A PROJECT REPORT

ON

HOME LOANS

With reference to

Submitted to Osmania University in partial

Fulfillment of the requirements for the award of degree

In

Master of Business Administration

By

ABSTRACT Fixed rate home loans are very simple in their structure, this kind of loan offers

to the borrower the advantage of planning his - her because of fixed monthly payments.

However, you should consider that this kind of loans is not short term loans, so it is difficult -

impossible - to know the market conditions 15 years in advance. 

                 When you got a variable rate mortgage, that means that the interest rate change

according to the conditions of the market and it is affected with any treasury bond rate change,

borrowers in this case enjoy or suffer lower or higher interest rates, these rates are changing

permanently during the loan duration time. 

               The option of start with a fixed interest rate during a certain period of time, and after

that apply a variable interest rate according to the market conditions at that time, the advantage

of this kind of home loans is that they try to get the best of the 2 systems listed above. You plan

your finance for a reasonable period of time, meaning that you have a fixed monthly payment for

the next - for example - 5 years, and later on a new monthly payment is calculated accordingly.   

ACKNOWLEDGEMENT

The presentation of this project has given me the opportunity to express my gratitude to all those who

have made it possible for me to accomplish this project.

I thank ICICI BANK management for giving me this opportunity to under go a project study program

in their esteemed organization.

I would like to express my deep sense of gratitude towards

I gratefully acknowledge Mrs, Head of the Department of MASTER OF BUSINESS

ADMINISTRATION, for his encouragement and advice during the course of this work.

My sincere thanks to my project Guide, for providing me timely guidance and supervision.

TABLE OF CONTENTS

Contents Page numbers

List of tables i - ii

List of figures iii

Chapter 1

I. Introduction 1 - 4

1.1 Need of the study 5

1.2 Objectives of study 6

1.3 Scope of the study 7

1.4 Research Methodology 8

1.5 Limitations of Study 9

Chapter 2

2.1 Theoretical Framework 10-14

2.2 Review of Literature 15-20

Chapter 3

3.1 Industry profile 21-23

3.2 Company profile 24-50

Chapter 4

4.1 Data Analysis & Interpretation 51-96

Chapter 5

5.1 Findings 97

5.2 Conclusion 98

5.3 Suggestions 99

5.4Bibliography 100

Appendices 101

Appendix –A

Appendix – B 102-104

LIST OF TABLES:

S.NO CONTENTS PAGE NO.

1. Table showing the Income clubbing of Co-applicant 38

2. Table showing Employees in the Public Ltd Companies 42

3. Table showing the Employees Repayment Facility 49

4. Table showing the marks awarded to each of the criterion 59

5. Table showing Data related to Client 1 61

6. Table showing the Credit Score of Client 1 66

7. Table showing Data related to Client 2 68

8. Table showing the Credit Score of Client 2 73

9. Table showing Data related to Client 3 75

10. Table showing the Credit Score of Client 3 79

11. Table showing Data related to Client 4 81

12. Table showing the details of Co-applicant 82

13. Table showing the Credit Score of Client 4 88

14. Table showing Data related to Client 5 90

15. Table showing the Credit Score of Client 5 95

LIST OF FIGURES:

S.NO CONTENTS PAGE NO.

1. Pie Diagram showing the increasing share of Banks 3

2. Organization Diagram indicates the Loan Procedure at ICICI Bank

52

3. Pie Diagram showing the marks alloted to each of the parameters.

60

4. Pie diagram showing the scores allotted to Client No 1 67

5. Pie diagram showing the scores allotted to Client No 2 74

6. Pie diagram showing the scores allotted to Client No 3 80

7. Pie diagram showing the scores allotted to Client No 4 89

8. Pie diagram showing the scores allotted to Client No 5 96

CHAPTER-1

INTRODUCTION

1. INTRODUCTION

2. NEED FOR THE STUDY

3. SCOPE OF THE STUDY

4. OBJECTIVES OF THE STUDY

5. RESEARCH METHODOLOGY

6. LIMITATIONS OF THE STUDY

I. INTRODUCTION

Most people can't accumulate all the cash needed to buy a house. So, what most people

do is, borrow a large part of the purchase price. This instrument of borrowing is called

mortgage financing. When obtaining a home mortgage you must in return pledge your house,

the land or Plot, and the down payment as security.

A mortgage financing is simply a very large loan that a home buyer uses to purchase a

home.  It is the most common form of financing for real estate transactions.  A mortgage is a

legal contract between mortgagee which is generally a bank or other lending institution and a

mortgagor which is the borrower.  This legal document contains the amount of money

borrowed to buy the property and the interest rate that applies. 

A mortgage is a formal document which proves the legal claim or lien on your property

that your lender holds as security for the money you borrowed. There are two people involved

in a mortgage, borrower and the lender. Borrower pledge the property as security for the

repayment of the money borrowed, but he do not transfer title to the lender. However, if he

does not pay the debt as agreed the lender, through a court proceeding, can compel the sale of

property to pay off debt.

They say you mustn’t trust a man till you know his house. Everyone likes hearing

people say “Wow, what a beautiful house you have!” From cave dwelling, we have evolved

and now a house provides far more than just shelter, it also becomes a source of pride. A

Housing Loan is used as finance to help you buy or modify that perfect home.

The concept of Home Loans in India is growing day by day. The growth of the Home

loans in India is boosted by the development of the real estate and increment in the activity

pertaining to construction.

The Home loans in India were previously supplied mainly by the financial institutions but

now the commercial banks are also providing mortgage based loans to various types of

customers. The commercial banks provide mortgage loans on nominal rates of interest.

Objectives of mortgage loans in India:

1. To provide the customer with the best possible services

2. To put emphasize on the quality of the credit and advance in form of mortgage loan

3. To focus on management of income and cost

All the Public and Private Sector banks in India are offering various types of home loan

schemes to cater to the needs of different customers based upon their capacities like Income,

Term of Payment, Rate of Interest etc., Some of the well-known mortgage-financing companies

offering various types of mortgage in India are as follows -

1. LIC Housing Finance

2. HDFC Home Finance

3. ICICI Home Finance

4. SBI Housing Finance

5. UCO Housing Finance

Increasing share of banks

Banks, despite being late entrants in the housing finance segment, have overtaken established

HFCs (Housing Finance Corporations) over the past 4 years. This is indicated by the fact that

share of banks has augmented from 43% to 69% of the housing loan market over this period.

It was also estimated by a research firm that by 2011 the demand would further grow to

a massive volume of around 400 Million Units. This will necessitate a minimum outlay

of US$ 890 Billion. There is a shortage of more than nearly 20 Million housing units in

India and this is a positive sign of the untapped opportunities for this sector.

A recent report on “Opportunities in Indian Housing Sector (2010-2011)”, talks about

the Housing and real estate industry and its impact on the other sectors of the economy.

Experts highlight that for every unit added as expenditure, there are rippling effects on

income generation capacity, with an increase of approximately 400%.

Looking at the impressive pace of the Indian economy in general and housing sector in

particular, it can be fairly concluded that the housing sector will grow at around 14%.

The sector will also contribute to employment generation with a capacity of creating

roughly 3.2 Million new job opportunities in the coming decade.

REASONS FOR THE GROWTH OF HOUSING INDUSTRY IN INDIA.

The regional distribution of housing demands by the year 2011.

The reasons for slower growth of housing sector in India.

The role played by housing finance companies in India.

Changes in the demographic profile including increase in the rate of household

formation due to structural shift from joint family system to nuclear family.

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

increase in total income levels.

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

Increasing affordability of housing property purchase due to declining interest rates

and stable property prices. Ever increasing middle class, migration of population and

increasing Urbanization resulting in acute shortage of housing units.

1.1 NEED FOR THE STUDY

Retail banking has been popular segment to enter into for many banks. In the retail

banking, housing sector has been most promising segment which is promising a Comprehensive

growth rate of about 30 per cent for the next five years. With the government keen on

infrastructure development and announcing various tax Sops housing loan segment has been a

tempted area for many banks to enter into housing sector can be bifurcated into organized and

unorganized segments with the unorganized segments accounting for over 75 per cent of the

housing units constructed.

During the past 4 – 5 years the housing sector helped by the growing housing finance industry

has witnessed significant developments.

1.2 OBJECTIVE OF THE STUDY OF HOME LOANS

1. The study was mainly conducted to understand the concept of home loan scheme and the

eligibility criteria of the customers.

2. The study is done to understand the documents involved in the home loan scheme and the

repayment methodology adopted by various banks and the HFC‘s (Housing Finance

Corporations).

3. The innovative home loan schemes and the risk capturing mechanism adopted by the HFC’s

and the future of the home loan segment has been undertaken as a part of this study

1.3 Scope of study

1. The study covers a period of five years from 2006 to 2011. There are several reasons for

selecting this period.

2. During the past 5 years the Bank has gone global as a result the company has witnessed

many economic and political changes.

3. Company has undergone rapid changes in the past 5 years due to many policy decisions

relating to capital markets, banking sector & licensing policy.

4. The study is limited to only ICICI Bank This study is mainly related to the individuals who

are interested in taking home loans from banks to fulfill their dreams.

5. The study is mainly related to all the loans provided by ICICI bank only.

1.4 RESEARCH METHODOLOGY:

Methodology is the framework of methods and procedures carried on for Acquiring

information needed. It is a blue print according to which research is conducted .The project

report was undertaken in ICICI BANK to study the organization, its function, measures taken to

arrest HOME LOANS in disbursements of funds. The methodology followed in collection and

processing of data includes.

1. PRIMARY SOURCES :

Interaction with officers and resource person in bank.

2. SECONDARY SOURCES :

The secondary source of data consists of:

The published documents pertaining to the organization such as lending policy, broaches on

schemes of the corporation, annual report books, office records, circulars and articles

appeared in the various magazines

1.5 LIMITATIONS OF STUDY :

I. The study was restricted in understanding the home loan as concept so the practical

implications of the study have been difficult.

1. The innovative features of the various ICICI as part of their home loan schemes but is not a

comprehensive study of their home loan schemes.

2. The Take Over home loans of high interest rate for low interest rates and their inherent risks

on the banks lending profile has not been undertaken in the study.

3. The mortgage home loans and its scope on the home loan lending portfolio were not studied

as this would lead into a relatively new kind of home loan segment.

4. The study is limited to and is based on the secondary data available and stated at the top of

the project.

CHAPTSER – 2

THEORITICAL FRAMEWORK

2.1 THEORITICAL FRAMEWORK

IMPORTANCE OF HOUSING LOAN

It's important to know all the ins and outs of a home loan. In truth not many people can

purchase a home, whether it may be a house, flat or penthouse without taking some form of a

home loan. It goes without saying that the most common known type of home loan is the

mortgage. Virtually everybody who purchases a home does so with the use of a mortgage. Once

again the question what type of mortgage is worth taking and what is definitely to be rejected.

Whatever type of home loan you eventually decide to take, remember that this should be made

only after a market survey.

No other item in our daily lives is so important than the home loan. The reason is that the

home loan or mortgage is something we have to usually carry with us for a great part of our

lives. Mortgages are taken on an average of some twenty years, hence the decision when and

when not to take such a home loan is very serious. The answer is to take a mortgage if you have

to only when you can pay it all back the moment you feel you want to. But let's not forget home

loans can be acquired all along the way in order to refurbish the home too.

They say you mustn’t trust a man till you know his house. Everyone likes hearing people

say “Wow, what a beautiful house you have!” From cave dwelling, we have evolved and now a

house provides far more than just shelter, it also becomes a source of pride. A Housing Loan is

used as finance to help you buy or modify that perfect home. The different Housing Loan

products can be classified as:

1) Home Loan

2) Home Extension Loan

3) Home Improvement Loan

4) Land Loans

5) NRI Loans

6) Home Equity Loans

7) Short Term Bridging Loans

DOCUMENTS REQUIRED

Application form with photograph Photocopy of the Employment Contract or Labour Contract

and English translation countersigned by your employer Latest salary certificate (in English)

specifying the following:

1) Name (as it appears in the passport)

2) Date of joining

3) Passport Number

4) Designation

5) Perquisites and salary

Photocopy of Identity card / Labor card Photocopy of latest work permit Photocopy of valid

resident visa stamped on the passport Overseas Bank Account and NRE/NRO

statement for the last six months. Continuous Discharge Certificate (CDC) - if applicable

Latest Credit Bureau Report [Applicable to customers residing in countries where Credit

Bureaus exist. [eg. USA, UK etc.] Property related documents processing fee cheque

FOR SALARIED CUSTOMER

1) Application form with photograph

2) Identity and Residence Proof

3) Latest salary-slip

4) Form 16

5) Last 6 months bank statements

6) Processing fee cheque

FOR SELF EMPLOYED PROFESSIONALS

1) Application form with photograph

2) Identity and Residence Proof

3) Education Qualifications Certificate and Proof of business existence

4) Last 3 years Income Tax returns (self and business)

5) Last 3 years Profit /Loss and Balance Sheet

6) Last 6 months bank statements

7) Processing fee cheque

FOR SELF EMPLOYED BUSINESSMAN

1) Application form with photograph

2) Identity and Residence Proof

3) Education Qualifications Certificate and Proof of business existence

4) Business profile

5) Last 3 years Income Tax returns (self and business)

6) Last 3 years Profit /Loss and Balance Sheet

7) Last 6 months bank statements (self and business)

8) Processing fee cheque

REPAYMENT CAPACITY

The repayment capacity is judged according to the income and the income is considered

differently if customers are salaried and differently if customers are self-employed. Income is

used to calculate the amount of money that you will be able to shell out every month towards

your loan installment using IIR and FOIR norms. FOIR calculation also takes into account the

installments of loans you are currently repaying. The lower between the IIR and FOIR is chosen

as your maximum repayment capacity. This is then compared to the loan amount that you have

requested for and the loan eligibility as per LTV norms and the lowest of these would be your

final loan eligibility.

Salaried

1) Any extra income on your salary slip (including overtime, etc.) is subtracted

2) 50% of the average variable income over the last 6 months is added

3) Any fixed cash or voucher payment that can be proved is added.

4) HRA that can be received and is not being received is added.

5) 50% of the average annual income of the last two years is added.

Self-employed

1) Any non-recurring income that affects profit (like sale of asset) is subtracted.

2) Any non-recurring expense that adversely affects profits and was not capitalized (like repairs

and maintenance) is added.

3) 50% of the average depreciation of the last two years is added.

REVIEW OF LITERATURE

2.l LITERATURE REVIEW:

1. Fixed and Variable Rate on Home Loans

 

               Fixed rate home loans are very simple in their structure, this kind of loan offers to the

borrower the advantage of planning his - her because of fixed monthly payments. However, you

should consider that this kind of loans is not short term loans, so it is difficult - impossible - to

know the market conditions 15 years in advance.

 

When you got a variable rate mortgage, that means that the interest rate change according

to the conditions of the market and it is affected with any treasury bond rate change, borrowers in

this case enjoy or suffer lower or higher interest rates, these rates are changing permanently

during the loan duration time.

 

                   The option of start with a fixed interest rate during a certain period of time, and after

that apply a variable interest rate according to the market conditions at that time, the advantage

of this kind of home loans is that they try to get the best of the 2 systems listed above. You plan

your finance for a reasonable period of time, meaning that you have a fixed monthly payment for

the next - for example - 5 years, and later on a new monthly payment is calculated accordingly.

 

      

2. General Home Loans Information

            The main aim of this article is provide the facts about home loans. The resources need in

order to find loans that are important and relevant to what are we looking for in a home,

mortgage etc. This website provides extensive information on leading home loan in articles,

products, resources, and many types of additional home loan information. There are dozens

specific topic related to home loans that you can find information on home loans, mortgage, and

so on.                       

There are 2 types of mortgage home loans; the first is the fixed interest rate mortgage

home loan that the interest rate you pay will last the same for duration of the mortgage. The

other type is a flexible mortgage interest rate that will go up and down depending on the current

market conditions and national economy.                          

There are many kinds of home loans that provide the needs from bad credit to those with

perfect credit. The interest rate is the first things to look for; the other thing is the fees, just to

name a few. The things mentioned above will have the largest effect on the cost of the

loan.  Home loans can be made up in different ways for the property that is why paying attention

closely is very important part of getting a home loan. It is advised to consult a. 

mortgage broker who will be able to give advices of the options

3. Relationships and Rationing in Consumer Loans

We empirically examine how relationships between individual households and their

creditors affect the probability of being credit-rationed. Using a data set where the credit-

rationing of individual households is observed directly, we show that relationship duration and

the number of activities between a family and a potential lender significantly lower the

probability of being

Credit-rationed. Additionally, we examine the relative role of relationships in

determining the interest rates of two consumer loans-a mortgage loan and a “special purposes”

loan-and show that mortgage loan rates are driven less by relationship factors than the special

purposes loan rates.

4. Entry Restrictions, Industry Evolution, and Dynamic Efficiency:

This article shows that bank performance improves significantly after restrictions on bank

expansion are lifted. We find that operating costs and loans losses decreases sharply after states

permit statewide branching and, to a lesser extent, after states allow interstate banking. The

improvements following branching deregulations appear to occur because better banks grow at

the expense of their less efficient rivals.

By retarding the “natural” evolution of the industry, branching restrictions reduced the

performance of the average banking asset. We also find that most of the reduction in banks cost

were passed along to bank borrowers in the form of lower loan rates.

5. Small Business Loan Turndowns, Personal Wealth, and Discrimination

We examine the impact of personal wealth on small business loan turndown across

demographic groups. Information on home ownership, home equity, and personal net worth, in

combination with a rich set of explanatory variables, furthers our understanding of the credit

market experiences of small businesses across demographic groups.

We find substantial unexplained differences in denial rates between African-American,

Hispanic, Asian, and white- owned firms. We find that greater personal wealth is associated with

a lower probability of loan denial. However, even after controlling for personal wealth, large

differences in denial rates across demographic groups remain.

CHAPTER-3

INDUSTRIAL PROFILE

3.1 INDUSTRY PROFILE Banking Sector in India

The services sector is under tremendous pressure of change due to the liberalization,

privatization & globalization. The margins are squeezing and expectations of customers are

increasing day by day due to employmentation. Also due to well informed customers,

organization can no more enjoy the legacy of loyalty of customers.

Since banking is also a part of the above process, the banking industry is also undergoing

the churning process and only fittest will survive.

Banking in India originated in the first decade of 18th century with The General Bank of

India coming into existence in 1786. This was followed by Bank of Hindustan. The oldest bank

in existence in India is the State Bank of India. Couple of decades later, foreign banks like Credit

Lyonnais started their Calcutta operations in the 1850s. The first fully Indian owned bank was

the Allahabad Bank, which was established in 1865.

The market expanded with the establishment of banks such as Punjab National Bank, in

1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under

private ownership. The Reserve Bank of India formally took on the responsibility of regulating

the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was

nationalized and given broader powers.

Nationalization

Banks in India can be categorized into scheduled and non-scheduled banks. Schedule

banks constitute of commercial banks and co-operative banks. There are about 67,000 branches

of Scheduled banks spread across India.

During the first phase of financial reforms, there was a nationalization of 14 major banks in

1969. A Second Phase of nationalization of 6 more commercial banks followed in 1980. The

stated reason for the nationalization was to give the government more control of credit delivery.

After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the

average growth rate of the Indian economy. This crucial step led from Class banking to Mass

banking. Since then the growth of banking industry in India has been a continuous process.

Liberalization

In the early 1990s the then Narasimha Rao government embarked on a policy of

liberalization and gave licenses to a small number of private banks, which came to be known as

New Generation tech-savvy banks, which included banks such as UTI Bank (now re-named as

Axis Bank) (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank.

This move, along with the rapid growth in the economy of India, kick started the banking sector

in India, which has seen rapid growth with strong contribution from all the three sectors of

banks, namely, government banks, private banks and foreign banks.

Current Situation

As far as the present scenario is concerned the banking industry is in a transition phase.

The public sector banks (PSBs), which are the foundation of the Indian Banking System

accounting for more than 78 percent of total banking industry assets. Unfortunately they are

burdened with excessive Non Performing Assets (NPAs), massive manpower and lack of modern

technology.

The Reserve Bank of India is an autonomous body, with minimal pressure from the

government. The stated policy of the Bank on the Indian Rupee is to manage volatility but

without any fixed exchange rate-and this has mostly been true.

On the other hand the Private Sector Banks in India are witnessing immense progress.

They are leaders in internet banking, mobile banking, phone banking, ATMs. On the other hand

the Public Sector Banks are still facing the problem of unhappy employees. There has been a

decrease of 20 percent in the employee’s strength of the private sector in the wake of the

Voluntary Retirement Schemes (VRS).

As far as foreign banks are concerned they are likely to succeed in India. IDBI, ING

Vyasa Bank, SBI commercial and International Bank Ltd, Dhanalakshmi Bank Ltd, Karur Vysya

Bank Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks from the Public

Sector include Punjab National Bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank,

Andhra Bank, etc. ANZ Grind lays, ABN-AMRO Bank, American Express Bank Ltd, Citibank

etc are some foreign banks operating in India.

COMPANY PROFILE

ICICI was established in 1955 to lend money for industrial development. It was India's

second-largest bank with total assets of Rs. 4,997.95 billion (US$ 100 billion) at December 31,

2011 and profit after tax Rs. 51.84 billion for the nine months ended December 31, 2011. The

Bank has a network of 1,416 branches and about 4,644 ATMs in India and presence in 18

countries.

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 and asset management. ICICI Bank's equity shares are listed in India on Bombay Stock

Exchange and the National Stock Exchange of India Limited and its American Depositary

Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Vision Statement:

“To emerge as the most trusted, admired and sought-after world class financial institution

and to be the most preferred destination for every customer and investor and a place of pride for

its employees.”

Mission Statement:

“To be a Top-class Bank to achieve sustained growth of business and profitability,

fulfilling socio-economic obligations, excellence in customer service; through up gradation of

skills of staff and their effective participation making use of state-of-the-art technology.”

Global banking has changed rapidly and ICICI Bank has worked hard to adapt to these

changes. The bank looks forward to the future with excitement and a commitment to bring

greater benefits to you. ICICI Bank, with years of dedicated service to the Nation through active

financial participation in all segments of the economy - Agriculture, Industry, Trade &

Commerce, Service Sector, Infrastructure Sector etc., is keeping pace with the changing

environment. With a countrywide network of more than 2000 service units which includes

specialized and computerized branches in India and overseas, ICICI Bank has marched into the

21st Century matched with dynamism and growth.

Overview

ICICI was formed in 1955 at the initiative of the World Bank, the Government of India

and representatives of Indian industry. The principal objective was to create a development

financial institution for providing medium-term and long-term project financing to Indian

businesses. In the 1990s, ICICI transformed its business from a development financial institution

offering only project finance to a diversified financial services group offering a wide variety of

products and services, both directly and through a number of subsidiaries and affiliates like

ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial

institution from non-Japan Asia to be listed on the NYSE.

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.

The 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.

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 and 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.

ICICI Bank Strength

1) Country-wide presence

2) Overseas Presence with Profitable Overseas Operations

3) Strong Capital Base

4) High Proportion of Long Term Liabilities

5) A Well Diversified Asset Portfolio

6) A Large and Diversified Client Base

7) Fully Computerized Branches at Major Centers

Organization Structure

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

emerging competitive scenario in the India 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 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 to access to low-cost deposits,

greater opportunities for earning fee-based income and the ability to participate in the payment

system and provide transaction-bank 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 relationship 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 Bank and its

subsidiaries. In October 2001, the Board of Directors of ICICI and ICICI Bank approved the

merger of ICICI and two of wholly-owned retail finance subsidiaries, ICICI personal financial

services Limited and ICICI Capital services limited, with ICICI Bank.

The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by

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

Mumbai and the Reserve Bank of India in April 2002. ICICI Bank offers wide variety of Loans

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 loan product and provide your details online and our representative

will contact you for getting loans.

Loan Schemes in ICICI Bank

ICICI Shelter

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ICICI Tractor Loan

ICICI Car Loan

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ICICI Vehicle Loan

ICICI Tractor Loan

Preferred financier for almost all leading tractor manufacturers in the country. Flexible repayment options in tandem with the farmer's seasonal liquidity. Monthly, Quarterly and Half-yearly repayment patterns to choose from. Comfortable repayment tenures from 1 year to 9 years.

ICICI Business Loan

Business Installment Loan (BIL) helps the entities take a giant strides by fulfilling their business requirements, be it working capital requirement, business expansion or to grab that once in a lifetime business opportunity

ICICI Business Loan

Basis of home loan eligibility

The cost of the property you are planning to buy has a direct impact on your loan

eligibility. Read on to find out how. The bank which finances your house purchase naturally

wants you to put in a contribution towards the cost of the house so that you have a stake in its

continued maintenance.   This also ensures that if the value of the house goes down in future,

the bank's outstanding loan amount is lower than the market value of the property. Hence, if a

house costs Rs 5 lakh, the bank may require you to fund at least Rs 50,000 to Rs 75,000 from

your own sources, while the remaining Rs 4,25,000 - Rs 4,50,000 is provided as loan subject to

your eligibility. The amount you are expected to put in is called margin money or down

payment.  Even if your income is enough to justify a higher loan, the bank will give a

maximum loan based on its margin requirements. For instance, if your income justifies a loan

amount of Rs 6 lakh, and you are buying a house that costs Rs 5 lakh, the bank may restrict the

loan to between Rs 4.25 and Rs 4.50 lakh, depending on its down payment policy.   

The down payment can also vary depending on the age of the property. If the property

is older, the down payment requirement may be higher.

Age of the building :

Most banks have a cap on the maximum age of the building at the end of the loan tenure. This

would normally be 50 years. So, if you are buying a property on resale and the current age of the

building is 38 years, the probability of getting a tenure higher than 12 years is very low, despite

the fact that you may otherwise be eligible for a 20-year loan. This reduction of tenure would

reduce the loan eligibility.

Unaccounted component:

In some real estate transactions, a portion of the cost is not accounted for in any of the

documents related to the purchase. Thankfully, this practice is on the decline, especially where

the property is bought from reputed builders. No bank takes this unaccounted amount in

calculating the cost of the property while determining the loan amount eligibility.

Amenities agreement :

Some home buyers enter into a lower agreement value for minimising the payment of stamp duty

that is applicable on transfer of property. They sign an amenities agreement or a furnishing

agreement to account for the balance purchase price. However, such transactions have a direct

bearing on the loan amount that a bank will be willing to provide. Most banks calculate the cost

of the property after restricting the value of such an amenities agreement to 20% of the original

agreement value of the property. However, if the amenities agreement is also stamped and

registered, most banks will take into account the full amount of the amenities agreement.

Amenities agreements are normally not taken into account at all if the property is purchased on

resale.

Power of Attorney :

In some northern states like the National Capital Region of New Delhi, many property

transactions are done on the basis of a power of attorney. The seller of the property gives the

buyer the possession of the property and the power to deal with the property as he (the buyer)

may deem fit. This power of attorney would also give the power to the buyer to further provide

such power of attorneys to other people (for other buyers in the future).

Most banks do not encourage such transactions, since the ownership is itself suspect in such a

transaction. Such transactions are normally entered into to save on charges payable to the

development authorities as well as stamp duty and registration charges. Home loans   to buy such

properties may be available from a restricted list of home loan lenders, who may also lend at

higher interest rates.

Balance transfer on home loans:

Now that all home loan borrowers are under the spell of increased interest rates leading to

increased EMI, it is not surprising to note that borrowers are contemplating either prepayment or

switching lenders to counter the burden. As prepayment entails penalty besides lump sum funds,

switching to lender offering better rates looks like a feasible option. Also known as Balance

Transfer (BT), the process here is very similar to that of home loans.

Major variables in BT :

Two aspects associated with BT are prepayment penalty and processing fee. Lending is

the business of the bank and the interest on the loan, one of its major sources of income. This is

one of the major reasons why a bank would charge a consumer, should he desire to switch

lenders. This charge is known as 'prepayment penalty', the definition varying from bank to bank.

Normally, a bank will charge up to 2 per cent of the total loan outstanding as a prepayment

penalty. Just as there is a cost to pay for a transfer, the new lender will also charge a processing

fee to take over the loan. It can be about 0.50 per cent to 1 per cent of the total loan amount one

applies for.

The basic premise of taking such a step is to be benefited by way of lower interest rates

on loans. Banks are known to offer lower interest rates to new loan consumers, rather than the

existing ones.

Let's take an example. Say 'A' took a loan at an interest rate of 8.50 per cent in 2004-2005

from lender 'X'. The interest rates have increased on the loan since then and currently he is

paying an interest rate of 13 percent.

Another consumer, say 'B' approaches 'X' for a loan and gets an interest rate of 11.50 per

-cent. The option available for 'A' to transfer his loan to another bank 'Y' if the interest rate

offered is lower than the one 'A' is paying currently. So, in a nutshell, it makes sense to transfer

the loan to another bank only if the gain (in terms of interest range) is to the tune of 1 per cent (or

more). The 'Should I Switch my loan ' will give an empirical, close to accurate idea in figure to a

consumer to gauge whether the switch will be beneficial.

Shop for a better deal

Before one decided to switch lenders, shop for a deal. Approach various lenders with the

intent of transferring the loan. The success of the deal or the lack of it will be dependant on the

income of the applicant and the repayment track record. It is necessary to get a rough idea of the

offers available from the potential lender/lenders.

As a first step, inform the current or the existing lender or the bank about your intent to

transfer the loan. This can be done by submitting a letter to them. The intent is to be

communicated in written form to them. Negotiations, Consent Letter may follow...Now follows

the first round of negotiations with the current lender.

Before one finally decides to end the borrower-lender relationship with the current

lender, it is necessary to negotiate. The borrower can utilize the opportunity to make the lender

aware of his reasons for discontent - latent or otherwise (within scope of reason!)

Once the negotiations are completed, based on the outcome, the lender will give the

consent letter. This simply means that the existing lender has given a 'go' to the transfer process.

This letter will have mention of the details regarding loan like total loan amount taken, the loan

amount outstanding as well as the prepayment charges, if any. The amount mentioned will be

calculated as on a future date, to enable time for the buyer to arrange the payment. Once the

borrower gets the consent letter, one can approach the potential lender with the same for balance

transfer.

Transfer with consent

From hereon, the process largely resembles to that of taking a home loan. The applicant

has to fill in an application form with the requisite details, followed by a personal discussion. It

is necessary to have all the original documents pertaining to the information provided on the

application form for the personal discussion.

Discussion is followed by field investigation and valuation of the property. After credit appraisal,

the current lender will disburse the loan.

Before BT is a reality...

But remember, the current lender will require all the originals documents relating to the

property and other documents such as NOC's from the relevant regulatory bodies before the loan

is disbursed. Normally, the existing lender will not release the property documents before the

loan is prepaid. Similarly, the new lender may not be ready to disburse the loan before it gets the

original papers. Do not distress!

Once can obtain a letter from the current lender giving details of the legal papers held by

them as security against the home loan and indicating the number of days it will take to release

the documents to the borrower/applicant, once the payment is received.If one has photocopies of

the documents held by the existing lender, it will be of help when applying for a loan transfer.

Do not forget, in no other loan process than this does the repayment track record play such an

important role. So, make sure that you continue with timely repayment or pay heavy price.

Plots loan, loan to buy property

You may be among the ones who prefer to construct your own house on a piece of land.

To buy a piece of land, you will not be able to avail a home loan from the banks. Banks will

offer what are known as 'plot loans' or land loans.

You can purchase a plot of land and construct the house immediately, or purchase a plot

and wait prior to commencing construction. Simply put, it is a loan to finance an individual's

purchase of land. You could also go in for this loan if you do not want to incur an immediate

cash outflow for purchase of land. Not all banks or housing financing lending institutions extend

land loans since there is difficulty in documentation and security of the property (risk of

encroachments).

Most banks which offer these loans, insist that the land is purchased from a development

authority or from a society. Some banks also permit purchase of land from a developer.

However, the land has to be developed and clearly demarcated for any bank to accept the

proposal for land finance.

Plot loans are not available for purchase of agricultural land. Banks also don't permit

loans for land already purchased and for purchase of land from an individual owner. Getting

finance for a plot is also difficult, because land can be purchased for speculative purposes, and

valuation tends to be more difficult to assess. http://www.apnaloan.com/loan-advice-india/taxtips.html Tax

deduction benefits are not available on a plot loan.

In case of an under-construction property, tax deduction benefits will be available only

from the financial year in which the construction is completed. Interest rates on plot loans are

about 2-3 per cent higher when compared to a home loan. Also, the loan tenure is smaller (up to

10 years) when compared to a home loan tenure.

Home Conversion Loan:

This is available for those who have financed the present home with a home loan and wish to

purchase and move to another home for with some extra funds are required. Through home

conversion loan, the existing loan is transferred to the new home including the extra amount

required, eliminating the need of pre-payment of the previous loan

ICICI offers: 

1. Attractive loan interest rates.

2. Home Loan amounts starting from Rs.2 lacks and ends up to 20lakhs.

3. Tern loans up to 20 years.

4. Free personal Accident Insurance (Terms & Conditions).

5. Insurance options for your home loan at attractive premium.

6. Special 100% funding for select properties.

ELIGIBILITY CRITERIA FOR HOME LOANS

 

How much can you borrow?  

Griha Home Loans range from Rs.1lakh to Rs. 50 lakhs. Your repayment period can vary

from 1 year to 20 years depending upon your capacity to repay. 

Eligibility:

Age: - Min: You should be at least 21 years of age.      

 Max: At the time of loan maturity, you should not exceed 65 years or your  

               retirement age, whichever is earlier.

Individuals:

You should have completed a minimum of 2 years of service (with a minimum of 1 year in

the current job)

Businesspersons/Self-employed professionals:

You must have an established business or professional practice of not less than 3 years, with

a positive net worth and must have posted a net profit for the last 2 years.

Note :

Minimum net take home salary of Rs. 6000/- p.m. for salaried employees or annual income

of not less than Rs. 1.20lakh for businesspersons/ self-employed professionals. (Spouse/co-

applicant’s income can be included in the income computation). 

1. Individuals who are salaried or self employed, professionals, businessmen are eligible.

Proprietary concerns, HUF, partnership firms or limited companies are not eligible for this

loan, where partners at their individual capacity are free to avail this loan. 

2. As a customer to enhance the loan eligibility, all HFIs lay down conditions to who be co-

applicants, al co owners to the property should necessarily be co-applicant. Income of the co

owners can be clubbed together to get higher loan eligibility. Minors are not eligible to

become co owners, as also friend and relative’s only blood relatives are eligible to take a

property jointly. Some of the acceptable relationships where loan clubbing is possible:

Table No: 1

Income clubbing of co – applicantsCombinations Income clubbing

Husband – wife YES

parent – Son YES (if only son)

Parent – Daughter YES (If only child)

Brother- Brother YES (if currently staying together and intend staying together in the new property)

Brother – Sister NO

Sister – Sister NO

Parent – Minor Not eligible for loan 

3. The minimum age for the applicant and the co applicant to become eligible for the

commencement often loan is 23 years, and co applicant can be of 18 years of age if their

income is not clubbed to calculate the loan eligibility.

4. The maximum age at the time of loan maturity for applicant or co-applicant is 60 years or

the retirement age whichever is earlier. 

 

Documentation for resale property

 Documentation is extensive for a resale property as compared to a new one. The previous

agreement, known as the 'link agreement' is required along with registration and stamp duty

receipt. The allotment letter which the seller may not have if he has purchased the house on a

loan is also required. This could make things difficult, especially if you (the buyer) plan to

purchase the house on loan. If the resale flat is being purchased in a registered co-operative

society, look for the following list of documents:

Original share certificate of the Society.

Allotment letter from the society in your name.

Copy of the lease deed, if executed.

Certificate of the registration of the society.

Copy of the byelaws of the society.

No-objection certificate (NOC) from the society.

7/12 extract or property register card in the society's name.

Copy of N.A permission for the land from the collector.

Search and title report (with the details of documents) for the last 30 years.

Copy of order under the Urban Land ceiling Act.

what is known as a 'No Objection Certificate' (NOC).

Copy of the building plans sanctioned by the competent authority.

Commencement certificate granted by Corporation/Nagar Palika.

The latest receipts of taxes paid.

Original Agreement to assign/Deed of assignment.

Besides these documents mentioned above, there is more to be done.

Once the buyer gets the documents relating to the house checked by his lawyer, he may

decide to proceed with the transaction. If you are the seller, be ready with

The NOC is indicates to the buyer that the concerned society has no objection to transfer the

share certificate in favour of the intended buyer and admits the concerned person/persons as

member/s of the society.

It also mentions that the seller has no default/outstanding payments to be made to the society

as of date. It is after obtaining this certificate that the process of agreement for sale begins.

It is also necessary to check the latest payment receipt made by the seller to the society for

the out goings to ascertain and ascertain if the seller has paid all the dues to the society.

As a buyer of the concerned property, you should ask for a copy of the last electricity bill

paid by the seller. Make sure that the agreement has a mention of the fact that the said

property is not mortgaged to anyone. If it is mortgaged (say, to a bank) on or before the date

of execution of the sale/conveyance deed, make sure that the agreement mentions that the

mortgage account is clear.

As a buyer, make sure that the society's transfer forms, etc for transfer of ownership are duly

filled and signed by the seller and purchaser and should be submitted to the concerned

Society.

Documents may slightly vary if the house is located in the following:

Society has not been registered.

Originally allotted by a development authority.

Check for the following documents in the above cases:

Previous chain of agreements with past owners in original with original receipt of registration

(if any).

Original letter of allotment issued to the first owner by the development authority.

In case the latest agreement is pending the registration, obtain the original receipt issued by

the sub-registrar acknowledging the pending registration needs to be taken along with a

certified true copy of that agreement.

Original stamped receipts of payments issued to the previous and present owners by the

builder/development authority/society.

Transfer permission from the respective authority (development authority/society)

Copy of the approved plan and 'Occupation Certificate' (OC) issued by a competent authority

like the Municipal Corporation, specifying the user permission of the premises

However, there may be certain additional requirements. As a buyer, it is advisable to consult a

lawyer for legal opinion regarding the documents. The criteria with respect to the private sector

employees and employees belonging to the public limited companies is bit more stringent 

Table No: 2

Employees in the Public Limited Companies.

    The documents required to be submitted by the businessmen as follows: 

     

Criteria                             

Norms      Existence    Turnover Net worth Profit   Financials   Salary  Min. number of Employees                 PF deductions is a Must Whether Listed/unlisted               

Employee No.1 Employee No.2    > 5 years  Rs. 3 crores p.a Positive 3 years with a Rising trend   For 2 years to be submitted   Through bank credit 

20   PF statement as proof

          ------

    >4 years  Rs. 3 crores p.a Positive 2 years with a rising trend  For 2 years to be submitted  Through bank credit  

20   PF statement as proof  2 years annual report to be submitted.

a. Last three years Profit & Loss Account Statement duly attested by a Charted Accountant

b. Last three years Balance Sheets duly attested by a Chartered Accountant

c. Last three years Income Tax Returns duly filed and certified by Income Tax authorities  

d. Proof of Investments

Bank statements for the last six months of all current accounts.  Any other photocopies of

investments held, as required by the HFI. The above are the various documents required by the

businessman in addition to the documents, which are common to the entire category. 

The businessman is also judged on the basis of the business conducted by him, if his Business

profile is in the negative list, he will be thoroughly considered for his credibility before

dispersing loan, the organization and property location should not be in the negative list. 

These are the additional documents which are required to be looked at before going on for

completing the pre sanction formalities with respect to dispersing of the home loans to the

business class. 

The advantages associated with ICICI Home Loans are:

1. An individual can undergo a Home Loan Counseling where ICICI shares its experiences of

providing Home Loans for 29 years.

2. Wide range of products which offers multiple choices to an individual to choose the loan plan

that suits him/her the best.

3. Multiple Repayment Options gives a customer a wider scope of repayment according to

his/her financial situations.

4. Wide network of financing also enables the individual to get his/her loan sanctioned from a

place of his/her choice and also pay the installments duly no matter where he/she is due to all

such innovative ideas, ICICI Home Loans have had an edge over others.

THE PARAMETERS INVOLVED IN HOUSING LOAN EVALUATION   There are a number of parameters on which the housing loans are built.

They are:

1. TENURE

The tenure of the home loan refers to the time limit for a customer to repay the loan

Generally, the maximum tenure of home loans is 20 years, with a few lenders offering tenure of

20 years or more (ICICI has recently launched a 30 years loan). The longer the tenure, more a

customer pays in total interest, but monthly payments will be less.

So depending on the earning potential and bank balance of the customer, an appropriate can be

chose. An important requirement of most banks/ HFIs is that they pay up the entire loan before

you retire. The customer can always prepay the entire loan amount before it is due.As long as the

tenure goes up a customer pays more interest which is up to 0.25 – 0.5%, generally above the

home loan rates. 

2. AMOUNT PAID BY THE FINANCER/ MARGIN REQUIREMENTS 

The financer does not pay the entire amount of the loan, they request the customer to

maintain margin, most banks go in for a 85% funding of the property value including the stamp

duty and charges, it however varies among various banks. This is also treated as the margin

money or own contribution required to be put by the prospective loan seeker as the contribution

towards the purchase of the house. Most HFCs believe the amount paid is upfront before they

release any disbursement.

As a rule of thumb, depending upon the HFC, the prospective loan seeker has to cough up

15% - 20% of the loan amount as a down payment. For smaller amounts, this may not be much.

But for figures running into lacks, this could make loads of difference.

For example: An apartment costing Rs. 10lacss may get 85 per cent financing. So, customer has

to arrange for the remaining Rs 1.5lacs.Some banks however make way for the payment for 90%

of financing and about 100% financing for some new projects, however they are subjected to a

large number of factors and constrains. 

3. INTEREST RATES

Without doubt the most important parameter to factor into home loan calculations. The

interest rates may vary from institutions to institutions and generally range from about 7.25% -

7.75% to around 9% Repayment is in the form of EMIs (Equated Monthly installments). The

longer the tenure, the more you pay in interest, but your monthly payment will be less.

The two kinds of interest rates available to a customer are:

Fixed interest rates

Floating interest rates

Fixed interest rates remain fixed over the tenure of the loan. Floating interest rates are affected

by the rates in the market, they fluctuate according to the rates issued or changed by the RBI

from time to time. The finance minister’s Diktat on home loans does not hold for private banks.

India’s largest home loan provider and second largest bank is ICICI Bank as on Tuesday hiked

its home loan by 1%. The bank has also increased its deposit rates. 

As per the new rate structure, customer will have to pay 10.5% on the home loans with a

floating rate, while the fixed home loan will now invite an interest of 12.5%. With this increase,

the monthly installment on an Rs.1lakh loan for 20 years goes up by Rs70.

Some public sector banks do so only once in 12 months while some private sector lenders

do it as frequently as a quarter. Though the current interest rate quote maybe lower, over the life

of the loan, a customer will be able saved more in the case of a lender who resets your floating

rate more frequently. The investors are also given the option of changing their option from fixed

rate loan to a floating rate loan, of course by paying a penalty.  

 

4. MISCELLANEOUS CHARGES:

      All banks charge certain amount of processing fee which cannot be ignored, it should be

understood that along with monthly payments, the customer should also ensure that he has to pay

these charges, so he should careful in choosing his HFC. The miscellaneous charges generally

range around 2.5% to 3%.  A 1% administration fee and 0.8% processing fee on, say RS. 5,

00,000 loan, would amount to RS 10.000. Other times, it could be just one fee (either

administration or processing) but could yet work out to be much more if it is considerably higher

at, say, 2.5 per cent or 3 per cent. The various other fees, which you are required to be paid along

with the margin amount, are: 

a) Processing fee:

      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 1% of the loan amount .  The loan amount received by

customer can be less than the processing fee. It is charged at the submission of the application

form and covers expenses incurred for processing the application form.

b) Prepayment Penalties:

When a loan is paid back before the end of the agreed duration a penalty is charged by

some banks/companies, which is usually between 1% and 2% of the amount being pre paid.

c) Administrative Fees:

An administrative fee is charged by the HFI on the loan amount sanctioned to customer.

This fee is normally payable at a time of accepting the offer letter. It is charged mainly to meet

the operating expenses of the loan amount of the entire tenure.

d) Others:

It is quite possible that some lenders may levy a documentation or consultant charge.

ICICI Bank the processing fee is 0.25% of the loan amount and the administrative fee is

approximately 0.50% of the loan amount. 

 5. AMORTISATION

It means the method or the calculation by which the entire Principal amount / loan

amount is paid through the tenure of the loan.

This helps the customer to know what his outstanding principal is at any point of time. There are

two methods generally followed:

o Annual rests

o Monthly rests

Annual rests:

      This is more commonly known as annual reducing balance of the principal/loan amount

lent to you. In an annual rest the EMIs (fixed monthly payment for the dispersal of the loan

amount) are calculated on a annual basis.

The component of interest is higher in the initial years and later on the component of

principal increases and the interest keeps reducing year after years. In other words, the interests

in the EMI will keep reducing year after year and the principal component keeps increasing. 

Monthly rests:

      This is called monthly reducing balance or principal. The calculation in the above method

remains the same as of the above except that the balance is calculated on a monthly basis and the

EMI is broken up every month to arrive at the opening balance of the principal for the next

month. It is always better for a customer to seek an HFI, which generally has monthly rests,

based system; this will reduce the amount of interest paid by the customer. Many banks have

adapted to the monthly rests system. 

6. REPAYMENT FACILITY

      The bank has given three options for repayment of the loan to suit the convenience of

Borrower. Equated Monthly Installments (EMI) uniform monthly installment, inclusive of

interest, for the entire repayment of only interest for the first five years, and thereafter in EMI for

the next 10 years. Repayment of only interest in the first five years, 30% principal plus interest

in the next five years, and balance 70% plus interest in the remaining period.

Repayment to start on completion of construction, but not later than 18 months from first

disbursement and in case built up houses after one month from disbursement. Interest during

gestation shall be paid as & when due. The repayment not to extend beyond the age of retirement

of the borrower or 70 years whichever is earlier, however where co-borrower is taken, a

maximum repayment period of 20 years may be considered provided the loan is liquidated within

the age of 70 years of the borrower/ co-borrower having capacity to service the loan. 

Repayment

Facility Borrower

Term Loan Maximum 84 E.M.I.

Overdraft 15% reduction in the overdraft limit by the end of each year so that advance is completely liquidated by the end of 7th

year.

Interest should be serviced every month.

Salient Features

Processing Fee 1% of loan amount

Prepayment Charges

1% of amount prepaid

1. While determining repayment capacity, income of spouse can also be taken. In that case loan

should be in joint names.

2. The condition of maintaining 40% of net take home is applicable to both Salaried and non-

salaried person. In case of non-salaried person, their annual Gross Income, as per IT Returns,

is to be divided by 12 to arrive at Monthly Gross Income. Like Salaried persons, their NET

monthly income after all deductions including monthly installment of proposed Term Loan

and/or monthly interest on Overdraft and proportionate principal amount to the extent of 15%

of the O.D. limit/balance should not be less than 40% of their Gross monthly income.

3. If credit facility is granted against building/flat/apartment, the same should not be more than

30 years old.

CHAPTER: 4

DATA ANALYSIS & PRESENTATION

1 Data Presentation and Analysis

2 Interpretation

4.1 Data Presentation and Analysis:

The Loan Procedure Followed At ICICI Bank

The procedures involve in the disbursement of home loan by any bank entails the following

steps:

Home loan application form is first submitted by the customer covering all details.

Checklist of requirements is requested for from the customer, and all documents are required

to be submitted (copies), they are then verified whether the details are failed in correctly and

whether all the documents are submitted.

Additional loans, if any are applicable. Many banks provide for supplementary loan as a part

of their comprehensive home loan scheme.

The following diagram indicates the loan procedure at the ICICI Bank

Credit appraisal process

The credit appraisal process of Home loan sanction broadly consists of the following stages.

They are:

1. Financial appraisal

2. Valuation of property

3. Legal vetting and scrutiny of documents

4. Other aspects

Customer

Branch manager

Loan Department

Branch manager

Regional Officer

For large borrows

Legal opinion, valuationAnd Technical

) Financial Appraisal:

An important part of credit appraisal is financial appraisal, where the applicant’s financial

position is reviewed. Past repayment records including defaulting late payments, delinquencies

and bankruptcies, earnings potential including spouses, any outstanding debt, assets liabilities

and stability of employment income comes under close scrutiny. Financial stability of the

borrower and the co-borrower is an important factor not only for credit worthiness. The banks

sanctions the loan based on the income levels repayment capacity. The quantum of loan

sanctioned depends on the income levels of the person who are applying for the loan. Income

from the following sources can be included in the NMI (Net monthly income):

a) Income of self

b) Income from spouse

c) Income from Son/Daughter

d) Expected rental

e) Other income such as dividends and interest

2) Valuation of property:

Apart from the financial appraisal the valuation of the property is also an integral part of the

credit appraisal process. The bank’s panel will visit the property and assess the value of the

property.

3) Legal vetting and scrutiny of documents:

In this stage bank’s advocate looks in to the documents submitted by the borrower like:

a) Flow of title

b) Payment of property tax

c) Encumbrance certificate

d) Building permissions

4) Other aspects:

Other aspects such as Insurance of the property, the borrower’s credit history, age, guarantor’s

promise etc are valued.

Stages in processing a sanction of a mortgage loan:

Login:

The borrower of the loan duly fills the application form and submits it to the bank for

consideration.

RCU Check:

Risk containment check. This is a valuation of documents submitted by the borrower. Thorough

scrutiny of documents and credit worthiness of the borrower is checked here.

Field Investigation:

Field investigation team checks whether the address of property provided is correct and not. It

also checks the whole value of the property for the sanction of quantum of loan. The said activity

may be done my bank’s panel or outsourced to agencies that are specialized in this field. In UCO

bank both the bank’s panel and valuation agency do the job.

Credit:

If all the documents and financials of the borrower are checked and verified by a team of

processors the file will be sent to the credit manager for approval.

Risk:

If the credit manager is satisfied the case then he/she will process the case to risk manager. Then

the risk manager checks for the risk associated with the case.

Approval:

After all the checks the case is sent to head office for the approval.

Sanction:

The head office sanctions the loan and the details are forwarded to the branch office.

Disbursal:

The loan amount is then disbursed to the borrower.

The parameters on which the loan seeker is evaluated are:

1. Age-------Awarded points 5 :

Age plays a major role for the sanction of loan. A person whose age is less than 45 has more

repayment capacity when compared to person above 55 years. Therefore the score of out of 5 is

awarded to persons according to their age.

2. Business/Job-------Awarded points 5 :

The loan seeker’s job plays a vital role in sanctioning a loan. A person who has a lot of

experience in his career is awarded more points. Similarly a person is awarded points depending

upon the job whether it is private or government job. As the job security is high is government

jobs that person has an edge. Similarly a person who has a lot of experience in Business is

awarded more points than a novice. Loan seekers are awarded points out of 5.

3. Net worth-------- Awarded points 10 :

Here, Net worth= Assets- Liabilities

A person’s immovable property may have liabilities on it. So the bank should make sure that the

quantum of loan awarded should not exceed net worth. In case the person defaults the bank

should get the due amount from the auction of the property. Hence the bank officials should

make sure that this criterion is met. The loan seeker is awarded points out of 10 to this parameter.

4. Education-------- Awarded points 5 :

A person’s wealth is his education. So bank considers this criterion equally important. This is

very important during this time of recession when people are getting pink slips and education is

the one which helps people to get back their jobs.

5. Percentage of Instalment------- Awarded points 10 :

Proposed instalment out of the monthly income is calculated to find out what is the percentage of

proposed instalment in the monthly income.

Percentage of instalment= [Proposed instalment] *100

Net monthly Income

This percentage plays a major role for the sanction of the loan as the person needs a certain

percentage of income for living. Hence it is recommended that the percentage of instalment

should not exceed 50-55%. The person is awarded points out of 10 in this criterion.

6. Number of dependents------ Awarded points 5:

The number of persons dependent on loan seeker is also seen while granting a loan. As the

number of mouths to feed increases the disposal income becomes less for them. At the same time

even if the dependents are more but the disposal income is also high then the points are awarded

accordingly. Hence as the dependents increase the points decrease. The loan seeker is awarded

points out of 5 for this parameter.

7. Local reputation-------- Awarded points 5:

The loan seeker’s local reputation is also one of the criterions for the grant of loan. Is the person

credit worthy or not is found out and awarded points out of 5.

Valuation report of the property------- Awarded points 10 :

As it is a mortgage loan the property plays an important role. The proper valuation of the

property is done by bank’s panel and outside agency. The loan seeker is eligible for loan for 60%

of value of the property. The valuation depends on whether the property is located in

Urban/Semi-urban/rural area and many other criteria. Though the person is eligible for 60% of

value of the property, he is granted loan only according to the above mentioned parameters. The

person is awarded points out of 10.

Title of the Document------ Awarded points 10 :

The title of the document must be free from all controversies. As it is vital for mortgage loans it

is given 10 points. The sale deed and title must be proper and the loan seeker is awarded points

out of 10 accordingly.

Registration of EM with sub registrar----- Awarded points 10 :

The duly registered property with the sub registrar must be submitted to the bank officials. The

person is awarded points out of 10 accordingly for this criterion.

Encumbrance Certificate------- Awarded points 10 :

The encumbrance certificate must be submitted to the bank officials. The person is awarded

points out of 10 accordingly for this parameter.

Credit History----- Awarded points 10:

The person’s past credit history must be taken into consideration for the grant of loan. The

person might be an earlier customer itself to the bank so information can be taken from internal

sources itself or Credit Information Bureau (India) Limited[CIBIL] has the past credit

history of each Indian citizen. According to the credit history the person is awarded 5 points.

Other factors------ Awarded points 5 :

Other factors can be insurance taken for the property or if the loan seeker has already has an

account in the bank etc. Points out of 5 are awarded accordingly.

Table showing the marks awarded to each of the criterion

Particulars Marks Awarded

Age 5

Business/Job(Experience) 5

Net worth 10

Education 5

Percentage of instalment in the monthly income

10

Number of dependents 5

Local reputation 5

Title of the document 10

Registration of EM with sub registrar 10

Encumbrance certificate 10

Valuation report of the property 10

Credit history 10

Other factors 5

Total100

Pie Diagram showing the marks alloted to each of the parameters

Interpretation:

A score of 75 is fixed, and 75 is considered to be good. Score of 60 is considered to be above

average and a score of 25 to be below average. The prospective loan seeker on scale of 100 is

expected to get 60 score to avail the loan

Data Analysis for Sample No 1:

Name Client no 1

Age 55 years

Education Schooling completed

Number of dependents 1

Purpose of the loan Investment in business

Loan amount applied for Rs.50,00,000

Value of the property Rs.3,19,00,000

Eligible amount(60% of value of the property)

Rs.1,90,00,000

Rate of interest 12%

EMI Rs 88,265/-

Number of instalments for repyament of loan

84 months

Whether the property is in the name of self or spouse

Self

Details of the property including Valuation Valuation report by bank’s panel

Whether legal opinion enclosed Yes

Whether salaried or non salaried Salaried

Mention sources of Income Business, Rents

Monthly total income from different sources Rs.99,075

Report on visit to applicants/Guarantor’s residence

1) Details of dependents

Name of the dependent Age Relation Occupation

Mrs XYZ 51 Wife House wife

2) Documents verified for identification: Pan card

3) Local reputation: Good

4) Occupation: Business

5) Financial condition: Affluent

6) Information furnished in the application correct: Yes

7) Whether local enquiry made to satisfy about history of the property: Yes

8) Comments on the locality: Posh

9) Surroundings: Very good

10) Connection of the locality with the main road: Well connected

11) Type of construction of the building: With posh amenities, tile and marble with

flooring and costly fittings.

12) All the required documents submitted: Yes

Calculation of disposal Income:

Total monthly income for different sources : Rs 99,075

(-) Deductions : -----

Monthly take home income : Rs 99,075

(-) Monthly EMI : Rs 88,265

Disposal income Rs 10,810

Brief Valuation report of the property:

Part A Land value-------------------- 1, 92, 41,250.00

Part B Building------------------------ 85, 77, 200.00

Part C Extra --------------------------- 9, 00, 000.00

Part D Amenities--------------------- 26, 53, 100.00

Part E Miscellaneous---------------- Nil

Part F Services------------------------ 5, 75, 000.00

Total Property Rs.3, 19, 46, 550.00

Statement of means:

1) Total annual income for the past two financial years

Total annual Income 31-03-06 31-03-05Annual income 11,88,906/- 10,00,446/-

2) Details of assets owned:

Details Present Market Value

Residential Building at Jubilee Hills 4,00,00,000/-Flat at Ameerpet 30,00,000/-Duplex house 3,00,00,000/-Agricultural lands 30,00,000/-

3) Deposits with bank:

Name of the bank BalanceSBI 1,25,000/-

4) Details of personal assets owned:

Details Amount(Rs.)ELANTRA car 11,00,000/-Honda city 12,50,000/-Furniture and house hold goods 6,00,000/-Gold and jewellery 10,00,000/-Cash at home 3,00,000/-

Credit score for Client No 1:

1) Age:

He is awarded just 2 marks because the age of the person in 55. More the age more is the chance

of default.

2) Business:

He is awarded 4 marks as he has good experience in business.

3) Net worth: Assets- Liabilities

Total assets worth = Rs.8, 03, 75,000/-

Liabilities reported = Nil

Therefore Net worth = Rs.8, 03, 75,000/-

Hence he is awarded 9 marks as the Net worth is satisfactory.

4) Education:

Points awarded is 2 as he has completed his schooling.

5) Percentage of instalment in the monthly income:

Percentage = [88265/99075]*100= 89%

Since the monthly instalment occupies 89% of the monthly income and the disposal income

available to him is just Rs 10810/= he is awarded just 2 out of 10 for this criterion.

6) Number of dependents:

He is awarded 5 as number of dependents is just one.

7) Local reputation:

He is awarded 4 here because his local reputation is fairly good.

Since he submitted all the required documents and since all of them are free from discrepancies,

he is awarded 9 each for the following criteria.

8) Title of the Document -9

9) Registration of EM with Sub Registrar -9

10) Encumbrance Certificate -9

11) Valuation report:

The bank’s panel and the outside agency found that the specifications of the property made by

the applicant are true. Hence he is awarded 9 for this criterion.

12) Credit history:

His past credit history is found satisfactory. Hence he is awarded 7 for this parameter.

13) Other factors:

He is not an account holder in the bank neither he has an insurance for the property. Hence he is

not awarded marks for this criterion.

Table showing the Credit Score of client 1

Particulars Marks Awarded

Age 2

Business/Job(Experience) 4

Net worth 9

Education 2

Percentage of instalment in the monthly income 2

Number of dependents 5

Local reputation 4

Title of the document 9

Registration of EM with sub registrar 9

Encumbrance certificate 9

Valuation report of the property 9

Credit history 7

Other factors 0

Total 71

Pie diagram showing the scores allotted to Client No1

Interpretation:

Since the loan seeker has scored 71 out of 100, it is fairly a good score.His loan can be

sanctioned as he has good credit history, good local reputation. All the documents submitted are

free from discrepancies as per legal opinion. His financial condition is also affluent.

Hence, the grant of loan to him is a correct decision. But the disposal income of the client is a

worrisome factor.

Data Analysis for Sample No 2:

Name Client no 1

Age 38 years

Education B.E

Number of dependents 3

Purpose of the loan Investment in business

Loan amount applied for Rs.50,00,000

Value of the property Rs.3,18,00,000

Eligible amount(60% of value of the property)

Rs.1,90,08,000

Rate of interest 12%

EMI Rs.83,006

Number of instalments for repyament of loan 84 months

Whether the property is in the name of self or spouse

Spouse

Details of the property including Valuation Valuation report by bank’s panel

Whether legal opinion enclosed Yes

Whether salaried or non salaried Salaried

Mention sources of Income Salary,Business

Monthly total income from different sources

Rs.1,21,000

Report on visit to applicants/Guarantor’s residence

1) Details of dependents

Name of the dependent Age Relation Occupation

Mrs XYZ 32 Wife WorkingPQR 7 Son StudentMNB 12 Daughter Student 2) Documents verified for identification: Pan card, passport

3) Local reputation: Very well known

4) Occupation: Business

5) Financial condition: Affluent

6) Information furnished in the application correct: Yes

7) Whether local enquiry made to satisfy about history of the property: Yes

8) Comments on the locality: Posh

9) Surroundings: Very good

10) Connection of the locality with the main road: Well connected

11) Type of construction of the building: With posh amenities, like marble flooring and

costly Fittings

12) All the required documents submitted: Yes

Calculation of disposal Income:

Total monthly income for different sources : Rs 1, 21,000

(-) Deductions : -----

Monthly take home income : Rs 1, 21,000

(-) Monthly EMI : Rs 83,006

Disposal income Rs 37,994

Brief Valuation report of the property:

Part A Land value-------------------- 3, 05, 01,000.00

Part B Building------------------------ 11, 63,000.00

Part C Extra --------------------------- 42,000.00

Part D Amenities--------------------- 30,000.00

Part E Miscellaneous---------------- 9,000.00

Part F Services----------------------- 55,000.00

Total Property Rs. 3, 18, 00,000.00

Statement of means:

1) Details of assets owned:

Details Present Market ValueResidential Building 4,00,00,000/-Residential building 70,00,000/-

2) Details of Investments:

Number of shares/units Name of the company Face Value Present market value

125 Shares Kotak Mahindra bank 10 244

500 shares Syndicate bank 10 51200 Shares LIC 10 160

3) Details of Insurance policies:

PolicyAmount Insured(Rs.)

Surrender value(Rs.)

Date of Commencement

Date of maturity

Max New York Life

30,00,000 2,40,000 Oct 2003 Whole life

LIC 20,00,000 1,62,000 Oct 2003 15 Years

4) Details of personal assets owned:

Details Present ValueCar 15,00,000/-

5) Details of Borrowings:

Amt of borrowing From whom Security offered When payable10,00,000 ICICI Home loan 2015

Credit score for Client No 1:

1) Age:

He is awarded just 4 marks because the age of the person in 38. Less the age more is the chance

of repayment of loan

2) Business:

He is awarded 3 marks as he has good experience in business.

3) Net worth:

Assets- Liabilities

Total assets worth = Rs. 4, 85, 88,000/-

Liabilities reported = Rs. 10, 00,000/-

Therefore Net worth = Rs. 4, 75, 88,000/-

Hence he is awarded 8 marks as the Net worth is satisfactory.

4) Education:

Points awarded is 4 as he has completed his B.E.

5) Percentage of instalment in the monthly income:

Percentage = [83006/1, 21,000]*100= 69%

Since the monthly instalment occupies 69% of the monthly income and the disposal income

available to him is just Rs 37994/- he is awarded just 6 out of 10 for this criterion.

6) Number of dependents:

He is awarded 2 as number of dependents is 3 with less disposal income

7) Local reputation:

He is awarded 4 here because his local reputation is fairly good.

Since he submitted all the required documents and since all of them are free from discrepancies,

he is awarded 8 each for the following criteria.

8) Title of the document -9

9) Registration of EM with sub registrar -9

10) Encumbrance certificate -9

11) Valuation report:

The bank’s panel and the outside agency found that the specifications of the property made by

the applicant are true. Hence he is awarded 9 for this criterion.

12) Credit history:

His past credit history is found satisfactory. He has also completed a loan from ICICI. Hence he

is awarded 8 for this parameter.

13) Other factors:

He is not an account holder in the bank but has insurance for himself and not the property. Hence

he is awarded 2 for this criterion.

Table showing the Credit Score of client 2

Particulars Marks Awarded

Age 4

Business/Job(Experience) 3

Net worth 8

Education 4

Percentage of instalment in the monthly income 6

Number of dependents 2

Local reputation 4

Title of the document 9

Registration of EM with sub registrar 9

Encumbrance certificate 9

Valuation report of the property 9

Credit history 8

Other factors 2

Total 77

Pie diagram showing the scores allotted to Client No 2

Interpretation:

Since the loan seeker has scored 77 out of 100, it is very good score. His loan can be sanctioned

as he has good credit history, very well known figure in his locality. All the documents submitted

are free from discrepancies as per legal opinion. His financial condition is also affluent. And his

credit history is also good.

Hence the grant of loan to him is a correct decision. But the disposal income of the client is again

a worrisome factor as he has manage a family of 4 including himself for a monthly income for

Rs 37000/-.

Data Analysis for Sample No 3:

Name Client no 1

Age 40

Education Bsc BL Adovocate

Number of dependents 3

Purpose of the loan For the purchase of property

Loan amount applied for Rs.45,00,000

Value of the property Rs.1,35,00,000

Eligible amount(60% of value of the property) Rs.81,00,000

Rate of interest 13.5%

EMI Rs 72100/-

Number of instalments for repyament of loan 84 months

Whether the property is in the name of self or spouse

Self

Details of the property including Valuation Valuation report by bank’s panel

Whether legal opinion enclosed Yes

Whether salaried or non salaried Salaried

Mention sources of Income Profession, Rents

Monthly total income from different sources

Rs.76,237

Report on visit to applicants/Guarantor’s residence

1) Details of dependents

Name of the dependent Age Relation OccupationMrs XYZ 36 Wife House wifePQR 14 Daughter -MNB 11 Son -

2) Documents verified for identification: Pan card

3) Local reputation: Good

4) Occupation: Advocate

5) Financial condition: Good

6) Information furnished in the application correct: Yes

7) Whether local enquiry made to satisfy about history of the property: Yes

8) Comments on the locality: Good

9) Surroundings: Very good

10) Connection of the locality with the main road: Well connected

11) Type of construction of the building: A good building with good amenities.

12) All the required documents submitted: Yes

Calculation of disposal Income:

Total monthly income for different sources : Rs 76,237

(-) Deductions : -----

Monthly take home income : Rs 76,237

(-) Monthly EMI : Rs 72,100

Disposal income Rs 4,137

Annual Income:

Income from House property----- 3,02,845.20

Income from Profession------------3,62,007.82

Agricultural Income---------------- 2,50,000.00

Total Income Rs. 9,14,853.02

Valuation report of the property:

Undivided share of area-179.66(1/6th of undivided share land area out of 1078 square yards)

Build up area of northern portion in ground floor value of Rs 5000/- per sq ft(2700 sq ft)= Rs

1,35,00,000/-

Statement of means:

Other than the house property no other property reported.

Credit scores for Client No 2:

1) Age:

He is awarded just 4 marks because the age of the person in 38. Less the age more is the chance

of repayment of loan

2) Job:

He is awarded 4 marks as he is working as advocate.

3) Net worth:

No other asset other than the house property is reported. No other liabilities reported either.

Hence he is awarded 3 marks.

4) Education :

Points awarded is 4 as he has completed his BSC BL and is a advocate.

5) Percentage of instalment in the monthly income:

Percentage = [72100/76237]*100= 94.5%

Since the monthly instalment occupies a whooping 94.5% of the monthly income and the

disposal income available to him is just Rs 4173/- he is awarded just 1 out of 10 for this criterion.

6) Number of dependents:

He is awarded 2 as number of dependents is 3 with less disposal income

7) Local reputation:

He is awarded 4 here because his local reputation is fairly good.

Since he submitted all the required documents and since all of them are free from discrepancies,

he is awarded 8 each for the following criteria.

8) Title of the document -9

9) Registration of EM with sub registrar -9

10) Encumbrance certificate -9

11) Valuation report:

The bank’s panel and the outside agency found that the specifications of the property made by

the applicant are true. Hence he is awarded 9 for this criterion.

12) Credit history:

His past credit history is not known properly. Hence he is awarded 4 out of 10.

13) Other factors:

He is an account holder in the bank .He is awarded 2 out of 5.

Table showing the Credit Score of client 3

Particulars Marks Awarded

Age 4

Business/Job(Experience) 4

Net worth 3

Education 4

Percentage of instalment in the monthly income

1

Number of dependents 2

Local reputation 4

Title of the document 8

Registration of EM with sub registrar 8

Encumbrance certificate 8

Valuation report of the property 8

Credit history 4

Other factors 2

Total 60

Pie diagram showing score allotment to client no 3:

Interpretation:

Though this person has met the minimum score of 60. Bank should not have grant the loan as his

disposal income is very less. He does not possess any other assets too. His financial condition is

good and is working as an advocate. But the credit risk to the company due to this borrower is

high.

Chapter-5SUGGESTIONS & CONCLUSION

1.FINDINGS

2.CONCLUSIONS

3. SUGGESTIONS

5.1 FINDINGS

1. ICICI Bank is following all the policies and procedures set by the central bank (RBI) before

sanctioning the loan.

2. It is found that Loans are granted up to 60% of the value of the property.

3. Quantum of loan is between 1-50 lakhs.

4. It is found that duration of the loans is ranging from 48 months-84 months.

5. Loans are granted after proper valuation of the property.

6. Apart from the valuation report HUDA report, legal opinion, Insurance is considered for the

grant of loan.

7. The bank is studying applicant’s creditworthiness before sanctioning a loan.

8. The bank is giving loans as per the norms of BPLR set by the RBI.

9. 3 out of 5 samples have crossed the credit score of 60.

10. 2 out of 5 samples have crossed the credit score of 75.

11. It is found that the disposal income after the payment of EMI in all cases is very less.

5.2 CONCLUSIONS:

1. ICICI Bank is following all the norms and policies set by the RBI and its performance is

also good.

2. The bank is showing control over the operations and accounts of the company during the

period of the loan.

3. Bank is verifying the accounts of the company at regular intervals after sanctioning the loan

to reduce its risk coverage.

4. The bank considers various parameters in fixing the credit worthiness of the customers.

5. The credit risk for the company is medium as it is taking precautions.

5.3 SUGGESTIONS:

The study suggested the following

1) The staff strengthens need to be improved to cater the requirements of the borrowers.

2) The time period for the sanction of the loan must be shortened. This enables timely sanction

of loan to the customers. Hence, adds to the value services of the bank.

3) There should be proper co-ordination between branch and head quarters for the quick service.

4) Whenever there is a change in the terms and condition especially on interest rate, all the

customers should be informed.

5) Insurance for the property has to be strictly considered for the grant of the loan.

6) There has to be thorough qualitative assessments while doing field investigations and risk

containment assessment.

7) If a person crosses a score of 75, the borrower can be given a concession of 0.5% less interest

rate as he his credit worthy as shown by the credit score.

5.4 BIBLIOGRAPHY

Web-sites :

1. www.icicibank.com

2. http://www.icicibank.com/pfsuser/loans/homeloans/hlhomepage.htm

3. Online Home loan. in/ICICI Bank

4. www.ficci.com

5. www.wekipedia.com

6. Money and business out looks(maxins)

APPENDICES

APPENDIX - A

APPENDIX - B

APPENDIX-A

Advance EMI:

Pay back time. No of equated installments in the form of post dated cheques paid out in advance

at the time of disbursement of loan.

Administrative Fee:

Unavoidable payments to the bank/HFC it’s a one time fee, generally non-refundable payable

before the loan is disbursed. Rates may vary from 1-2% of the loan amount.

Documentation:

It is the papers to be signed in connection with the loan that is the loan papers.

Down Payment:

Housing finance companies normally give loans up to 80-85% of the value of the property. The

balance would have to be paid by the buyer, as a payment before he draws on the loan amount.

EMI ( Equated Monthly Installments ) :

Loan repayments are usually in EMI over the tenure of the loan. Some banks also offer a variable

installment scheme in the beginning of the loan period. This is beneficial for those individuals

who are trying to maximize the tax breaks in the initial years and expect future tax breaks to fall.

Floating Rate:

Here the interest rate on the loan depending on the Prime Lending Rate (PLR) fixed by own

bank. This change can happen as frequently as one in six months. If the PLR falls, the borrower

benefit and if it rises, however, incase of a fall the payments remain the same for every month.

The finance company will refund some of the borrower’s EMI cheques and effectively

compensate him by lending the tenure of loan.

Interest Tax:

Housing finance companies have to pay a tax on the interest, income they receive one should

think whether the interest rates quoted include interest tax or not. This tax is normally about 2%

of the interest rates charged. Interest tax has been abolished from April 2000.

Interest Rate:

It is the rate at which the lenders charge interest for the loan amount.

IRR:

Internal Rate of Return is the rate at which the lender accounts for interest.

Margin Amount:

Margin amount is the difference between the total costs of the project and the loan amount

sanctioned. This money has to be invested by the borrower prior to the release of the loan

amount.

Pre-Sanction Inspection of Property:

After the receipt of the loan application, a loan officer from the HFC conducts an inspection of

the property to ascertain the location of the property, verify the technical details of the house and

stage of construction.

Property Tax:

This is the tax which is levied by the local authority such as corporation, municipality etc to the

person in whose name the property stands.

Registration Value:

This is the value of the property at which the property is registered.

Role of Guarantor:

The role of guarantor is commitment by the way of agreeing to the terms and conditions of the

loan and liable to the extent of the loan/liability together with the interest and other charges.

Sale Agreement:

Sale agreement is an agreement which is entered in between the parties dealing with the property

and which creates right to obtain a sale deed mentioning the property. Generally it precedes a

sale deed and normally it fixes a time for completion, payment of earnest money or part payment

of purchase consideration.

Tenure of Loan:

Normally loans are given for a period of 5-15 years. Some companies also give loans up to 20

years at an additional interest cost of 0.25%-0.5%.

APPENDIX-B

CUSTOMER SATISFACTION ON PROCESS OF HOME LOAN WITH REFERENCE TO ICICI BANK

(This survey is for academic purpose and the information would be kept confidential)

1. Name: _________________________

2. Age: ____________________________

3. Occupation ( ) Employee ( ) Business Man ( ) Professional

4. Gender ( ) Male ( ) Female

5. Income Earned ( ) Below 25000 ( ) 25000-35000 ( ) 35000-45000 ( ) Above 45000

6. Have you taken a loan from ICICI Bank? ( ) Yes ( ) No

6a. If Yes, specify how do you rate the services? ( ) Excellent ( ) Very Good ( ) Good ( ) Average ( ) Poor

6b. If No, specify from which bank have you taken the loan? ( ) Public ( ) Private

Name: ____________________

7. How much time it took for the whole process? ( ) 1 week ( ) 2 weeks ( ) 1 month ( ) 2 months

8. Do you think the time taken for the loan process is long when compared to other banks? ( ) Yes ( ) No

9. To what extent your loan requirement was met? ( ) 50% ( ) 50-70% ( ) 70-90% ( ) 100%

10. Are you satisfied with the amount sanctioned by the bank? ( ) Yes ( ) No

11. Are you satisfied with the payment period? ( ) Yes ( ) No

12. Do you find the interest charges are reasonable? ( ) Yes ( ) No

13. Are you satisfied with the processing fee? ( ) Yes ( ) No

14. Are you satisfied with the formalities during the sanction of the loan? ( ) Yes ( ) No

Your valuable suggestions___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Thank you for your valuable time.