banking Corporation,

Bank of America, Deutsche Bank, Development Bank of Singapore and Banque National De

Paris.

PUBLIC SECTOR BANKING – AT A DISADVANTAGE

Functioning of Public Sector Banks (PSBs), which are yet to achieve computerization

across the board, is at a relative disadvantage when compared to the private sector, which is

offering state-of-the-art facilities such as ATMs, doorstep banking, banking on phone, and net

banking. PSBs also suffer from huge costs of labor and low levels of automation. At this rate, it

may not be long before new channels devised by private banks effectively surpass the number of

branch networks offered by the PSBs.

This apart, the problems which have assumed enormous proportion today as far as Public

Sector banks are concerned are ballooning NPA levels, declining margins, poor credit off-take,

high overheads, and lack of good quality assets. Banks are sticking to reliable borrowers for fear

of bad debts. In fact, banks largely invest in government securities, which have zero risk. With

GOI being the single largest borrower, the yields on these securities determine the interest rates.

The government aims to decrease its shareholding in PSBs to 33%, however, at the same

time it also wants to retain the controlling stake. This, it is feared, is not going to solve the

problems which PSBs are coping with now.

13

PRIVATE SECTOR BLOOMS

Corporate governance and self-regulation are the ground rules for the private sector.

Government interference is not preferred. While some private banks such as ICICI Bank, UTI

Bank and IDBI Bank have financial institutions backing them, others are opting for foreign

partnerships for technology and monetary resources.

Private banks have emerged relatively strong, with about 60% growth reported in net

profits in the year ended March 2000. With a net profit of Rs.120 crores (+46%), HDFC was the

clear leader. IDBI Bank, however took the cake by doubling its net profit, which reached

Rs.60.99 crores in March 2000.The jump in profits can mainly be attributed to non-traditional

sectors such as commission, exchange, brokerage, and profit on sale of investments.

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RBI POLICIES

The RBI does not interfere in determining the prime lending rates for commercial banks.

The onus is on banks to do so. RBI regulates interest rates on savings accounts, export credit, and

credit for small and tiny sectors. The rates fixed by RBI are quite low at 7%, 5%, and 4%

respectively for Bank Rate, Repo Rate, and savings account rate. Fixing rates on bank credit is

the discretion of the banks. Though banks are allowed to offer variable interest rates on longer-

term deposit rates, they continue to offer fixed deposit rates.

Current account transaction norms eased

Norms on current account transactions were eased, in line with the Foreign Exchange

Management Act (FEMA). The Basic Travel Quota (BTQ) has been raised from US$3,000 to

US$5,000, without the need for central bank’s approval. Capital account restrictions related to

dealing in assets with residents and non-residents have also been relaxed.

RBI to launch liquidity adjustment facility

The Reserve Bank of India (RBI) is launching its new liquidity adjustment facility (LAF),

effective June 5. The first phase would see the withdrawal of additional collateralised lending

facilities, and Tier-II refinance to banks. The 5% fixed rate Repo will also be withdrawn. The

facilities of collateralised lending and Tier-I refinance facilities will continue.

The Central government has granted approval to banks during the current financial year to make

a foray into forward trading in gold by including gold on the list of commodities eligible for

hedging under the Forward Contract (Regulation) Act, 1952.

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MEASURES ADOPTED BY RBI

Measures to increase liquidity and decrease the cost of funds to banks

Bank rate cut by 1% from 8% to 7%

CRR cut by 0.5%, from 8% to 7.5%

Repo rate cut by 1%, from 6% to 5%

Savings deposit rate for scheduled commercial banks cut from 4.5% to 4.0%

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MAJOR COMPETITORS

STATE BANK OF INDIA

It is India's largest bank with assets worth Rs.2, 615 billion. SBI also has the distinction of

having the world’s largest branch network of 9,000 branches. The bank has a share of about 22%

of India's loans and deposits, and is a top player in trade finance and forex. Through its

subsidiaries, SBI is also a leading provider of other financial products like mutual funds,

investment banking, housing finance and factoring. SBI has a market share of one-fifth of the

banking sector in India. Nationalized banks and SBI and its subsidiaries form the heart of the

Indian banking system. These two entities operate 70% of the total branches spread across the

length and breadth of India.

BANK OF INDIA

As one of the leading public sector Indian banks, Bank of India has the distinction of being the

first bank to open a branch outside India. The bank, which currently has overseas operations in

about 10 countries, is one of the leaders in financing foreign trade. It is one of the few Indian

banks that provide tele-banking facilities, Remote Access Terminals for corporate clients, and

Signature Retrieval System. Some of the recent forays made by the bank in terms of its business

operations include bullion business and demat services.

SYNDICATE BANK

It is a pioneer in terms of the introduction and adoption of a model banking policy that suits India

and other developing countries. The bank, which is synonymous with progressive banking in

India, has a strong presence in rural India. The bank was nationalized in 1969. Syndicate Bank

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has correspondent relations with 400 banks from all over the globe. The bank is also one of the

leading players in the foreign exchange market.

Citibank, idbi, hdfc,hsbc

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CHALLENGE FOR THE INDIAN BANKING SECTOR

Indian banks have a long way to go before they reach the size of their international counterparts.

Even the biggest Indian bank, State Bank of India, is nowhere on the international scale, with

assets in the range of $50billion. Absence of significant scale benefits and higher implicit costs

of several services are perpetuating the poor ranking of Indian banks in the international league

tables.

Shareholding structure, government regulations and sheer size of the country ensure that the

existence of Indian banks is not at stake at this stage. What is at stake is the banking support that

is available for Indian economic activity, and thereby the international competitiveness of

various sectors. What is also at stake is the scope for the banking industry to earn superior

returns through differentiated wider services.

Further, it is quite conceivable that with passage of time, as government holding in banks is

progressively divested, regulatory authorities will be unable to hold back the international giants

from buying out Indian banks. Even economies with a "domestic mindset", such as France and

Germany, have been forced to bow before the international capital market forces.

It would be a shame if painstakingly built retail strength is offered on a platter to some predator.

The challenge can be met through some concerted action -

Government

The Government needs to do away with artificial fragmentation of the financial

sector. A case in point is the segregation of banks and financial institutions induced by

policy. If this is changed, we may well see mergers between the two sectors to create

19

organizations of size. Why not a merger of Industrial Development Bank of India with

Bank of Baroda, or even better with State Bank of India? This would definitely lead to a

merger between ICICI and ICICI Bank and for that matter between HDFC and HDFC

Bank. The possibilities are interesting and numerous.

Domestic Banks

Domestic Banks - private as well as public - need to continuously explore options to

acquire or merge with other institutions to enhance their size, service or skill-set. This

could also mean looking beyond the national boundaries as truly global corporations do.

New Initiatives

The recent crisis in the Far East has demonstrated the need for a robust banking

sector. Therefore the whole structure of Regional Rural Banks (RRBs) and Urban Co-

operative Banks (UCBs) needs to be strengthened. The focus that FMCG companies such

as Hindustan Lever have given to the rural sector proves that private sector interest is not

limited to the cities and major towns. Technological changes (such as wireless

communication, net etc.) have drastically changed the communications scenario. This

may be the time to come out with interesting initiatives with regard to structure of RRBs

and UCBs so that private sector organizations - banks as well as non-banks - play a

greater role in meeting the needs and aspirations of hitherto neglected parts of the

country.

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Social considerations

The full benefit of mergers can only be realized if they are followed up with some hard

measures such as re-location / closure of branches, rationalization of employee strength etc. It

would be a welcome change if the management and unions collaborate in seeking appropriate

social security from the Government - financed out of the divestment of stake in these banks.

Indian banking has to operate with a global mindset even while fulfilling local banking

requirements. By joining in the effort to make this happen, we will get the banking service we

need. Else, we will deserve the banking service we get.

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COMPANY PROFILE

ICICI Bank is India's second-largest bank with total assets of about Rs. 1 trillion and a network

of about 540 branches and offices and over 1,000 ATMs. ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers through a variety of

delivery channels and through its 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 Vadodara, 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 was formed in 1955 at the initiative of the World

Bank, the Government of India and representatives of Indian industry. The principal objective

was to create a development financial institution for providing medium-term and long-term

project financing to Indian businesses. In the 1990s, ICICI transformed its business from a

development financial institution offering only project finance to a diversified financial services

group offering a wide variety of products and services, both directly and through a number of

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subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and

the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging

competitive scenario in the Indian banking industry, and the move towards universal banking,

the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI

Bank would be the optimal strategic alternative for both entities, and would create the optimal

legal structure for the ICICI group's universal banking strategy. The merger would enhance value

for ICICI shareholders through the merged entity's access to low-cost deposits, greater

opportunities for earning fee-based income and the ability to participate in the payments system

and provide transaction-banking services. The merger would enhance value for ICICI Bank

shareholders through a large capital base and scale of operations, seamless access to ICICI's

strong corporate relationships built up over five decades, entry into new business segments,

higher market share in various business segments, particularly fee-based services, and access to

the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of

ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finances

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

with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January

2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of

Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger,

the ICICI group's financing and banking operations, both wholesale and retail, have been

integrated in a single entity.

24

BOARD MEMBERS:

MR. N. VAGHUL, CHAIRMAN

MR. UDAY M. CHITALE

MR. P.C. GHOSH

DR. SATISH C. JHA

MR. L. N. MITTAL

MR. ANUPAM PURI

MR. VINOD RAI

MR. SOMESH R. SATHE

MR. P.M. SINHA

MR. R. SESHASAYEE

MR. M.K. SHARMA

PROF. MARTI G. SUBRAHMANYAM

MR. K.V. KAMATH, MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER

MS. LALITA D. GUPTE, JOINT MANAGING DIRECTOR

MS. KALPANA MORPARIA, EXECUTIVE DIRECTOR

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MR. S. MUKHERJI, EXECUTIVE DIRECTOR

MS. CHANDA KOCHHAR, EXECUTIVE DIRECTOR

DR. NACHIKET MOR, EXECUTIVE DIRECTOR

26

HISTORY OF COMPANY

1994

The Bank was incorporated on 5th January at Baroda. ICICI Bank was promoted by ICICI and

erstwhile SCICI Ltd. and received the Certificate for Commencement of Business on 24th

February. It does banking business of all kinds. It was founded as an institution to provide

quality-banking services using state-of-the-art technology.

1996

The deposit products and other services of the bank were branded with names such as

`Maxicash' for services accounts, `Money Plus' for Current Account, `Quantum' for fixed deposit

account, `Power Pay' for payroll accounts treasure chest for locker facilities and `Trice' for

automated teller machine facility.

The Bank had, in compliance with a directive issued by RBI, deposited in aggregate Rs 88.16

crores with small Industrial Development Bank of India and National Bank for Agricultural &

Rural Development.

The `B' category branches were authorised to handle full range of foreign exchange

transaction of customers and five other branches were placed in `C' category to handle limited

foreign exchange transactions.

Seven branches of the bank with substantial foreign exchange business were linked to the

society for worldwide Interbank Telecommunication (SWIFT) network which enables them to

transmit Letter of Credit and fund transfer messages promptly world wide.

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700 No. Of equity shares subscribed for by signatories to the Memorandum of Association.

1500,00,000 No. Of equity shares allotted to ICICI Ltd.

1997

The bank introduced electronic funds transfer facility. The bank has a full-fledged vigilance

and inspection department.

The Bank offered 150,00,000 No. Of equity shares of Rs 10 each at a prem., of Rs 25 per

share to ICICI.

The Bank offered for sale 412,50,200 No. Of equity shares of Rs 10 each at a price of Rs 35

per share.

Sicom Ltd. has entered into an agreement with ICICI Bank and Dresdner Bank for providing a

counter guarantee against letters of credits (LCs) opened by its clients.

The merger of SCICI with ICICI effective from April 1, the bank has become a wholly owned

subsidiary of ICICI.

ICICI Banking Corporation, a fully-owned subsidiary of Industrial Credit & Investment Corp

of India Ltd, has finalized an offer for sale of 4 crore equity shares of Rs.10 each at a premium of

Rs.30 per share, according to merchant banking sources.

1998

ICICI Bank, which introduced Internet banking in India, is set to launch various technology-

based new services in the near future. Some of the new services include setting up of call centres

and the introduction of fund transfers between own accounts in its branches.

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ICICI Banking Corporation Ltd, the first bank in the country to go in for Internet banking, is

now all set to provide its account-holders with the facility of transferring funds across their

accounts on the Net.

1999

ICICI Bank has signed an agreement to use the NCR switchmark technology for online-

networking all its ATMs, the officials said they network would come into place in September.

ICICI Bank recently restructured its organizational structure by setting up strategic business

units for retail banking, corporate banking and forex and treasury operations, as independent

profit centres.

ICICI is all set to launch a 60-second television commercial on August 15, 1999.

30

2000

ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its

$175-million American depository shares issue generating a demand book 13 times its size at

$2.2 billion.

The Bank proposes to bring credit cards to the "large, underserved population" in rural and

semi-urban areas.

SkyCell Communications Ltd, one of the two cellular service providers in Chennai, has

launched `Sky Banking', for which the company has tied up with ICICI Bank and HDFC Bank.

The ICICI has announced the launch of mobile banking services for its customers, using the

wireless application protocol (WAP) technology.

Ford India has tied up with ICICI Bank to introduce a scheme, enabling non-resident Indians

(NRIs) to purchase a Ford Ikon car for their friends and relatives in India.

ICICI Bank has set up an ATM facility at an Indian Oil Corporation petrodiesel outlet at

Chennai.

ICICI Bank has tied up with Chennai Telephones to provide Internet bill payment facility to

its customers.

31

CEO’s DESK

During the year, ICICI Venture has successfully laid the foundation to emerge as one of the

most successful private equity players in India. Through a series of strategic measure, the

company has been modeled on the lines of international private equity players and is on a

sound platform to gain a dominant presence in VC and PE business in the current year.

The company focussed on realizing value in each of its portfolio companies in a manner that

maximized gains for all stakeholders. This was achieved through consolidation within the

portfolio, proactive exits, additional funding support and improved corporate governance.

The Company also internally reorganized itself to create two separate teams - one to manage

past funds and the other to build sector expertise and identify attractive investment

opportunities in private equity. Special emphasis was put on managing investor expectations

in terms of timely reporting, transparency, audit etc.

These efforts have been applauded both by domestic and international investors.

Reckoned, as a pioneer for Venture Capital in India, the opportunity and timing today is right

for ICICI Venture to affirm its presence in Private Equity as well. The company has now

launched 'India Advantage Fund'

The Fund's investment philosophy is to pursue transactions with established companies that

are leaders in their own right and where there is a clear proposition for value creation. The

Fund will provide expansion capital, acquisition finance and funding for buy-out of

restructured assets/spin-off. The Fund also intends to selectively pursue opportunities arising

out of Privatization initiative of the Government.

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PRODUCT PORTFOLIO

CORPORATE BANKING RETAIL BANKING

Corporate Solutions Home Loans

Government Solutions Car & Two Wheeler Loans

Capital Market Services Consumer/Personal Loans

Agriculture Finance Saving & Term Deposit

Structured Finance Salary Account

Project Finance Roaming Current Accounts

Infrastructure Finance Investment Products

Term Loans Private Banking

Working Capital Finance NRI Services

Cash Management Services Demat Services

Trade Finance Services Credit & Debit Cards

International Banking Smart Cards

Treasury Services Bill Payment Services

Corporate Internet Banking E-Cheques

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Corporate Advisory Branches

Custodial Services ATMs

Professional Clearing Internet Banking

Membership Services Phone Banking

Youngstar account

35

PROMOTION

What's on offer

Hello ICICI brings you a host of services at your fingertips 365 days a year. A user friendly

automated service menu offers you convenient access to your account coupled with security as,

all your transactions are protected by a TPIN - The Personal password to your account. But if

you do need any assistance our officers will be glad to help you.

Whats more... this facility comes to you totally free of charge! Some of the services offered are

listed below

Savings account :

o Balance Enquiry Statement of account

o Cheque status enquiry Stop Payment

o Cheque book request

o Dial-a- draft/payorder

o ATM lost card reporting

o Request for a new ATM PIN

Fixed Deposits:

o Opening a Fixed Deposit

o Checking Fixed Deposit details

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o Request for TDS statement

Credit Cards:

o Balance and account related inquiries Statement of account

o Dial a draft/payorder

o Lost/Replacement card

o ATM pin re-issue

o Payment instructions (maybe through a letter to the Call Centre)

Others:

o Standing Instructions

o Complaints and suggestions

o Inquire about any ICICI retail product

37

RISK MANAGEMENT

Risk is an integral part of the banking business and ICICI Bank aims at the delivery of

superior shareholder value by achieving an appropriate trade-off between risk and returns. ICICI

Bank is exposed to various risks, including credit risk, market risk and operational risk. Our risk

management strategy is based on a clear understanding of various risks, disciplined risk-

assessment and measurement procedures and continuous monitoring. The policies and

procedures established for this purpose are continuously benchmarked with international best

practices. A comprehensive range of quantitative and modelling tools developed by a dedicated

risk analytics team supports the risk management function at ICICI Bank.

The Risk, Compliance & Audit Group (RCAG) is responsible for assessment,

management and mitigation of risk in ICICI Bank. This group, forming a part of the Corporate

Centre, is completely independent of all business operations and accountable to the Risk and

Audit Committees of the Board of Directors. RCAG is organised into six sub-groups: Credit

Risk Management Group, Market Risk Group, Credit Policies Group, Internet Audit Group,

Retail Risk Group and Risk Analytics Group.

38

CREDIT RISK

Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender.

ICICI Bank measures, monitors and manasgers credit risk for each borrower asnd also at the

portfolio level. ICICI Bank has a standardised credit approval process, which includes a well-

established procedure of comprehensive credit appraisal and rating. ICICI Bank has developed

internal credit rating methodologies for rating obligors as well as for rating. ICICI Bank has

developed internal credit rating methodologies for rating obligors as well as for product /

facilities. The rating factors in quantitative and qualitative issues and credit enhancement

features specific to the transaction. The rating serves as a key input in the sanction as well as

post-sanction credit processes. Credit rating, a as concept, has been well internalised within the

Bank. The rating for every borrower is reviewed as least annually and for higher risks credits and

large exposures at shorter intervals. Sector knowledge has been institutionalized across ICICI

Bank through the availability of sector-specific information on the Intranet. Industry knowledge

is constantly updated through field visits, interactions with clients, regulatory bodies and industry

experts. In respect of the retail credit business, ICICI Bank has a system of centralized approval

of all products and policies and monitoring of the retail portfolio. We continuously refine our

retail credit parameters based on portfolio analytics.

39

MARKET RISK

Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange

rates, equity prices and commodity prices. ICICI Bank’s exposure to market risk a function of its

trading and asset and liability management activities and its role as a financial intermediary in

customer-related transactions. The objective of market risk management is to minimize the

impact of losses due to market risks on earning and equity capital.

Market risk policies include Asset-Liability Management (ALM) policies and policies for

the trading portfolio. The Asset-Liability Management Committee (ALCO) of Board of Directors

approves ALM policies. ALCO’s role encompasses stipulating liquidity and interest-rate risk

limits, monitoring risk levels by adherence to set limits, articulating the organization’s interest

rate view and determining business strategy in the light of the current and expected business

environment. These sets of policies and processes are articulated in ALM policy. A separate set

of policies for the trading portfolio address issues related to investments in various trading

products and are approved by the Committee of Directors (COD) of the Board. RCAG exercises

independent control over the process of market-risk management and recommends changes in

processes and methodologies for measuring market risk.

40

MIDDLE OFFICE GROUP

ICICI Bank has a separate Middle Office Group to monitor both credit and treasury-

related compliance. The Credit Middle Group monitors compliance with policies and terms of

sanction of credit proposals.

The Treasury Middle Office Group monitors the asset-liability position under the

supervision of the ALCO. It also monitors treasury activities, including determining compliance

with various exposure and dealing limits, verifying the appropriateness and accuracy of various

transactions, processing these transactions, tracking the daily funds position and all treasury

related management and regulatory reporting.

Interest rate risk is measured through the use of re-pricing gap analysis. Liquidity risk is

measured through gap analysis. ICICI Bank ensures adequate liquidity at all times through

systematic funds maintenance of liquid investment as well as by focusing on more stables

funding sources such as retail deposits. ICICI Bank mitigates its exposure to exchange rate risk

by stipulating daily stop-loss limits and position limits.

41

OPERATIONAL RISK

Operational risk can result from a variety of factors, including failure to obtain proper

internal authorization, improperly documented transactions, failure of operational and

information security procedures, computer systems and software or equipment, fraud, inadequate

training and employee errors. We attempt operational risk by maintaining a comprehensive

system of internal controls, establishing systems and procedures to monitors transactions,

maintaining key back-up procedures and undertaking regular contingency planning. The Middle

Office Group monitors adherence to credit procedures. The International Audit Group undertakes

a comprehensive audit of all business group and other functions, in accordance with a risk-based

audit plan. This plan allocates audit resources based on an assessment of the operational risks in

the various businesses. ICICI Bank has been a pioneer in the implementation of a risk-based

audit methodology in the Indian banking sector. The International Audit Group conceptualizes

and implements improved system of internal controls to minimize operational risk.

42

FUTURE PROSPECTS OF ICICI BANK

Future expectations

We soon plan to introduce:

payment services to certain standard utilities

Demat-related information

own accounts funds transfer

ICICI will also use WAP technology for undertaking on-line transactions

If you have an ICICI Phone Banking Relationship Number (under which your accounts

are linked to the ICICI Call Centre for ICICI Phone Banking), the same accounts will be linked

for Mobile Commerce. If you do not have an ICICI Phone Banking Relationship Number, you

can specify the account number(s) and your ICICI Credit Card Number to be linked for SMS.

43

ICICI BANK NAMES CONSULTANT FOR GOVT

BUSINESS

ICICI Bank has appointed international consultancy major monitor group to help the

bank in identification of business prospects in the government sector which has recently been

identifies as a focus area.

Monitor will help ICICI get business from the government sector, particularly the

infrastructure sector mandates. The bank did not consider government business a focus area till

sometime back. Now, Monitor Group will study investment prospect of tourism in Rajasthan,

opportunities for the government of Andhra Pradesh and investment prospects for the bank

through the government in cities such as Pune and Kolkata.

“We are trying to find out how ICICI Bank can be a partner to the government in

development plans and projects. The bank has initiated fresh focus towards the government

which is a major source of business and we would like to increase relationship with government

agencies,” ICICI officials said.

Monitor Group will find out ways and means for ICICI Bank through which the latter

“Can solve government fund flow problems and how ICICI Bank can play a role in the projects,”

bank officials said.

This is a test study and if there is a positive response from the government then more

such specific developmental studies will be taken up by the bank as partners to development.

-ECONOMICS TIMES.

44

1/11/03 ICICI Bank clocks 110% growth in retail portfolio in Q2

Mumbai: The retail portfolio of ICICI Bank grew by 110 per cent to Rs 25,205 crore (Rs 12,021

crore) in the second quarter. Retail assets constituted 39 per cent of the bank's customer assets.

While leveraging and enhancing its position as the original lender, the bank also continued to

focus on securitisation of its customer assets. This had enabled the bank to optimize resources

and capital utilization and diversify the composition of its asset portfolio.

During the first half of this financial year, the total sell down and securitisation of assets was

around Rs 5,300 crore. According to the bank, its net restructured loans declined to Rs 7,856

crore (Rs 10,491 crore). Net NPAs were at Rs 3,128 crore, constituting 4.8 per cent of its

customer assets. Deposits grew by 18 per cent to Rs 56,880 crore (Rs 48,169 crore). As on

September 30, 2006, the deposits constituted 58 per cent of the bank's funding against 42 per

cent in the corresponding period of the previous year. The capital adequacy as on September 30,

2006 was at 11.5 per cent.

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ACCOUNTS IN ICICI BANK

ICICI Bank offers wide variety of Deposit Products to suit your requirements.Coupled with

convenience of networked branches/ ATMs and facility of E-channels like Internet and Mobile

Banking, ICICI Bank brings banking at your doorstep. Select any of our deposit products and

provide your details online and our representative will contact you for Account Opening.

ICICI Bank offers you a power packed Savings Account with a host of convenient features and

banking channels to transact through. So now you can bank at your convenience, without the

stress of waiting in queues.

Senior Citizen Services

We understand that as you reach the age to retire, you do have certain concerns … whether your

hard earned money is safe and secure … whether your investments give you the kind of returns

that you need. That's why we have an ideal Banking Service for those who are 60 years and

above. The Senior Citizen Services from ICICI Bank has several advantages that are tailored to

bring more convenience and enjoyment in your life.

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http://www.icicibank.com/Pfsuser/icicibank/depositproducts/savingaccount/savingaccount.htm

http://www.icicibank.com/pfsuser/icicibank/depositproducts/seniorcitizen/seniorcitizen.htm

Young Stars

It's really important to help children learn the value of finances and money management at an

early age. Banking is a serious business, but we make banking a pleasure and at the same time

children learn how to manage their personal finances.

Fixed Deposits

Safety, Flexibility, Liquidity and Returns!!!! A combination of unbeatable features of the Fixed

Deposit from ICICI Bank.

When expenses are high, you may not have adequate funds to make big investments. But simply

going ahead without saving for the future is not an option for you. Through ICICI Bank

Recurring Deposit you can invest small amounts of money every month that ends up with a large

saving on maturity. So you enjoy twin advantages- affordability and higher earnings.

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http://www.icicibank.com/pfsuser/icicibank/depositproducts/kid-e-bank/kid-e-bank.htm

http://www.icicibank.com/Pfsuser/icicibank/depositproducts/fixeddeposits/fixeddeposits.htm

http://www.icicibank.com/Pfsuser/icicibank/depositproducts/recurringdeposits/recurring.htm

IV. ICICI Bank Salary Accounts

1.1 It is the responsibility of the customer to ensure that he has read and understood the "terms

and conditions" under which the Salary Accounts scheme is offered to the corporate

1.2 The employer has full right to reverse any instruction given by him to credit the customer's

account for any amount within a period of 3 working days and the account holder will not

dispute or hold the bank responsible for any such debits in the customer's account.

1.3 It is the responsibility of the customer to inform ICICI bank immediately on termination of

his employment with the current employer whereupon he will cease to enjoy any/all benefits

under Salary Accounts scheme

1.4 If no credits are made to the account for a continuous period of 6 months, ICICI Bank

reserves the right to change the status of the Salary account to ICICI bank saving account

without any intimation to the account holder and the terms and conditions as applicable to the

ICICI bank saving account shall apply to this account from the date of change of the status.

1.5 In case of a joint account, both the applicant and joint applicant are singly and jointly liable

for Overdraft if any, even if the application cum demand promissory note is signed by the

applicant alone.

V. Terms and conditions for the issue and use of ICICI Bank ATM cards.

1. Meaning of certain terms : The term "Bank" refers to "ICICI Bank Ltd." "ATM" refers

to the Automated Teller Machines installed by the Bank "Card holder" refers to an

account who has been issued an ICICI Bank ATM Card.

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2. ICICI Bank ATM Card Issuance : An account holder may be issued an ICICI Bank

ATM Card by the bank at its discretion, if he/she has satisfactorily conducted savings

and/or current account and/or any other type of account so designated by the Bank to be

eligible account(s) for operations through the use ICICI Bank ATM Card. The account

holder shall give his/her preference of such account(s) held by him in writing in the

Relationship form for issue of ICICI Bank ATM Card. A Minor's account or an account

in which a minor is a joint account holder, is not eligible for issuance of ICICI Bank

ATM Card.

There may be more than one such account in which case one account shall be designated

as " Primary Account", and the others as "Secondary Account 1" and " Secondary

Account 2" at the option of the Cardholder.

3. ICICI Bank ATM Card : ICICI Bank ATM Card shall be issued to an approved account

holder in respect of his account to enable him to operate the ATM.

4. ATM-Facilities: The facilities offered under ATM facility will include withdrawal of

cash by the Cardholder from his account up to a stipulated amount limit only during a

cycle of 24 hours deposit of cash and cheques in the account enquiry about the balance in

the account(s), cash/cheque deposits requisition for a statement of account, request for

changed PIN number, request for issue of cheque-books, request for transfer of amount

from the Primary Account to the Secondary Account(s) or vice-versa and such other

facilities as the Bank may decide to provide, from time to time.

5. Minimum Balance in Primary Account : The Cardholder shall maintain, at all times,

such minimum balance in his account, as the Bank may decide from time to time and the

49

Bank may at its discretion levy such penal or service charges as per the Bank's rules from

time to time, or withdraw the ATM facility, if at any time the amount of deposit falls

short of the required minimum as aforesaid, without giving any further notice to the

Cardholder(s) and/or without incurring any liability or responsibility whatsoever by

reason of such withdrawal.

6. Fees: Currently, the ATM card is issued free of cost to customers. Also no charges are

levied for transactions made through the ATM. However, the Bank reserves the right to

charge fees for the ATM facilities in future with prior intimation to customers.

7. Bank's Lien : The Bank shall have the right of set-off and lien, irrespective of any other

lien or charge, present as well as future on the deposits held in the Cardholder's Primary

Account and/or, Secondary Account(s) or in any other account, whether in single name or

joint name(s), to the extent of all outstanding dues, whatsoever, arising as a result of the

ICICI Bank ATM card services extended to and / or used by the Cardholder.

8. Multiple Cards : In case of joint account(s) Either or Survivor /anyone or Survivor where

more than one person has been issued ICICI Bank ATM Card, all the Card-holders put

together, shall withdraw only upto the permissible limit allowed to single card account(s),

within the cycle time of 24 hours.

9. Joint account : In case of joint accounts where only one card is issued to a joint account

holder, the other joint account holder(s) shall expressly agree with and give his/her

consent on the application form for issue of ICICI Bank ATM card. In case any of the

joint account holder(s) gives "stop payment stop transactions" instructions in respect of

operations through the use of ICICI Bank ATM card, on any of the accounts held jointly

50

by them, no operations will be allowed on such account(s) through the use of ICICI Bank

ATM card. The "stop payment stop transactions" instruction can be given only in respect

of such accounts in which he/she is a joint account holder.

10. Non-Transferability : ICICI Bank ATM card is not transferable under any circumstance

and shall be used only by the Cardholder.

11. Personal Identification Number : Each Cardholder will be issued a sealed envelope

containing a four digit number called Personal Identification number (PIN) to gain access

to the ATM services. This number can be changed to any other convenient four digit

number by the cardholder, at the ATM. The PIN shall under no circumstances be

revealed to any third party. The Cardholder shall be solely responsible for the

consequences arising out of the disclosure of his PIN and/or unauthorised use of ICICI

Bank ATM card and shall be liable for any increased liability which he may incur on

account of unauthorised use of the PIN and ICICI Bank ATM card.

If the Cardholder forgets the PIN, he/she should make an application in writing for a

fresh PIN. The selection of a new Personal Identification Number and/or the replacement

of ICICI Bank ATM card shall not be construed as the commencement of a new contract.

12. Funds in the accounts: The Cardholder should not use or attempt to use ICICI Bank

ATM card without sufficient funds in the account he wants to operate through the card.

13. Loss/ Theft of Cards : The Cardholder shall be responsible for the safe custody of ICICI

Bank ATM card. In case of loss or theft of the ICICI Bank ATM card, the Cardholder

shall advise any of our branches, preferably the ICICI Bank ATM card issuing branch as

promptly as possible in writing, of the loss of ICICI Bank ATM card, however occuring.

51

Cardholder shall however be responsible and liable for all transactions effected by the

user of the Card until it is confiscated / cancelled. Another ICICI Bank ATM card will be

issued to the Cardholder, in lieu of lost / stolen ICICI Bank ATM card, upon request in

writing and payment of issue fee.

14. Authority to debit the account : The Cardholder along with the joint account holder(s), if

any, shall authorise the Bank to debit the account(s) with the amount of withdrawals, or

transfers effected by the use of ICICI Bank ATM card, as per the Bank's records. The

Bank's record for transactions processed by the ATM machine shall be binding on all the

joint account holders, jointly and severally.

15. Deposits : The amount of cash/cheque deposits shall be verified by two members of the

Bank's staff, one of whom will be an officer. The amount verified by the Bank shall be

deemed to be correct amount deposited by the Cardholder. The statement issued by the

ATM at the time of deposit only represents what the Cardholder purports to have

deposited and will not be binding on the Bank. If there are soiled, mutilated notes in such

deposits, the acceptance of such deposits shall be subject to final acceptance and

reimbursement by RBI as per the Note Refund Rules. Cheques will be accepted for

collection only and the proceeds will not be available until they have been cleared.

Deposits of foreign currency cash/cheques /soiled and mutilated notes or any other

deposits which are unacceptable, shall be returned, at the Cardholders cost, risk and

responsibility.

16. Responsibility for all transactions processed through the ATMs : Operations through

the ATM facility on the Cardholders account(s) can only be through the use of ICICI

52

Bank ATM card on the machine. The Cardholder shall in all circumstances, accept full

responsibility for all transactions processed by the use of his/ her ICICI Bank ATM card,

whether or not processed with the Cardholder's knowledge or authority, express or

implied. The printed output that is produced at the time of operation of the ATMs are a

record of the operation of the ATMs and shall not be construed as the Bank's records. The

Bank's records of transactions shall be accepted as conclusive and binding for all purpose.

17. Closure of account(s) : If the Cardholder desires to close his account(s) or withdraw any

ICICI Bank ATM card linked deposit, or even otherwise decides to terminate the use of

the ICICI Bank ATM card facility, he shall give a written notice of at least two days and

surrender ICICI Bank ATM card to the Bank. The Cardholder shall also pay dues, if any,

payable to the Bank in connection with the ATM facility.

18. Change of terms and conditions : The Bank has the absolute discretion to withdraw

ICICI Bank ATM card, the service thereby provided, or amend or supplement any of the

above terms and conditions at any time without prior notice to the Cardholder.

19. Honouring the Card : The Bank shall in no circumstances be held liable to the

Cardholder if ICICI Bank ATM card is not honoured in the desired manner for

whatsoever reason, or if the ATM is destroyed or not functioning due to power failure,

temporary insufficiency of cash in the ATM or any other reason. The Bank will not be

liable for any consequential or indirect loss or damage arising therefrom.

20. Ownership of ICICI Bank ATM card: ICICI Bank ATM card shall be the property of

the Bank and will be surrendered to the Bank on request or in the event of the Cardholder

no longer requiring the service. The Bank reserves the right to disclose, in strict

53

confidence, to other institutions, such information concerning the Cardholder's account as

may be necessary or appropriate in connection with its participation in any ATM or

Electronic Fund Transfer Network.

ATM USAGE: The Card is operable with the help of the confidential PIN at ATM locations. All

Transactions conducted with use of the PIN will be the Cardholder's responsibility. The

Cardholder agrees that he will be allowed to withdraw/ purchase only a certain amount of cash

everyday irrespective of the credit balance in the Account(s).

DETAILS OF APPLICABLE FEES AND CHARGES

Annual Fee for Debit Card: Rs. 99/-

Transaction Charges at ICICI Bank ATMs: Nil.

Cash Withdrawal Charges at VISA ATMs, in India: Rs. 50/- per cash withdrawal.

Balance Enquiry at VISA ATMs in India: Rs. 25/-.

Cash withdrawal charges at VISA ATMs abroad in US Region: $1 per cash withdrawal

plus 2% currency conversion charges.

Cash Withdrawal Charges at VISA ATMs abroad in non-US regions: $ 2.25 per cash

withdrawal plus 2% currency conversion charge.

Merchant Transaction abroad will attract 2% currency conversion charges.

Transactions at Railway counters will attract a service charge of 2.5% on the transaction

amount as per VISA regulations.

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Transaction at petrol pumps will attract a service charge of 2.5% or Rs. 10/- (whichever

is higher) as per VISA regulations.

Card Reissue Fee: Rs. 200/-.

TERMS AND CONDITIONS: The Cardholder shall be deemed to have unconditionally agreed

to and accepted these Terms and Conditions by signing the Card application form, or

acknowledging receipt of the Card in writing, or by signing on the reverse of the Card, or by

performing a transaction with the Card or by requesting activation of the Card to the ICICI Bank

24-Hour Customer Care Centre or after 10 days have elapsed since the Card was dispatched to

his address on record. These Terms and Conditions will be in addition to and not in derogation of

the Terms and Conditions relating to any account of the cardholder. The Bank may also make a

change without notice if the change is necessary to maintain or restore the security of the

electronic system or equipment used for the Card Transactions, The Cardholder will be notified

within 30 days if such a change is made, unless disclosure would jeopardize the security of the

electronic system or equipment.

55

LOANS AND ADVANCES

Lending of funds to the constituents, mainly traders, business and industrial enterprises,

constitutes the main business of the banking company, The major portion of a bank’s

funds is employed by way of loans and advances, which is the most profitable

employment of its funds. The major part of bank’s income is earned from intrest and

discount on the funds so lend.

BASIC PRINCIPLES OF SOUND LENDING

The business of lending, which is main business of the banks, carry certain inherent risk

and bank cannot take more than calculated risk whenever it wants to land. It has to follow

a cautious approach based on certain principle which include.

Principle of safety of funds: Safety of funds means that whenever is lend should come

back through repayment of the loan. To ensure safety the bankers must take into account

the willingness, honesty, integrity, character and financial standing of the borrowers.

Principle of Profitability: While granting loans, it must be borne in mind that whatever

loan is given it should generate income to the bank in the form of profit (which means it

should cover the cost of funds, cost of its administration and risk cost). Hence the price of

the loan products i.e. interest and other charges , should be such that it should amount to

products.

57

Principle of Liquidity: The money lent should come back as stipulated in the repayment

fixed at the time of sanction of the loan.

Principle of purpose: The loans given for production purpose help generate additional or

incremental income which works like an incentive to pursue the financed activity.

Principle of risk spread: The loans should be spread over a number of economic

activities or industries rather then only one of the few activities.

Principle of security: Loans given by bank should be secured ones so that in case of

need the bank should fail back upon for repayment by enforcing the securities available

to it.

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CLASSIFICATION OF PRIORITY SECTOR

ADVANCES:

At present, priority sector broadly comprises the agriculture, small scale industries and

other activities / borrowers.

Agriculture

Small scale industries

Other priority sector activities

o SRWTO

o Small business

o Education

o Housing loan

o Personal loan

o Software industry

o Consumption loan

59

ICICI HOME LOAN

Since making its maiden venture in the home loan segment in 1999, ICICI Bank has been

breathing down the neck of market leader HDFC with its aggressive marketing strategy. Quality

and value-added service - rather than interest rate - have been the hallmark of ICICI with the

company capitalizing on the absence of `door delivery' for housing loans. In a marked shift from

the existing industry norms, ICICI carved a niche for itself by going to the potential borrower

rather than waiting for him to come to them.

ICICI Bank offers home loans for purchase or construction of house and the loan amount can be

up to 85% of the cost of the property. The loan must terminate before or when the borrower turns

65 years of age or before retirement, whichever is earlier. ICICI home loans come with benefits

like easy interest rates, simplified documentation, doorstep service and free personal accident

insurance.

ICICI Max Money Home Loans offer the unique advantage of higher loan eligibility with a

lower initial installment. One can get up to 30% higher amount against one's current income and

the installment amount gets stepped up over the years.

ICICI Smart Fix Home Loans combine the safety of fixed rates plus the advantages of floating

rates. For the first 3 years the borrower gets a fixed interest rate and the fourth year onwards, the

loan gets switched to the prevailing floating interest rate.

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ICICI Bank offers Home Improvement Loans for renovation /refurbishment of one's home. One

can avail of loan up to Rs. 50 Lakhs and the interest rate is same as that of the Home Loans. The

loan covers up to 70% of the cost of improvement and the repayment period is 15 years.

61

ICICI BANK HOME LOAN

ICICI Bank, one of India's leading home loan providers, on Monday announced a reduction in

interest rates on its adjustable (floating) rate home loan products.

With this, adjustable rate home loans with maturity up to five years would be available at the rate

of 7.50 per cent and home loans with maturities of 6-20 years at the rate of 7.75 per cent, making

them among the most cost effective offerings in the country.

The new rates will be effective from November 11, 2003.

The new floating home loan rates effective from November 11, 2003:

The Bank has also announced a 0.5 per cent reduction in the ICICI Home PLR.

Tenure Rate EMI per lakh

Up to 5 years 7.50 per cent Rs 2,004 for 5 years

6-20 years 7.75 per cent Rs 821 for 20 years

This ensures that the benefit of reduced rates will be available not only to new customers, but

also to existing customers who have taken floating rate home loans earlier from ICICI Bank.

"With the ongoing reduction in our cost of funds and the continuing soft interest rates in the

system, we are pleased to offer a corresponding benefit to both our existing and new customers.

We will continue to serve our customers by offering transaction convenience and competitive

product features," said Chanda Kochhar, executive director, ICICI Bank.

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The above rates would also be available on balance transfer schemes in force. Customers with

existing home loans can benefit substantially by transferring their loans to ICICI Bank and enjoy

these new rates.

As a special festival offer, ICICI Bank's adjustable rate home loans will be available at a uniform

interest rate of 7.5 per cent for all tenors till November 26, 2003.

Customers availing the Bank's Balance Transfer scheme during this period will also benefit from

zero fees for home loans transferred to ICICI Bank from their existing bank/ housing finance

company.

63

However, special facility is also available as under

a. Repayment Option for salaried persons desirous to extend the repayment period beyond

the date of retirement under Public Housing Loan Scheme of the Bank will be eligible up

to 5 years after the date of retirement.

b. Availability of Progressive monthly installments (PMI) options under public housing loan

scheme.

Nature of Loan: Term Loan

Loan amount:

a. In case of salaried persons: The loan amount will be restricted to 60 times of monthly

gross salary last drawn subject to the condition that it is within the project cost less

stipulated margin and Total deductions including EMI of proposed loan should not

exceed 40% of the Gross monthly salary of the applicant.

b. In case of others: The loan will be restricted up to 4 times of gross Income average

shown in last 3 years Income Tax Assessment Order/ acknowledged copy of income tax

return subject to the condition that it is within the project cost less stipulated margin and

Total deductions including EMI of proposed loan should not exceed 40% of the Gross

monthly income of the applicant as per IT Returns.

Income Tax returns will be got verified by engaging services of Chartered

Accountant.

64

For repairing/furnishing of house/flat: Maximum loan for Repairing/ Furnishing of

existing House/ Flats will be 75% of the estimated expenses or Rs 3, 00,000 which ever is

low subject to the condition that borrower has sufficient repaying capacity as per income

criteria given hereunder: The minimum take home monthly salary/income taking into

account all deductions (including EMI of proposed loan) should not be less than 40% of

last month's gross salary in case of salaried persons & 50 % of average gross monthly

income as per average of last three years IT Return in case of others.

4.3 For application money raised by Housing Boards/ Development Authorities:

Permissible Loan amount for Application Money raised by local Housing Boards/

Development Authorities will be 75% of application amount or Rs 3,50,000/- which ever

is lower subject to the condition that the borrower has capacity to repay the loan within

stipulated repayment period.

4.4. For Joint Borrowers: While computing repaying capacity in case of joint

borrowers*, income of all borrowers may be clubbed. Joint borrowers may be the co-

owner of the property or they may not be co owner (but must be legal heirs of owner of

the property / PF nominee / Spouse having future interest in the property) but their

income is to be considered as one of the source of loan repayment. (*However, Income of

Co- borrower / (s) will be clubbed only if source of income of co-borrower is salary and

co-borrower / (s) is a permanent employees of Government / Semi Government / Public

Sector Unit/ Multinational Corporate Houses/ Blue Chip Companies / reputed

companies.)

Note: Income Tax return must be obtained in all cases including salaried persons.

65

Margin:

15% of project cost in case of salaried person

25 % of project cost for others

in case of repairing / furnishing 25% in all categories (including salaried class)

Project cost will consist of -

Purchase price of land/ house/ Flat, plus

Cost of construction/ renovation/ extension (if applicable) plus

Stamp duty and registrations charges, as applicable plus Accrued Interest amount of

moratorium period, if proposed to be capitalized

It will be ensured that margin at all stages has been contributed by the borrower

upfront where disbursement is to be made in phases.

66

Rate of interest

Partuculars Revised rates

Floating Fixed

i) Up to 5 years PLR-1.75 12.25%

iI) Up to 5 years to 10 years PLR-1.50 12.50%

iII) Up to 10 years 15 years PLR-1.25 12.75%

iV) Up to 15 years 20 years PLR-0.75 13.25%

(** For housing loans having above Rs. 20.00 lacs the Interest Rate will be 0.50% more than the

rates applicable in each slabs.

** If the borrower opts for fixed rate option, interest rate will be increased by 1.50% on each slab

as per existing structure. The rates prescribed under fixed rate option are indicative, taking in

view of the present PLR.)

Subject to "interest rate reset" clause in terms of which fixed rates may be reset at the end

of every three years on the basis of interest rate prevailing at that time.

Subject to "force measure" clause in terms of which Bank is authorized to revise fixed

interest suitably and prospectively in the event of major volatility in interest rates.

Borrower of housing loan may exercise the option to switch over at any point of time

from floating to fixed or vice versa on the condition that borrower has to pay as under:

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From Fixed to Floating- 2% of outstanding balance for exercising the option

From Floating to fixed- 0.50% of outstanding balance for exercising the option

Security:

I. Primary:

a. Equitable/ Registered mortgage of the property or

b. Pari- passu charge over the property if the borrower (salaried person) has already

availed loan from his organisation.

II. Collateral Security:

i. Personal Guarantee of one person of means and standing acceptable to the Bank

will be taken in all cases. However, in case of delay in creation of mortgage

Personal Guarantee of two person of means and standing will be taken, where

delay over 6 months in creation of equitable mortgage of the property to be

financed by the Bank is expected. In case of delay in creation of equitable

mortgage of the property beyond 6 months, collateral security to the extent of loan

amount in the shape of immovable property or financial securities or personal

guarantee of two persons of means & standing acceptable to the Bank will be

taken. However, the same will not be needed where a property is being purchased

from seller/builder as mentioned hereunder:

Housing Board/ Development Authority /Govt agency

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Good rated /reputed housing company / builder/developer well known at

national / state level (VIZ: Ansal, Gujarat Ambuja, Bengal Ambuja,

Bengal Peerless, Sahara Housing). List of such reputed housing

companies/ developers will be circulated by respective Zonal Offices after

its careful scrutiny and a copy will be endorsed to Retail Credit Section,

Head Office.

Approved Housing Societies notified by Zonal Offices.

Builders/Developers whose project has been approved by the Bank as per

bank's guidelines. (Approval of housing projects for the purpose of tie-up

arrangement for loan to their prospective buyers where builder/developer

is not seeking finance from the bank for the housing project may now be

accorded by the Zonal Head).

Documentation: In a booklet form complete in all respect.

Processing Fees: 0.50% of loan amount, Maximum Rs. 10,000/-

Documentation Charge: Actual expenses / charges incurred for creation of mortgage.

Disbursement:

In case of purchase of flat / House payment should be made direct to seller / promoters / societies

by DD/ Banker's cheque and should be issued in the name of builders with Bank account number

on it. Bank's official should be sent for delivering the cheque / draft to the builders / sellers

property at the registered addressed mentioned in the title deed.

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In case of construction of new house / flat, loan will be disbursed in a phased manner, in 4 or

more installments. Each such installment will be released only after verification of end use of

funds already released by the bank.

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Repayment Period & Moratorium:

a Repayment Period:-

i. For construction of House &/ or Purchase of House/ Flat/Residential Plot: For salaried

Persons-- Maximum 20 years or length of remaining service, whichever is less. For

Others -- Maximum 15 years or remaining period in attaining an age of 65, which ever is

earlier.

ii. For Repairing/ Furnishing of House/ Flat: For salaried Persons-- Maximum 7 years or

length of remaining service, whichever is less.For Others -- Maximum 7 years or

remaining period in attaining an age of 65, which ever is earlier.

iii. For Application Money raised by Housing Board/ Development Authority:12 Months or

receipt of refund order, which ever is earlier.

iv. Other Norms on Repayment Period: Repayment period will be exclusive of moratorium

period.

v. If the borrower desires to repay the loan in shorter period, he/she may be allowed to do so

and monthly installment will be fixed accordingly. Interest will be realised on monthly

basis during the moratorium period. However, in case of salaried persons the interest

amount may be capitalised (i.e. included in project cost) on request of the borrower.

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i) Loan Repayment Options is available.

a) Repayment option for salaried persons desirous to extend the repayment period beyond

the date of retirement under Housing Loan Scheme:

To extend repayment period of housing loan to salaried persons upto 5 years after the

date of retirement subject to the condition that EMI will be within 60% of their estimated

post retirement monthly earnings (pension plus ascertainable other income such as rental

earnings, income from investment in securities/LIP/NSC etc.., if any) as also existing net

take home salary after taking all deductions will not be below 40% of gross salary.

There will also be flexibility to consider some lump sum / bullet payment of full or part

of the loan outstanding out of future sources of fund and draw the repayment schedule

accordingly.

If post retirement EMI is more than stipulated norms, pre-retirement EMI may be

proportionately increased with borrower's consent.

b) Offering progressive monthly installments (PMI) options

Under the plan, the initial monthly installments for the first 5 years shall be kept lower

i.e., 80% of normal EMI and it will gradually go up to 90% of EMI plus whatever

shortfall during the first 10 years shall be realized after 10th year of loan. Accordingly, a

three-tier repayment schedule will be drawn up.

Borrowers will have also option for 2 tier repayment structure (with first tier not above

one third of repayment period)

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Borrowers may also get higher amount of progressive monthly installments (PMI) than

the above norms by opting higher %of EMI for PMI calculation.

Existing borrower or Bank's employees also can exercise options (a) & (b).

Minimum 24 PDCs will be obtained before releasing of fund except salary tied-up cases.

Prepayment Penalty

If liquidated within 1 year: 2% of outstanding balance· If liquidated after 1 year: 1.50%

of outstanding in case of takeover.

Accepted as both Identity and Address proof

(Any one of the following)

Passport

Arms License issued by State/Central Government of India authorities

Freedom fighter's pass issued by Ministry of Home affairs, Government of India with photograph

of applicant

Pension payment order/book/Card issued by State/Central Government of India.

Printed Ration Card with Photograph of applicant.

House hold Card with photograph issued by Govt of Andhra Pradesh

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ID card with photograph issued by Govt of Jammu and Kashmir

Bank Pass Book with photograph issued by SBI and its subsidiaries or Nationalised Banks

Photo Social Security Card (Smart Card) issued by Central/State Govts or Union territories.

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OBJECTIVE OF THE STUDY

The study undertaken includes the study of home loan , it’s recent

growth with a special focus on scope of home loan.

Along with all this the basic objectives of the study undertaken are as follows:

1. To find out the growth of home loan in Basti in last one year.

2. To find out the growth of home loan in Basti to know the customers preference for

various bank.

3. To know the customer choices for various schemes of home loan.

4. To find out the attribute emphasize by ICICI bank to do well in Basti.

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RESEARCH METHODOLOGY

Research methodology is a systematic way, which consists of series of action steps, necessary to

effectively carry out research and the desired sequencing to these steps. The marketing research

is a process of involves a no. of inter-related activities, which overlap and do rigidly follow a

particular sequence. It consists of the following steps:-

Formulating the objective of the study

Designing the methods of data collection

Selecting the sample plan

Collecting the data

Processing and analyzing the data

Reporting the findings

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Objective of Study

Research Design

Sample Design

Data Collection

Data Analysis

Report of findings

RESEARCH DESIGN

Research design specifies the methods and procedures for conducting a particular study.

A research design is the arrangement of conditions for collection and analysis of the data in a

manner that aims to combine relevance to the research purpose with economy in procedure.

Research design is broadly classified into three types as

Exploratory Research Design

Descriptive Research Design

Causal Research Design

I have chosen the descriptive research design.

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DESCRIPTIVE RESEARCH DESIGN:

Descriptive research studies are those studies which are concerned with described the

characteristics of particular individual.

In descriptive as well as in diagnostic studies, the researcher must be able to define clearly, what

he wants to measure and must find adequate methods for measuring it along with a clear cut

definition of population he want to study. Since the aim is to obtain complete and accurate

information in the said studies, the procedure to be used must be carefully planned. The research

design must make enough provision for protection against bias and must maximize reliability,

with due concern for the economical completion of the research study.

SAMPLE DESIGN

A Sample Design is a definite plan for obtaining a sample from a given population. It refers to

the technique to the procedure adopted in selecting items for the sampling designs are as below:

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SAMPLE SIZE

Sample method

Survey period

SAMPLE SIZE: The substantial portions of the target customer that are sampled to achieve

reliable result are 50.

The cost and time limitation completed me to select 50 respondents as sample size

SAMPLING METHOD:

In this marketing research project, I am using

Random sampling method

SAMPLE DESIGN

As complete enumeration of all the members of the population (Member and Non-member) I

have understate sampling technique.

SAMPLE SIZE

200 Customers

SAMPLE TYPE

AREA SAMPLING

Sample area

Basti

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SAMPLE SELECTION

Simple random selection sampling

SAMPLE TECHNIQUE

I have taken the Statistical tool of percentage method to analysis and interpretation of the

collected data.

RANDOM SAMPLING:

A random sample gives every unit of the population a known and non-zero probability of being

selected. Since random sampling implies equal probability to every unit in the population, it is

necessary that the selection of the sample must be free from human judgment.

There is some confusion between the two terms ‘random sampling’ and ‘unrestricted’ random

sampling. In the latter case, each unit in the population has an equal chance of being selected in

the sample. Such a sample is drawn ‘with replacement’, which means that the unit selected at

each draw is replaced into the population before another draw is made from it, ‘As such, a unit

can be included more than once in the sample. Most statically theory relates to ‘unrestricted

random sampling. In order to distinguish between these two sample. I.e. sample, without

replacement and sample with replacement, the terms ‘sample random sample’ and ‘unrestricted

random sample’ are used. If the latter is devised in such a manner that no unit can be included

more than once, it will then be known as the simple random sampling.

It may be noted that while both sample random sampling and unrestricted random sampling give

an equal probability to each unit of the population for being included in the sample, there are

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other sample design too which provide equal probability to the units. The process of randomness

is the very core of simple and unrestricted random sampling. The selection of a sample must be

free from bias, which can be ensured only when the process of selection is free from human

judgment.

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COLLECTION OF DATA

DATA COLLECTION

The study was conducted by the means of personal interview with respondents and the

information given by them were directly recorded on questionnaire.

For the purpose of analyzing the data it is necessary to collect the vital information. There are

two types of data, this are-

Primary Data

Secondary data

PRIMARY DATA:-

Primary data can be collected through questionnaire. The questionnaire can be classified into

four main types.

Structured non disguised questionnaire

Structured disguised questionnaire.

Non structured non disguised questionnaire

Non –structured disguised questionnaire.

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For my market study, I have sleeted structured non-disguised questionnaire because my

questionnaire is well structured, listing of questions are in a prearranged order and where the

object of enquiry is revealed to the respondents.

To making a well-structured questionnaire, we have adopted three type of questions-

Open ended question

Dichotomous questions

Multiple choice questions

These types of questions are easy to understand and easy to give required answers.

SECONDARY DATA:-

Secondary data means data that are already available i.e. they refer the data which have already

been collected and analyzed by someone else. When the researcher utilizes secondary data, than

he has to look into various sources from where h e can obtain them, in this case he is certainly

not confronted with the problems that are usually associated with the collection of original data.

Secondary data may either be published data or unpublished data. Usually published data are

available in:

Various publications of the central, state and local government;

Various publications of foreign government or of international bodies and their

subsidiary organizational;

Technical and trade journals;

Books, magazines and newspapers;

Reports and publications of various associations connected with business san industry,

stock exchanges etc.;

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Reports prepared by research scholars, universities, economists etc;

Public records and statistics, historical document and other source of published

information.

The source of unpublished data are many; they may be found in diaries, letters, unpublished

biographies and autobiographies and also may be available with scholars and research workers,

trade associations, labor because and other public private individuals and organization.

COLLECTION TECHNIQUE:

Questionnaire method is used in collection the data.

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DATA ANALYSIS

DATA PROCESSING AND ANALYSIS

Processing & Analysis the collected data: - once the field survey is over and questionnaire

have been received, the next task is to aggregate the data in a meaningful manner. A number of

tables are prepare to bring out the main characteristics of the data. The researcher should have a

well thought out framework for processing and analyzing data, and this should be done prior to

the collection. it includes the following activities—

(i) Editing: the first task in data processing is the editing. Editing is the process of examining

errors and omissions in the collected data and making necessary corrections in the same.

(ii) Coding: coding is the procedure of classifying the answer to a question into meaningful

categories. Coding is necessary to carry out the subsequent operations of tabulating and

analyzing data. If coding is not done, it will not be possible to reduce a large number of

heterogeneous responses into meaningful categories with the result that the analysis of data

would be weak and ineffective, and without proper focus.

(iii)Tabulation: tabulation comprises sorting of the data into different categories and counting

the number of cases that belong to each category. The simplest way to tabulate is to count the

number of responses to one question. This is also called universal tabulation. The analysis based

on just one variable is obviously meager. Where two or more variables are involved in

tabulation, it is called bivariate or multivariate tabulation.

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(iv) Analysis: after the all three above steps, the most important step is analysis of the data.

Under this step, they can use the various tools of the analysis such as Central Tendency,

Dispersion, Correlation co-efficient, Regression Analysis, Test of Hypothesis etc.

89

DATA ANALYSIS

FIG NO 1

CASH AND FINANCED RATIO OF HOME LOAN MARKET IN BASTI

(Last 2 years sales)

In 2003-04

30%

70%

FinancedCash

In 2004-05

31%

69%

FinancedCash

The above graphs are showing the percentage of financed sales ratio of Home loan have

increased in 2010-11 as compared to 2009-10 in Basti.

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IN 2009-10

IN 2010-11

FIG NO 2

TOTAL SALES OF HOME LOAN COMPANIES IN BASTI

Sales in 2009-10

7530

2600240021501500

800 400 167 00

10002000300040005000600070008000

Bajaj

Honda

H Hond

aTVS

Kinetic

Hero

Yamah

a

R Enfi

eldLM

L

Series1

Sales in 2010-11

6822

23002400 24001400 850 600 287 850

0

2000

4000

6000

8000

Bajaj

Honda

H Hond

aTVS

Kinetic

Hero

Yamah

a

R Enfi

eldLM

L

COMPANIES

SALE

S

Series1

The above graphs are showing the total sales of Home loan companies in Basti in year 2009-10 and

2010-11

91

FIG NO 3

SALES GROWTH OF HOME LOAN COMPANIES IN BASTI

S No. COMPANY SALES OF

2009-2010

SALES OF

2010-2011

SALES

GROWTH IN

%

1 PNB 7530 6822 -9.40

2 Citi bank 2600 2300 -11.54

3 HDFC 2400 2400 STABLE

4 ICICI 2150 2400 +11.63

5 Allahabad 1500 1400 -6.67

6 Punjab and Sindh 800 850 +6.25

The above table is showing the percentage of sales growth of home loan bank in Basti in last one

year.

92

FIG NO 4

CASH AND FINANCED RATIO OF HOME LOAN MARKET (last 2 year sales)

CASH AND FINANCED % IN 2009-10

Financed69%

Cash31%

FinancedCash

CASH AND FINANCED % IN 2010-11

Financed72%

Cash28%

FinancedCash

The above graphs are showing the percentage of cash and financed ratio of home loan in Basti.

93

DO YOU KNOW ABOUT HOME FINANCE

Yes 180

No 20

Sample Size: 200

Interpretation

In the survey I find they have no knowledge about Home finance 90% respondent know about

for Home finance and 10% respondent not know about for home finance.

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FROM WHICH COMPANY HAVE YOU HOME LOAN

ICICI 2

HDFC 7

P N B 2

Allahabad 1

P & S B 5

SBI 3

Sample Size: 20

Interpretation

In the survey I find more 35% have HDFC and rest more 25% P and Sindh Bank and 15% have

SBI.

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FROM WHICH CHANNEL HAVE YOU HOME FINANCE?

AGENT 18

DSF 0

OTHERS 2

Sample Size 20

Interpretation:

In the survey I find more than respondent has finance from bank agent and just only 2% person

has finance from other.

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FINDINGS

1. Home loan market are rising in Basti because of stiff competition between home loan

bank. Every company is launching new model with attractive prices and with latest

technology in order to capture the market.

2. Total sales of most Home loan companies are increasing.

3. Home loan bank like ICICI, PNB, HDFC are doing well in the market of Basti.

4. More than 2% of loan has gone up in Basti in last one year.

5. Home loan market is also rising in Basti because of easy finance options provided by

various financial bank.

6. Almost all home loan bank sales have increased in last one year.

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SUGGESTIONS AND RECOMMENDATIONS

1. As the market is growing in Basti so there is a lot of scope for vehicle finance in Basti so

ICICI bank should keep this thing in mind and makes the home loan more comfortable

for customer.

2. ICICI Bank should cover all loans in Basti.

3. ICICI Bank should make home loan easier and hassle free to customer.

4. As people still don’t know about the schemes of ICICI Bank in Basti so ICICI Bank

should do campaigning at different locations at Basti to increase awareness about the

bank existence.

5. ICICI Bank should focus on better communications between loan agent and the bank to

maintain good relationship.

6. ICICI Bank should make people aware about their loan schemes to people of Basti to

attract more customers.

7. ICICI BANK should pay attention towards these vehicle dealers which are doing well in

Basti.

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8. ICICI bank should go for more eye catching advertisement programmers and roadside

hoardings.

9. ICICI BANK should introduce new and attractive home loan schemes like minimum

interest schemes on some special occasions.

10. ICICI BANK should develop a healthy competition between the home loan agents

through various incentives schemes.

11. ICICI BANK should advertise about their schemes in leading news paper of Basti like

Amar Ujala, Danik Jagran, Times of India etc.

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LIMITATIONS OF SURVEY

1. In our customer survey some people was not ready to fill the questionnaire.

2. Sometimes due to lack of respondent’s support it has become difficult to get required

information.

3. The data collected is approximate as it is obligatory for every company to disguise its

actual data.

4. The tool we used for the study was the structured questionnaire which is itself has narrow

scope.

5. The analysis done has got limited scope.

103

BIBLIOGRAPHY

REFERENCE BOOK:

Marketing Research (Author- G C Beri)

(Publish by Tata McGraw Hill Publishing Co. LTD., New Delhi)

Third Edition (2002)

Marketing Management (Author- Rajan Sexana)

(Publish by Tata McGraw Hill Publishing Co. LTD, New Delhi)

Second Edition (2001)

Marketing Management (Author- R S Sexana)

(Publish by Himalaya Publication, New Delhi)

Ninth Edition (2000)

Marketing Management (Author- Philip Kotler)

(Publish by Pren Tice-hall of India PVT. LTD., New Delhi)

Ninth Edition (2002)

Research Methodology (Author- Bhandrai)

Print 2005, second edition

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QUESTIONNAIRE

Q-1: DO YOU KNOWN ABOUT HOME LOAN

Yes No

Q-2: ARE YOU HAVE HOME LOAN

Yes No

Q-3: FROM WHICH BANK HAVE YOU HAVE HOME LOAN

HDFC Bank P N B

Syndicate bank Union bank

HDFC SBI

Q-4: FROM WHICH CHANNEL HAVE YOU ACQUIRED THE HOME LOAN?

AGENT DSF OTHERS

Q-5: YOU WANT TO HAVE HOME LOAN FOR FURTHER PLANNINGS?

Yes No Can’t say

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a market survey of home loan with special reference to icici

Documents