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BY MANOJ GEHLOT SUBMITTED TO MAHAKAL INSTITUTE OF TECHNOLOGY & MANAGEMENT UJJAIN ( M.P.)
In Partial Fulfillment of the requirement for the Award of the Degree of Master of Business Administration (MBA) Vikram University, Ujjain (M.P.) June 2010 July 2010 EXTERNAL GUIDE Mrs. Archna Ladha SHRI BALAJI HOME FINNANCE 36,Drivid Marg, Ujjain (M.P.) INTERNAL GUIDE Prof. Harshita Tiwari MITM College, UJJIAN (M.P.)
CERTIFICATE 2010 This is to certify that the project titled A study on HOME LOANS OF ICICI BANK submitted by Mr. Manoj Gehlot in partial fulfillment of the requirement for the award of degree of Master of Business Administration of Vikram University, Ujjain is bonafied record of work done at Shri Balaji Home Finance, Ujjain during the period between 15th June,2010 to 30th July 2010.
PREFACE
This Report is an attempt to provide a detailed analysis of the process to get a home loan and the requirements to get a loan in ICICI Bank. In my complete student internship program I met more than 30 customers and promoted ICICI Bank home loan products. During this student internship program I came to know that most of the people r showing to take a home loan but they are so confused what the necessary requirements to get a loan. However, my survey suggests that maximum number of people are interested to take a loan but all are not aware of the products and the process. Employees and Business people are already taken home loans to meet their financial requirements to construct a home. In my survey I found that 80% of people do not know how to get a loan in a bank. Finally, creating awareness is very important to get good profits to the company as well as to build good brand image in the minds of customers. Place :- Ujjain Manoj Gehlot
Student of MBA MITM, Ujjain
ACKNOWLEDGEMENT
It gives me immense pleasure to express my deep sense of gratitude to Prof. Hirshita Tiwari of Mahakal Institute of Technology & Management, Ujjain (M.P.) for his valuable guidance and consistent supervision through out the course. I am also thankful to Mrs. Archna Ladha, my Company Guide of ICICI BANK, Ujjain, for his valuable guidance for preparing the Final Report and also for providing the necessary facilities. Finally I am indebted to our other faculty members, my friends and my parents who gave their full-fledged co-operation for successful completion of my project. It was a indeed a learning experience for me.
Manoj Gehlot
DECLARATION
I (undersigned) a student of Mahakal Institute of Technology & Management , Vikaram University, Ujjain(M.P.) hereby declare that this project work entitled A study on Home loans of ICICI Bank is my work, carried out under the guidance of my Internal guide Prof. Hirshita Tiwari and my External guide Mrs. Archna Ladha. This report neither full nor in part has ever been submitted for award of any other degree of either this university or any other university.
Manoj Gehlot
CONTENTS
Certificate by Company Certificate by Institute Preface Acknowledgement Declaration Indian banking system ICICI Company profile Project Questionnaire Findings Recommendations Conclusion On the job training 02 03 04 05 06 08 14 20 48 53 54 55 56
Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank
10 Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India (SBI) State Bank of Indore (Proposed Merger to SBI) State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank .
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Bank of Rajasthan Bharat Overseas Bank Catholic Syrian Bank Centurion Bank of Punjab
Dhanalakshmi Bank 12 Federal Bank HDFC Bank ICICI Bank IDBI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Kotak Mahindra Bank SBI Commercial and International Bank South Indian Bank
AXIS Bank
YES Bank
If there is one industry that has the stigma of being old and boring, it would have to be banking; however, a global trend of deregulation has opened up many new businesses to the banks. Coupling that with technological developments like Internet banking and ATMs, the
banking industry is obviously trying its hardest to shed its lackluster image. 13
COMPANY PROFILE
ICICI Bank is India's second-largest bank with total assets of about Rs.3,634.00 billion(US$ 81 billion) at March 31, 2010 and profit after tax of Rs.40.25 billion(US$ 896 million) for the year ended March 31, 2010. ICICI Bank has a network of about 2,035 branches and about 5,518 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and other insurance, venture capital and asset management. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and Russia, branches in United States ,Singapore and Bahrain, Hong Kong, Sri Lanka, Qutar and Dubai International Finance Center and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange and the National Stock Exchange of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). 14 ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy.
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Deposits
ICICI Bank offers wide variety of Deposit Products to suit your requirements. Coupled with convenience of networked branches/ ATMs and facility of E-channels like Internet and Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our deposit products and provide your details online and our representative will contact you for Account Opening. ICICI Bank offers you a power packed Savings Account with a host of convenient features and banking channels to transact through. So now you can bank at your convenience, without the stress of waiting in queues. We understand that as you reach the age to retire, you do have certain concerns whether your hard earned money is safe and secure whether your investments give you the kind of returns that you need. That's why we have an ideal Banking Service for those who are 60 years and above. The Senior Citizen Services from ICICI Bank has several advantages that are tailored to bring more convenience and enjoyment in your life. It's really important to help children learn the value of finances and money management at an early age. Banking is a serious business, but we make banking a pleasure and at the same time children learn how to manage their personal finances Safety, Flexibility, Liquidity and
Returns! A combination of unbeatable features of the Fixed Deposit from ICICI Bank. 16 When expenses are high, you may not have adequate funds to make big investments. But simply going ahead without saving for the future is not an option for you. Through ICICI Bank Recurring Deposit you can invest small amounts of money every month that ends up with a large saving on maturity. So you enjoy twin advantages- affordability and higher earnings.
Investments
At ICICI Bank, we care about all your needs. Along with Deposit products and Loan offerings, ICICI Bank assists you to manage your finances by providing various investment options ranging from ICICI Bank Tax Saving Bonds to Equity Investments through Initial Public Offers and Investment in Pure Gold. ICICI Bank facilitates following investment
Products:
ICICI Bank Tax Saving Bonds Government of India Bonds Investment in Mutual Funds Initial Public Offers by Corporate Investment in "Pure Gold" Foreign Exchange Services Senior Citizens Savings Scheme, 2004
IPO 17
Cards
ICICI Bank offers a varied range of cards to suit your requirements. These cards having a wide acceptance, nationally and internationally, coupled with benefits of channels like Internet and Mobile, will enhance your experience. ICICI Bank Credit Cards give you the facility of cash, convenience and a range of benefits, anywhere in the world. These benefits range from life time free cards, Insurance benefits, global emergency assistance service, discounts, utility payments, travel discounts and much more. The ICICI Bank Debit Card is a revolutionary form of cash that allows customers to access their bank account around the clock, around the world. The ICICI Bank Debit Card can be used for shopping at more than 100,000 merchants in India and 13 million merchants worldwide.
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LOANS
DIFFERECT LOANS PROVIDED BY ICICI BANK
ICICI Bank offers wide variety of Loans Products to suit your requirements. Coupled with convenience of networked branches/ ATMs and facility of E-channels like Internet and Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our loan product and provide your details online and our representative will contact you for getting loans.
Products:
Home Loan Commercial Vehicle Loan Personal Loan Loans Against Securities Car Loan Loans Against Gold Ornaments Construction Equipment Flexi Cash
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PROJECT
A STUDY ON HOME LOANS OF ICICI BANK THROUGH SHREE BALAJI HOME FINANCE
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rates & best level of service, but also products designed to cater to the specific needs of consumer. New products / New features in existing products are introduced based on customer feedback. Choose the ICICI Bank Home Loan that suits your needs.
Home Loans
Home Loans are provided to individuals to own a residential property. ICICI Bank offers easy home loans for First Purchase in ready construction Under construction property Purchase in re-sale Self construction & extension of existing living space
Home loan amount can be chosen to suit specific needs One can avail of a loan up to 85% of Cost Of Property Conveniently pay off the loan over a period of up to 25 years It can be availed at the Floating rate of Interest or at the Fixed rate of Interest or at the combination of both Fixed & Floating rates Faster repayment as principal repayment in on monthly rest.
Eligibility Norms for Home Loans . Home Loans can be availed by Resident Indian whether Salaried or SelfEmployed and also by Non- Resident Indian who are Salaried. For resident
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sanctioned. The loan must terminate before or when you turn 65 years of age or before retirement, whichever is earlier. You must be employed or self-employed with a regular source of income.
Land Loan
Land loans give an opportunity for individual customer to purchase a residential plot of land to do self- construction. Thus, customer can invest now in a plot of land & build in future. The Land loan can be financed only within municipal limits or in case of direct allotment outside municipal limits by DA. Land Loan can be availed by Resident Indian whether Salaried or SelfEmployed and also by Non- Resident Indian.
owned dwelling unit to existing or new customer. HIL considers a range of facilities internal or external to the structure without increase in the living pace. Thus, a customer can add or improve facilities to his dwelling unit with a loan at Home Equity Loan rate of interest Home Improvement Loan can be availed by Resident Indian whether salaried or Self-Employed.
24 Home Loans can be availed by Resident Indian who are Self-Employed and also by Non- Resident Indian who are Salaried.
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Balance transfer:
Balance Transfer is a facility offering the customer a choice to transfer the outstanding balance of the loan availed for better terms & conditions. Balance Transfer helps to move from higher rate of interest to lower rate of interest or increase in loan component as Top up. BT is possible only from loans taken from HFCs approved by NHB for refinance, Banks or employer Loans taken from Central or State Government. Balance Transfer can be availed by Resident Indian whether Salaried or Self-Employed.
Money saver:
Money Saver account is a home loan account with transaction facility. The account holder can deposit & withdraw to the extend of balance maintained. On the commencement of EMI the interest will be calculated on the outstanding debit balance. Thus, the home loan account holder maintaining large balance in the Money Saver account can save on the interest paid by faster repayment. This means one can pay less & repay loan faster. This product can be offered only in case of first and final disbursement Part disbursement cases cannot be offered this product. 26 Money Saver would be available at Floating Rates only & Fixed EMI per lacks per month would be applicable . IT certificate in the case of
Money Saver is not issued. Money Saver can be availed by Resident Indian whether Salaried or Self- Employed
Topup loan:
Top Up Loan can be availed time and again for various personal requirement based on value of the property. It offers the customer additional funds against the security of the same property. To avail Top Up loan , the vintage of at least six months is required for the loan availed. The basic eligibility emerges with good repayment track record. The end use letter is essential to be collected.
This product is applicable to fully disbursed cases with no post disbursement document pending. This product is priced more than base home loan rates but lower than any personal loan rates. Top Up Loan can be availed by Resident Indian whether Salaried or Self- Employed.
Loan on Phone:
Loan On Phone is a pre sanctioned loan. Its is based on the existing relationship of the customer with ICICI Bank. The biggest advantage is that the customer can get the loan with minimum documentation. Good banking transactions and repayment records becomes a strength for availing loans in future. Loan on Phone can be availed by Resident Indian whether Salaried or Self- Employed 28
Loan against property gives the owner of residential or commercial premises to leverage on the value of the property. It offers the ability to unlock funds gives the advantage of looking at the asset as a source of security bringing liquidity and retaining ownership. In case of HEL the property should be self occupied by one of income considered applicants. The security of the property ensures competitive rate of interest . The interest component of the EMI paid by SEP / SENP can be booked as expenses in their P & L Home Equity Loans are provided for many personal requirements of the customer viz. Marriage Child Education Business Purchase of Property (Where mortgage is not possible) Improvement of Property Medical Treatment Home Equity Loans can be availed by Resident Indian who are SelfEmployed and also by Non- Resident Indian who are Salaried. 29
Property overdraft:
The overdraft facility from ICICI Bank allows you to borrow money against your self occupied property. The overdraft facility comes with a multi-city cheque book and phone banking facility. The customer is charged interest only for the amount that he withdraws from the account. Whenever he deposits funds into the account, they go towards reducing the outstanding balance in the account.
It offers the following benefits: Generating capital against property (R ) or ( C) for business or personal use Convenience of Pre - Sanctioned limit and draw as you need Pay interest on the amount drawn and for days utilized Convenience of depositing & withdrawing like any Current Account Benefit of Cheque Book & Phone banking Fast Processing and door-step service Multi-city cheque book and phone banking facility Property Overdraft can be availed by Resident Indian who are SelfEmployed 30
Lease Rental Discounting helps to raise funds against the future expected rentals of self owned commercial property. The property should be occupied by the Lessee. Similar to Home Equity Loans, LRD can be provided for any.
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However, there are ways by which you can enhance your eligibility.
If your spouse is earning, put him/her as a co-applicant. The additional income shall be included to enhance your loan amount. Incidentally, if there are any co-owners they must necessarily be co-applicants. Did you know that your blood relater income can also be considered for sanctioning the loan on your combined income? The disbursement of the loan, however, will be done only after you submit proof of your marriage. Providing additional security like bonds, fixed deposits and LIC policies may also help to enhance eligibility. 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. The final amount to be sanctioned will depend on your repayment capacity. However, what you ultimately are entitled to will have to conform within the limits fixed for each loan. 33
Also, when the company looks at the total cost, registration charges, transfer charges and stamp duty costs are included.
Sanction Documents
Duly Completed Application Form Photograph Fee cheque Photo identity proof Age proof Signature verification proof Residence address proof 34
These are the documents required for sanctioning a loan. You may be asked to submit further legal documents if required by ICICI Bank or its approved lawyers. Do retain photocopies of all documents being submitted by you.
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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. The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if applicable) is also needed. On satisfactory completion of the above, on registration of the conveyance deed and on the investment of your own contribution, the loan amount (as warranted by the stage of construction) will be disbursed by ICICI Bank.
Disbursement Documents
Property documents (as per P&D for respective states and as asked by empanelled lawyers for individual cases) Facility Agreement Disbursal Request Form Cheque Submission ECS or Auto Debit for ICICI Bank account holders or Post Dated Cheques for EMI 37
ECS or Auto Debit for ICICI Bank account holders or Post Dated Cheques for EMI Personal Guarantors Documents (PG Form, Photograph, Identity Proof, Address Proof, Signature Verification and Income documents, if applicable)
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40 FLIP can be availed by Resident Indian whether Salaried or SelfEmployed and also by Non- Resident Indian who is Salaried.
41 For the first 3 years you get a fixed interest rate. From the fourth year, your loan gets switched to the prevailing floating interest rate. Thus, a customer gets an opportunity to observe the interest rate movement over a period of time and expects to benefit in the bargain Smart Fix can be availed by Resident Indian whether Salaried or SelfEmployed. Rate of Home Loan Interest: ICICI Bank has announced a shift in the existing benchmark rate from Floating Reference Rate (FRR)PLR / I-BAR the Base Rate (I-Base). The same will be effective for all it's mortgage products from July 1, 2010. The ICICI Bank Base Rate (I-Base) has been fixed at 7.50%. This is the minimum rate that ICICI Bank will charge to its new customers. The current interest rate on ICICI Bank Home Loans :8.25% fixed till Mar 2011. 9.25% fixed from Apr 2011 to Mar 2012. 9% to 9.25% floating afterwards
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What is an EMI?
An EMI refers to an equated monthly installment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.
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45 However, we are always ready to assist our customers in the event of legitimate problems. And, we might reconsider this if we find that there are satisfactory reasons for the delay. And, neither would we charge you extra for this delay. If it is refinancing you are interested in, it is possible within 6 months from the date of purchase of property.
benefits u/s 80D of the Income Tax Act 46 Sum Insured remains constant throughout the policy period (loan O/S amount to come to bank, rest goes to individual) Multiple applicants can be covered under the same loan Simple application form Key Benefits of Home Assure/ Health Assure Life Cover from Home Assure for the entire home loan tenure. Critical Illness cover from life threatening illnesses like. cancer, coronary artery bypass, heart attack, kidney failure, stroke, major organ transplant. Special non-medical limits only for ICICI Bank Home Loans Customers. Dual benefit to customers, Life Cover from Home Assure and Critical Illness Cover from Health Assure Dual tax benefits, Section 80C benefits under Home Assure, Section 80D benefits under HealthAssure Simplified claim procedure.
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Questionnaire
A survey of 30 peoples have been made. Following are the questions which have been asked during the survey. Que.1 Are you aware about the procedure to get a Home Loan? Yes / No.
Que.2 Do you know the name of the bank giving Home Loan? Yes / No.
27%
Yes No.
73%
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Que.3 Do you know about the rate of interest which you have to pay? Yes / No.
17%
Yes No.
83%
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Que.5 Do you know the Application Process of your Home Loan ? Yes / No.
20%
Yes No.
80%
Que.6 Are you aware about the documental requirements for getting a Home Loan ? Yes / No.
10%
Yes No.
90%
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Que.7 Will you Like to take House Loan from ICICI Bank? Yes / No.
50%
50%
Yes No.
Que.8 Have you got some guidance or motivation from the banks to get a Home Loan ? Yes / No.
27%
Yes No.
73%
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Que.9 Do you know about the Insurance Plans involved in the Home Loan ? Yes / No.
7%
Yes No.
93%
Que.10 Are you satisfied with knowledge about Home Loan ? Yes / No.
13%
Yes No.
87%
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FINDINGS
1. ICICI Bank having good brand image in the minds of customers. 2. Majority of the people got loans from ICICI Bank only 3. Most of the customers are not aware of the products of ICICI home loans. 4. Some of the customers felt that the interest rates are some what high 5. Some of the customer not having good faith on private banks 6. Most of the people are directly go to bank to apply a home loan 7. Some of the customer of ICICI already benefited through ICICI home loan products and services 8. Customer awareness is medium about ICICI products. 9. ICICI providing good services to their customers.
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RECOMMENDATIONS
Create awareness: The Company has to take care of awareness creation about the products and services among the customers. Charges: The Company has to reduce the mortality and administration charges. The process is some what late to sanction a loan.\ The company has to reduce their interest rates on home loan products and services. The company has to identify the potential customers. Production promotion strategies should be improved. Company should consider the present competition and should act according to the customer needs.
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CONCLUSION
In my study we came to know that many peoples are interested to take a home loan from ICICI bank to construct their homes. Home loans have long period when compare to other personal loans and other loans. So peoples are confused to take a home loan. The interest rates also some what high when compare to other banks. Even though the interest rates are high peoples are willing to take a loan from ICICI bank due to some reasons. The loan sanction process is low when compare to other banks. For disbursement process is also it will take low time when compare to other banks. 55
Manoj Gehlot
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