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Executive Summary

Chapter 1 Introduction
Chapter 2 Products
Chapter 3 Objectives and Rationale of the Project
Chapter 4 Review of Literature

4.1 Business Process

4.2 Types of Appraisal

4.3 Property Documentation

4.4 Know Your Customer Compliance

4.5 Repayment Track Record based lending

Chapter 5 Research Methodology

5.1 Research Design

5.2 Sample Design

5.3 Research Tools and Questionnaire

5.4 Analysis

a) Porters five forces model

B) SWOT Analysis

c) Comparative study of Punjab & Sindh BankLtd and HDFC

Chapter 6 Research Findings

Chapter 7 Summary and Conclusion


I am obliged to all the people which includes my managers and mentors and my
colleagues for co-operation during the internship. My increased spectrum of knowledge
in this field is the result of their content supervision and direction that has helped me to
absorb relevant and high quality information.

I would like to thank my faculty guide Ms. sharma for her guidance and enriching my
thoughts in this field from different perspectives.

I would like to thank all my respondents without whose cooperation my study/project

would not have been possible/complete.

Last but not the least, I feel indebted to all those persons and organizations who/which
have provided helped me directly or indirectly in successful completion of this study.

Executive Summary

Against the milieu of rapid urbanization and a changing socio-economic scenario, the

demand for housing has grown explosively. The importance of the housing sector in the

economy can be illustrated by a few key statistics. According to the National Building

Organization (NBO), the total demand for housing is estimated at 2 million units per year

and the total housing shortfall is estimated to be 19.4 million units, of which 12.76

million units is from rural areas and 6.64 million units from urban areas. The housing

industry is the second largest employment generator in the country. It is estimated that

the budgeted 2 million units would lead to the creation of an additional 10 million man-

years of direct employment and another 15 million man-years of indirect employment.

A year equates a century, knowledge compresses time and the information technology

sweeps the world, gathering momentum with each new application, soaring towards fresh

goal, rapidly opening vistas hitherto unknown. Here we are, in the 21st century.Years

that catapults us towards new challenges at every stage of endeavor. It gives us

good reason for aiming high.

Keeping the above philosophy in mind, this project is carried out with an objective to

identify the basic needs of the applicants and the process of Home Loans in Punjab &

Sindh Bank
Punjab & Sindh Bankis Indias No. 1 Home Loans Provider. At Punjab & Sindh

BankHome Loans, it offers unbeatable benefits to ensure that the customers get the best

deal without any hassles. And Punjab & Sindh Bank makes it extremely easy for them

by offering

Attractive loan interest rates

Home loan amounts starting from Rs.2 lakhs

Term loans up to 20 years

Free Personal Accident Insurance

Insurance options for your home loan at attractive premium

With varied offering of house loans and home finance, Punjab & Sindh Bank Home

Loans gives an opportunity to select the perfect loan as per the needs of the customers

who can choose from:

Adjustable Rate Home Loan

Fixed Rate Home Loan

Part fixed, Part Floating Rate Home Loan

Smart fix Home Loan

Money Saver Home Loan and also

Balance Transfer of your existing home loan from other banks.

And the other categories that the customers can avail are :

Land Loans

Office Premises Loans

Home Improvement Loan and

Home Loan for NRI.Customers can also leverage their existing property to get

Loan against Property

Property Overdraft or Lease Rental Discounting.

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

Challenges in the growth path

The housing finance industry is going to observe polarization of the players

For survival, the Housing Finance Institution should have -:

Good investment in people and system

Should have strong Business Origination process in

place Excellent Credit Appraisal Skills

Monitoring the Systems in place

Strong Collection mechanism in

place HFIs survival can be at stake

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

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


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

19th February 1999The launch of Punjab & Sindh BankHome Loans

Scenario then

New to the business

Formidable competition

End to End delivery of the product through the DMA being done for the first time

Ambitious growth plans

Home loans Highlights

Customer base (as on march 2005):

Year-to-Date.276756 (Sanction cases)

Life-to-Date..687364 (Sanction cases)

Book Size (as on March 2005) Rs.33175.20 crores

Disbursement (YTD).Rs.18871.00 crores

Now Year 2007

1000 + locations

845 + Direct marketing Agencies

10000 + FOS across the country

Centralized Call Centers covering all major states and

cities Leveraging corporate relationships

Cross sell initiatives: leveraging customer centric data warehouse infrastructure.

Polarization Future Scenario

Weak HFI with high cost of funds & poor system would end up as DSA

sourcing business in the market.

HFIs with low cost of funds but poor system may turn out to be buyers of MBS

HFI with good systems in place but with high cost of funds need to look at


HFIs with Low cost funds and good systems would be the major players.

Low margins & High delinquency can increase the lending rate to

cover the cost of operations.

Can force the HFIs to re-look at its business model.

Products and Documentation

Products: We Offer:-

Products Home Loan & XSELL

1. Home Loans (HL) &

Variance MV Lending

Smart Fixed

Part Fixed & Part floating

Fixed ROI with MMC

EMI in under construction stage

Max Money SURF

2. Money Saver

3. Home Improvement Loan (HIL)

4. Land Loans (LL)

5. Office Premises Loan (OPL)

6. Balance Transfer (BT)

7. Top Up Loan

8. Cross Sell to Auto loans

9. No Income Proof Loan (NIP)

Products LAP / OD

Loan Against Property (LAP)

Property OD (Residential / Commercial)

Income Surrogate Banking Product

Lease Rental Discounting (LRD)

New product introduced on June 4, 2007

Lap on Land

Features :-

1. There must be a plot number. The plot must be properly demarcated by fencing

or boundary wall.

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

be changed.

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

is not considered.

4. It should be DLA or Municipal approved.

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

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

16.50 % ROI on 35 % LTV

6. Minimum Plot Area must be 800 square feet

Maximum can be 10000 square feet.

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

8. Case can be made on Income Basis or Repayment Track Record (RTR) of all

kinds of loans i.e., auto loans, medical equipment loans, personal loans.

9. LAP on Land can be given to all kinds of customers Salaried, Self Employed

Non Professional (SENP) & Self employed Professional (SEP).

Home Loans : Key Features

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

Loan to value (LTV) ratio is 85 %. This includes stamp duty, registration charges

and amenities.

Amenities on Stamp paper : We can add Maximum of 20% of Agreement value.

Maximum Tenor : 20 years (15 years for SENP retail & non retail)

Only for first sale builder properties.

Loan amount : From Rs.2 lac to Rs. 3 Crore

Validity of Loan Approvals : 6 months from the date of Sanction Letter.

LTV Norms

In case of Resale :

A) If COP = MV, Loan Amount = 85% of COP (LTV 85%)

B) If COP > MV, Loan Amount = 85% of MV (LTV 85%)

Example : COP : Rs.25 Lacs & MV : Rs.20 lacs Loan

Amount : Rs.17 lacs

C) If COP < MV, Loan Amount = 80% of MV subject to 100% of

COP Example : COP : Rs.20 lacs & MV : Rs.25 lacs

Loan Amount : Rs.20 lacs

LTV Norms > Rs.100 lacs

Cap based on COP

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

Property value > Rs.200 lacs, the max LTV will be 75%

Cap based on MV

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

Property value > Rs.200 lacs, the max LTV will be 70%

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

MV Lending LTV Norms

MV Lending

To bridge customers requirements between circle rates specified by sub-registrar and

transaction value. For example transaction in certain sectors are as given below

Location % of MV

Delhi 25 40 %

Banglore 60 65 %

LTV Based on the lower of the two : In case of purchase in ready / resale cases

1.Lower of the TWO

1. 80 % of the Market Valuation if the property is valued up to Rs.50 lacs

65 % of the Market Valuation if the property is valued at more than Rs.50 lacs

(Lower of 2 valuations done will determine market valuation).

2.100 % of agreement value / sale deed (with stamp duty paid) + stamp duty +

registration + society transfer charges + state electricity board connection charges +

amenities agreement (without stamp duty )

The cost of Amenities should not exceed 200 % of (Agreement Value / Sale Deed +

Stamp Duty + Registration charges).

If Amenities Agreement is not on stamp paper, then that component of the loan amount

would be done as Top Up loan with norms of Home Loans.

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

03 Years Fixed Smart Fixed

03 Years fixed gives option to customer to look at fixed rate for the first 03 years and

subsequently the product moves into floating reference rates

Fixed from the first date of disbursement based on weighted average rate

of interst.

At the end of 03 years it will move to FRR on immediate reset date which could

be 03 years to 03 years and 03 months.

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

possible Margins for FRR set at the time of Sanction.

Part Fixed & Part Floating

Customer can opt for combination of them.

02 separate tranches would be given on the same date.

Amount under each category decided at the time of sanction itsef.

Combination of two should be minimum of Rs.1 lac and each tranch should be of


Products : HL / LL / NRI / OPL / HIL / LAP (R&C)

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


02 separate application forms

02 LAN numbers for the loans

Common Sanction Letter

Common HLD

Common I/T certificate on cross linking of files.

Prepayment on each tranche possible but foreclosure on completion of both

the loans.


Based on the combination of the loan EMI for the other loan would be considered

as FOIR for calculation purpose.

Fixed with MMC

A new product variant for Home Loans with a variation in Fixed rate of interest with

Money Market Conditions (Fixed MMC)

Salient features :-

Fixed MMC rates can be offered for Home Loans & Balance Transfer of Home

Loans only.

Fixed MMC rates can be offered only to Resident Indians. Thus, Home Loans

with Fixed MMC rate cannot be offered to NRIs

The Fixed MMC rate can be offered only for new sanctions. Conversion from

fixed ROI to Fixed MMC rate and vice versa would not be allowed.

All Fixed MMC rate loans would be booked under the following scheme

Finnone/ APS :

a) Individual Home Loan with Fixed MMC

b) BT of HL with Fixed MMC

New format of the sanction letter for Home loans with Fixed MMC

A new Home Loan Document (agreement) with the following mentioned on the

top cover With Money Market Condition Clause for Fixed Rate of Interest.

EMI Under Construction

Purpose : Commence EMI in under Construction Project.

Target Segment : Home Loans to Resident Indian

Features :

Offered to APF Projects.

Customers pay EMI from the first disbursement on total sanctioned amount.

EMI remains constant with term changing

Disbursed amount keeps changing

Disbursed amount not more than Sanctioned amount.

Subsequent disbursement would be at the end of the month.

EMI Under Construction : Example

Sanctioned amount Rs. 10.00 lacs

ROI 7.5 %
Tenor 240 months
EMI Rs.8056/-
1st Disbursement Rs.5 lacs
Reduced Tenure 79 months
Principal O/s At the end of 03 months Rs.485114.00
2nd Disbursement after 03 months Rs.2 lacs
Balance Tenure 240 3 = 237

O/s principal = Rs. 485114.00 + 200000.00 = 685114/-

EMI Rs.8056.00
Revised Tenure 124 months
Full & Final after 03 months
Balance Principal O/s 673721 + 300000 = 973721/-
Revised Tenure 233 months
Maximum Tenure 240 6 = 234

Step Up Repayment Facility (SURF)

Concept SURF

The tenor is divided in three parts ; viz.

a) Primary

b) Secondary

c) Tertiary

The installments will increase beginning from the least in Primary & the

highest in Tertiary.

Installment in Primary period to cover interest, in the current rate scenario

Rs.625/-per lacs

Types of SURF

Category I

Category II

Category I

Monthly Income > Rs.25000/-

Applicant is employee of Select Corporate (i.e., Category 0 and Category

1 worksite list)

Should NOT be employee of Pvt. Ltd Companies, Prop. Concerns,

Trusts. Should NOT be a Self Employed Non- Professional.

Category II

Monthly Income > 15000/-

Should NOT be employee of Pvt. Ltd Companies, Prop. Concerns,

Trusts. Should NOT be a Self Employed Non- Professional

Benefits :SURF

Enhanced Eligibility

Opting for SURF could raise the eligibility by up to 30% above the eligibility in a

normal repayment pattern.

Ex. Term 20 yrs , ROI 7.5% , Income pm 25000/- , Normal eligibility

Rs.17.07 lacs , Enhanced Eligibilty Rs.22.14 lacs & Increase in Eligibility 30%.

Easy Installments in Primary period, lower strain on cash flows.

Features : SURF

Eligible Entities (Only Individuals)

a) Salaried

b) Self Employed Professional

Eligible not Eligible Products:

a) Only Home Loans (Top Ups not permitted)

b) BT of Home Loans shall also not be permitted SURF

Term possible 15-20 years (both terms included)

Not Eligible :

a) Self Employed Non Professional

b) Employees of Pvt. Ltd Companies, Prop. Concerns, Trusts.

Rate of Interest Only Adjustable Rate Loans

Deviations / Re schedulements

a) No Deviations permitted

b) No Re Schedulements permitted.

Documents SURF

Sanction Letter Automated Sanction Letter capable of generating SURF letter.


a) Normal loan Agreement

b) Amendatory Agreement

Income Tax Benefits

IT Certificate to show both ; Interest payable & Actual Interest paid.

In case if Negative Amortization :

a) No IT benefit available on capitalized interest Sec 24 (b)

b) No IT benefit available on re-payment on capitalized interest sec 80C

Part Pre-Payments Adjustments will be made first towards the capitalized


Land Loans : Key Features

Purpose : To acquire a site / plot of land for residential use

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

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

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

Fee : Same as Home Loan

Amount of Loan : Rs.2 lacs to 50 lacs

In HUB & Spoke Locations

Land Loans + Construction

LTV would be 85% of Land + Estimated Construcction

Provided land has been purchased in last one year OR 100% of estimated

construction based on technical report which is lower.

In Spoke Loactions

Only land loan would not be financed.

Land Loan + Construction would be considered.

First disbursement would happen only after the construction has reached

plinth level.

75% of land cost can be given provided land has been purchased in the last 01


In HUB locations for Land + Construction

Disbursement for land would be done.

Case would be Pre EMI

In case the applicant avoids construction the scheme ID should be changed

To avoid giving I/T benefits certificate on the case

Office Premises Loan : Key Features

Purpose : To purchase / construct office premises

Maximum Tenor : Resident Indian

SENP Retail = 15 years.

SENP Non Retail = 10 years.

LTV Ratio :

85% of the cost of property for doctors.

60% of the cost of property for others.

Fee : Processing and Administrative fee of 0.5% each

Amount of Loan : From 2 lacs to 1 crore.

Eligible Entities :

Professionally Qualified Self Employed Individuals & only Qualified Chemist


Other Norms :

Minimum 3 years Experience as Practicing Professional

Loan available for improvement of office premises

Maximum of 30% of the cost of the property.

LAP / Home Equity Loan

Loan Against Property : Key Features

Purpose : For Marriage, Business, Education, Medical Treatment, Purchase of

Property, etc.

Maximum Tenor : 15 years (10 years for SENP)

LTV Ratio : 45% for commercial and 60% for Residential

LTV + FOIR (Non retail) : Subject to maximum of 120% for residential and 105% for

commercial with no LTV deviation.

FOIR for Salaried : 50% & SENP Retail : 55%

Amount of Loan : From Rs. 5 lacs to 100 lacs

Eligible Entities : Salaried, SEP & SENP

Minimum value of property : Rs. 7 Lacs across all cities.

Other norms : Loan can be availed only against the self occupied property.

Balance Transfer

Balance Transfer : Key Features

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

current rate.

Tenor : Maximum term not to exceed as applicable under product category OR

Residual age of property as determined by the site engineer

LTV : 85%

Fee : Same as Home Loan

Amount of Loan : Outstanding principal amount of the existing loan + prepayment

charges + fee payable to ICICI HFC subject to applicable LTV norm, calculated on the

cost of property.

Disbursal to be in favor of HFCs / Banks whose loan is being prepaid.

Repayment track record for the last twelve months to be verified.

Documents Required : Pre Sanction

Outstanding Principal statement from existing HFC / Bank

Declaration-cum-Undertaking of legal documents submitted with earlier HFC /


Legal verification

Letter to the builder / society / DA as per letter drafted by ICICI HFC

Documents Required : Pre Disbursal

Letter of Authority & Power of Attorney in favor of ICICI representative

to collect original docs & mortgage release letter from HFC / Bank.

Cases Pending with Sub Registar : BT applications where property title

documents are pending will not be accepted.

Documents Required : Post Disbursal

Original receipt required from HFC / Bank for the amount disbursed

Mortgage release letter & No dues letter required.

Original title deeds as per list provided.

Acknowledged copy of notice sent by the legal agency of ICICI to the




Top Up Loan

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

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

the borrower.

Maximum Tenor : as per individual product norms

Fee : Same as Home Loan

Amount of Loan : Rs.50000 to 20 lacs

Validity of loan approval : 3 months from date of sanction.

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

ICICI loan

Security of Loan : Extension of mortgage on the property financed.

Top Up Loan is offered on following products :

Home loan

Balance Transfer Home Loans

Balance Transfer NRP


(Loan available on fully disbursed cases & NIL post disbursement pending documents)

Home Improvement Loan

Purpose : Improvement of residential premises.

Maximum Tenor : 15 years

LTV Ratio : 70% of the estimate subject to

45% of the market valuation of property prior to fianancing

Fee : Same as Home Loan

Amount of Loan : From Rs.1 lac to 50 lacs

Eligible Entities :




Eligible Improvements : Being completed within 12 months from the date of first


Property has to be occupied by at least 1 applicant to the loan.

Lease Rental Discounting

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

expected funds from property leased out by him.

Maximum Tenor : 9 years (subject to balance lease period)

LTV Ratio : 50% of market valuation subject to

85% of the NPV of furure expected rentals discounted at the applicable ROI

( net of TDS)

Eligible Entities :



SENP (Non Retail)

Amount of Loan : From Rs.10 lacs to 1 crore

No Income Proof Loan

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

Eligible Entities : Self Employed Individuals only

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

Amount of Loan : from Rs.2 lac to 50 lacs

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

(whichever is lower)

For loan amount < Rs.25 lacs,

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

Documentation :

Proof of continuity of business 05 years

Bank Statements 6 months (verification required)

a) Current Account

b) Savings Account

Out Cheque returns not more than 06 in 06 months.

Stop Payment returns 02 in least 06 months

Maximum number of transactions 10 per month

EMI not to exceed 10% of the average monthly bank credits for the last 06


Average balance on 10th, 20th & 30th for last 06 months should be greater than

02 times EMI.

Client / Supplier References -2

Copy of title document

RTR of 12 months if EMI of existing loan is more than 25% of the proposed


OCR : By Cheque prior to disbursement & No

PDD No deviations permitted.

Income Surrogate Banking Product

Purpose : Surrogate product for Home Equity

Loan Target customers with good banking record.

Lap Income Surrogate Banking Product

1. Approved Borrower Entities Resident Indians (SEP & SENP)

2. Loan Amount

Min. Rs.5 lacs

Max. Rs.30 lacs

3. Term Max.10 years (Term should not exceed propertys residual age)

4. Loan type Fixed and Floating.

5. Min Property Value Rs. 15 lacs (as per technical valuation)across all


6. LTV

i) Residential property 35%

ii) Commercial property 25%

7. Bank Statement

i) Photocopies of updated bank statements for the last one year

from current a/c of the firm / company.

ii) Photocopies of updated bank statements for the last one year

from current a/c / savings a/c of the individual applicants and


8. Client reference required 3 large creditors.

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

10. Personal discussion is mandatory.

11. CC accounts EMI to be less than or equal to 10% of the inward flow

into the bank a/c in last 6 months.

12. Other accounts EMI to be less than or equal to 15% of the inward flow

into the bank a/c and average balance to be more than 1.5times the EMI in

the last 6 months.

Adjustable Rate Home Loan

Purpose : Facility of variable ROI

Eligible Entities : Existing and new customers

Eligible Products :

Home loan

Land Loan





Top Up

Max. term of Loan : 20 years for Salaried and

SEP 15 years for SENP

Monthly reducing

Date of change : 1st day of each quarter (as per calendar year)

EMI shall remain constant, except in the following three instances :

1. Negative amortization

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

20 yrs for SENP

3. Term of loan exceeding : Retirement age for salaried.

65 years for self employed applicants whose income is

considered for eligibility.

Switching of Rates Between Switch fees ICICI Bank Others

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

of change in Tenor Fixed to



Icici Home Finance Loan Shield with ICICI Lombard

Loan Shield For Resident Indian

Loan Shield for a period of 05 years.

Loan care Insurance

Property Insurance offered free one year in case of commercial property.

Maximum Cover : Rs.1050000

Minimum Age : 20 years

Maximum Age : 50 years ( loan cover ends at 55 years)

Loan Care is maximum of 05 years

Property Insurance : Same Tenure & cover commences after completion of work

Feature : Based on Medical declaration no medical check up.

Loan Shield

Loan Care Features : Salaried & Self Employed

1. Default due to Death : Principal o/s paid

2. Permanent disability due to accident : Principal o/s repaid

3. Critical illness leading to hospitalization and loss of

income In case of Salaried only 12 EMIs would be covered

Unemployment due to retrenchment

1. Closure of unit due to financial health or M&A

2. Closure due to action by Public Authority.

3. Termination from job due to ill health.

Any illness pre-existing or repoted within 90 days or loss of job within 90 days

not covered.

Salaried employees would be paid maximum of 03 monthly EMIs in case of default.

Policy ends on attaining at the age of 55 years

Policy ends with closure of loan account.

No refund of premium on part prepayment

Part Premium refund in case of full closure

Claim settlement in 21 days.

Home Assure Prudential (Group Policy)

Customer Segment : Individuals opting for Single premium

Age Group : 18 to 60 years ( Maximum on attaining 70 yrs)

Sum Assured : Rs. 25000/-To Home Loan scheme

Product Feature

No medical examination upto Rs.15 lakhs

Death Cover : principal o/s as per the sanction letter

Part / Under Construction : Cover can take 0/1/2 + tenure of the loan.

Joint Cover Possible provided both are earning

Cover would cease on Full closure or BT

Surrender Value : 70% of single Premium ( Balance Term / Policy Term)

Exclusions : No claim within 45 days

No claim due to suicide within 01 year


Main objective:

To find out the utility of Home Loans in general public and analyze the number of

customers applying for Home Loans in ICICI. To learn the process of Home Loans.

The basic necessity of general public is food, clothing and SHELTER. So , for

the fulfillment of the last need ICICI has introduced many products according to

the status of the applicant.

Economic Growth of the country is predicted by its Infrastructure and Real Estate.

Therefore, ICICI has made easy by granting loans by easy methods and normal


Home loans are of big amounts therefore, it comprises of many important

documents and deeds which have to be studied with due importance.

Government is concentrating on one important aspect that every person should

have his/ her own house through home loans which facilitates deduction in

Income Tax.

All the NBFCs are interested in granting Home Loans because it is of large

amount .

It is the only type of loan which is coordinated and continued from the time of

money lenders to NBFCs.

Personal Objective :

I choose this project in order to have the detailed study of the topic Home Loans

as it comprises of many formalities and legal deeds.

To have the practical knowledge because in future every second person will be in

need of Home Loans

Punjab & Sindh Bankspecializes in Home Loans so to gain knowledge

regarding career prospects.

It helps in calculating Income and eligibility of the customer, Study of

ITRs, Legal and Technical study of any property and even profile check.


Business model

ICICI HFC currently functions through four sales channels :

a) DMA Network

b) Counselor Teams

c) Relationship Managers

d) Punjab & Sindh BankBranches

All channels function independently of each other

Processing and appraisals are done in house and on-site to reduce TATs

Role of the DMA / DME / COUNSELOR

The face of Punjab & Sindh BankHome Loans

Representing everything that ICICI HFC promises

a) Superior service

b) Excellent products

c) End to end solutions

The person who has to ensure that we fulfill every promise that we make to the


A consultant and guide to the customer

Risk Containment Unit (RCU) Process

Purpose Control frauds entering the system

a) Pre-Sanction Stage

b) Pre-Disbursement Stage

Pre sanction stage verifies files based on triggers.

The files are either

a) Screened No triggers found. Allowing credit process to continue

b) Sampled Implying verification required with source of document

c) Credit Referred Based on Credit Manager request

Pre Disbursement Stage verifies property document.

Field Investigation (FI) Process

Purpose Collection process of ensuring customer

verification a) Residence FI

b) Employment FI

c) Tele FI of both residence and office

Property verification

This FI Shoot is done of all the applicants and co-applicants. The office FI

is done of all the co applicants whos income is considered.

Operation Process

Sanction Process

b) NDC Check

c) Data Entry in Finnone

d) Storage of sanctioned files

Disbursement Process

a) NDC Check

b) Date Entry in Finnone

c) Preparation of Cheque

d) Storage of Dockets

Sanction Process

Normally, it would take 4-7 days for the sanction process from the date of receipt of

all the documents at IHFC

The customer calls the bank

Banks representative visits the customer and explains the loan product

Now customer provides the bank with Income and Personal documents as

listed in the brochure

Again the representative visits the customer to validate information

Documents are credit appraised and decision taken on the sanction of the loan

Bank delivers the offer letter along with a list of legal documents required.








Disbursement Process
Normally, it would take 4-7 days for the disbursement process from the date

of receipt of all the documents at IHFC

The customer calls the bank for disbursement

Banks representative visits the customer and collects the Legal Documents.

Loan Documents and PDCs from the customer.

An IHFC lawyer vets the legal documents.

An IHFC Site Engineer visits the property to verify stage of construction.

Disbursement cheque is prepared.

The disbursement cheque is delivered to the customer.





Fires and Receive Legal and

Sales Technical department

Firstly, starts the work of Relationship Officer

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

process of Enrolment, Sanction and Disbursement.


Ensure entry of new DME leads and updation of existing leads in CMS

Make Welcome Call to customers for all new logins

Ensure Welcome Letter is sent to all new customers at the time of login.


Resolve with customer all enquiries raised by CPA / BCM on the Sanction file

Make Sanction Call to all customersand inform them regarding all disbursement

documents required and take DID.

Attach Annexure containing list of disbursement documents with all

Sancction Letters


Ask the customer regarding Express Disbursement during Welcome Call

Inform customer about the pending documents, if any, as per the legal report

and set DME appointment.

Make a Disbursement call to customer to inform him that the

disbursement cheque is ready

Introduce Call Centre to the customer during the disbursement call

Next is Branch Credit Manager

Purpose : To provide credit decision for snction and disbursement in order that
the commitment to the customer on turnaround time is fulfilled


Check the Sanction file for Credit compliance and eligibility norms and authorize


Coordinate with the higher authority for the cases that require approval


Scrutinize complete docket and DM and authorize disbursement

Ensure completion and clearing of dockets put on hold by branch

operations Coordinate with the outsourced agency for collection of PDDs

Impart training to Back office and DMEs regarding policy and process changes

What is Contact Management System ?

It is a Lead Management System.

It appointments the Scheduler.

Records all touch points with customer.

Acts as a reminder for all follow ups.


Add Contact

Leads With DMA

Fix Appointment
Remainder for Customer
Update Diary

Take a Print of Schedule

DME Meets


Close DME Collects Documents and Returns

the DSR to the Back Office

All NO
Sanction Process

Benefits of CMS

Availability of Information

Structured Planning

Ensures no loss of leads

Online feedback to Call Center and Marketing

Manager Increase in Productivity

Better service to the customer.

Introduction to Credit

Why is Credit essential ?

It is important to evaluate cases for credit so as to have a quality portfolio, remove

frauds, have control checks to see the performance of the portfolio

Whom do we want to fund ?

Anyone who will

Repay all the installments

Repay installments on time

Things to look at in credit

Ability to Pay Intention to Pay

How do we judge it ? Industry Trends

Income received by the customer Background of Individual

Disposable Income Previous Repayments

Other sources of income a) Car loans

Possibility of Cash income b) Housing loans

Petrol pump owners, doctors, etc. c) Credit cards loans

d) Cellular repayments

Income can always be window dressed

Income Document Analysis

In case of salaried look at Fixed & Variable Income

Compare Gross Income and Net Income

Savings in Social Security Funds

b) Mandatory contribution

c) Additional Contribution

d) Withdrawals in Social Security Funds

Contribution towards other savings

Deduction or payment of all obligations

Look at Form 16 for Annual benefits & any obligations too.

In case of Self Employed / Non Proffesional

Comprehensive look at ITRs of last 3

years Computation of Income

Balance Sheet and P& L certified by C.A

Stability of Income

In case of Salaried

Look at the Organization employed with

The Industry in which it operates

Skill set and Educational Qualification

No. of years in the Organization / Industry

In case of Self Employed

Family business or start-up

Business volume vis a vis Industry Standard

Understanding of industry structure/ Forces operating

Health of Bank Statement

Verification of Bank Statement

In salary case, number of credits to be checked Fixed & Variable

In business case, check the average balance for liquidity

Large credit or debit entries

Recurring debits on account of loan repayment

b) Inward Cheque bounces

c) Outward Cheque bounces

d) Verify with debtors or creditors list to know

e) The impact on business

Stop Payment Instruction

Minimum Balance charges

Family Background


No. of dependents

Age of dependents to understand the expenses

Additional earnings of family members cash flow

Dependence of parents / family members staying in

hometown Any ancestral or self owned property

Family dependent on salary income or diversified income i.e., rental, agriculture,

business, small savings

Family reference / Business reference As

per the norms maximum should be 5

Applicants Lifestyles match between Income & Savings & Expenses

Habits like excessive drinking Reference check

Family members with medical history

b) Claims made under various Income Tax Benefit

c) Any banking transaction showing payments

d) Information provided by FOS / FI / Personal Visit

Appreciation of Insurance

a) Family medical cover is a good indication

b) Life Insurance Planning for the Future of the family

Geographical Restrictions

Customer Residence / Property not in Negative Area. Customer does not belong to

Negative Profile category. Customer Residence / Property not beyond

Geographical limits.

In case customer working outside Geo limit

Property to be purchased should be within Goe limits

Immediate family member to be within Geo limit & to be taken as co-

applicant PDC to be issued from Bank Account to be in Geo limit

Waiver of FI subject to positive office tele check & residence FI of

family member (within Geo limit

Customer Profile

Where applicant and co-applicants income are combined, the minimum

income per applicant should be Rs.4000/- pm

Work site is further classified as : Category 0 & Category 1

Employees working with Trust should be approved & noted by the Policy & Risk.

Employees working with Private Ltd.Companies


a) Minimum Age 21 years

b) Maximum Age 65 years OR retirement, whichever is Earlier.(The

maximum age at the time of completion of loan)

There will be cases where the co-applicant who is the owner of the property

does not fit into the above categories. In these situations the age criteria is

relaxed as follows:

a) Min Age 18 years (At Loan origination )

b) Max Age 70 years at application or 80 yrs (at loan maturity )

Customer Profile


Income not below 7K in other

Income not below 9K in Metro
(Banglore, Delhi, Chennai,
CASH Pvt.Ltd

Age Proof

Driving license

Life Insurance Policy

Birth Certificate

Election ID

School leaving certificate

Employee ID (only for PSU /

Govt.employees) PAN Card

SSC / HSC Admit Card

SSC / HSC Mark Sheet

School / College passing Certificate (printed format with personal details of the

applicant handwritten are acceptable)

Salary slip (if date of birth is mentioned)

Domicile certificate

Age proof is waived for all applicants whose income is not considered for

eligibility. However, age proof is mandatory for applicants below 20 years age &

above 65 years, even if his/her income is not considered for eligibility.

Negative Profile

Daily wage laborers / Mathadi Workers

Drivers and conductors of SRTC/ Taxi drivers/ Auto Rickshaw Drivers/

Commercial Vehicles Drivers


Anti Social Elements


Mine and Quarry workers

Firma engaged in parcel movement

Plantation / Time Share Companies

Employees of Chit fund/ Stock Broking/ Investment Companies

Class 4 employees

Garment Exporters

Employees of BIFR Companies


Security Services- Companies and their

Employees Stock Brokers

Real estate agents

Tour Operators

Cable Operators

Employees of NBFCs below AA rating

Film stars

Employees of Dot Com Companies

Bar Owners


Additional Documentation for Specific Cases

Cash salary One Additional Proof required

Form 16/ ITR/ PF Statement / Appointment Letter / Increment

Letter Job confirmation proof for applicants less than 23 years

If Existing Loans are not being considered proof for the same.

Annual benefits - Form 16 / Appointment Letter / Increment Letter / Employer


Documents Required


Application Form with photo

6 months Bank statements ( 3 months for work site )

Not more than 02 or 01 cheque bounces in case of normal and worksite cases


KYC Documentation (Address / Identity / Signature)

Age Proof

Latest Salary Slip / Certificate 4 salary slips for variable

salary Form16

Processing Fee Cheque

Mode of Repayment


Post Dated Cheques

Auto Debit


Deduction at Source (only for salaried)


Post Dated Cheques

Auto Debit

Payment Cycle

1st and 10th of every month

Now the work starts in Operations Department:

The file logins from the Credit Department to Operations Department with 2 types

of documents

a) Customer related documents

b) Bank related Documents / Mandatory Documents

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

Statements, PAN No., Id Proof, DOB Proof, etc.

Bank related documents are

a) Application form In Application Form all compulsory fields should be

filled up by the customer with no overwriting.

All the data entry should be done by the DEO.

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

who have applied for home loans previously which helps trace any


c) FI / TVR This is done by the bank to verify the residence and

telephone number of the applicant in order to avoid any fraud beforehand.

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

Final NDC is done by CAM

If there is any discrepancy the file is sent to Credit Department for re-credit with

reasons of hold.

Publishing of hold cases is done in MIS at the end of every day.

If the file is clear and there is no discrepancy, then the data is entered in finnone

by DEO.(Finnone is a software based on oracle which is the master of storing all

the entries and transactions done on daily bases)

Now, CAM authorizes the transaction i.e., Maker Checker which means the

CAM will check the transactions and authorize them finally.

Finally when the case is clear, a Loan Account Number (LAN) is generated

which is the primary key to identify the case for the bank.

Now, at the end of the day the files are dispatched to Regional Operations.

After sales services performed by Operations Department:

Request of Statement of Accounts.

Request for Repayment Schedule.

Swap of Cheques.

Conversion (condition change in agreement)


Part Payment

NOC + Document Collection

At the time of Sanction:

When the file reaches the Regional Operations it is login at two places:

a) Processing Cell

b) Storage Cell

In processing cell

a) Firstly, the processing cheque is pulled out.

b) Banking of Cheque is done

c) Finally the cheque is released.

If the cheque is clear, entry is done in the account otherwise, the case is rejected.

In Storage Cell, the papers are divided in two types

a) Customer papers which are retained till the term of loan is completed.

b) Bank papers are shedded after some time i.e.,3 years or so.

Now the sanction is clear and processing fee is released.

At the time of Disbursement:

The docket is login from Credit to Operations Department. Docket is an important

envelop containing different papers.

Types of Disbursement:

a) Full & Final Disbursement - Eg. Applicant sanctioned loan of amount 5

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

b) First & Subsequent Disbursement Eg. Applicant first Sanctions for

purchase and then subsequently for construction so, the amount is

granted in installments.

c) Enhancement / Reduction Eg. Applicant if in future decides to

increase or decrease the amount of loan sanctioned, then again the file

of increased amount has to be sanctioned. And in case of reduction the

amount id directly deducted.

d) Back to Back Disbursement Eg. It is done in the case of High Net

Individual (HNI) who takes loan more than 20 lacs. In this type of

Disbursement the file and docket both are done side by side.

Contents of Docket :

Loan Agreement There are 2 copies of loan agreement, one for the abnk and

the second for the customer (including the stamp papers with stamp duty as per

respective State Stamp Act.

Disbursement Memo It captures the entry of all financial details & entry is

done in Finnone.

Legal & Technical Deviation Sheet This is signed by the person who takes all

the liabilities regarding the loan granted.

Cheque Submission Form It is for the acknowledgment taken from the customer

as per how many cheques have been issued and received and the entries are done

so as to avoid any future misunderstanding between the bank and the customer.

Disbursement Request Form It is necessary as to know on whose name the

loan is applied and granted. And where to pay.

Pop Sheet It contains all the contents of the docket to avoid misplacement of

any important paper. And entry is done again.

Over The Counter Sheet (OTC) It is to exchange the deed with the cheque.

PDC Pouch / Pre EMI Pouch It contains all the entries of cheque details.

Cheque Acknowlegement Its purpose is to take cheque acknowledgement

from the customers.

Legal Report It consists of Non Encumbrance Certificate (NEC) + record of 13

years of the property which is mortgaged.

Technical Report It shows the valuation of the property and the estimate taken

by the architecture.

Punching Process:

Financial details are entered by Disbursement Memo.

Property Details are entered with the help of Legal Report.

Technical Details by Technical Report,

And all other contents are checked, verified and entered with the help of Pop


Finally the cheque is cut and directly handover to the customer or through Over

the counter (OTC)

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

Operations (CO).

Post Disbursal Documents:

Banking of Cheques

Realization of Cheques.

Types of Appraisals

There are basic two types of appraisals done to investigate about the cases that are

logged into the bank:

Technical Appraisal

Construction Structure

Load Bearing Wall Structure

Entire Load on Walls

Cost of Construction Lower

Prevalent in Small Towns

RCC Frame Structure Reinforced Concrete Cement

Entire Load on Columns and Beams

Construction of Commercial and Residential Complex

High Usage of Equipment

Mixed Structure

An Overview

Methods of Valuation

Approach for Valuation




Methods of Valuation

Method of Comparison

Income Approach to Valuation

Summation or Cost Method

Residual Method

Method of Comparison

Property Rate is worked out on other similar properties that have been sold in near


Circle Rates are compared.

Broker Feedback is compared.

No Standard Formula to work out value of property.

Factors vary from locality to locality.

Things to Observe while visiting a site:

Distance from Bus Stop and Railway Station

Accessibility of Site, Infrastructure Facility

Availability of Municipal Transport.

Development of Surrounding Area.

Building wise details of Construction.

Look out for Deviations.

Check Quality of Construction & Structural soundness.

Verify Amenities & Assess their True Value through Materials at site.

How Do We Fund ?

Structure Base

a) Load Bearing or RCC

b) Bungalow or Flat


a) Track Record

b) Projects Completed

c) Category A,B,C (Matrix)


a) Stage of Construction

b) Cost Involved

c) Security

Adherence to Process

Technical Executive

Check on the progress of the work.

Check on activity levels on or Not

Arrive at cost incurred by Seeing Completed

Structures. Amenities in and around the Site.

Quality of Construction


Negative Area

Plan Validation

a) Check Frauds

b) Set Back Check measure from Plinth (Has to measure)

c) Check whether it Confirm Building Plans

Authentic Valuation of the property (to be dealt in details)

What is to be checked at the Site and From whom

Building Rules Critical Rules (please provide hand outs of the critical building


APF Process

Revised APF Process

Sourcing DMA / BSM

Technical Manager

Fire Legal
Fire Technical

APF Process Advantages

Entire legal and technical due diligence is done in one single stroke.

Monitoring is on project wise unlike unit wise.

It is a win win situation for the developer customer

bank. Retrieval of project details is easy.

Total Value of the property and amount of constructed area coming up in the

market is known.

Market Share of ICICI and project wise market share can be

evaluated. Tracking of property prices becomes easier

Exposure level per project can be evaluated.

Double funding on the project can be reduced

Better control

Better TAT

Generating huge database of property rates across India.

Turn Around Time / Amenities Valuation

For Normal Technical Report 24 hours

For APF reports 05 days

Communication should be perfect, in case plans not

received. No site visits without building plans

No amenities valuation unless actually verified at the site.

Valuation not to include Stamp Duty and Registration Charges or Water and

Electricity Charges.

Legal Appraisal

Appraisal for Home Finance

Appraisal Process for Home Finance has two distinct stages:

Sanction Stage

Relates to Credit Appraisal for the

individuals. Disbursement Stage

Legal appraisal of the property financed

Technical appraisal of the property financed.

Legal Appraisal

Transfer of Property

Living person conveys his interest , right or title to one or more person(s)

Person includes Individual, Association of persons, Partnership, Company or


Transfer of property must be done by a written registered document.

Sale for a value exceeding Rs.100/- requires registration.

Transfer of Property may happen by



Government Allotment





Transfer of Tiltle Deed

Sale Deed

Agreement for Sale

Allotment letter

Lease deed

Gift Deed

Probated Will

Develop Agreement

Deed of Exchange

Deed of partition

Release Deed

Concept of Contract

There has to be an offer and

acceptance Creation of an agreement

To be valid contract there should be NO coercion, undue influence, fraud,

misrepresentation or mistake.

Competence to Contract

The person should not be a minor.

He should be of sound mind.

Minor to be represented by Guardian and can transfer property with the

permission of Court.

Property Documentation

Classification into two parts:

1. Types of Transactions

2. Classification of Documents

Transaction type



Development Boards / Authorities

Self Construction

Resale Transaction

Classification of Documents

Land Related Documents

Government Land Records

Plans and Permissions

Individual Title Documents

Property Documentation

Situation : Purchase from Builder

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

Situation : Allotment from Development Authority

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

Situation : Purchase from Society

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

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

Situation : Purchase on Resale

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

Know Your Customer (KYC) compliance

(A) The matrix of the documents that are required to be collected for resident
individual borrowers is as below, any one document from each of the document
category would be required :

Document Category Salaried SEP & SENP

Residence Address Passport Passport
Proof Driving license Driving license
Election Id card Election Id card
Utility bill (not more than 3 Utility bill (not more than
months old) 3 months old)
Latest (not more than 3 Latest (not more than 3
months old)statement of months old)statement of
account / passbook account / passbook
maintained with any maintained with any
scheduled bank, duly scheduled bank, duly
certified by the bank certified by the bank
confirming the address confirming the address
Letter from the existing Letter from the existing
Banker (scheduled Banker (scheduled
commercial bank) in commercial bank) in
original verifying the name original verifying the
and address on the banks name and address on the
letterhead. banks letterhead.
Copy of registered lease / Copy of registered lease /
leave and license leave and license
agreement which are not agreement which are not
expired along with the expired along with the
utility bill in the name of utility bill in the name of
the landlord / owner the landlord / owner
confirming address. confirming address.
Residential Certificate Residential Certificate
issued by Municipal issued by Municipal
corporation / local self corporation / local self
government bodies government bodies
confirming address. confirming address.
Latest premium receipt of Latest premium receipt of
general/ life insurance general/ life insurance
company (not more than 12 company (not more than
months old in case of 12 months old in case of
annual premium receipt) annual premium receipt)
True Copy of Gas True Copy of Gas

connection book. connection book.

Certificate issued by Ward Certificate issued by

Officer maintaining Ward Officer maintaining
election roll certifying election roll certifying
address of the applicant. address of the applicant.
Letter from employer
certifying residential
address. Name and
Designation of the issuing
authority must be clearly

@ The passport $ driving license as above should be current i.e., the same should not
be expired.

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

Salaried SEP SENP

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

personal details of the personal details of the personal details of the
applicant handwritten are applicant handwritten are applicant handwritten are
acceptable) acceptable) acceptable)
Salary Slip (if Salary Slip (if Salary Slip (if
date of birth is date of birth is date of birth is
mentioned) mentioned) mentioned)
Domicile Domicile Domicile
certificate certificate certificate
Ration Card Ration Card Ration Card

(B) Documents required for individual NRI / PIO borrowers

Document category
Identity Proof In case the customer is a NRI

a. Photocopy of the relevant pages of the passport where

the customers name, address, date of birth, date & place
of issue, expiry date, photograph, signature & stamp
regarding stay outside India appear.
b. Photocopy of valid work permit / employment visa. In
case of expired visas, duly acknowledged petitions made
to the Visa Authorities for renewal of Visas will be
accepted as a valid document.

In case the customer is a PIO

a. Copy of the relevant pages of his current passport.

b. Copy of his PIO card
Copy of past Indian passport of self / parent / grand-parent
along with a self declaration as ICICI format duly notarized
and stamped for requisite value.

Adress Proof A copy of at least one of the following Address proog outside
or within India :
a. Utility Bill
b. Driving license
c. Residential Permit (Government Issued Identity Card)
d. Credit Card Bills
e. Rent Receipt
f. Overseas / Indian bank Statement

The address proof must match with the communication address
mentioned on the application form.

(C) Documents required for non individual borrowers :

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

In case of non individual applicants, KYC will also be required for the partners /
directors / promoters who would be required as the co applicants and also all authorized

Repayment Track Record Based lending
Auto loans

Introduction of RTR based product

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

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

Product Features
RTR of commercial vehicles not acceptable
a) Scorpio / Qualis
b) Sumo / Tata Indicab
Multiple lending on same RTR not
acceptable Lending to Directors / Partners
a) Based on RTR of the firm / Pvt Ltd. company
b) Director / Partner > 76% should come as Co-applicant / Guarantor
c) Stake to be verified by CA / CS or Returns of ROC
Loan To Value as per product norms
All other norms as per the product category

Customer Segment
Resident Indian
1. Salaried
2. Self Employed Professionals
3. Self Employed Non Professional

Transporters / Taxi fleet Operators Not acceptable

Target Segment

Self Employed
Salaried Professional /

Already having Auto Loans with Punjab & Sindh Bankand other

Product Working

1. Minimum Seasoning 12 months
2. Seasoning EMI Multiplier
>12 months 1 times of the current EMI for Auto
>18 months 1.25 times of the current EMI for Auto
1. EMI in arrears (current) Nil
2. Defaults Peak not more than 30 days
RTR Health
For 12 months RTR 0 Cheque bounces in 12 months
For 24 months RTR Maximum 02 cheque bounces
For 36 months RTR Maximum 03 cheque bounces

Loan Amount based on RTR working

Loan Amount in lacs Auto loan EMI *1.25/ EMI factor per lac
for the loan tenure
Example 1
Mr. Rakesh has Accent loan paying EMI Rs.15000/-
Loan Amount in lacs 15000*1.25 / 927 = Rs.20.22 lacs


Completely filled in Home Loan form. Bank

statement considered for RTR. Repayment
Track for the applicable repayment period.

Age Proof / Signature Proof

IMP Processing Fee Cheque
Proof of existence in case of SEP / SENP
Field Investigation
Office address proof.

LAP: 03 years continuity of business Proof of Existence

Client Reference 02 large suppliers / customers.


Income Documents Salary Slip,

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

Research Methodology

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


Primary Secondary
Source Source

Interviews Websites and

with Intranet of
customers / ICICI Bank
DMAs Ltd.


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

Sample Design:

The data collected from the questionnaire is of sample size 40.

The questionnaires have been filled by the customers through Direct Marketing Agencies
of Punjab & Sindh BankLtd. and their Direct Sales Agent.
The questionnaires were distributed equally among 4 DMAs equally and the response
collected through them was of great use.

Research Tools and Questionnaire:







(a) ECS (b) PDCs (c) DAS (d) SI (e) Any other




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





(a) YES (b) NO


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

(These figures are of a particular state)

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

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

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






Supplier Power
Increased Dependence on IPOs
There is a growing dependence of corporates on broking houses with the rising
number of IPOs coming to the market.

Buyer Power
Lack of Expertise Curtails Bargaining Power
Retail investors often lack the knowledge and expertise in the financial sector that calls
them to approach the broking houses.
Low Product Differentiation Proves Beneficial
The retail broking services provided by the various companies is homogeneous with very low
product differentiation. This allows customers to enjoy a greater bargaining power.

Degree of Rivalry
Move towards consolidation
Lot of brokerage companies are moving towards consolidation with the smaller ones
becoming either franchisees for the larger brokers or closing operations.
Increased Focus of Banks in Retail Broking
Various foreign banks like ABN Amro and others are planning to enter the Indian
retail brokerage industry.
Online Trading Competes with Traditional Brokerage
There is an increasing demand for online trading due to consumers growing
preference for internet as compared to approaching the brokers.

Barriers to Entry
Entry of Foreign Players
New forms of trading including T+2 settlement system, dematerialization etc are
strengthening the retail brokerage market and attracting foreign companies to enter
the Indian industry.

Threat of Substitutes
Alternative Investment Options
Various alternative forms of investment including fixed deposits with banks and
post offices etc act as substitutes to retail broking products and services.


Advanced Technology
Providing innovative products and technology
Leverage technology to satisfy customer
demands. Add value to share holders.
Too many subsidiaries
High cost of funds

Higher capital base
First mover advantages

Competition from other industry rivals like HDFC.
Concern over NPA despite provisioning

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

Comparative study of Punjab & Sindh BankLtd. and HDFC Bank

Even their offices reflect their attitudes. ICICI Bank's headquarters in suburban Mumbai is a huge,
imposing edifice in glass and granite. HDFC Bank's office in central Mumbai is comparatively
smaller and more sedately furnished. The two banks have carried forward their style statement in
their approach to business. Punjab & Sindh Bankthinks big, is all for growth and hungry for
market share. HDFC Bank is more conservative and cautious, grows at a measured pace,
without taking any undue risks.

ICICI Bank's assets in the retail space stand at Rs 56,000 crore (Rs 560 billion). In comparison,
the tally for HDFC Bank is Rs 18,000 crore (Rs 180 billion). Punjab & Sindh Bankalso leads
HDFC Bank in almost every segment they are present in. But that's just the current update.

The DNA of the strategy

Punjab & Sindh Bankbegan its retail banking venture in mid-1999. By January 2000, it had
moved on to introducing home loans, car loans, personal loans and credit cards. Realising the
need for a bigger retail deposit base, the bank started building a branch and an ATM network.
The acquisition of Bank of Madura in March 2001 added 263 branches, many of them in cities
where Punjab & Sindh Bankdid not have a presence.

The merger of the erstwhile financial institution ICICI Limited with the bank in April 2002, gave it
a ready-made corporate clientele. The flip side was that Punjab & Sindh Bankhad Rs 10,000
crore (Rs 100 billion) of restructured assets for which it had to make provisions.

On the other hand, HDFC Bank kick started its operations in 1995 with a focus on corporate
banking, targeting the top-end of the market.HDFC Bank ventured into retail lending in 1998, a
year before ICICI Bank. But in products like credit cards, it was slow to get off the mark. For
instance, its credit cards were launched only two years ago. By then Punjab & Sindh Bankhad
been present in the credit card business for nearly three years.

However, HDFC Bank was handicapped because it could not sell home loans (because its
parent HDFC was in the business), though it has been originating them in the past one-and-a-half
years. For ICICI Bank, home loans are 46 per cent of its retail assets.

A banking consultant observes that Punjab & Sindh Bankis far more aggressive. Though ICICI
executives do not admit it, industry sources observe that ICICI's pricing has been far more
competitive, which probably brought it more customers.

According to some industry experts, growth for Punjab & Sindh Bankmay have come at the cost of
Punjab & Sindh Bankdenies this.

Calling the customer

Both players targeted the same customer -- the upper-middle class. The marketing channels
used by both, including direct sales agents (DSAs), were the same. Yet, there was a difference.

In the past two years, the bank has spent less than Rs 100 crore (Rs 1 billion) on advertising
and publicity (In comparison, ICICI has spent Rs 185 crore). HDFC Bank says that its spends
have always focused on other channels such as direct sales and phone banking rather than
mainstream advertising.

Better pick-up

The numbers tell the story. ICICI Bank's retail deposits are nudging Rs 60,000 crore (Rs 600
billion) and in FY06, it grew its deposits by 47 per cent compared with the industry deposit growth
of 14 per cent. HDFC Bank's retail deposits are about Rs 23,000 crore (Rs 230 billion). Even in
home loans, Punjab & Sindh Bankcommands 30 per cent of the market, having eaten into
housing finance pioneer, HDFC's share.

Share of the wallet

Bank Bank
Branches 467 565
ATMs 1,147 2,000
Cities 211 371
Retail assets (Rs
18,000 56,000
Deposits (Rs crore) 38,000 99,800
Car loans (Rs crore) 2,500 11,500
Credit cards (Mn) 1.3 3
Retail customers
6.4 13.7
Cost of deposits (%) 3.2 4.5
Net interest margin
3.2 2.4
Net NPLs (%) 0.2 2

Even in the number of customers Punjab & Sindh Bankleads by a distance (See table: Share
of the wallet). Nearly 14 million customers bank with ICICI Bank, while the number for HDFC
Bank is less than half (6.4 million). Punjab & Sindh Bankhas issued 3 million credit cards -- that
is more than twice the number of HDFC Bank's credit card users. However, industry observers
point out that ICICI Bank's effective users for credit cards may not be high.

Nonetheless, they concede that even with a discounted customer base, the numbers will still be
strong. Even in businesses like online trading where the risks are relatively low, Punjab & Sindh
Bankcommands a two-thirds marketshare.

'Tell all' street

The stock market has always valued HDFC Bank at a huge premium -- at the current price of Rs
585, HDFC Bank is valued at 3.5 times price to forward book (valuation based on estimated
book value in FY 06 of Rs 165). The multiple for Punjab & Sindh Bankthat quotes at Rs 415, is
just 2.1 (estimated book value Rs 194). The reason: the impeccable quality of HDFC Bank's
balance sheet. With NPLs of less than 0.2 per cent, compared with 2 per cent for ICICI Bank, its
books are definitely in far better shape.

HDFC Bank's operations are also more profitable -- its net interest margin at 3.2 per cent is way
higher than that of ICICI Bank's 2.4 per cent. Also, it is able to access deposits at a lower cost.
On an average, it pays an interest of 3.2 per cent while Punjab & Sindh Bankshells out 4.5 per

But round one of the banking sweepstakes has clearly gone to ICICI Bank.


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

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

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

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

Product applied for: The most preferred products in Home Loans are:

Home Loan It is specially for the purpose of construction and purchase.

Benefits of Home loans
Cheaper Rates RBI has given a margin of 0.75% which deducts
from the current prevailing rates.
Easily granted.
Amount of loan granted 50% of the salary in case of salaried
Rebate / deduction in Income Tax.

Land Loan It is normally given for the purpose of purchase of land

for Investment for future.
Benefits of Land Loans
Normal rates As it is granted for the purpose of investment so
RBI has not given any deduction of margin because it is not
beneficial for the government and is merely for the
personal benefit of the customer.

There is no rebate in Income Tax.

LAP (Loan Against Property) It is given for different purposes against

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

Modes of Payment: After the whole analysis, the final conclusion is

that more than 60% of the applicants repay the loan through PDCs.

Property Mortgaged: Applicants can mortgaged any free property which

they own. Free property includes:
Residential ( commercial and non-commercial)

Any other loan taken for the same property: Out of sample size 40, mostly
have not applied for any other loan simultaneously but through Credit
Information Bureau of (India) limited (CIBIL) and DEDUP records show that
at time of applying for HL customers itself take a check that they have already
repaid their dues of other loans.

Preferred bank for Home Loans: According to the survey through

questionnaire shows that Punjab & Sindh BankLtd. is the most
bank but this is because questionnaires have been filled by the applicants
applying in ICICI. Otherwise, HDFC is second market leader in Home Loans.

Loan from any other bank: Out of sample size of 40 customers mostly have
not applied in any other bank but some number of applicants are customers of
any other bank.

Sources of information for the various home loan plans: Features launched
by the bank in different plans of HL is outsourced through Direct Sales agents
and agencies. And even some customers or can say general public prefers
bank as the most reluctant source of availing information.

99% of the applicants in sample size are satisfied by the services provided
by Punjab & Sindh BankLtd.


The report made on ICICI Home Loans concludes by findings of various benefits to the
customer, government, builders and HFCs / Banks.
There is a growing tendency of investing at a younger age, increase in NRI demand in
real estate, increased urbanization, owning property now more economical than renting.
Government committed to simplifying Mortgaged Backed Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI)
Act 2002. There is tax benefit to the customers and rationalization of stamp duty.
Builders are now a days focusing on end users rather than Investors and there is
improvement in quality of constructions.

The final outcome of the report gives the following data:

JUNE 2008
FILES LOGIN 100( Ist Disbursement) 49 ( Sub Disbursement) 52 ( Final Disbursement)

FILES CLEAR 46 ( Ist Disbursement) 26 ( Sub Disbursement) 47 ( Final Disbursement)

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

Market leadership

Sanctions (in Rs.Crore)


20000 ICICI

15000 HDFC

10000 SBI


2004 2005 2006 2007

2005 2006 2007 2008

Market leadership
Disbursement (in Rs.Crore)

12000 ICICI

10000 HDFC

8000 SBI

2004 2005 2006 2007

2005 2006 2007 2008

Market share of ICICI

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

Market Share

2007 FBs
2005 Pvt Bks
2004 ICICI
2005 0% 50% 100%


Pandey I.M., Financial Management

Chandra P., Financial Management

Khan & Jain, Financial Management

V.Sharan, Financial Institution & Services

Induction program book of Punjab & Sindh

BankLtd. www.ICICIBank.com