Académique Documents
Professionnel Documents
Culture Documents
ON
Session: 2005-2006
1. Acknowledgement 3
2. Executive summary 4
3. Introduction 5-7
4. Research Design 8-9
5. Housing Finance 10-21
6. Current Scenario 21-24
7. Company Profile 25-32
ICICI Bank
8 Unique features of home loan schemes of 4 banks 33-44
ICICI Bank
HDFC Bank
SBI Bank
UTI Bank
8. Findings and analysis 45-51
9. Conclusion 52
10. Recommendations 53
11. References 54
12. Annexure
2
EXECUTIVE SUMMARY
A roof over one's head and ground beneath one's feet count as the
bare necessities of life. There’s nothing quite like owning a home,
however humble, to give one that warm and glowing feeling. But
when one buys a home, one has much more than a feel-good
purchase in mind: it’s also a crucial investment decision, perhaps
the biggest spending decision of one's life. There are ample
opportunities today for young salaried investors to plan their
moves early and buy a house at the right time — and at the right
price. Every individual aspires to own a home. But many either
spend a lifetime saving to purchase a house or exhaust money on
monthly house rents. The project at one level, is about India’s
great housing boom, At another, it is about people with rising
salaries and falling mortgage rates to buy homes. Five years ago,
mortgage rates ranged between 16 percent and 18 percent; today,
the range is 8-15 percent.
The aim of this research project was to analyse the home loans
and HomeSaver loans with a view to arrive at the most popular
loan schemes offered by the banks under study and to conclude
from the analysis the best possible schemes which would keep the
bank ahead of competition.
The purpose of the study is to find the critical factors that are
essential for any housing loan scheme and especially for Homer
Saver Scheme of Standard Chartered Bank to become the most
favored scheme in the Indian scenario. The reasons being the
features that the scheme provides are not being provided by many
of the housing finance companies.
3
INTRODUCTION
"It was Never so easy to build your own house"
A roof over one's head and ground beneath one's feet count
as the bare necessities of life. There’s nothing quite like
owning a home, however humble, to give one that warm and
glowing feeling. But when one buys a home, one has much
more than a feel-good purchase in mind: it’s also a crucial
investment decision, perhaps the biggest spending decision
of one's life. There are ample opportunities today for young
salaried investors to plan their moves early and buy a house
at the right time — and at the right price. In the process,
not only do they fulfill that cherished dream of owning a
house, but also put themselves on the path to acquiring
property that would meet the needs and aspirations of their
growing family, even as it leads to wealth creation. Every
individual aspires to own a home. But many either spend a
lifetime saving to purchase a house or exhaust money on
monthly house rents.
Profitable Proposition
4
One , income-tax exemption;
5
reduction in the processing fee translates into a saving of Rs
15,000 on Rs 15 lakhs loan for borrowers. No lender has
announced a permanent lowering of service charges, but
they’re offering these at special events or for specific
periods. A decision on whether one should go in for a fixed-
rate or a floating-rate loan is a function of two factors: One's
perception of where interest rates in the economy are
headed, and one's capacity to ride the interest rate changes.
A floating-rate loan lets one take advantage of further falls
in interest rates, but one stands to lose if interest rates rise
again. In other words, floating-rate loans make sense only
when the interest rates are high and are expected to fall. On
the other hand, a fixed-interest loan immunises oneself to
interest rate jumps. If, however, interest rates fall, one can
foreclose one's loan and refinance at a lower rate-either with
another lender or, increasingly, with the same one.
Locking in
6
AIM
Scope
i. Identification
of loan schemes of various public and private sector banks
for comparative study and analysis.
ii. Identification
and detailed study of home loans for each selected bank.
iii. Advantages or
strong points of each of the schemes of the selected
banks.
iv. Comparative
analysis in tabulated form of all 4 banks at a glance.
v. Identification
of the most popular and favoured loan scheme with
reason.
vi. Recommendati
ons.
7
Methodology
8
HOUSING FINANCE
Product description
9
applicant who has to pay administrative fee again along with
the acceptance letter. A legal appraisal of title related
documents is then carried out before the mortgage is
created and disbursed. Equated monthly instalments (EMI)
including principal and interest components are paid by the
borrower until the period of the loan. Incase of pre-payment
HFCs charge a penalty of about 1% if the prepayment is
done within 5 years of sanction. The process is depicted in
Exhibit 2.3.
10
Exhibit 2.3: Product Process Flow for Housing Finance
Enquiry
Credit Appraisal
Sanction by
committee
Letter to
applicants
12
The applicant gets possession of the property
Step
depending upon the level of completion of the
11
property.
Step
The applicant starts paying the EMIs.
12
Home Purchase Loans : This is the basic home loan for the
purchase of a new home.
13
Land Purchase Loans: This loan is available for purchase
of land for both construction or investment purposes.
Amount
Tenure
14
always prepay ones entire loan amount before it is due.
There is a trend to do away with the pre-payment penalty
being imposed by some lenders so its best one checks on
this as well.
Interest Rate
Refinance
15
Miscellaneous charges
a) Interest Tax
b) Processing Charge
c) Prepayment Penalties
d) Commitment Fees
16
Some institutions levy a commitment fee in case the loan is
not availed of within a stipulated period of time after it is
processed and sanctioned.
e) Others
PEST ANALYSIS
Political
Real estate sector is a major focus since 2002 – 2003
budget.
17
Comprehensive legislation for enabling framework for
securitisation to boost financing.
Economical
4.2% growth in construction industry in past 4 years
18
NPA’s are as low as 0.8% in housing finance which attract
more and more finance companies to enter in to housing
finance sector.
ADB provides dollar 300 million housing loans for India for
a repayment of 25 years plus a grace period of 5 years
Social
Housing demand is basically generated by low-income
groups that have no or only limited financial resources to
house themselves.
19
More preference for outskirts locations.
Technology
20
Interest rates over last few years
In te r e s t R a te s in L a s t fe w ye a rs
20
interest rates
15
10 in te re s t ra te s
5
0
99
00
01
02
03
04
05
06
19
20
20
20
20
20
20
20
y e a rs
21
ICICI BANK
22
operating in the Indian Market. After its success in the GDR
segment, ICICI expanded its custodial operations by offering
custodial services to overseas institutional investors
including foreign institutional investors (FII’S) and as on
June 30, 1999, the value of assets held in our custody
exceeded US 2 billion.
a. FIIs
b. OCBs
c. OFFSHORE FUNDS
d. VENTURE FUNDS
5. Mutual funds
7. Large corporate
23
PERSONAL BANKING
At ICICI BANK, they are committed to making banking a
pleasure. This commitment is manifested in the services
they offer – a wide range of accounts, investment schemes,
and facilities. Each service offers their customers security,
flexibility of operation and maximum returns. The various
services provided under this is as follows:
• ATM
• Phone Banking
CORPORATE BANKING
MOBILE COMMERCE
ICICI Bank now brings Bank Account and ICICI Credit Card
to customers fingertips. With Mobile Commerce , customers
can perform a wide range of query-based transactions from
their OrangeTM (MUMBAI) and AIRTEL ( DELHI) Mobile
Phone, without even making a call.
24
• Balance enquiry to the linked accounts
ICICI
No guarantor required
25
Home loan
Loan Amount
26
While there is no need for a guarantor, it could be that
having one might enhance your credibility with us. If so, our
loan officer would provide you with the necessary details.
HOME LOANS
Refer to the table for a loan option that suits your need best
Sanctioning
27
Documents
Disbursement
Your loan will be disbursed after you identify and select the
property or home that you are purchasing and on your
submission of the requisite legal documents.
This may take some time but we want to ensure a clear title
and will complete all the legal and technical verifications to
ensure that you have full rights to your home.
28
contribution, the loan amount (as warranted by the stage of
construction) will be disbursed by ICICI.
Standard documents:
F Y 03 86 595
F Y 02 22 370
F Y 01 6 770
Rs . In Mn
29
Unique features of HDFC housing loan schemes
• Maximum loan
85% of the cost of the property (including the cost of the land)
and based on the
repayment capacity of the customer.
• Maximum Term
20 years subject to your retirement age.
• Fixed Rate
*Conditions Apply
Purpose
• Purchase of
o Flat, row house, bungalow from developers
o Existing freehold properties
30
o Properties in an existing or proposed co-operative housing
society or apartment
owner's association
o First Power of Attorney purchases in Delhi for DDA flats
allotted before 1992.
• Self Construction
Processing Fees
1% of the loan amount applied plus applicable service taxes and cess.
No Charges for
31
installment reduces upon retirement of the earning parent.
Documents required-:
32
returns (self and
business)
Last 3 years Income Tax
returns
Last 6 months Last 3 years Profit /Loss (self and business)
bank statements and Balance Sheet
Last 3 years Profit /Loss
and Balance Sheet
Last 6 months bank
Last 6 months bank
Processing fee statements
statements
cheque (self and business)
Processing fee cheque Processing fee cheque
33
• Special scheme to grant loans to finance
Earnest Money Deposits to be paid to
Urban Development Authority/ Housing
Board, etc. in respect of allotment of sites/
house/ flat
• No Administrative Charges or application
fee
• Prepayment penalty is recovered only if
the loan is pre-closed before half of the
original tenure (not recovered for bulk
payments provided the loan is not closed)
• Provision for downward refixation of EMI
in respect of floating rate borrowers who
avail Housing Loans of Rs.5 lacs and
above, to avail the benefit of downward
revision of interest rate by 1% or more
• In-principle approval issued to give you
flexibility while negotiating purchase of a
property
• Attractive packages in respect of loans
granted under tie-up with Central/ State
Governments/ PSUs/ reputed corporates
and tie-up with reputed builders
Purpose
Purchase/ Construction of new House/ Flat
Purchase of an existing House/ Flat
34
Purchase of a plot of land for construction of
House
Extension/ repair/ renovation/ alteration of an
existing House/ Flat
Purchase of Furnishings and Consumer Durables
as a part of the project cost
Takeover of an existing loan from other Banks/
Housing Finance Companies
Eligibility
Margin
35
Repairs/ Renovation of an existing House/ Flat: 20%
Processing Fee
Prepayment Penalty
Security
36
Documents
37
The loan is granted as an Overdraft facility with
the added flexibility for you to operate your
Home Loan Account like your SB or Current
Account.
38
who are on the look out for a source of finance
for a property they want to invest in without
mortgaging the same. All you have to do is
pledge any financial security that you have and
you will get a Home Loan for your dream home.
Reach us
• Apply online
• SMS <UHL City Name> to 4646
• Write to us at:
homeloan@utibank.co.in (Please specify
your City & contact numbers with STD code)
39
• Contact any of our Branches / Offices
Products offered
Documents Required
40
Income showing all 2 years and
deductions or Computation of
Form 16 along income for the last 2
with recent salary years certified by a CA
certificate.
Proof of Bank account Bank account
Residence statement / Latest statement / Latest
Electricity Bill / Electricity Bill / Latest
Latest Mobile OR Mobile OR Telephone
Telephone Bill / Bill / Latest Credit
Latest Credit Card Card statement /
statement / Latest Latest LIC policy /
LIC policy / Insurance Premium
Insurance Receipt / Latest NSC /
Premium Receipt / other similar
Employers letter instruments indicating
certifying the the address
current mailing
address / Latest
NSC / other similar
instruments
indicating the
address / Existing
House Lease
agreement
Bank Last 6 months Last 6 months
Statement /
Pass Book
where
salary/income
is credited
Guarantor Optional Optional
Form
41
Loan amount
Home Loan
Margin
Repayment
Security
Insurance
Disbursement
42
The loan will be disbursed in full or in suitable
installments, taking into account the requirement of
funds and progress of construction, as assessed by
the Bank directly to seller / builder / local
development authority / supplier of materials etc.
Other Conditions
43
Comparison of interest rates of the four banks-:
Procressi
ng
Annual or Prepaymen
Name of Rate of EMI per Fee &
Type Loan Slab Monthly t
the Bank Interest lac (Rs) Administr
Rent Fee
ation
Fee
Floating 3 lac to Monthly
ICICI 9.50% 2102 0.5% 2%
crore
1 lac to 50 Monthly
HDFC Floating 9.25% 2089 1% 2%
lac
1 lac to 50
UTI Floating lacs Monthly 9.00% 2076 1.0% 2%
1 lacs to 1
SBI Floating Monthly 8.75% 2063 0.5% 2%
crore
44
Fixed interest rates in case of loan Tenure of 5 Years
Procressi
ng
Annual or Prepaymen
Name of Rate of EMI per Fee &
Type Loan Slab Monthly t
the Bank Interest lac (Rs) Administr
Rent Fee
ation
Fee
3 lac to 1 Monthly
ICICI Fixed 10.75% 2162 0.5% 2%
crore
1 lac to 50 Monthly
HDFC Fixed 10.50% 2150 1% 2%
lac
1 lac to 50
UTI Fixed lacs Monthly 11.00% 2175 1.0% 2%
1 lacs to 1
SBI Fixed Monthly 9.50% 2100 0.5% 2%
crore
45
Floating interest rates in case of loan Tenure of 10 Years
Procressi
ng
Annual or Prepaymen
Name of Rate of EMI per Fee &
Type Loan Slab Monthly t
the Bank Interest lac (Rs) Administr
Rent Fee
ation
Fee
Floating 3 lakh to 1 Monthly
ICICI 9.50% 1293 0.5% 2%
crore
1 lac to 50 Monthly
HDFC Floating 9.25% 1280 1% 2%
lac
1 lac to 50
UTI Floating lacs Monthly 9.00% 1267 1.0% 2%
1 lacs to 1
SBI Floating Monthly 9.25% 1280 0.5% 2%
crore
46
Fixed interest rates in case of loan Tenure of 10 Years
Procressi
ng
Annual or Prepaymen
Name of Rate of EMI per Fee &
Type Loan Slab Monthly t
the Bank Interest lac (Rs) Administr
Rent Fee
ation
Fee
3 lac to 1 Monthly
ICICI Fixed 10.75% 1364 0.5% 2%
crore
1 lac to 50 Monthly
HDFC Fixed 10.50% 1351 0.5% 2%
lac
1 lac to 50
UTI Fixed lacs Monthly 11.00% 1378 1.0% 2%
1 lacs to 1
SBI Fixed Monthly 9.75% 1310 0.5% 2%
crore
47
THE MARKET SHARE OF DIFFERENT BANKS IS
GIVEN BELOW-:
SWOT ANALYSIS
STRENGHTS:
33%
paradigm shift in the way the industry
now markets Home Loans
48
• Shift from ‘Walk-in’ to ‘Doorstep
Service’
• Property Shows
• Distribution reach
49
• Counselor network
• I-Bank
• Insurance agents
BRANDING
• Logo
• ‘I-Man’ – 1:1.08
• Colors
• Fonts
• Corporate Baseline –
50
WEAKNESSES :
OPPORTUNITIES:
THREATS:
51
RECOMMENDATIONS
52
increase to 65-70 years of age. Such facility
will help grow fast retail segment of the bank.
CONCLUSION
53
technological savvy, customer centric
progressive driven by highest standards of
corporate governance and guided by sound
ethical values and above all should be cordial
and should have personalize customer services.
54
REFERENCES
1) www.icicibank.com
2) www.hdfc.com
3) www.utibank.com
4) www.sbi.co.in
5) www.google.co.in
6) www.realestateinfo.com
7) www.apnaloan.com
55