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Acknowledgement
Executive Summary
Chapter 1 Introduction
Chapter 2 Products
Bibliography
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 manyears 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 21
century.Years
st
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
Ltd.
various
the basic
areas needs
covered
of in
thethe
applicants
report are:
and the process of
6 Home Loans in ICICI Bank
The final outcome of the report is to find out the number of the applicants who have
applied for bank loans in the month of June and the analysis of the population applying
for Home Loans through the sample size 40.
The report includes the various products that are introduced by the bank such as Home
Loans, Loan against property, Land Loan, Property OD, Lease Rental Discounting,
Balance Transfer, etc. It consists of questionnaire which helped to analyze the final
outcome of the report.
Introduction
ICICI Bank is Indias No. 1 Home Loans Provider. At ICICI Bank Home Loans, it offers
unbeatable benefits to ensure that the customers get the best deal without any hassles.
And ICICI Bank makes it extremely easy for them by offering
With varied offering of house loans and home finance, ICICI Bank Home Loans gives an
opportunity to select the perfect loan as per the needs of the customers who can choose
from:
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
-:
ICICI Bank
RCLG
(Retail Customer Liability
Group)
RAPG
(Retail Assets Product
Group)
Sales
department
COPS
Credit
/ CAM Operations
department
Sales Manager
Credit Manager
DMA / DSA
CPA (Credit
(Direct marketing Processing Analyst
Agency/ direct sales
Agent)
Sales Department
Department
Collection
Department
Credit
and
Technical
Department
reports of the
It
customer
is responsible
and hisfor
property.
Credit Documentation,
10
Profile check, Legal
Operations Department
according to the RBI norms and performs after sales services. It collects the Post Dated
Cheques.
Collection Department
19 th
February 1999The launch of ICICI Bank Home 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
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
12
model.
2. Money Saver
13
Products LAP / OD
2. There must be change in transaction within last 10 years. The title must be
changed.
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
Non
onProfessional
Land can be(SENP)
given to&allSelf
kinds
employed
of customers
Professional
15 Salaried,
(SEP).
Self Employed
Purpose
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
Loan Amount
Example
: Rs.20
: COP
lacs: Rs.20 lacs & MV : Rs.25 lacs16
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.
17
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
Stamp
Duty
of Amenities
+ Registration
should
charges).
not exceed 200 % of (Agreement
18
Value / Sale Deed +
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.
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.
19
Process
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.
Eligibility
Basedason
FOIR
the combination
for calculation
of purpose.
the loan EMI for the other
20 loan would be considered
21
Purpose :
Target Segment :
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.
7.5 %
Rs.8056/-
EMI
Rs.8056.00
23
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 aemployee
Self Employed
of Pvt. NonLtd Companies,
Professional.
Prop.
24 Concerns, Trusts.
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.
25
Features : SURF
Eligible Entities (Only Individuals)
a) Salaried
b) Self Employed Professional
Documents SURF
Sanction
Letterb)
Automated
Letter capable
Agreements
a)
Normal
Amendatory
loanSanction
Agreement
Agreement
26of generating SURF letter.
27
Purpose :
Maximum Tenor :
LTV Ratio :
20 years (15 years for SENP retail & 10 years for SENP non-retail)
Amount of Loan :
28
In Spoke Loactions
29
Purpose :
Maximum Tenor :
SENP Retail
Resident Indian
= 15 years.
LTV Ratio :
85% of the cost of property for doctors.
60% of the cost of property for others.
Amount of Loan :
Eligible Entities :
Professionally Qualified Self Employed Individuals & only Qualified Chemist
NRIs
Other
Minimum
Loan
Norms
available
:3 years
for Experience
improvement
as of
Practicing
office premises
Professional
30
Purpose :
etc.
Maximum Tenor :
LTV Ratio :
Balance Transfer
Purpose :
Take over of housing loans taken from other HFC / Bank at a higher rate than
current rate.
Tenor :
LTV :
85%
Amount of Loan :
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
Documents
Required
record: Pre
for the
Sanction
last twelve months to be 32
verified.
34
Top Up Loan
Purpose :
Maximum Tenor :
Amount of Loan :
Rs.50000 to 20 lacs
Entitled Borrowers :
Borrowers for the Top up loan must be the same as the existing
ICICI loan
Security of Loan :
Purpose :
Maximum Tenor :
LTV Ratio :
15 years
Amount of Loan :
Eligible Entities :
Salaried
SEP
SENP
Eligible Improvements
Property
disbursement
has to be occupied
: by at least
Being1 completed
applicant towithin
the 36
loan.
12 months from the date of first
Purpose :
Enable the consumer to raise funds (and increase liquidity) against future
Maximum Tenor :
LTV Ratio :
Eligible Entities :
Salaried
SEP
SENP (Non Retail)
Amount of Loan :
37
Purpose :
Eligible Entities :
Amount of Loan :
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
Out Cheque
Stop
Payment
b) Savings
returns
returns
Account
not
02more
in least
than0606months
in 06 months.
38
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
EMI
OCR : By Cheque prior to disbursement & No PDD
No deviations permitted.
39
Purpose :
41
Purpose :
Eligible Entities :
Eligible Products :
Home loan
Land Loan
NRI
OPL
LAP
BT
Top Up
Monthly reducing
Date of
EMI
shall
change
remain
: constant,
1st dayexcept
of eachinquarter
the following
(as per calendar
three
42 instances
year) :
1.
Negative amortization
2.
Others
Portfolio
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%
43
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
In caseillness
of Salaried
leadingonly
to hospitalization
12 EMIs would
andbeloss
covered
44
of income
45
46
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
rates.
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
money
onlylenders
type ofto
loan
NBFCs.
which is coordinated and continued
47
from the time of
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
ICICI Bank specializes 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.
48
REVIEW OF LITERATURE
Business model
49
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
Bank
delivers
arethe
credit
offerappraised
letter along
andwith
decision
a listtaken
of51legal
on documents
the sanctionrequired.
of the loan
CUSTOMER
DMA/COUNSELLOR
BSM
RO
FIRE FI
FI AGENCY
RCU
RECEIVES FI
BCM
COPS
DEDUP
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
The
disbursement
cheque
cheque
is prepared.
is delivered to the customer.
52
Customer
DMA
RO
BCM
Fires and Receive Legal and
Technical
Sales
department
53
Purpose
: To provide Single Point contact to the customer and handhold him through the
Sanction
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
Disbursement
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
Introduce
Make
cheque
a Disbursement
Call
is appointment.
ready
Centre to
call
thetocustomer
customerduring
to inform
the disbursement
him
54 that the disbursement
call
Purpose :
To provide credit decision for snction and disbursement in order that the
Disbursement
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
55
56
Flowchart
Add Contact
Fix Appointment
Remainder for Customer
Update Diary
Take a Print of Schedule
NO
DME Meets
The
Customer
YES
NO
Customer
Interested
YES
Close
All
Documents
Collected
NO
YES
Sanction Process
57
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
58
Ability to Pay
Intention to Pay
How do we judge it ?
Industry Trends
Background of Individual
Disposable Income
Previous Repayments
a) Car loans
b) Housing loans
d) Cellular repayments
59
Stability of Income
In case of Salaried
Look at the Organization employed with
The Industry in which it operates
Skillofsetyears
No.
and in
Educational
the Organization
Qualification
/ Industry
60
61
Family Background
Family
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
62
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
63
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
AGE
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 )
64
Customer Profile
CASH Pvt.Ltd
Age Proof
Passport
Driving license
Life Insurance Policy
Birth Certificate
Election ID
School leaving certificate
Employee ID (only for PSU / Govt.employees)
PAN Card
SSC / HSC Admit
Mark Sheet
Card
65
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
HUF
Anti Social Elements
Politicians
Mine and Quarry workers
Firma engaged in parcel movement
Plantation
Employees
Class
4 employees
/ of
Time
ChitShare
fund/Companies
Stock Broking/ Investment66
Companies
Garment Exporters
Employees of BIFR Companies
Watchmen
Security Services- Companies and their Employees
Stock B rokers
Real estate agents
Tour Operators
Cable Operators
Employees of NBFCs below AA rating
Film stars
Employees of Dot Com Companies
Bar Owners
Builders
68
Documents Required
Salaried
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
respectively
KYC Documentation (Address / Identity / Signature)
Age Proof
Latest Salary Slip / Certificate 4 salary slips for variable salary
Form16
Processing Fee Cheque
Mode of Repayment
EMI
Post Dated Cheques
Auto Debit
ECS
Deduction at Source (only for salaried)
Pre EMI
Post Dated
Auto
Debit Cheques
69
Payment Cycle
1
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
Application form
Dedup It is a software which has all the past data of all the customers
c)
who have applied for home loans previously which helps trace any
defaulter.
FI
number
/ TVR
of theapplicant
This is done
in order
by the
to bank
avoid
70 toany
verify
fraud
thebeforehand.
residence and telephone
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.
73
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
byisTechnical
Report,
And Sheet.
Finally
all other
theDetails
cheque
contents
cut
are checked,
and directly
verified
handover
and entered
to74thewith
customer
the help
or of
through
Pop Over
75
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
Mixed Structure
An Overview
Methods of
Approach
forValuation
Valuation
76
Market
Income
Cost
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
past.
Circle Rates are compared.
Broker Feedback is compared.
No Standard Formula to work out value of property.
Factors vary from locality to locality.
77
How Do We Fund ?
Structure Base
a) Load Bearing or RCC
b) Bungalow or Flat
Builder
a) Track Record
b) Projects Completed
c) Category A,B,C (Matrix)
a) Cost
Lending
b)
c)
StageInvolved
Security
of Construction
78
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
Accessibility
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
rules)
79
APF Process
Revised APF Process
Sourcing DMA / BSM
Technical Manager
Fire Legal
Fire Technical
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 TAT
Generating
control
huge database of property rates across India.
80
Legal Appraisal
81
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
Trust.
Transfer of property must be done by a written registered document.
Sale for a value exceeding Rs.100/- requires registration.
82
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
Minor
permission
to beberepresented
of of
sound
Court.
mind.
by Guardian and can transfer
83property with the
84
Property Documentation
Classification into two parts:
1. Types of Transactions
2. Classification of Documents
Transaction type
Builder
Society
Development Boards / Authorities
Self Construction
Resale Transaction
Classification of Documents
Land Related Documents
Government Land Records
Plans and Permissions
Individual Title Documents
85
Property Documentation
86
87
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 :
Passport
Passport
Driving license
Driving license
Election Id card
Election Id card
Residential Certificate
issued by Municipal
corporation / local self
government bodies
Latest
True
confirming
general/
company
months
annual
Copy
premium
ofpremium
old
life
Gas
(not
receipt
address.
ininsurance
88
case
more
receipt)
of
ofthan 12
Residential Certificate
issued by Municipal
corporation / local self
government bodies
Latest
annual
company
12general/
months
confirming
premium
True
premium
(not
life
old
Copy
more
insurance
in
receipt
address.
receipt)
of
case
than
Gas
of
connection book.
connection book.
Certificate issued by
Ward Officer maintaining
election roll certifying
address of the applicant.
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
Driving license
Passport
Passport
Driving license Driving license
Election ID
Election ID
Election ID
PAN Card
PAN Card
Life Insurance
Policy
Life Insurance
Policy
Birth Certificate
Birth Certificate
Birth Certificate
School leaving
certificate
School leaving
certificate
School leaving
certificate
Employee Id
(only for PSU /
Govt. employees
Employee Id
Employee Id
(only for PSU / (only for PSU /
Govt. employees Govt. employees
SSC
// HSC
Admit
(Printed
SSCformat
School
Card
Sheet
passing
HSC
/ college
with
Mark
certificate
PAN Card
Life Insurance
Policy
SSC
// HSC
Admit
SSC
/ /HSC
Admit
89 (Printed
SSCformat
School
Card
Sheet
passing
HSC
/ college
with
Mark
certificate
(Printed
passing
SSC
School
format
HSC
certificate
/ college
Sheet
Mark
Card
with
Domicile
certificate
Domicile
certificate
Ration Card
Ration Card
Partnership Firm
Partnership Deed
Company
Articles of Association, Memorandum of
Association, Certificate of Incorporation.
Any one of the following documents:
Latest (not more than 3 months old) Utility Bill like
Telephone Bill, Electr icity 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
address.
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)
92
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
Transporters
2. Self Employed
3.
/ Taxi fleetNon
Professionals
Operators
Professional
Not acceptable
93
Target Segment
Self Employed
Professional /
Non
Profesional
Salaried
Product Working
Eligibility
1. Minimum Seasoning 12 months
2. Seasoning EMI Multiplier
>12 months 1 times of the current EMI for Auto
>18 months
loan
1.25 times of the current EMI for Auto
loan
Parameters
1. EMI in arrears (current) Nil
2. Defaults
RTR Health
PROCESS OF RTR
IMP
PROCESS
Waiver
95
RESEARCH METHODOLOGY
Research Design:
The Research Design can be grouped under 2 sectors i.e., Primary
source and secondary sources.
Research
Design
Primary
Source
Interviews
with
customers /
DMAs
Secondary
Source
Websites and
Intranet of
ICICI Bank
Ltd.
Questionnaire
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 ICICI Bank Ltd. and their Direct Sales Agent.
The questionnaires were distributed equally among 4 DMAs equally and the response
collected through them was of great use.
96
QUESTIONAIRE:
AGE:
2. PROFESSION:
3. LOAN AMOUNT:
4. TENURE:
6. MODES OF PAYMENT:
(a) ECS (b) PDCs (c) DAS
(d) SI
7. PROPERTY MORTGAGED:
10. LOAN TAKEN FROM ANY OTHER BANK, IF YES WHICH BANK AND FOR
WHAT PURPOSE:
11.
OF INFORMATION
FOR
THE MARKETING
VARIOUS
HOME
LOANS
PLANS:
12. SOURCES
(a)
ARE
YES
NEWSPAPER
U SATISFIED
(b)
(b)NO
WITH
BANKTHE
(c)SERVICES
DIRECT
PROVIDED
BY
AGENCY
ICICI?
97 / DSA
Analysis:
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.
98
SUPPLIERS
POWER
BARRIERS
TO ENTRY
RIVALRY
THREAT OF
SUBSTITUES
RIVALRY
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
Increased
Various
Online
There
becoming
brokerage
for
isTrading
foreign
internet
anFocus
increasing
either
industry.
Competes
banks
as
of compared
Banks
franchisees
like
demand
in
with
ABN
Retail
tofor
Traditional
approaching
Amro
for
online
Broking
theand
larger
trading
Brokerage
others
the
brokers
brokers.
due
are99to
planning
orconsumers
closing
to enter
operations.
growing
the Indian
preference
retail
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.
100
SWOT ANALYSIS
Strength
Advanced Technology
Providing innovative products and technology
Leverage technology to satisfy customer demands.
Add value to share holders.
Weakness:
Too many subsidiaries
High cost of funds
Opportunities:
Higher capital base
First mover advantages
Threats:
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.
101
E ven their offices reflect their attitudes. ICICI Bank's headquarters in suburban Mumbai is a
huge, edifice in glass and granite. HDFC Bank's office in central Mumbai is
imposing
comparatively
smaller and more sedately furnished. The two banks have carried forward their style
statement
in to business. ICICI Bank thinks big, is all for growth and hungry for market
their
approach
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). ICICI Bank also leads HDFC
Bank inevery segment they are present in. But that's just the current update.
almost
The DNA of the strategy
ICICI Bank began 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
ICICI Bank did not have a presence.
The merger of the erstwhile financial institution ICICI Limited with the bank in April
2002, gave itcorporate
a
ready-made
clientele. The flip side was that ICICI Bank had 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,before
a
year
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 ICICI Bank had 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 oneand-a-half
years. For ICICI Bank, home loans are 46 per cent of its retail assets.
A banking consultant observes that ICICI Bank is far more aggressive. Though ICICI
executives
do not admit it, industry sources observe that ICICI's pricing has been far more
competitive,
whichit more customers.
probably brought
According to some industry experts, growth for ICICI Bank may have come at the cost of
quality.
ICICI Bank denies this.
Calling
the
customer
publicity
Both
used
In
theby
players
past
both,
(In
two
comparison,
targeted
including
years, thedirect
bank
same
ICICI
sales
has
customer
hasspent
agents
spentless
--Rs
(DSAs),
thethan
185
upper-middle
crore).
Rswere
100HDFC
the
crore
same.
class.
(Rs
Bank
The
Yet,
1 billion)
says
marketing
there
that
was
onitsaspends
channelsfocused
difference.
advertising
always
have
mainstream
and
advertising.
on other channels such as direct sales and
102
phone banking rather than
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
of
14 pergrowth
cent. HDFC Bank's retail deposits are about Rs 23,000 crore (Rs 230 billion).
Even in
home
loans, ICICI Bank commands 30 per cent of the market, having eaten into housing
finance
pioneer, HDFC's share.
Share of the wallet
Mar-05 HDFC
Bank
ICICI
Bank
RESEARCH FINDINGS:
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.
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
class.
Rebate / deduction in Income Tax.
Itbenefit
is normally
given
for the
purpose
ofmargin
purchase
ofthe
land
forso
Benefits Land
Investment
of Land
for Loan
future.
Loans Normal
RBI
beneficial
rates
hasofnot
the
for
Asgiven
it
customer.
theis government
granted
any
deduction
for
104the
andof
purpose
is
merely
ofbecause
for
investment
personal
it is
not
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)
Commercial
The graphs below shows the market leadership of ICICI as compared to HDFC and SBI.
Market leadership
ICICI
HDFC
SBI
15000
10000
5000
0
2004 2005 2006 2007
2005
2006
2007
2008
106
Market leadership
Disbursement (in Rs.Crore)
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
ICICI
HDFC
SBI
2006
2007
2008
Market Share
2007 SBI
2008
2006
2007
2005
2006
2004
2005
0% 50% 100%
OTHER PSBs
LIC
OTHER HFCs
FBs
Pvt Bks
HDFC
ICICI
StanChart
Citi
107
108
Bibliography:
109